Commerce Department Seeks Comments on Section 232 Exclusion Process for Steel and Aluminum

Comments Due by July 10, 2020

Today, the Department of Commerce’s Bureau of Industry and Security (“BIS”) published a Federal Register Notice seeking comments from interested parties to assist in its decisions on exclusions from the Section 232 tariffs and quotas imposed on imports of steel and aluminum articles.

Since issuing its interim final rule establishing the Section 232 exclusion request process, BIS has received over 179,000 exclusion requests (157,900 for steel and 21,100 for aluminum), with over 78,500 being granted and 25,400 being denied.

BIS is seeking public comment regarding “the appropriateness of the factors considered, and the efficiency and transparency of the process employed, in rendering decisions on requests for exclusions from the tariffs and quotas imposed on imports of steel and aluminum articles.” The notice lists various topics for comments including but not limited to expanding or restricting eligibility requirements for requestors and objectors; the Section 232 Exclusions Portal; the factors considered in rendering decisions on exclusion requests; and the incorporation of steel and aluminum derivative products into the product exclusion process.

BIS is also seeking suggested revisions to the exclusion process, such as time-limited annual or semi-annual windows during which all product-specific exclusion requests and corresponding objections may be submitted and decided; issuing an interim denial memo to requesters who receive a partial approval of their exclusion request until they purchase the domestically available portion of their requested quantity; requiring requestors to make a good faith showing of the need for the product in the requested quantity, as well as that the product will in fact be imported in the quality and amount, and during the time period, to which they attest in the exclusion request; and in the rebuttal/surrebuttal phase, requiring that both requestor and objector demonstrate in their filings that they have attempted to negotiate in good faith an agreement on the said product (i.e., producing legitimate commercial correspondence).

In a May 22 press statement announcing the comments, Secretary of Commerce Wilbur Ross indicated the Department’s inquiry was reflective of its ongoing efforts to improve the product exclusion process. Specifically, Ross said, “We want these critical national security measures to be applied effectively while avoiding unnecessary impacts on downstream American industries.”

Since its inception, the product exclusion process has been the subject of much criticism from the business community and Members of Congress, with concerns raised by both proponents and opponents of the tariff program. On a bipartisan basis, Members have raised the issue in letters and during various oversight hearings, and several pieces of pending legislation seeking broad Section 232 reform have also specifically addressed the product exclusion process. Additionally, last October – during the course of an audit of the Department of Commerce’s processes and procedures for reviewing and adjudicating Section 232 exclusion requests – the Department’s Office of Inspector General (OIG) issued a Management Alert raising transparency concerns.

Comments on the Section 232 exclusion process are due by July 10, 2020 (45 days after publication). All written comments must be submitted to the Federal rulemaking portal (www.regulations.gov). The regulations.gov ID for this rule is: BIS-2020-0012. Please refer to RIN 0694-XC058 in all comments and in the subject line of e-mail comments.