On August 28, 2023, the Bureau of Industry and Security (BIS) published a proposed rule to revise the Section 232 steel and aluminum tariff exclusion process. The proposed rule responds to public comments received in response to BIS’s February 2022 Request for Public Comments. By proposing further revisions to the exclusion request process, BIS aims to balance the needs of various stakeholders while upholding U.S. national security interests.
Section 232 tariffs on steel and aluminum were imposed in 2018 by former President Donald Trump under the Trade Expansion Act of 1962 after investigations into the impact of steel and aluminum imports on U.S. national security. Since then, BIS has been responsible for administering the product exclusion process that allows U.S. businesses to request exemptions for specific steel and aluminum imports from the 25 percent tariff. The August 28 proposed rule builds on previous regulations, aiming to refine the process further. The proposed rule outlines four main amendments designed to make the exclusion process more “transparent, equitable, and streamlined”:
- Revised Approach to General Approved Exclusions (GAEs). BIS seeks to streamline the process for GAEs by changing the criteria used for them. Instead of focusing on whether any objections have been submitted, the new criteria would hinge on the substance of the objections. Previously, GAEs were identified based on whether Harmonized Tariff Schedule of the United States (HTSUS) codes had received objections. The new proposal shifts the focus to HTSUS codes with very low rates of successful objections, which would discourage objections that lack merit and thereby streamline the exclusion process. This shift toward considering substantiated objections is designed to be a more accurate gauge of industry capabilities and needs. BIS believes this change could result in up to a 20 percent reduction in the total number of exclusion requests, enhancing the efficiency, fairness and effectiveness of the system.
- Implementation of General Denied Exclusions (GDEs). BIS proposes to add a process for GDEs. To balance the new system for GAEs, the process for GDEs would target HTSUS classification codes that have a high frequency of substantiated objections. By doing so, BIS aims to reduce the number of exclusion requests that have a low likelihood of approval, thereby streamlining the process and reducing the burden on both objectors and requesters. Like GAEs, the identification of GDEs would also be based on the volume and substance of objections received. The implementation of GDEs is anticipated to improve the overall efficiency of the Section 232 exclusions process, although the exact impact on the number of exclusion requests remains uncertain.
- Modifications in Certification Requirements for Exclusion Requests. BIS is proposing modifications to the existing certification requirements for exclusion requests. These changes would ensure that businesses are genuinely in need of the high volumes of imported steel or aluminum they are requesting and have made reasonable attempts to source these materials from either the United States or countries deemed safe under Section 232 national security measures: Argentina, Australia, Brazil, Canada, the European Union, Japan, Mexico, South Korea, and the United Kingdom. Requesters would be required to submit evidence of their sourcing attempts as part of their exclusion requests. If this evidence is not provided, the request will be rejected. The proposed certification changes are designed to make the exclusion process more efficient and to ensure that the volume requested aligns with real business needs, thereby informing more accurate policy decisions.
- New Certification Requirements for Objectors. BIS is proposing new certification requirements for objectors. These requirements aim to ensure that objectors can actually supply the same quality and quantity of steel or aluminum that requestors are seeking to import, and can make it “immediately available” in accordance with prior guidelines. Alongside their objections, objectors would have to submit evidence, either of having commercially sold the same product within the last year or of having engaged in relevant sales discussions. Failure to provide this supporting evidence would result in the rejection of the objection. This move aims to eliminate instances where objections are made but not substantiated, thereby streamlining the exclusion process and making it more efficient.
BIS has initiated a 45-day public comment period, ending on October 12, 2023. Comments can be submitted through the federal eRulemaking website under Docket Number BIS-2023-0021 or RIN 0694-AJ27.