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On December 14, 2020, the Department of Commerce published an interim final rule (December 14 rule) that revised aspects of the process for requesting exclusions from the duties and quantitative limitations on imports of aluminum and. The December 14 rule added 123 General Approved Exclusions (GAEs) to the regulations. The addition of GAEs was an important step in improving the efficiency and effectiveness of the 232 exclusions process for certain Harmonized Tariff Schedule of the United States (HTSUS) codes for steel and aluminum that had not received objections. Subsequently, based on Commerce’s review of the public comments received in response to the December 14 rule and additional analysis conducted by Commerce of 232 submissions, Commerce determined that a subset of the GAEs added in the December 14 rule did not meet the criteria for inclusion as a GAE and should therefore be removed. Commerce is removing these GAEs in today’s interim final rule to ensure that only those GAEs that meet the stated criteria from the December 14 rule will continue to be included as eligible GAEs.

Statement of Need:

On December 14, 2020, the Department of Commerce published an interim final rule (the December 14 rule) that revised aspects of the process for requesting exclusions from the duties and quantitative limitations on imports of aluminum and steel discussed in three previous Department of Commerce (Commerce) interim final rules implementing the exclusion process authorized by the President under section 232 of the Trade Expansion Act of 1962, as amended (232), as well as a May 26, 2020 notice of inquiry. The December 14 rule included adding 123 General Approved Exclusions (GAEs) to the regulations. The addition of GAEs was an important step in improving the efficiency and effectiveness of the 232 exclusions process. Commerce selected certain steel and aluminum articles under select Harmonized Tariff Schedule of the United States (HTSUS) codes as GAEs on the basis that exclusion requests submitted for the specified HTSUS codes had not received objections from domestic industry in the 232 exclusions process. 

Commerce is publishing this interim final rule to remove a subset of General Approved Exclusions (GAEs) added in the December 14 rule after public comments on the December 14 rule and subsequent Commerce analysis of data in the 232 Exclusions Portal identified these HTSUS codes as not meeting the criteria for inclusion as a GAE. These cases include HTSUS codes with exclusion requests that recently received objections and/or denials in the 232 Exclusions Portal. Commerce is removing these GAEs in this interim final rule to ensure that only those GAEs that meet the stated criteria from the December 14 rule will continue to be included as eligible GAEs.

Summary of the Legal Basis:

The legal basis of this rule is section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862) and Reorg. Plan No. 3 of 1979 (44 FR 69273, December 3, 1979).  This rule is also implementing the directive included in Proclamations 9704 and 9705 of March 8, 2018.  As explained in the reports submitted by the Secretary to the President, steel and aluminum are being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security of the United States, and therefore the President is implementing these remedial actions (as described Proclamations 9704 and 9705 of March 8, 2018) to protect U.S. national security interests. That implementation includes the creation of an effective process by which affected domestic parties can obtain exclusion requests based upon specific national security considerations. Commerce started this process with the publication of the March 19 rule and refined the process with the publication of the September 11, June 10, and December 14 rules and is continuing the process with the publication of today’s interim final rule. The revisions to the exclusion request process are informed by the comments received in response to the December 14 rule and Commerce’s experience with managing the 232 exclusions process.

Alternatives:

Alternatives to doing this rule would include not publishing the rule.  The public has the ability to apply for exclusion requests, so instead of creating GAEs, the public could be told to rely on the existing exclusions process.  However, numerous commenters on the 232 interim final rules that have been published have emphasized the need for making improvements in the efficiency, transparency, and fairness of the 232 exclusion process and had suggested the creation of a GAE type of approval as part of the 232 exclusions process would benefit the program.  Commenters on the December 14 rule identified certain GAE eligible items that they believed did not meet the stated criteria for what should be eligible for be authorized under a GAE.  Commerce after reviewing those comments and conducting its own additional analysis agrees that certain items identified under the current GAEs no longer reflect the GAE criteria and therefore should be removed, so the alternative of not doing a rule or the option of removing the GAE approvals completely are not viable options for achieving the intended policy objectives that Commerce is trying to fulfill with having a more effective exclusion process. 

Anticipated Costs and Benefits:

For the anticipated costs, this rule is expected to increase the burden hours for one of the collections associated with this rule, OMB control number 0694-0139. This increase is expected because of the removal of certain GAEs for steel and GAEs for aluminum, which is expected to result in an increase of 1,100 exclusion request submissions per year. These removals are estimated to result in a twenty percent reduction in the burden and costs savings described in the December 14 rule. These GAE removals are expected to be an increase in 1,100 burden hours for a total cost increase of 162,800 dollars to the public. There is also expected to be an increase in 6,600 burden hours for a total cost increase of 257,000 dollars to the U.S. Government. As Commerce asserted in the December 14 rule that the steel and aluminum articles identified as being eligible for GAEs, including those being removed in today’s rule, had not received any objections, the addition of those new GAEs was not estimated to result in a decrease in the number of objections, rebuttals, or surrebuttals received by BIS. As described elsewhere in this rule, the GAEs removed in today’s interim final rule did receive objections and/or denials and therefore warrant removal at this time. Because the December 14 rule did not make any adjustments to the collections for objections, rebuttals, or surrebuttals, the removal of these GAEs is estimated to result in no change in the burden associated with the other three collections. 

For the anticipated benefits, these changes will ensure the effectiveness of the GAEs under the 232 exclusions process.  By ensuring that only those GAEs that meet the stated criteria for what should be considered a GAE, will help improve the effectiveness, fairness and transparency of the 232 exclusions process. Importers and other users of steel and aluminum in the U.S. and U.S. producers and steel and aluminum have comments in response to the various section 232 interim final rules published that creating an effective 232 exclusion process is key to reduce burdens on the public.  The adoption of the GAEs was an important step in improving efficiency, but in order ensure U.S. national security interests are protected, only items that meet the GAE criteria should be eligible and any other item should be required to be included in the normal 232 exclusion process.   

Risks:

If this interim final rule were to be delayed, companies in the United States would be unable to immediately benefit from the improvements made to the GAE process and could face significant economic hardship, which could potentially create a detrimental effect on the general U.S. economy and national security. Comments received on the December 14 rule that were critical of the GAEs were clear that the removal of GAEs that consisted of HTSUS codes that received objections and/or denials under the 232 process was needed. Commenters noted that failure to provide this additional improvement could allow the floodgates to open for imports of those articles, and that the influx of such articles could undermine the efficiency of the 232 process. Commenters also noted that if this specific improvement is not made, significant economic consequences could occur. Given the imports of these articles have already been objected to and/or denied in exclusion requests under the 232 process for national security reasons, allowing these specific GAEs to exist could undermine other critical U.S. national security interests.