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04 September 2018 US issues new steel and aluminum proclamations outlining potential relief opportunities for US importers On 29 August 2018, United States (US) President Trump signed two Presidential proclamations granting targeted relief to US importers of steel and aluminum products that are subject to country specific quotas covered by Section 232 of the Trade Expansion Act of 1962. For imports of steel and aluminum subject to country specific quotas, interested parties can apply for a product-specific exclusion from quantitative limitations on steel and aluminum under a process that will be similar to the existing product exclusion process established for the relief of punitive tariffs. Steel and aluminum products relieved from quantitative limitations under this process will not be subject to punitive tariffs. Under a separate process, relief from steel quotas, but not aluminum quotas, may be available to companies involved in large domestic construction projects when importers are experiencing closed or nearing capacity quotas, but only where the transaction meets certain requirements.1 The relief mechanism is intended to address instances where previously contracted purchases of steel were imported following imposition of the initial duty orders, but where specific circumstances show that US economic impacts have resulted due to cost increases, denial of imports upon clearance and thus project delays and other factors. Relief is effectively limited to allowing imports without quota restrictions, however the punitive duty rates will still apply. As of 1 June 2018, steel quotas have been imposed on Argentina, Brazil and South Korea, while aluminum quotas were imposed on Argentina. Through the new relief process, companies can apply for product specific exclusions where they can demonstrate that there exists an insufficient quantity or quality available from US steel or aluminum producers or based upon specific national security reasons, thus excluding the product from the applicable quantitative limitation. This criteria will mirror the criteria currently being used for the existing product exclusion process, which grants relief from punitive tariffs. To the extent that a product exclusion from quantitative limitations is granted, the product will not be subject to punitive duties.2 Relief on steel and aluminum products subject to quota restrictions will be granted on a party-by-party basis taking into account the regional availability of particular articles. The relief will only apply to an article entered for consumption, or withdrawn from a warehouse for consumption on or after the date on which the relief request was approved. Products granted exclusion from the quota restrictions will be counted toward any quantitative limitation previously proclaimed until such limitation has been filled. The steel proclamation further acknowledges that the country-specific steel quotas previously imposed have significantly disrupted or delayed certain large construction projects in the US that employ thousands of workers. In several instances, critical steel articles, which were contracted for purchase prior to the implementation of quotas, cannot be entered into the US since the quantitative limitations have already been reached. As a result, the steel proclamation creates a separate process whereby limited relief from quantitative limitations will be granted based on meeting the following criteria:3
In addition to the above criteria, a party seeking relief under this process must also submit a sworn statement signed by the company's chief executive officer and chief legal officer.4
If at any time after granting relief the Department of Commerce determines that the criteria has not been met, Commerce has been instructed to notify the Attorney General and revoke any relief previously granted. While the proclamation offers exclusion from quantitative restrictions imposed on steel imported from Argentina, Brazil and South Korea, any steel article granted relief will be subject to the 25% punitive tariff. The proclamation also stipulates that any steel article granted relief must be entered for consumption, or withdrawn from a warehouse for consumption, on or before 31 March 2019. Importers of steel from Argentina, Brazil, South Korea and/or aluminum from Argentina should consider whether they qualify under these relief actions. Specifically, if importers from these countries can support the argument(s) that there is a lack of availability and/or quality in the US or there is a compelling national security argument, a product exclusion request should be considered. To date, approximately 35,000 steel and aluminum exclusion submissions have been filed with the Government seeking exclusion relief, with 4,500 decisions made (13%), seeing an approximate approval rate of 55%. Importers of steel who have entered into contracts for US-based construction projects and shipment of foreign steel in advance of 8 March 2018 (with consideration of the project end date) should consider requesting relief from the quota. It bears mentioning again; however, that under this quantitative relief scenario, the punitive tariffs of 25% will apply. 1 For background on the steel and aluminum tariffs and quotas implemented under Section 232 of the Trade Expansion Act of 1962, see EY Global Tax Alert, US suspends tariff exemptions on steel and aluminum for EU and NAFTA countries; EU, Canada and Mexico to impose retaliatory duties on a wide range of products, dated 31 May 2018. 2 For steel, see Presidential Proclamation Adjusting Imports of Steel into the United States, Clause 1 (29 August 2018). For aluminum, see Presidential Proclamation Adjusting Imports of Aluminum into the United States, Clause 1 (29 August 2018). 3 Presidential Proclamation Adjusting Imports of Steel into the United States, Clause 2 (29 August 2018). 4 Presidential Proclamation Adjusting Imports of Steel into the United States, Clause 3 (29 August 2018). Document ID: 2018-6034 |
