Section 232 Metals Investigations, Pressure for Faster Duty Rulings Signal Evolving Enforcement Posture
There's still some question as to exactly how broad the Commerce Department's Section 232 investigations on steel and aluminum imports will be (see 1704200029 and 1704270024), members of the trade community said during a panel discussion May 3. The broadness of the administration’s definition of “national security” will determine the range of products covered by any safeguard measures, Allegheny Technologies Vice President Terrence Hartford said during a Kelley Drye event examining the first 100 days of Donald Trump’s presidency. Commerce Department officials are also under more pressure to finish antidumping and countervailing determinations early, said the panelists.
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The administration could correlate "national security" to a narrow set of military and defense applications, or to broader infrastructural, industrial base and health-related products, Hartford said. “We’re looking at it; we’re seeing maybe broader potential of products,” Kelley Drye attorney Kathleen Cannon said at the event. Hartford said Section 232 actions aren’t as well understood as other trade remedies and any resulting safeguards “should be temporary.” The executive branch can level tariffs or quotas on imports found through a Section 232 investigation to endanger national security.
The Section 232 process could be “dead on arrival” if another country challenges it at the World Trade Organization, said Christian Marsh, executive director of Kelley Drye consulting subsidiary Georgetown Economic Services. “But … that’s national security,” he said. “That’s the WTO telling the Trump administration that they got it wrong on national security, and I think that’s going to be a weird case." During a separate panel session, American Enterprise Institute resident scholar Derek Scissors said the U.S. is "going to be sorry" if it takes trade actions pursuant to any national security impacts evidenced by Section 232 investigations, because several other countries would then claim they could take protective measures against goods that have peripheral relationships to national security.
Marsh, who served as Commerce deputy assistant secretary for antidumping and countervailing duty operations until just before the Obama administration exited office, said his former colleagues are now under more pressure to issue preliminary or final duty assessments earlier, which he suggested is straining resources without significant benefits for anyone. His former colleagues say they’re “no longer investigating some cases; they’re simply administering those cases, and I think that’s a problem,” Marsh said. “It becomes a budget problem as well. There’s clearly not enough people to do the work there, and I think ITC is still under the same gun.” Commerce didn't comment.
While expediting cases might provide early relief for petitioners, it might result in rulings too factually weak to withstand a court challenge, and almost all Commerce AD and CV duty cases are challenged, he said. While Marsh agreed with Hartford that it’s beneficial to act as quickly as possible, Commerce needs a “release valve,” Marsh said. He suggested that Commerce consider whether administrative reviews are needed as frequently as they’re performed. Marsh said the Trump administration, like the Obama administration, is conducting trade actions in an “enforcement-minded” way, rather than merely being administrative “paper pushers.”
The International Trade Commission is “very thinly staffed,” and judiciously applies resources according to usual Commerce ruling timelines, ITC Chairman Rhonda Schmidtlein said during the panel discussion. The ITC is used to Commerce extensions, and when the agency doesn’t postpone its deadlines, “it does upend things at the ITC very directly,” she said. The ITC is on pace in fiscal 2017 to reach the same decade-high number of cases it considered in fiscal 2016, as the commission has received eight filed cases in eight weeks, about half the amount of cases filed with the ITC in a normal year, Schmidtlein said.
The commission is also considering a record high number of intellectual property cases, she said. “The workload is just exploding,” Schmidtlein said. “When you speed it up just a little bit, suddenly it has a big ripple effect on our agency.” She said she hopes that the proposed 3 percent budget increase in House spending legislation for the ITC in fiscal year 2017 over fiscal year 2016-enacted levels will help tackle the influx of cases (see 1705010037).
The administration could strengthen trade enforcement by imposing shorter deadlines or fewer extensions for petitioners and respondents to respond to each other’s submissions to Commerce during the course of a case, said Cannon. Commerce could also expedite judgments on “adverse facts available,” she said. The ITC recently posted a survey on its website asking trade attorneys how well it conducts investigations, but diligent fact gathering is an integral part of decision-making in ITC rulings, Schmidtlein said. “We do take very seriously the idea that this is a costly process, and that we should be constantly looking for ways to make it less burdensome for the companies and the other participants who have to respond to those questionnaires,” she said. “I, personally, think it’s a very good thing that you go through this extensive effort to gather as much information as possible to make sure that we’re making the right decision, because there is going to be somebody who’s paying those higher duties.”