Rare Earth Magnets Target of New Section 232 Investigation
The Commerce Department has initiated a Section 232 case to determine whether the importation of neodymium magnets, a type of rare-earth magnet used to improve motor efficiency, is imperiling the national security of the United States. The department signaled it might initiate such an investigation back in June (see 2106080002), when it published a supply chain study.
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The import of neodymium magnets has been a controversial issue for decades. Crucible Materials Corporation won a Section 337 case in 1996 against importers that were bringing in Chinese magnets from companies that did not pay licensing fees to the U.S. inventors of the technology.
In 2011, the House Foreign Affairs Asia Subcommittee held a hearing about the problem that domestic manufacturers were entirely reliant on rare earths from China, just after China cut off exports to Japan over a political issue. Rep. Donald Manzullo, then chair of the subcommittee, said, "China's ability to dictate market terms to the rest of the world is particularly worrisome given its unwillingness to follow established international trade rules."
A request for comments is scheduled to be published in the Federal Register on Sept. 27, and comments will be due 45 days after that. The investigation was initiated Sept. 21, the notice says. Fighter aircraft, missile guidance systems, wind turbines, electric vehicles, computer hard drives, audio equipment and MRI devices all rely on these magnets, which are also sometimes called rare earth magnets.
Back when the Biden administration signaled it might initiate this investigation, Cato Institute trade analysts Inu Manak and Scott Linicome wrote that "pursuing any Section 232 investigation without rectifying the law’s many procedural and substantive flaws would effectively condone the Trump administration’s abuses and cement that precedent -- and Section 232 -- as not merely an unfortunate blip in U.S. trade policy history but the 'new normal' that will be used and abused by future presidents as they see fit."