In off the record comments on March 28, 2018, an official of the Dept. of Commerce provided some clarification as to how the product exemption process will work relative to steel and aluminum tariffs. Of course, the starting point is: if your product is subject to the steel or aluminum tariffs and is not from an exempted country, the 25% or 10%, respectively, will have to be paid. After that, things get trickier.
If you decide to seek exemption for your product, the first step obviously is to gather the needed details and file your exemption request. The way the process is intended to work is once the exemption request is uploaded to regulations.gov, the Bureau of Industry and Security (“BIS”) will review it for completeness. If not complete, the application will be rejected. If complete, it will be officially posted on the regulations.gov website. That date is key. Because, if your exemption request is later granted, while not official until five days after it is published, you will be able to seek refunds on any entries filed between the date the exemption request is posted and when it is granted.
There are currently more than 100 exemption requests filed, although it is not clear whether any of them are officially posted. The aim is to have the review for completeness process concluded in a matter of days, but naturally at the outset, the process is taking longer. To complete the substantive review process and publish a decision, BIS acknowledges its aim remains approximately 90 days.
If an applicant has business-sensitive information, one checks the appropriate box at the end of Section 5. As has been made clear in the Federal Register notices, once the exclusion request is officially posted, anyone may file objections within 30 days. There is no rebuttal process provided. As such, applicants would be wise to anticipate the nature of the objections which might be made, but BIS also anticipates the possibility there may be radically different views of the facts in some cases. If that happens, BIS is considering ways to follow-up with the parties to reconcile those differences.
BIS will rely on Dept. of Commerce internal expertise but also conduct an interagency review, as warranted, for each exclusion application. It hopes to have that process completed in approximately 60 days and then have the remaining 30, of the 90 day anticipated processing time, to complete its actions. After reviewing the application and any objections, if BIS deems it advisable to seek the business proprietary information indicated by the applicant, it will make that request prior to reaching a final decision.
Given the need for Customs and Border Protection to administer any exclusions, if you are either downstream (e.g. an American buyer) or upstream (e.g. also an American buyer but purchasing it to be imported from a foreign country) from the importer, applicants would be wise to partner with importers in making their applications. Box 5.e. does request: “Provide a detailed explanation as to how U.S. Customs and Border Protection (CBP) will be able to reasonably distinguish the steel product subject to the Exclusion Request at time of entry, without adding undue burden to their current entry system and procedures.” Identifying the importer with the specific goods will go a long way to addressing that question, but certainly is not the only factor to consider. Whether you are upstream or downstream, but are an American entity eligible to request an exclusion, companies should also look at their contracts and other commercial documentation to make sure they include provisions for the parties to cooperate in seeking and administering any exclusion which is sought or granted, and also provide for penalties and recourse in case cooperation is not forthcoming, or the exclusion is not properly administered once granted.
China imposes retaliatory tariffs on U.S. goods effective April 2, 2018. The list of impacted products can be found here.
The WTO is circulating a communication from China which also lists the products against which retaliation has been taken – see China 232 Product List for more details.