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Section 232: What to Know

Section 232 is part of the Trade Expansion Act of 1962. It gives the president the ability to penalize imports if he decides they pose a threat to national security.

232 Recommendations are Nearing Delivery to the President

The Trump administration said it plans to take “major action” once it receives the U.S. Commerce Department’s report in its Section 232 investigation.

The president has 90 days to review Commerce’s recommendations. However, it is anticipated that he will announce his plan of action within weeks of receiving Commerce’s report. This could include imposing tariffs on top of the current anti-dumping and countervailing duties already in place or imposing quotas that will limit import volumes or a combination of both.

Commerce Delayed Anticipated Determinations

The U.S. Commerce Department modestly delayed its anticipated determinations and recommendations to consider the concerns that have been voiced by manufacturers. Most do not support a potential blanket ban on imports.”

Some manufacturers and trade associations expressed apprehension regarding the investigation’s potential to cut off vital suppliers, greatly effect domestic steel prices, and impact American jobs.

Many even requested that their product, nation, or supplier be excluded from the Section 232 investigation.

Section 232 and National Security Concerns

While Section 232 is framed with concerns of national security, it casts a wider net well outside solely what we would think of as national security matters (e.g., military-related materials or intelligence-sensitive materials). Interpretation includes jobs, job security, ability of metals producers to remain profitable and viable, etc.

Domestic steelmakers have urged Commerce to define “national security” broadly. They would like to it to include not only military goods, but also products used in roads, bridges, and other infrastructure. Mills also said their commercial viability is a matter of national security. If they aren’t profiting, they can’t afford to invest in the research that is necessary to develop future military-grade steel.

Commerce is expected to issue the report by the end of the month.

For more information about the Section 232 investigation, contact your local sales representative.

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Trade Case Toolbox: Trade Actions Available to Steelmakers

With news of trade cases filling steel industry media outlets it is important to understand exactly what a trade case is and the different trade actions the U.S. steel industry has available to it regarding international commerce.

In a previous post we discussed a brief background on steel trade cases as well as recent activity. In this post we will expound upon that by going into more detail about the different types of trade actions and provide another update on recent activity.

201, 232, 301, 332, 337. So, what do all these numbers mean?

Section 201

Trade Act of 1974

Section 201 allows domestic industries who have been seriously injured or threatened with serious injury by increased imports to petition the International Trade Commission (ITC) for import relief. If the ITC makes an affirmative decision it recommends a solution to prevent or resolve the injury and facilitate industry adjustment to import competition. The President makes the final decision whether to provide relief and the amount of said relief.

A 201 is probably the most commonly known trade action for steelmakers besides anti-dumping and countervailing duty cases.

Section 232

Trade Expansion Act of 1962

Section 232 investigations are used to determine the impact of imports on national security. Congress grants the President unprecedented authority to negotiate tariff reductions up to 50%. The Department of Commerce conducts an investigation on the imports and then makes recommendations to the President. The President then decides if he (or she) agrees and adjusts the imports.

Section 301

Trade Act of 1974

Section 301 is used to enforce trade agreements, resolve trade disputes, and open foreign markets to U.S. goods and services. It was designed to eliminate unfair foreign trade practices that have an adverse effect on U.S. trade. The President determines whether the alleged practices are unjustifiable, unreasonable, or discriminatory and burden or restrict U.S. commerce. If he (or she) decides action is necessary, the law directs that all appropriate action within the President’s power be taken.

Section 332

Tariff Act of 1930

The ITC investigates international trade, tariffs, and competition between the U.S. and foreign industries under section 332. The investigations and reports do not contain recommendations unless they have been specifically requested and do not provide a legal basis for other trade actions by the President.

Section 337

Tariff Act of 1930

The ITC, under section 337, determines whether there is unfair competition in the importation of products into the U.S. It declares infringement of a U.S. patent, copyright, registered trademark, or mask work to be an unlawful practice in import trade. It also declares that unlawful other unfair methods of competition and unfair acts in the importation of products in the U.S., the treat of which is to destroy or substantially injure a domestic industry, prevent establishment of such industry, or monopolize trade and commerce in the U.S.

