September 18, 2023

REMINDER: Make Your Voice Heard On Proposed Changes To Section 232 Exclusion Process

As Connecting the Dots reported earlier this month, the Bureau of Industry and Security (BIS) at the U.S. Department of Commerce has proposed a new regulation that, if implemented, would make significant changes to determining exclusions from the country’s Section 232 penalties for, and quotas on, imports of aluminum and steel.

The public has until Oct. 12, 2023 to comment on the changes. Click here for detailed instructions for how to do so.

As lawyers at Clark Hill explained, BIS proposed four specific changes. They are to:

  • Change criteria for General Approved Exclusions, or GAEs. In general, the GAE process allows steel and aluminum products classified under a specific Harmonized Tariff Schedule of the United States (“HTSUS”) subheading to be excluded from the Section 232 tariffs. Under the proposed changes, GAEs would be granted to HTSUS classification codes, or subproducts, with very low rates of successful objections. The BIS said this change would allow it to focus on meritorious objections and would decrease the incentive for parties to file objections lacking in merit.
  • Create a General Denied Exclusions (GDEs) process. Under the proposal, GDEs would be implemented if the HTSUS classification code, or subproducts, have very high rates of successful, substantiated objections. The BIS said this change would increase efficiency while having impact on which products are ultimately subjected to or exempted from the Section 232 tariffs.
  • Put in place certification requirements for exclusion requests. The proposal would add a step before filing for an exclusion. Specifically, requesters would first need to certify they made reasonable efforts to source their product from the United States and then, if unsuccessful, that they made reasonable efforts to source their product from a country with which the United States has arrived at a satisfactory means to address the threat to national security. Eligible markets for sourcing would include Argentina, Australia, Brazil, Canada, the European Union, Japan, Mexico, South Korea, and the United Kingdom. Requesters also would need to provide evidence of their sourcing attempts within the 12 months preceding the date of submission of the exclusion request.
  • Implement new certification requirements on objection forms. Objectors would need to satisfy similar certification requirements detailed in the third proposed change. This revision would ensure objectors can supply a comparable quality and quantity of steel or aluminum and make it “immediately available” to requestors. Objectors also would be required to file evidence that they have commercially sold the same product as that which is being requested within the last 12 months, offer or evidence that they have engaged in sales discussions with the requesting company or another company requesting the same product within the last 12 months.

MSCI is not submitting comments on this process, and is offering this information for members’ consideration only.

As a reminder, MSCI consistently has argued that global overcapacity and other unfair trading practices, particularly by China, have harmed the U.S. steel and aluminum markets. To address this circumvention, MSCI has advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements, including the United States Mexico Canada Agreement (USMCA). MSCI also asked that Canada and Mexico be excluded from any trade penalties.

Click here to review all of MSCI’s advocacy on Section 232 tariffs.

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