On March 19, 2018, the Bureau of Industry and Security (BIS), Department of Commerce, published in the Federal Register an interim final rule [Docket No. 180227217–8217–01] that amends the National Security Industrial Base Regulations to add two new supplements. The new supplements set forth the process for how parties in the United States may submit requests for exclusions from actions taken by the President (“exclusion requests”) to protect national security from threats resulting from imports of specified articles. The new supplements also set forth the requirements and process for how parties in the United States may submit objections to the granting of an exclusion request.
The supplements are being added to implement Presidential Proclamations 9704 and 9705 of March 8, 2018 (“Proclamations”), adjusting imports of steel articles identified in Proclamation 9705 (“steel”) and aluminum articles identified in Proclamation 9704 (“aluminum”) through the imposition of duties so that imports of steel articles and aluminum articles will no longer threaten to impair the national security. As set forth in the Proclamations, the President concurred with the findings of the Secretary of Commerce (“Secretary”) in two reports to the President on the investigations under section 232 of the Trade Expansion Act of 1962, as amended, of the effect of imports of steel and aluminum, respectively, on the national security of the United States. The Proclamations authorize the Secretary to grant exclusions from the duties upon request of affected parties if the steel or aluminum articles are determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality or based upon specific national security considerations. The President directed the Secretary to promulgate regulations as may be necessary to set forth the procedures for an exclusion process.
Note: The process described for the two new supplements is separate and apart from the process by which countries may seek exemptions from the duties imposed by the President. The process established in the interim final rule is limited to the issuance of product-based exclusions as authorized by the President. Consistent with the President’s instructions, the criteria in the forms and supplements are primarily focused on the availability of the product in the United States. The Secretary will consider information about supply in other countries to the extent relevant to determining whether specific national security considerations warrant an exclusion. Commenters on this interim final rule may submit comments regarding how and whether or not the country of origin of a proposed product should be considered by Commerce as part of the process for reviewing product-based exclusion requests. Comments on the interim final rule must be received by BIS no later than May 18, 2018.
All exclusion requests and objections to submitted exclusion requests must be in electronic form and submitted to the Federal rulemaking portal using docket number BIS–2018–0002 for aluminum and docket number BIS–2018–0006 for steel. Any company potentially interested in seeking an exclusion for one or more articles covered by the section 232 duties should review the actual notice. In particular, there are a number of key items worth noting:
(1) exclusion petitions may be submitted only by “individuals or organizations using [steel or aluminum] articles . . . in business activities . . . in the United States”;
(2) objections to exclusion petitions may be submitted by “any individual or organization in the United States”;
(3) any approved exclusion petitions will be limited to a specific article and to the petitioner (i.e., you cannot generally get the benefit of someone else’s exclusion petition unless Commerce approves a broader application of the product based exclusion request to apply to additional importers); you can, however, file “follow-on” petitions;
(4) exclusions petitions must be filed electronically, using a specific form created for this purpose; objections must be filed within 30 days of an exclusion petition being filed, also using a specific form; petitions can cover only a single 10-digit Harmonized Tariff Schedule classification; and the review process will generally take 90 days from date of filing; and
(5) approved exclusions will be effective 5 business days after the approval is published; and will “generally” be good for 1 year.
Product exclusion petitions will only be approved “if an article is not produced in the United States in a sufficient and reasonably available amount, is not produced in the United States in a satisfactory quality, or for a specific national security consideration.” We expect that Commerce will approve petitions only sparingly, and primarily for valid national security-related considerations. Commerce states that individuals and organizations will not be precluded from submitting a request for exclusion of a product where a previous exclusion request for the same product had been denied or is no longer valid. For example, it might be that the first exclusion request was inadequate to demonstrate the criteria were met for approving that exclusion request. The later requester should, however, submit new or different information in an attempt to meet the criteria for approving an exclusion request for that product.
Product based exclusions can be filed beginning March 19, 2018. If you are considering doing so, we recommend filing as soon as possible. That said, it is important that your petition be as well prepared as possible (e.g., consider scope issues, the import data, whether there are any national security implications/allies in the federal government, any likely objections, etc.) to give it the best chance of success