Department of Commerce Releases Section 232 Exclusion Process Details

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The Department of Commerce released both the process and requirements for the submission of exclusions for the steel and aluminum Section 232 proclamations made public on March 8, 2018.

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As published in the Federal Register, the Secretary of Commerce has the authority to grant exclusions from the duties, “if the steel or aluminum articles are determined not to be in a sufficient and reasonable available amount or of a satisfactory quality or based upon specific national security considerations.” (Editor’s Note: Italics added by MetalMiner for emphasis.)

The interim final rule went into effect on March 19, 2018.

Key Points About the Exclusion Process

Some of the key highlights of the interim rule include who can file for exemptions and who can file objections to exclusions.

First, according to the interim rule, “only individuals or organizations using steel articles in business activities or supplying steel to users in the U.S. may submit exclusion requests with respect to the Proclamation.” In other words, any non-metal-buying individual or organization can not argue nor ask for an exclusion.

However, any individual or organization in the U.S. can file objections to exclusions, but the Department of Commerce will only consider information directly related to a specific exclusion request. In other words, the DOC will ignore trade associations, lobbying groups, and media objections to an exclusion unless that objection is specifically tied to an exclusion request.

Exclusions apply on a product basis and can only be requested (and granted to) by the individual or organization that submitted the specific exclusion request. To clarify, unless the DOC approves a broader application of the specific request, each company will have to file its own exclusion request.

Taking that one step further, if additional companies seek exclusion requests for the same product, the company applying for the exclusion will not need to reference a previously approved exclusion, but can do so for its own exclusion request. Moreover, the interim rule allows for organizations and individuals to re-submit for a product exclusion, even if an earlier request is denied.

Buying organizations should note that all information included in an exclusion request is subject to public disclosure. This may prove challenging to buying organizations as some of the questions on the exclusion form appear quite detailed. For example, “all such physical properties must be defined based on actual rather than nominal measurements references to specific dimensions,” a requirement which may in fact begin touching on “secret sauce” types of information. This portion of the rule will likely receive negative market feedback during the open comment period for the interim rule.

Meanwhile, those that object to the exclusion will have 30 days to submit their objections.

Country-specific exemptions are not included in this interim rule.

Burden of Proof Appears to Lie With the Buying Organization

Companies purchasing more commodity-grade materials (i.e., standard forms, grades, alloys, sizes, etc.) need not bother with the exclusion process. However, MetalMiner sees several sub-segments of the market that will likely challenge the proclamations, particularly the markets for: grain-oriented electrical steel; tinplate; raw materials (slab, wire rod); some advanced, high-strength steels and ultra-high-strength steels, tire cord quality wire rod, etc. These individual companies purchasing these materials will each need to put their case forward.

“These requirements are much worse than trade case requirements,” said one company pursuing an exclusion to MetalMiner.

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Key Resources

The interim rule, comment and form to file a steel exclusion request or objection can be found here:  https://www.regulations.gov/docket?D=BIS-2018-0006.

The interim rule, comment and form to file an aluminum exclusion request or objection can be found here: https://www.regulations.gov/docket?D=BIS-2018-0002.

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