U.S. Government Accountability Office Agrees to Review 232 Tariff Exclusion Process

In response to Congressional concerns, the U.S. Government Accountability Office (“GAO”) has agreed to review the process by which the U.S. Department of Commerce (“Commerce”) has been processing steel and aluminum tariff exclusion requests. On March 8, 2018, President Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports under Section 232 of the Trade Expansion Act of 1962, which authorizes import restrictions for national security purposes. Shortly thereafter, Commerce established procedures by which companies could request exemptions for certain steel or aluminum products from the tariffs. Nearly 50,000 exclusion requests have been filed, but many view the rules and the process too slow and complicated, despite a modification to the process in August.

On November 26, 2018, a bipartisan group of U.S. Senators sent a letter to the GAO requesting the agency to conduct a formal review of Commerce’s exclusion request process. Specifically, they noted that Members of Congress and U.S. businesses have repeatedly raised concerns about the pace, transparency, and fairness of the section 232 steel and aluminum exclusion process.” The letter, which was signed by Senators Tom Carper (D-Del.), Doug Jones (D-Ala.), and Pat Toomey (R-Pa.), urged the GAO to examine several questions, including how Commerce has incorporated feedback from petitioners, members of Congress, and other stakeholders to develop and improve the process; what criteria is used to approve or deny an exclusion request; what steps have been taken to timely process exclusion requests; how it trains staff to evaluate exclusion requests; the average amount of time Commerce takes to issue a decision on a request; whether it ensures transparency and adequate communication with petitioners; and what degree of technical support is provided to assist petitioners, especially small businesses. A copy of the letter is available here. The GAO is set to begin its review of the exclusion process by March 2019.

On another note, the President’s authority to impose tariffs under Section 232 is currently on appeal before the U.S. Court of International Trade. The case, which is led by the American Institute for International Steel (“AIIS”), claims that Section 232 of the Trade Expansion Act of 1962 violates the U.S. Constitution because it wrongly transfers authority over trade policy from Congress to the executive branch. Oral argument was held earlier this week and at least one judge of the three-judge panel appeared to be sympathetic to the AIIS’s claims. As published by Law360, Judge Claire Kelly was quoted as stating “{m}y concern is that at some point, is there any limit on what kind of power you can give away?” Without judicial review, it seems Congress has given away a whole lot, and maybe you shouldn’t be allowed to do that?”