Walorski: Tariff Exclusion Process Is Broken

Tuesday, July 24, 2018

Walorski: Tariff Exclusion Process Is Broken

U.S. Manufacturers Testify at Ways and Means Hearing on Problems Plaguing Exclusion Process for Steel and Aluminum Tariffs

WASHINGTON – U.S. Rep. Jackie Walorski (R-Ind.) today at a Ways and Means Trade Subcommittee hearing renewed calls for the Commerce Department to fix the broken exclusion process for steel and aluminum tariffs.

“The current exclusion process is broken – it’s opaque, unfair, and breathtakingly inconsistent,” Congresswoman Walorski said. “We’re not asking Commerce to grant every request. We’re saying there are major structural issues that are causing uneven outcomes. We’re saying that the deck seems to be stacked toward one side right now and it needs to be rebalanced.”

Walorski highlighted problems encountered by U.S. manufacturers in all three phases of the process: posting, objections, and decisions. In May, Walorski led a bipartisan letter signed by 39 members of Congress asking Commerce Secretary Wilbur Ross to implement 10 commonsense changes to the exclusion process.

Posting

Businesses granted product exclusions are eligible for reimbursement of tariffs paid, but relief is retroactive to the date of posting for public comment rather than the date of the request.

According to data available on Regulations.gov and compiled by Walorski’s office, applications are posted an average of 3-4 weeks after they are submitted. Such delays are made worse when companies are forced to re-submit applications due to unclear guidelines or inconsistent rejections for minor errors.

Todd Adams, president of Sanitube LLC and vice president of Stainless Imports, Inc., testified that his company was forced to pay tariffs on a one-time order of imported steel. Although the shipments were initiated before Section 232 tariffs took effect, the company is ineligible for retroactive relief on two shipping containers of steel that arrived after the exclusion request was submitted but before it was posted. The company is still awaiting a decision on one of its applications.

Objections

Exclusion requests are posted for a 30-day public comment period, but there is no process in place to allow businesses to rebut objections.

Out of more than 5,700 objections submitted in response to steel and aluminum exclusion requests, only 54 were posted before the end of the comment period, leaving businesses no opportunity to respond. Some were told they had to re-submit their request – starting the process over – in order to make a rebuttal.

Willie Chiang, executive vice president, COO, and director of Plains All American Pipeline, testified that several objections to his company’s exclusion request were submitted on the last day of the 30-day comment period and were posted a week after it closed. The exclusion request was denied.

Decisions

The Commerce Department has made decisions on approximately 1,100 exclusion requests but is providing no explanation for its approvals or denials.

The department provides one of two reasons for denying a request: there is sufficient quantity and quality of domestic supply, or the application was incomplete. However, it does not provide an explanation or disclose its analysis. Demonstrating the lack of transparency in the decision process, Commerce has denied seven exclusion requests on the basis of sufficient supply even though there were no objections submitted.

One Commerce official predicted this opaque an inconsistent process in June, telling the Washington Post: “It’s going to be so unbelievably random, and some companies are going to get screwed.”

Video of Congresswoman Walorski’s comments at the hearing is available here.

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

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