Walorski Raises Concerns Tariff Exclusion Process Is Unfair to U.S. Businesses

Monday, March 11, 2019

Walorski Raises Concerns Tariff Exclusion Process Unfair to U.S. Businesses

In Letter to Commerce Secretary Ross, Walorski Requests Response to Questions Raised by Latest Data

WASHINGTON – U.S. Rep. Jackie Walorski (R-Ind.) today sent Secretary of Commerce Wilbur Ross a letter outlining her latest concerns that U.S. manufacturers and small businesses seeking relief from steel and aluminum tariffs are being treated unfairly.

“A fair, transparent, and efficient exclusion process is critical to providing relief to American manufacturers and small businesses affected by the steel and aluminum tariffs,” Congresswoman Walorski said. “I have long worried there was a finger on the scale putting these businesses at a disadvantage, and the early data suggests those worries were well-founded. I stand ready to work with the Commerce Department to fix this process so U.S. businesses that use steel and aluminum – including RV, boat, and trailer manufacturers in my district – are treated fairly.”

A copy of the letter can be found here.

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

In response to concerns raised by Walorski, the Commerce Department in September 2018 adopted several changes, including the creation of a rebuttal and surrebuttal process. On February 26, 2019, the Department began releasing decisions for steel exclusion requests that went through that process. No such decisions for aluminum have been released yet.

As outlined in the letter Walorski sent to Commerce Secretary Wilbur Ross today, according to statistics compiled by Walorski’s office, between February 26 and March 8, the Department released 1,045 decisions on steel exclusion requests that went through the rebuttal and surrebuttal process. Of those, 61 were approved and 984 were denied, a 5.84 percent rate of approval.

Concerns and questions raised by Walorski in the letter include:

  • Is the Commerce Department evaluating the overall capacity of an objector to deliver on time the quantity and quality specified for all requests on which it prevails, or is each request evaluated individually in a vacuum?
  • Commerce Department regulations require objectors to be able to make the product or start production “immediately,” or within eight weeks. Is there a plan to verify that the products have been delivered or production started on time? Is there any penalty or avenue for recourse if an objector does not meet the promised timeline?
  • Is the Commerce Department planning to better describe what factors led it to approve or deny a request? There is a lack of transparency in the decision memos, which use stock language that does not overtly explain what factors contributed to an approval or denial.
  • Despite Department regulations barring trade associations from filing objections, Walorski’s office identified at least 53 surrebuttals filed by members of the trade association, rather than by the individual or organization that filed the original objection.
  • Is the Department verifying the correct tariff code is being used before putting requests into the rebuttal and surrebuttal process? It seems backwards not to verify that the correct product has been identified before moving the process forward.
  • In some recent decisions, the Department denied the request for using the wrong tariff code while also appearing to say it would have denied the request anyway based on objections. How is the Department certain it has properly evaluated the correct product if the wrong tariff code was used?
  • For requests that went through the rebuttal and surrebuttal process and were denied for using the wrong tariff code, with no indication they would otherwise have been denied, will the Department provide an expedited path to approval? How is the Department planning to treat the eligibility for retroactive relief from tariffs paid for these requests?
  • Walorski’s office found that of the 1,045 decisions released between February 26 and March 8, 736 of the underlying requests contained one or more objections and no rebuttal or surrebuttal. Many objections did not appear to meet the Department’s scenario under which an objection should prevail. All 736 requests were denied.
  • It is unclear if the Department proactively made participants aware of the rebuttal and surrebuttal process. Walorski’s office found that of the 392 requesters who had an objection filed on at least one of their requests, 200 filed no rebuttals. Every request with no rebuttal has been denied.

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

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