Revisions of the Section 232 Steel and Aluminum Tariff Exclusions Process

<RULE> DEPARTMENT OF COMMERCE <SUBAGY>Bureau of Industry and Security</SUBAGY> <CFR>15 CFR Part 705</CFR> <DEPDOC>[Docket No. 240306-0071]</DEPDOC> <RIN>RIN 0694-AJ27</RIN> <SUBJECT>Revisions of the Section 232 Steel and Aluminum Tariff Exclusions Process</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Bureau of Industry and Security, U.S. Department of Commerce. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This final rule revises aspects of the process for requesting exclusions from the duties and quantitative limitations on imports of aluminum and steel discussed in five previous Bureau of Industry and Security (“BIS”) interim final rules implementing the exclusion process authorized by the President under section 232 of the Trade Expansion Act of 1962, as amended (“Section 232”). The changes in this final rule are also informed by public comments on a proposed rule on the Section 232 exclusions process that was published by BIS on August 28, 2023 (August 2023 Proposed Rule), detailed below. This final rule thus removes 12 General Approved Exclusions (GAEs) that were added in the December 2020 rule and maintained through the December 2021 rule, consisting of six GAEs for steel and six GAEs for aluminum. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule is effective July 1, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> For questions regarding this interim final rule, contact Kevin Coyne at 202-482-2313 or via email <E T="03">Kevin.Coyne@bis.doc.gov,</E> or email <E T="03">Steel232@bis.doc.gov</E> regarding provisions in this rule specific to steel exclusion requests and <E T="03">Aluminum232@bis.doc.gov</E> regarding provisions in this rule specific to aluminum exclusion requests. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Background</HD> On March 8, 2018, Proclamations 9704 and 9705 were issued imposing duties on imports of aluminum and steel, respectively. The Proclamations also authorized the Secretary of Commerce (“the Secretary”) to grant exclusions from the duties if the Secretary determines the steel or aluminum article for which the exclusion is requested is not “produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality” or should be excluded “based upon specific national security considerations,” and provided authority for the Secretary to issue procedures for exclusion requests. On April 30, 2018, Proclamations 9739 and 9740, and on May 31, 2018, Proclamations 9758 and 9759, set quantitative limitations on the import of steel and aluminum from certain countries in lieu of the duties. On August 29, 2018, in Proclamations 9776 and 9777, the Secretary was authorized to grant exclusions from quantitative limitations based on the same standards applicable to exclusions from the tariffs. <HD SOURCE="HD2">Implementing and Improving the 232 Exclusions Process</HD> Since March 19, 2018, Commerce has published five interim final rules (IFRs) that established and made various improvements to the Section 232 exclusions process, as well as a Notice of Inquiry and a Proposed Rule seeking public comment on certain aspects of the Section 232 exclusions process. On March 19, 2018, BIS issued an IFR, <E T="03">Requirements for Submissions Requesting Exclusions from the Remedies Instituted in Presidential Proclamations Adjusting Imports of Steel into the United States and Adjusting Imports of Aluminum into the United States; and the Filing of Objections to Submitted Exclusion Requests for Steel and Aluminum</E> (83 FR 12106), establishing the Section 232 exclusions process in supplements no. 1 and 2 to 15 CFR part 705. On September 11, 2018, BIS issued a second IFR, <E T="03">Submissions of Exclusion Requests and Objections to Submitted Requests for Steel and Aluminum</E> (83 FR 46026), which revised the exclusions process to increase transparency, fairness, and efficiency. On June 10, 2019, BIS issued a third IFR, <E T="03">Implementation of New Commerce Section 232 Exclusions Portal</E> (84 FR 26751), that revised the two supplements to part 705 to grant the public the ability to submit new exclusion requests through the Section 232 Exclusions Portal while still allowing the opportunity for public comment on the portal. On May 26, 2020, BIS issued a notice of inquiry with request for comment, <E T="03">Notice of Inquiry Regarding the Exclusions Process for Section 232 Steel and Aluminum Import Tariffs and Quotas</E> (85 FR 31441), that sought public comment on the appropriateness of the information requested and considered in applying the exclusion criteria and the efficiency and transparency of the process employed. On December 14, 2020, BIS issued a fourth IFR, <E T="03">Section 232 Steel and Aluminum Tariff Exclusions Process</E> (85 FR 81060) (4th IFR), which established General Approved Exclusions (GAEs) to reduce the number of exclusion requests for