Section 232 Product Exclusion Process Baffling Even for Successful Requesters
The Commerce Department posted one approval of a steel product exclusion request, and posted 215 denials on July 17. But the company that received the approval is not breaking out the champagne. Max Daetwyler Corp., a small North Carolina manufacturer of blades used to wipe away excess ink in printing processes, filed seven product exclusion requests, all for steel made in France it uses to make the blades. Two have been approved, five have been denied, and it's still waiting to hear on two more.
The U.S. plant is a subsidiary of a Swiss firm that also has factories in China, India and Switzerland. "And we have no idea why some of them got approved and some of them have not," said Walter Siegenthaler, executive vice president of the U.S. office. "There is no explanation at all." One product was eight thousandths of an inch thick, and was approved, and one was 10 thousandths of an inch think and was denied. Exact same material, same country makes the metal, and the one that was approved was imported in larger quantities than the one that was denied. None of Max Daetwyler's submissions drew objections from domestic producers.
The total volume of all the requests was 100 metric tons, and Siegenthaler said steel mills don't want to go to the trouble to adjust their processes for such small orders. "We thought, 'OK, we have a pretty good chance'" to get all the requests approved, he said, since no domestic mills objected. Each denial says: "there is insufficient information to verify the product description and/or HTSUS code." Siegenthaler said that doesn't make sense. "We filled out all of the applications the same way," he said. He sent an email asking why some requests were rejected, and has gotten no response.
"It's confusing, it's totally frustrating," he said. The only guess he has is that different reviewers looked at the two submissions of the same material that has slightly different thicknesses. Members of Congress from both parties have complained the reviews are arbitrary. "That's what it looks like to us," Siegenthaler said.
In a huge batch released July 16, 120 of the denials were all for one firm -- Seba Tubular, a Texas steel distributor that imports mostly from Turkey, but also from Eastern Europe and Asia. Seba is an American subsidiary of a Turkish firm. The Bureau of Industry and Security posted three decisions on steel product exclusions on July 17, with one denied -- a volume of 6 million kg from Japan by Vicksmetal -- and two granted. The two that were accepted were from American MSC, which needed 60,000 kg of oil tempered silicon chromium alloy steel wire in one dimension, and 272,400 kg of the same wire in another dimension. There were no decisions posted on July 18.
Max Daetwyler had said in its submission that it could move production out of the U.S. if it has to pay the tariffs. This plant supplies customers in Canada, the U.S. and Mexico. So far, the Swiss office has been sending blades to U.S. customers, since the finished blades face no duty. "We here in the U.S., we'd like to keep [production] going," Siegenthaler said, but it's the headquarters that will decide. "Switzerland, they have capacity. They're hungry, they're ready to get going." If the blade production leaves North Carolina, it could cost about a dozen of the facility's 65 jobs, Siegenthaler estimated. And even if the tariffs are lifted in a few months, if the production has moved to Europe, "it makes it tough to get it back." He said his employees know a little about the tariffs, but not how much is hanging on these exclusion decisions. "I don't want to get them nervous," he said.