Now that we have discussed the complicated part, here is a summary of the trade cases that have been filed. Final DOC and ITC anti-dumping and countervailing duty rulings:

  • ITC ruled in the affirmative the final determinations of anti-dumping and countervailing duties on corrosion resistant material for China, India, Italy, Korea, and Taiwan.
  • ITC also ruled in the affirmative the final determinations of anti-dumping and countervailing duties on cold rolled steel for Brazil, China, India, Korea, Japan, and the United Kingdom, but ruled to the negative for Russia.
  • ITC also ruled in the affirmative the final determinations of anti-dumping and countervailing duties on hot rolled steel for Australia, Brazil, Japan, Korea, Netherlands, Turkey, and the United Kingdom.
  • Preliminary determinations by both the ITC and DOC for stainless steel against China have been made with final determinations expected by January 2017.
  • U.S. Steel Corp., sought to have a Section 337 investigation by the ITC completed by Nov. 2, 2017, targeting Chinese mills back in August. It also proposed a single, 10-day evidentiary hearing on all claims in the case and no phased discovery process.
  • U.S. Steel Corp., gets 21-month time line for its Section 337 investigation targeting Chinese steelmakers.
  • The ITC found 14 Chinese companies are in default in the pending Section 337 investigation initiated by U.S. Steel Corp.

Contact your local sales representative or reference the ITC website trade.gov for more information.

Steel Trade Cases: The Steel Supply Chain

Background on Steel Trade Cases

To achieve economic and political objectives, many countries use industrial policies aimed at nurturing their domestic steel industry through trade protection and subsidies.

The U.S. steel industry claims to aspire only for a globally level playing field for international trade and commerce. So, the U.S. steel industry utilizes anti-dumping (to offset product sold below fair market value) and countervailing (to offset unfair subsidies) duty laws that require a significant amount of time, money, and resources to prepare and file. It also requires the U.S. International Trade Commission (ITC) and the Department of Commerce (DOC) to evaluate and determine if injury has occurred.

Recent Trade Case Activity

The 2015 year was filled with steel trade cases being petitioned and filed by many of the U.S. steel mills. Here is a recap of what we have seen recently:

The U.S. steel industry filed petitions in 2015.

  • Corrosion resistant material from China, India, Italy, South Korea, and Taiwan
  • Cold-rolled from Brazil, China, India, Korea, Netherlands, Russia, and United Kingdom
  • Hot-rolled from Australia, Brazil, Japan, and the Netherlands

Federal government passes Trade Preferences Extension Act (TPA) of 2015 providing an easier path of relief.

  • Material injury is no longer defined as an ‘unprofitable industry’ for several quarters and no recent improvement
  • Uncooperative parties named in petitions can now be assigned extremely high margins
  • The DOC can disregard certain distortive data that it previously could not

Latest Update on Steel Trade Cases

Now what you may be wondering is, does all this activity have an outcome or will it see the light at the end of the tunnel? It appears 2016 will see conclusions to these cases.

Corrosion Resistant Steels

Preliminary anti-dumping and countervailing duties of well over 200% for China and modest penalties of less than 10% for other countries have been established. Final determinations are currently expected to be announced on May 19, 2016.

Cold Rolled Steel

Preliminary determinations are scheduled to be announced on February 24, 2016, and final determinations are currently scheduled to be announced on May 10, 2016.

Hot Rolled Steel

Preliminary countervailing duties of 7% for Brazil have been placed. Preliminary anti-dumping determinations expected on March 9, 2016, and final determinations are currently scheduled for countervailing duties on March 24, 2016 and anti-dumping on May 24, 2016.

For more information on the steel supply chain contact your local sales representative.

 

By: Tony Hammes
Vice President Supply Chain
Metalwest