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Chairman Reichert Opening Statement at Hearing on Product Exclusion Process for Section 232 Tariffs on Steel and Aluminum

July 24, 2018

WASHINGTON, D.C. –  House Ways and Means Trade Subcommittee Chairman Dave Reichert (R-WA) delivered the following opening statement at a Subcommittee Hearing on Product Exclusion Process for Section 232 Tariffs on Steel and Aluminum.

CLICK HERE to watch the hearing.

Remarks as prepared for delivery:

“Today’s hearing focuses on the experiences of U.S. companies that are participating in the product exclusion process in the hopes of obtaining relief from the tariffs that the Administration has imposed on steel and aluminum. 

“As Congress provides oversight related to the Administration’s initiatives to confront China’s unfair trade practices, we must strike the right balance between being tough but also being effective and minimizing harm to American businesses and workers. 

“China’s predatory trading tactics are clear, and we applaud the President for taking action to end these abusive policies.  However, these challenges warrant a targeted response that minimizes collateral damage to the U.S. economy.  There are now serious problems as a result of the Administration’s decision to implement broad tariffs on steel and aluminum imports. 

“I believe that these tariffs are hitting the wrong target. When it comes to market-distorting excess capacity to produce steel and aluminum, our allies like Canada, Mexico, and the European Union are not the problem – China is.  Exempting our closest trading partners from these steel and aluminum tariffs would take some pressure off of American businesses, but in the meantime, we must help our manufacturers by making the product exclusion process more efficient.  As it stands, it is broken and must be fixed.

“In particular, many American manufacturers need to import certain specialized products from other countries that are not readily available in the United States so they can manufacture goods and create jobs here in America.  It’s clear to me that ‘readily available’ in this context should include availability in the specifications, quality, and timing a U.S. company requires.  Otherwise, we are penalizing American businesses for making their products here at home rather than importing finished goods that in most cases would not face steel or aluminum tariffs.

“That is why this hearing will focus on improving the exclusion process from the Section 232 steel and aluminum tariffs.  We must lift the significant burden that American manufacturers are facing – burdens that can lead to lost projects and lost jobs.  Our manufacturers need certainty and predictability so that they can make their business decisions and do what they do best.  

“Today, we’ll hear from a broad range of local American job creators about the problems with the exclusion process.  We are gathering facts – to find out what is working and what is not – so that the Administration can make the necessary changes and provide relief for our businesses and workers.

“Thus far, the Commerce Department has made some effort to improve the exclusion process, but much more is needed.  Members of this Committee have been actively engaged in providing advice since before the tariffs took effect in March.  The improvements that Commerce has made so far were, at least in part, results of the efforts by Members of this Committee, particularly Rep. Walorski, and countless constituents.  For example, Commerce agreed to implement an exclusion process in the first place after many Members advised them to do so.  It later agreed to provide some retroactive relief.  However, despite these efforts, the exclusion process is bogged down in red tape and is moving far too slowly.

“Four months have passed since the steel and aluminum tariffs were imposed, and less than 700 out of the 27,000 requests have resulted in determinations by the Commerce Department, with only 266 accepted and 421 denied.  The problem is not lack of resources.  The fact is that the process is burdensome, unwieldy, and inefficient. 

“There are a variety of improvements that Commerce can and should make immediately so that the exclusion process works.  I will highlight just a few, and I look forward to hearing more from our witnesses. 

“One common-sense solution would be to streamline the process both at the beginning and the end.  Allowing trade associations to apply would prevent duplicative applications and save time and money for both the U.S. company that needs the exclusion and the Commerce Department that must review all requests.  For the same reason, at the end of the process, when an exclusion is granted, it should be available to any U.S. company. 

“Both of these streamlining suggestions would particularly benefit small businesses and manufacturers that are at a disadvantage by having fewer resources to fill out these complicated exclusion forms and hire outside lawyers.  We don’t want a situation in which larger companies with more resources can use the product exclusion process to gain an advantage over smaller firms.

“In addition, Commerce has not provided these companies whose petitions have been denied an opportunity to refute objections or appeal the decision even if an objection contains clearly incorrect information.  Commerce should institute a brief but fair rebuttal process for these American businesses to ensure a robust record on which we can rely and not pick winners and losers arbitrarily.  And if there are no objections, the petition should be automatically granted.

“Moreover, Commerce should also allow our companies to use the product exclusion process for products coming from countries facing hard quotas like Argentina, Brazil, and South Korea. 

“These are only a few of the changes that can and should be made to make the exclusion process more fair and efficient.  The last thing we need is an unnecessarily cumbersome process that acts as a new bureaucracy. 

“Last year’s historic passage of tax reform has energized the economy and improved the spirits of American manufactures and businesses.  However, overly broad tariffs can slow this momentum, and a cumbersome exclusion process does not provide the necessary relief to affected U.S. companies.  It creates uncertainty in the economy, postponing investment and hindering job growth.”