products consistently found not to be produced in the United States, reducing the submission burden on both industry and the Section 232 exclusions process. The 4th IFR identified 123 GAEs that had generally never received an objection or very few objections via the Section 232 exclusions process. GAEs are available to all would-be requesters for steel and aluminum products imported under 10-Digit Harmonized Tariff Schedule of the United States (HTSUS) classifications without quantity limit or expiration date. For information regarding the adoption of the GAE policy, please review the 4th IFR. On December 9, 2021, BIS subsequently suspended 30 GAEs in its fifth IFR, <E T="03">Removal of Certain General Approved Exclusions Under the Section 232 Steel and Aluminum Tariff Exclusion Process</E> (86 FR 70003), on the Section 232 Exclusions process because they were determined by BIS to no longer fit the criteria of a GAE. On January 3, 2022, Presidential Proclamations 10327 (87 FR 1) and 10328 (87 FR 11) were published. These Proclamations implemented an understanding reached between the United States and the European Union including the establishment of tariff rate quotas for steel and aluminum articles imported from the European Union member countries. Proclamation 10328 also directed the Secretary of Commerce to seek public comment on the Section 232 exclusions process, including the responsiveness of the exclusions process to market demand and enhanced consultation with U.S. firms and labor organizations. On February 10, 2022, BIS published <E T="03">Request for Public Comments on the Section 232 Exclusions Process</E> (87 FR 7777) (February 2022 Notice), as directed by Presidential Proclamation 10328. The notice sought public comment on a variety of topics regarding the responsiveness of the exclusions process to market demand and enhanced consultation with U.S. firms and labor organizations. The notice comment period closed in March 2022, having received nearly 100 comments. On August 28, 2023, BIS published its proposed rule entitled <E T="03">Revisions of the Section 232 Steel and Aluminum Exclusions Process</E> (88 FR 58525) (August 2023 Proposed Rule). The rule proposed several revisions to the Section 232 exclusions process, including adjustments to the current criteria for identifying GAEs, the introduction of new General Denied Exclusions (GDEs), and the introduction of new certification requirements for both Requestors and Objectors. <HD SOURCE="HD1">Public Comments and BIS Responses</HD> The public comment period on the August 2023 Proposed Rule closed on October 12, 2023. BIS received roughly 100 public comments on the proposed rule. This is the first of at least two final actions stemming from the August 2023 Proposed Rule. While BIS will further analyze the comments received on the August 2023 Proposed Rule, the public comments described below provide a sufficient basis for the action taken in this final rule. This rule is a response to that issue alone. BIS will respond to comments received on the August 2023 Proposed Rule in a forthcoming final rule that details broader changes to the Section 232 exclusions process. <E T="03">Comment 1:</E> BIS received multiple comments regarding the efficacy of specific GAEs. The majority of commenters opposed the continuing use of certain GAEs as thwarting the objective of the Section 232 action, including the ability to submit objections to exclusion requests. One commenter specifically said: <EXTRACT> As a result of these GAEs, the vast volume of aluminum extrusion imports exempt from Section 232 tariffs . . . are once again able to directly and unfairly compete with U.S.-produced extrusions. This includes imports . . . covered by the GAEs (HTSUS 7609.00.0000; 7604.21.0010; 7604.29.1010; and 7604.29.5090) . . . By offering blanket duty-free treatment to importers of these products, the GAEs have effectively gutted any relief the Section 232 could provide for the extrusions industry. </EXTRACT> <E T="03">BIS Response:</E> GAEs addressed a long-standing request from exclusion requesters to create a more efficient process to approve certain exclusions where Commerce has determined that: (1) No objections will be received; and (2) it is warranted to approve an exclusion for all importers to use. As always, BIS evaluates all changes to the Section 232 exclusions process to determine if they improve the efficiency and effectiveness of the process, and thus U.S. national security. It was clear to BIS that an evaluation of the GAEs was warranted. The initial review has highlighted the need to remove additional GAEs. Removing these GAEs supports the effectiveness of the Section 232 tariffs and therefore U.S. national security. <HD SOURCE="HD1">Regulatory Changes</HD> With this final rule, BIS is removing 12 of ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 25k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━