The Section 232 quotas on steel and aluminum from certain countries and exclusions from the Section 232 tariffs are among the toughest procedural challenges CBP is facing in dealing with those trade remedies, CBP officials from the Base Metals Center of Excellence and Expertise recently told the American Institute for International Steel. AIIS said in its newsletter that the group's customs committee held a conference call on Sept. 6 with Center Director Africa Bell and other officials. CBP is in the process of making fixes to aid in the remedying of those problems, it said.
Section 232 Tariffs
The United States currently maintains a 25% tariff on steel imports and 10% on tariff on aluminum imports under Section 232 of the Trade Expansion Act of 1962. In 2018, the Trump administration imposed Section 232 Tariffs on steel and aluminum imports into the United States, citing national security concerns. The U.S. agreed to lift tariffs on Canada and Mexico after the signing of the United States-Mexico-Canada Agreement (USMCA), and reached deals with the European Union, Japan and other countries to replace the tariffs with quotas for steel and aluminum imports into the U.S.
It's uncertain how long it would take the International Trade Commission to report on the economic impact of an updated NAFTA, as required under Trade Promotion Authority, ITC Chairman David Johanson said during an Appropriations subcommittee hearing on Sept. 6. Commerce Subcommittee Chairman Jerry Moran, R-Kan., asked Johanson if the ITC's evaluation could be started before a deal signing and inquired on how long it might take. Johanson said he could not say how long it would take, but acknowledged they cannot even start without the text, and they do not have the text yet for the U.S.-Mexico agreement that was announced in late August. The ITC has 105 days from signing to finish, and if it took that long, a vote would likely come no sooner than the middle of next year, because Congress also has 45 session days to write the implementing legislation.
The Bureau of Industry and Security is set make changes to the process for requesting exclusions from Section 232 tariffs and quotas on steel and aluminum products. The interim final rule creates procedures for rebutting objections to exclusion requests, clarifies the criteria BIS reviews when deciding whether to grant or deny requests, and provides for broader exclusion requests based on ranges or dimensions within the same Harmonized Tariff Schedule code.
Usually tariff issues are taken up in the Senate Finance Committee, but the Senate Labor Committee examined recent trade policies during a Sept. 5 hearing. Labor ranking member Patty Murray, D-Wash., noted the committee has an interest because of the effect on workers. "[President Donald] Trump is playing a dangerous game right now, and workers are paying the price," she said.
The International Trade Commission recently issued Revision 11 to the Harmonized Tariff Schedule. Changes include those required to implement new exemptions from absolute quotas on steel from Argentina, Brazil and South Korea, and aluminum from Argentina, imposed as part of those countries’ deals to escape Section 232 tariffs (see 1808300004). Those changes take effect Aug. 30. The updated HTS also includes amendments effective Sept. 1 to rules of origin under the U.S.-Bahrain Free Trade Agreement. Finally, the recently revised subheading 9705.00.0085, which since July 1 has covered “zoological, botanical, mineralogical, anatomical, historical and paleontological pieces,” now refers more broadly to “other” collections or collectors’ pieces (i..e, other than numismatic, archaeological or ethnographic pieces). That change takes effect retroactively to July 1.
The "agreed outcomes" to the U.S.-Korea Free Trade Agreement were published by the U.S. Trade Representative on Labor Day, and they lay out the language changes put in place to protect the U.S. light truck market from Korean imports for another 20 years. In the original KORUS, agreed to in 2011, the 25 percent tariff on light trucks would last until 2021. In the renegotiated KORUS, they last through 2041. "The publication of the text of the agreed outcomes follows the completion in mid-August of U.S. domestic consultation procedures," said the USTR in a news release. "Korea will now initiate the next step in its own domestic procedures, which is to open for public comment the provisional Korean translations of the outcomes to amend the KORUS Agreement."
Sen. Elizabeth Warren, D-Mass., called on the Commerce Department Inspector General to investigate the process for receiving company-specific requests for exclusions from Section 232 tariffs on steel and aluminum. “Commerce officials claimed that the exemption process would be 'fair and transparent,'" her office said in an Aug. 29 press release. “But an investigation by Senator Warren and additional public reporting have revealed the process is replete with mistakes and appears arbitrary, opaque and subject to political favoritism,” she said, citing an exclusion granted to a sanctioned Russian aluminum company. Among other things, Warren asked in her letter that the IG examine the "processes and procedures in place for Commerce officials to make" decisions on tariff exemptions.
The White House on Aug. 29 issued proclamations expanding company-specific exclusions from Section 232 tariffs and quotas on steel and aluminum. The proclamations make exclusions from Section 232 tariffs retroactive to the date the exclusion request was "accepted," rather than the date of posting, by the Commerce Department. They also authorize Commerce to grant exclusions for products from countries constrained by Section 232 quotas on steel and aluminum (currently Argentina for steel and aluminum, and South Korea and Brazil just for steel).
Several trade lawyers see Chapter 19, dairy and steel and aluminum tariffs as the thorniest issues to resolve as Canada is invited to negotiate NAFTA this week. Dan Ujczo, chairman of the U.S.-Canada practice at Dickinson Wright, said that Mexico is considering agreeing to voluntary quotas in steel and aluminum, but that an agreement is "highly unlikely" this week, before the bilateral deal is forwarded to Congress on Aug. 31. "Canada may be able to raise the issue in its discussions; however, progress will be unlikely, given the long list of issues," he wrote in a note to clients. He predicted that the end of aluminum and steel tariffs on NAFTA partners -- and the dropping of their retaliatory tariffs -- will happen during the 90-day review in Congress.
The House could pass the Miscellaneous Tariff Bill in the first week or so following a return from recess after Labor Day "if they think that they can get it passed and get it through the president to sign," said Jon Kent, a lobbyist for the National Customs Brokers & Forwarders Association of America with Kent & O'Connor. One potential issue could be inconsistency concerns within the administration over tariff cuts on many goods that come from China as other tariffs are being added under Section 301 and other trade remedies, Kent said.