1. Playing the Numbers Game: Sections 232 and 301
Adrienne Braumiller
Braumiller Law Group, PLLC

2. Agenda Trade Acts: Source of Section Investigations

3. Trade Act Sources: Sec. 232 Sec. 232: Trade Expansion Act of 1962
Purpose: National security invocation. Petition brought by agency, interested party or Department of Commerce (DOC) alleging that imports of the product threaten national security.
DOC investigates whether the product is imported in such quantities or under such circumstances so as to impair U.S. economic well-being (U.S. national security interests).

4. Sec. 232 (Cont’d)
DOC concludes investigations, and makes recommendation to the President.
President makes final decision, and then enacts tariffs or quotas as determined to negate impact of imports to national security.
President can exclude specific countries or products, or institute other exemptions.

5. Trade Act Sources: Sec. 301 Sec. 301: Trade Act of 1974
Purpose: To eliminate unfair trade practices that adversely affect U.S. trade.
The President solely authorized to take all appropriate action, including retaliation, to redress the unfair trade action or practice by a foreign government. Must consult with other country through WTO.
301 investigations can focus on just one country.

6. Trump’s Tariffs
ADD/CVD cases often precede Sections 232 and 301 investigations for the threatened product.
President Trump has enacted tariffs on $85 billion worth of goods or 3.6% of total imports, with an additional $200+ billion proposed - Statutory bases:
Section 232 of the Trade Expansion Act of (National Security)
Section 301 of the Trade Act of (Unfair Trade Practices)

7. Section 232: Steel & Aluminum
On March 8, 2018, pursuant to national security considerations, President Trump signed two presidential proclamations announcing the imposition of tariffs on imported steel and aluminum under Section 232(b) of the Trade Expansion Act of 1962.

8. Section 232 Investigations
On February 16, 2018, the Department of Commerce (DOC) recommended large restrictions on the imports of aluminum and steel, citing national security.
Section 232 states national security includes economic security.

9. Section 232 Tariffs
On March 23, 2018, Customs and Border Protection began collecting tariffs.
Steel: 25% ad valorem tariff; HTS Codes through , , ,
Aluminum: 10% ad valorem tariff; HTS Code 7601, wrought aluminum under , and castings and forgings under
On August 10, 2018 Trump authorized the doubling of 232 tariffs on steel and aluminum from Turkey,
Effective Aug. 23 the tariffs will jump from to 50% in the case of steel. It is uncertain when the higher tariff on aluminum may enter into force.

10. Section 232 Tariffs (Cont’d)
No Set Benchmark for lifting 232 on steel and aluminum
The Trump administration is not operating off a set benchmark for when to lift Section 232 tariffs, and any decision to end the duties is at the discretion of the president himself.
Though Commerce in its Section 232 report set a threshold of 80 percent steel industry capacity utilization to judge the sector’s health, President Trump in impos­ing the tariffs was careful to say that we’re not looking at a specific thing.
The President will likely consider­ the overall health of the industry, its ability to stand on its own, and whether arrangements have been reached with other countries to address issues such as overcapacity.

11. Product Exclusions
On March 19, 2018, the DOC, Bureau of Industry and Security began accepting exclusion requests:
For items not produced in the U.S. in a sufficient and reasonably available amount or of a satisfactory quality or based upon specific national security considerations.
Exclusions generally are granted if there is no domestic availability and there are no overriding national security concerns with regard to the specific product.
On June 20, 2018, DOC announced the first product exclusions; >15,000 requests remain.

12. Country Exemptions Steel Aluminum Australia: Exempt
South Korea, Brazil, and Argentina: Exempt with Quotas
Aluminum
Argentina: Exempt with Quota

13. Section 232: Autos
Written comments due June 29, 2018; rebuttal comments due July 13, 2018.
Hearing: July 19, 2018.
The Secretary of Commerce must submit to the President a report on the finding of the investigation by February 17, 2019.

14. Section 232: Uranium
On July 18, 2018, the DOC initiated a Section 232 investigation into uranium imports:
“The investigation will canvas the entire uranium sector from the mining industry through enrichment, defense, and industrial consumption”—DOC Secretary Ross
Public Comment and Hearing Proceedings TBA; Report expected mid-2019

15. Section 232 vs. Section 301
Regulators: BIS for Section 232; USTR for Section 301
Objective: National Security for Section 232; Combating Unfair Trade Practices for Section 301
Exclusions: Section 301 is simpler
The separate Section 232 exclusion requesters have had no opportunity to rebut opposition. Commerce Secretary Wilbur Ross has said that opposition from domestic suppliers means ex­clusions to those tariffs won’t be granted.
Drawback: Available on Section 301 goods only

16. Section 301
Following a Memorandum from President Trump, on August 18, 2017, USTR initiated an investigation under Section 301 of the Trade Act of 1974 into the government of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.

