Walorski Raises New Questions About Tariff Exclusion Process

Thursday, October 17, 2019

Walorski Raises New Questions About Tariff Exclusion Process

In Third Letter to Secretary Ross, Walorski Requests Explanation of Inconsistent Exclusion Decisions

WASHINGTON – U.S. Rep. Jackie Walorski (R-Ind.) today sent a third letter to Commerce Secretary Wilbur Ross outlining her concerns that U.S. manufacturers and small businesses seeking relief from steel and aluminum tariffs are being treated unfairly. The Commerce Department has yet to respond to letters dated March 11 and April 30 of this year raising questions about the product exclusion process.

“In this and other correspondence, I have asked for explanations regarding decisions that, on their face, seem to run counter to the facts presented by both sides, usually to the detriment of the requester,” Congresswoman Walorski wrote. “I have also pointed out instances where it seems that the Department has bent or ignored its own regulations. These, too, are typically to the detriment of the requester. Looking at the numerous examples across the three letters, it is difficult not to believe that there is a finger on the scale favoring objectors. Unfortunately, the Department has done little to dispel this notion, either.”

A copy of the letter can be found here. Additional supporting information is available here.

Walorski has repeatedly pressed the Commerce Department to fix problems faced by businesses requesting relief from Section 232 steel and aluminum tariffs. American businesses can request the exclusion of a product from tariffs if the product is not available domestically in sufficient quantity or quality.

In response to concerns raised by Walorski last year, the Department adopted several changes, including the creation of a rebuttal and surrebuttal process. In February 2019, the Department began releasing decisions for exclusion requests that went through that process. According to statistics compiled by Walorski’s office, as of October 10 the Department has released 11,501 steel and 621 aluminum decisions in which it made a clear determination as to the domestic availability of the product. Of those, 1,919 and 175 respectively were approved, resulting in 16.69 percent and 28.18 percent rates of approval.

Concerns and questions raised by Walorski in the latest letter include:

  • Due to technical issues, it has been impossible to download any data from the new online portal for the Section 232 exclusion process since it went live in June 2019.
  • As of October 10, more than 500 requests have been posted on regulations.gov for 365 days or more without a decision, including 18 that have been posted for 500 days or more.
  • Numerous objections were posted despite being submitted more than 30 days after the request was posted, as required by the Department’s regulations.
  • The Department has inconsistently enforced limits on the number of PDF files allowed when submitting supporting documentation.
  • The vast majority of objections made no effort to summarize capacity and utilization data, as required by the regulations.
  • The Department has denied thousands of requests where the objector failed to state what percentage of the amount requested the objector can manufacture “on a timely basis,” or provided answers of less than 100 percent or outside eight-week timeline defined in the Department’s regulations.
  • The Department has reached inconsistent decisions on 136 requests with similar fact patterns, each of which drew one objection that cited a facility that does not appear to have been restarted at the time as the location where the product can be manufactured.
  • The Department has reached inconsistent decisions, including numerous denials nearly a year after posting, on requests using a tariff code that was in some cases cited as nonexistent.
  • The Department has denied more than 7,500 requests for using the wrong tariff code, forcing the requester to start the process over with a new request. More than 1,000 such requests were posted for 200 days or more before being denied. Nearly 850 went through the rebuttal and surrebuttal process before the denial.
  • The Department has told companies that an exclusion from a quota only applies after the yearly quota is reached and that all imports (including by importers that have been granted an exclusion) count against the annual quota until it is exhausted. Because the quotas are administered on both an annual and a quarterly basis, the exclusion can only be used in the 4th Quarter of a year, as opposed to year-round.
  • The Department has denied some requests even though the only objection to each request was withdrawn before the denial.
  • The Department has reversed numerous approvals citing a “system error” without further explanation.

Walorski represents the 2nd Congressional District of Indiana, serving as a member of the House Ways and Means Committee.

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