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Watchdog to audit US 232 exclusion process

Nov 02, 2018 | 01:49 PM | Chicago | Nat Rudarakanchana

Tags  steel, aluminum, 232, Section 232 exclusions, Commerce audit, 232 process audit, 232 exclusions process, Nat Rudarakanchana

An audit of the consistency and transparency of the US Section 232 exclusions process will be conducted by the Commerce Department’s Office of Inspector General, the office said in a memo.

An audit of the consistency and transparency of the United States' Section 232 exclusions process will be conducted by the Commerce Department’s Office of Inspector General, the office said in a memo dated Monday October 29.

The audit will cover both steel and aluminium and will aim to determine whether relevant Commerce divisions have adhered to the stated “processes and procedures in place to review Section 232 product exclusion requests,” and whether decisions on requested exclusions are “reached in a consistent and transparent manner,” the inspector general’s memo said.

Commerce’s Bureau of Industry and Security (BIS) and the International Trade Administration (ITA) are targets in the audit. The memo did not specify a time line for the audit.

Under BIS guidance, exclusions to the tariffs – now set at 25% for steel and 10% for aluminium  – are only allowed if the desired import product is not made domestically, in sufficient quantity or quality, or if “specific national security considerations” warrant an exclusion. Only metals consumers can request such exclusions.

US metals producers can object to exclusion requests, while metals consumers can now rebut those objections in changes made to the exclusions process in September. If US producers objected to an exclusion request, that effectively vetoed the request, some industry participants have claimed in recent months.

The Section 232 exclusions process has been criticized for being costly and time consuming and lacking transparency. Exclusions only last for one year.

Companies across the metals supply chain, from big steel consumers like Bekaert to steel rolling mills like NLMK and California Steel Industries, have applied for exclusions with various outcomes.

“The department has set up a fair and transparent administrative process which determines the timing of decisions on these exclusion requests,” a Commerce spokesperson said in an October 31 statement, responding to criticisms by Senator Elizabeth Warren (Democrat, Massachusetts) of the exclusion process.

“Virtually all exclusions granted to date had no objections [from domestic producers],” with 12,024 approved exclusions showing no objections out of 12,044 exclusions granted in total, the spokesperson said.

“We have issued over 12,000 exclusions for products from many countries, and the tariffs have still led to significant restarts in the steel and aluminium industries,” the spokesperson said via email, noting that 43,634 steel and 5,667 aluminium exclusion requests had been filed as of October 29.


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