A federal watchdog report published earlier this week concluded that unless the Commerce Department’s process for handling steel/aluminum exclusions is significantly improved, importers will continue to experience unacceptable delays in obtaining relief from the administration’s Section 232 duties.
Commerce Failing to Meet Guidelines
In its review, the GAO found that from March 2018 to November 2019 Commerce failed to decide nearly 80% of requests within its own timeliness guidelines, including taking more than a year to decide 841 exclusion requests.
The report also said that Commerce has so far neglected to document the results of any economic impact reviews of the steel and aluminum tariffs, thereby making it exceedingly difficult to consistently assess if adjustments to the tariffs are needed.
Additionally, Commerce failed to take adequate steps to reduce request submission errors that result in delayed relief for manufacturers and increased workload for the agency. According to the GAO, 19,000 requests were turned down “prior to decision due to incorrect or incomplete information.’’
Despite having made some improvements to help streamline the process, including a new website, the GAO notes that Commerce “continues not to meet guidelines and had a backlog of 28,000 requests as of November 2019.”
Lack of Transparency, Fairness
Following up on concerns raised last year by the Office of the Inspector General about domestic steel producers back channeling with Commerce staff to torpedo exclusion requests for competing foreign products, the GAO report found that the agency still appeared to be giving undue weight to the objections of domestic producers, even if they weren’t able to provide the needed steel or aluminum within a reasonable timeline.
Raising significant questions about the fairness of the Section 232 tariff exclusion review process, the finding prompted calls from lawmakers for Commerce to improve its exclusion process to better balance the interests of steel and aluminum producers and downstream manufacturers.
Three U.S. senators that had pushed for the GAO review last year issued statements highly critical of the ongoing problems with the “convoluted and lengthy exclusion process” that Commerce hurriedly implemented to provide relief from the administration’s “misguided” and “dubiously justified” tariffs.
Stating that the tariffs “have cost American consumers billions of dollars and the state of Pennsylvania manufacturing jobs,” Republican Senator Pat Toomey urged the administration to “eliminate these taxes altogether.”
Another Republican lawmaker, congresswoman Jackie Walorski of Indiana issued a statement saying the report “further confirms what anyone involved in the Section 232 tariff exclusion process already knows: it has been inefficient, inconsistent, opaque, and unfair.”
In its concluding recommendations, the GAO called for Commerce to:
- investigate the reasons why so many companies failed to properly complete the required paperwork;
- take steps to speed up the decision-making process; and
- analyze then document the impact the tariffs had on the metals markets and on companies that consume steel and aluminum.
Commerce Secretary Wilbur Ross is reported to have informed the GAO that the agency was in agreement with its recommendations and had already taken steps to resolve the paperwork issues and to expedite decisions.
- Commerce Department – Section 232 Exclusions
- Section 232 Exclusions Portal
- Congressional Research Service – Section 232: Overview & Issues for Congress
- IHS Markit – Trump Steel and Aluminum Tariffs Analysis
Should you have any questions about Section 232 tariffs, don’t hesitate to contact one of our helpful trade experts today.