Request for Public Comments on Proposed Changes to Section 232 Exclusion Process
Some of the key changes in the proposed rule include (1) a modification of the criteria for General Approved Exclusions (GAE); (2) the creation of a General Denied Exclusions (GDE) process; (3) modification of certification language and requirement for evidence of sourcing attempts in exclusion requests; and (4) introduction of new certification language on objection forms.
BIS has requested public comments from stakeholders on these issues as well as others outlined in the proposed rule. Comments on the proposed rule must be received by BIS no later than October 12, 2023.
Below, we discuss key changes to the Section 232 exclusion process proposed by DOC and next steps for companies interested in submitting comments. Some of the proposed changes will make it easier to obtain a 232 exclusion, while others, such as the certification requirements, will make obtaining 232 exclusions more challenging.
Key Proposed Changes
1. Modification of the Criteria for GAE
GAEs are a process by which all products classified under a specific Harmonized Tariff Schedule of the United States (HTSUS) subheadings are excluded from the Section 232 quota limits or additional tariffs. Under the existing rule, the criteria for determining if an HTSUS code qualifies for GAE-treatment is whether the code received no objections. Because the process was prone to abuse through the submission of frivolous objections (which, in effect, made those HTSUS ineligible for GAE treatment), DOC is proposing to modify this criterion.
Instead, the new rule proposes to focus on the number of substantiated objections. DOC has not made clear what type of evidence will be required to substantiate an objection. According to DOC, low rates of successful objections for 10-digit HTSUS subheadings indicate that the US industry does not produce the products or subproducts in question in a sufficient and reasonably available amount or of a satisfactory quality.
2. Creation of GDE Process
BIS next proposes the creation of a GDE process — similar to the GAE process — that would identify steel and aluminum articles for which no request for an exclusion from the 232 tariffs would be granted or considered by BIS.
BIS proposed the imposition of a GDE process on certain HTSUS subheadings if, among other things, there are very high rates of successful substantiated objections. Similar to the GAE process, the proposed rule seeks to deter parties from making frivolous objections that would unfairly target certain HTSUS subheadings for GDE-treatment.
New GDEs will be identified following an analysis of substantiated objections and exclusion requests that have generally been consistently denied. As with the process for GAEs, DOChas not identified its criteria for substantiating an objection.
Also similar to GAEs, BIS would periodically publish notices in the Federal Register soliciting public comments on potential removals, revisions, or additions of GDEs. BIS has not yet identified any specific HTSUS subheadings that would be subject to GDE-treatment.
3. Modification of Certification Language and Evidence of “Sourcing Attempts” in Exclusion Requests
One of the most notable changes proposed by BIS is the introduction of new certification requirements for exclusion requests. Namely, requestors would be required to certify that:
(1) they have first made reasonable efforts to source their product from the United States; and,
(2) if unsuccessful, that they made reasonable efforts to source their product from an “identified partnered country” – i.e., Argentina, Australia, Brazil, Canada, the European Union, Japan, Mexico, South Korea, and the United Kingdom.
The new certification requirements would be in addition to current volume certification requirements, which mandate requesters to certify that they “expect to consume, sell, or otherwise use the total volume of product … within the next calendar year.”
In addition, the proposed rule would require requesters to file evidence of their certified “sourcing attempts.” Any such sourcing attempts would need to have been made within 12 months from the date of the submission of the request.
BIS is seeking comments on the type of evidence that would constitute “sourcing attempts” and how the term should be defined.
This change would make the submission of exclusion requests much more burdensome for requesters, particularly for products that are already known to not be produced or otherwise available in the United States. Importers requesting Section 232 exclusions should therefore consider submitting comments to BIS on this proposed change.
4. Introduction of New Certification Language on Objection Forms
The proposed rule also seeks to introduce certification language to further ensure objectors can supply comparable quality and quantity steel or aluminum and make it “immediately available to requestors.” Currently, the term “immediately available” is defined as aluminum or steel that can be manufactured either “within eight weeks” from the receipt of a binding purchase order, or, if that is not possible, by a date earlier than the time required for the requester to obtain the entire quantity of the product from its foreign supplier. In its proposed rule, BIS seeks comments on whether this standard is appropriate or if a different time period should be specified.
In addition, objectors would need 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.
If this evidence is not provided with the objection submission, the objection will be rejected.
The deadline for submission of comments to BIS is October 12, 2023. Comments to BIS can be submitted through the Federal eRulemaking website at docket number BIS-2023-0021.
Importers and others affected by the Section 232 tariffs are urged to consider filing written comments with BIS before the October 12, 2023 deadline.
ArentFox Schiff’s International Trade and Investment team is experienced in counseling companies navigating the effects of Section 232 tariffs. If you would like more information or are interested in providing comments to BIS regarding these proposed changes to the Section 232 exclusion request process, please contact any ArentFox Schiff Customs & Import Compliance group member listed below.
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