BIS Proposes Changes to Section 232 Exclusion Process

The Bureau of Industry and Security is proposing changes to the exclusion process for Section 232 steel and aluminum tariffs to improve the accuracy of exclusion requests and objections, and generally improve the efficiency of the process, the agency said.

The proposed rule, released Aug. 25, would add a new general denied exclusion (GDE) in the same vein as the existing general approved exclusion (GAE), and make changes to how the agency considers GAEs. It also would require additional certifications and evidence from filers of both exclusion requests and denials.

The proposal would “better ensure that participants in the Section 232 exclusions process further focus their requests and objections as well as make important changes to improve the efficiency of the Section 232 exclusions process,” BIS said. Comments are due by Oct. 12.

Under the proposed rule, BIS would change its criteria for issuing GAEs so that the general exclusions would be issued for products with tariff classification codes that have “very low” rates of successful objections. Previously, the agency would not issue a GAE unless a product had received no objections.

“One of the problems with this past approach is that any party opposed to certain GAEs could submit objections regardless of the merits of those objections, which would make those HTSUS categories ineligible for GAE status,” BIS said. “This undermines the effectiveness of the Section 232 exclusions process, creates unnecessary burdens on BIS and industry, and reduces the fairness and efficiency of the process."

“BIS still believes that the number of objections received is generally the right criterion to use; however, that criterion needs to be updated to focus on the number of substantiated objections, which is a better metric to use and should deter objections only submitted to prevent specific GAEs,” the agency said.

The new general denied exclusions would operate similarly. They would be issued if, “among other things, the HTSUS classification code (or subproducts) have very high rates of successful, substantiated objections,” BIS said. “New GDEs would be identified following an analysis of substantiated objections and exclusion requests that have generally been consistently denied."

“The addition of the GDEs will further enhance the efficiency of the Section 232 exclusions process by reducing the burden on objectors and requesters with respect to Section 232 exclusion requests that historically have had a very low likelihood of being approved,” BIS said.

The proposed rule would also add new certification and documentation requirements for both requesters and objectors. Currently, requesters of Section 232 exclusions must only certify that they plan to consume, sell or use the total volume of excluded product within the next calendar year.

Under the proposal, requesters would have to certify that they “first made reasonable efforts to source their product from the United States and then, if unsuccessful in sourcing from the United States, that they have made reasonable efforts to source their product from a country with which the United States has arrived at a satisfactory alternative means to address the threat to the national security under Section 232,” BIS said.

Countries and markets with which the U.S. has “alternative arrangements” include Argentina, Australia, Brazil, Canada, the EU, Japan, Mexico, South Korea and the U.K.

Requesters would also have to “file, simultaneously with their request submission, evidence of the certified sourcing attempts,” BIS said. The documentation could be filed publicly as an attachment to the request, or confidentially by way of email. “These sourcing attempts need to have been made within 12 months from the date of submission of the request,” BIS said.

Likewise, exclusion objections would require an additional certification of the objector’s “intent and ability to provide the requested product to the requester if successful in their objection.” Requestors would also have to file “evidence that it has commercially sold the same product as that which is being requested within the last 12 months, or evidence that it has engaged in sales discussions with this requesting company or another company requesting the same product within the last 12 months,” BIS said.

As with the proposed additional documentation for requests, objectors could file the documentation either as part of their objection submission or confidentially by email. “If the evidence described above is not provided simultaneously with the objection submission, then the objection will be rejected,” BIS said.

“The proposed requirements to provide certain evidence upon submission, as opposed to later upon request of BIS, will enable BIS to conduct more timely and accurate certification reviews and enhance fairness, transparency, and efficiency in the Section 232 exclusions process for all involved parties,” BIS said.

The Government Accountability Office recently issued a report that found some $30 million in Section 232 tariffs have gone unpaid because BIS failed to adequately monitor import volumes (see 2307210064). The report also found many granted exclusions went largely unused or were never used at all.