US Commerce Dept adjusting Section 232 exclusion process

The United States Commerce Department is making changes to the way it administers the Section 232 tariff exclusion process.

Commerce is streamlining general approved exclusions (GAEs), changing volume limits from past usage for exclusion requesters and leveling the playing field between domestic producers and importers in terms of the timeframe under which disputed material needs to be produced. 

The latter two provisions became effective on Monday December 14, but changes to the GAEs will only take effect on December 29, according to a Federal Register notice

The changes to the GAEs will allow importers to enter products free from Section 232 duties without applying for an exclusion.

“These exclusions may be used by any importing entity and, unlike the importer-specific exclusion requests previously granted by the Bureau of Industry and Security, the GAEs do not include quantity limits. Commerce estimates this will lead to an immediate decrease of approximately 5,000 exclusion requests annually,” Douglas Heffner, partner at Faegre Drinker Biddle & Reath LLP, wrote in an article published in the National Law Review on December 23.

Commerce has also decided to cut down on the ability of importers to increase volumes they bring in from pre-tariff levels “in an attempt to limit a trend whereby exclusion requesters may have requested more volume than they need,” Heffner wrote.

Requestors now have to certify that they:

  • Won’t use the requested exclusion, if granted, solely to hedge or arbitrage the price;
  • Expect to use the total volume of product across their active exclusions and pending exclusion requests in the course of their business activities within the next calendar year;
  • Either imported the full amount of their approved exclusions last year, or intended to but could not due to a listed legitimate business reason;
  • Have requested a quantity that is in line with what their organization expects to import annually based on current forecasts, and be able to provide documentation that proves this;

“The volume certification marks a win for domestic objectors that have been forced to expend resources objecting to hundreds of identical exclusion requests that appear to exceed any reasonable volume amounts from the same requester,” Heffner said.

“In a system where Commerce’s ultimate determination often depends on whether or not an objection was filed, this placed a heavy burden on domestic producers to monitor the exclusion process to prevent even a single exclusion from being filed without objection,” he noted.

The interim rules also makes changes to the information that domestic producers must provide regarding their ability to “immediately” meet the requester’s requirements for the product subject to the exclusion request.

“Some domestic producers have objected that the previous interpretation of ‘immediately’ required them to prove that they had the ability to provide the subject material within eight weeks, whereas foreign suppliers were not held to the same standard and could take much longer,” Heffner wrote.

US imports of aluminium and steel have been limited by the Section 232 tariffs of 10% and 25% respectively. Some countries, including Brazil, South Korea and other major US trading partners, have been granted exclusions on steel items by agreeing to volume quotas or other restrictions.

US steel prices have jumped as a result.

Fastmarkets’ daily steel hot-rolled coil index, fob mill US was calculated at $51.29 per hundredweight ($1,025.80 per short ton) on December 28, up by 2.6% from $50 per cwt the previous business day and by 3.3% from $49.67 per cwt a week earlier. This is the highest level since reaching $53 per cwt in late August 2008.

What to read next
US President Joe Biden will increase tariffs on Chinese imports including steel and aluminium, electric vehicles, semiconductors and advanced batteries, to counteract China’s “unfair” trading practices, he announced on Tuesday May 14
North American softwood lumber exports to offshore destinations posted mild gains in the first quarter, sustaining the momentum evident in the second half of 2023. Want to predict the future of the lumber market? Learn more about our short-term and long-term forecasts and asset analysis for the global forest products market today. Learn more. Canadian exports overseas reached […]
Here are the four key takeaways from the US scrap market participants in our May survey
The new tariffs on aluminium imports imposed by Mexico are affecting the light metal's supply chain, trade flows and premiums, sources told Fastmarkets during the week to Friday May 3.
What factors are driving the significant downturn in US housing starts, accompanied by a decrease in building permits?
Fastmarkets' initial low-carbon premium for nickel briquettes captured existing regional price differences, with growing awareness and legislative incentives indicating there is potential for a strong market to emerge