17. Section 301 Investigation
USTR and an interagency committee concluded that China’s policies harm the U.S. economy by over $50 billion annually, due to:
Technology transfer through JV, investment, administrative, and licensing requirements
Chinese investment in U.S. which generate large- scale technology transfer
Industrial cyber espionage

18. Section 301 Tariffs List Based Approach
List 1: 25% ad valorem tariff effective July 6, 2018; 818 product lines worth $34 billion
List 2: 25% ad valorem tariff; proposed on 284 product lines worth $16 billion
List 3: 10% - 25% ad valorem tariff; proposed on 6,031 product lines worth $200 billion

19. Section 301 Tariffs (Cont’d)
List 1
25% ad valorem tariff, proposed on 818 products worth $34 billion
After public review process, List 1 cut from 1,333 products to current list of 818 products
Tariffs became effective July 6, 2018
USTR established process by which interested parties may request exclusions from List 1 tariffs, requests due October 9, 2018

20. List 1 Product Exclusions
Criteria:
Difficulty sourcing product from non-China alternative countries
Exclusion would avert severe economic harm to U.S. business or U.S. interests
Product not of strategic importance or related to “Made in China 2025”

21. List 1 Product Exclusions (Cont’d)
Procedure:
Exclusion requests due October 9, 2018
All exclusions retroactive to July 6, 2018
14 day response period; 7 day reply period
List 2 and 3 exclusion procedures yet to be promulgated

22. Section 301 Tariffs
List 2
25% ad valorem tariff, proposed on 284 products worth $16 billion
Subject to public review process:
Written comments - July 23, 2018
Hearing was July 24, 2018

23. Section 301 Tariffs (Cont’d)
List 3
10% ad valorem tariff, proposed on 6,031 products worth $200 billion
Subject to public review process:
Written comments must be filed by September 6, 2018
The public hearing will take place August 20-23, 2018
Rebuttal comments will be due on August 30, 2018
More than 300 witnesses in hearings scheduled for every day Aug , and again on Aug. 27

24. Section 301 Tariffs (Cont’d)
“List 4”
Tariffs on all Chinese products, worth $505.5 billion
“I’m ready to go to 500”—President Trump, July 20, 2018
In 2017, the U.S. accepted $505.5 billion worth of Chinese imports

25. Section 301 Tariffs (Cont’d)
USTR Ends Section 301 Exemption for U.S. Goods Returned After Repair, Alteration, Processing and Assembly
On August 16th, the USTR announced that special tariff provisions for U.S. goods returned after assembly, repair, alterations and processing become subject to Section 301 tariffs on China
Products on the tariff list properly claimed under Chapter 98 provisions were fully exempt from the 25 percent duty, but beginning 12:01 a.m. on Aug. 23, subheadings , , and will no longer be eligible for the carve-out if classified under a Chapter 1-97 tariff provision otherwise covered by the tariffs.
The change affects both goods on Lists 1 and 2
USTR’s notice adds new U.S. Note 20(c) to Chapter 99, with language applying the tariffs to U.S. goods returned under subheadings , , and

26. Domestic Response
80 Trade Associations: On August 8, a group of 80 trade associations, including the NAFTZ sent a letter to USTR asking for exclusions to Section 301 Chinese tariffs to be lib­erally granted.
Requested one submission covering multiple 10- digit HTS product lines that fall within one 8-digit HTS product category “to minimize duplication of product exclusion requests as well as expedite and streamline the review process.”
Also asked that applicants be allowed to rebut opposition to their requests before a final determination is made

27. International Response
Chinese tit-for-tat retaliation:
List 1: 25% ad valorem tariff, 545 products worth $34 billion, effective July 6, 2018
List 2: 25% ad valorem tariff, 114 products worth $16 billion, effective TBD
List 3: TBD

28. Enforcement
CBP Auditors Preparing Outreach on Safeguard Tariff Enforcement
CBP auditors plan to work with the CEEs to provide more information to industry on complying with recent safeguard tariffs, per Thomas Jesukiewicz, Long Beach field director in CBP’s Regulatory Audit office.
“It’s a progressive approach. Providing informed compli­ance, getting out there, letting you know what’s coming up, and then interpreting some of the complexities of these safeguards.” The informed compliance will be provided through a pamphlet and then possibly a site visit, he said.
Companies that import goods already subject to antidumping or countervailing duties and that are also covered by safeguard duties will be more likely to see auditor scrutiny, he said.

29. Strategies for Impacted Products
Participate in public comment/hearing proceedings
Engage with your Congressmen and women
Perform Classification Review
Request product exclusions
Change in Origin
Re-sourcing
Substantial Transformation
Change in Classification
Review current classifications
Tariff engineering

30. Inadvisable “Solutions”
Transshipment
Documentation Changes
Reducing Invoice Value

31. Braumiller Law Group, PLLC
Questions?
Adrienne Braumiller, Partner
Braumiller Law Group, PLLC
5220 Spring Valley Road, Suite 200
Dallas, TX 75254
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