An Update on Fair Trade
Approximately 90 FIA members gathered at FIA’s annual meeting in Fort Worth, Texas, to engage the issues of the day in the forging industry. Fair trade was on the minds of many, and FIA’s trade attorney firm, Cassidy Levy Kent LLP (represented by Thomas Beline), did not disappoint. What follows is a synopsis of FIA’s position toward a goal of global fair trade for the North American forging industry.
Section 232 Action Covering Steel Forgings
Section 232 empowers the President to impose tariffs to address threats to “national security,” including the ability of the U.S. industrial base to supply key sectors, including defense, aerospace, transportation, energy, chemicals and critical infrastructure.
- In April 2017, the President initiated section 232 investigations into primary aluminum and steel products.
- On March 23, 2018, the President imposed 10% tariffs on aluminum products and 25% tariffs on various steel products from most countries.
- While the proclamation broadly covered aluminum forgings, it failed to cover nearly all steel forgings.
- The architecture of the HTSUS tariff schedule makes it difficult to track steel forging imports, and the administration made no national-security findings regarding steel forgings.
- Effective July 2018, FIA obtained “tariff breakouts” for select forgings, including forged gear blanks, compressor housings, impeller covers and other items.
- FIA expects that additional tariff breakouts will be available in January 2019 to help better track imports of frack blocks.
During the summer, FIA completed a survey to examine whether the industry data supported a stand-alone Section 232 action covering imports of steel forgings. The survey results indicate that a Section 232 action on steel forgings may be ripening. FIA will update the survey in January 2019.
If FIA was to pursue a Section 232 action it would require an updated member survey, a drafted petition to initiate a 232 investigation, participation in an investigative process from the Department of Commerce, written comments and rebuttals from interested parties resulting in a hearing, the issuance of a formal report from the Department of Commerce, and advocacy before the White House. Government and public-relations support would be required throughout this process.
Antidumping (AD) and Countervailing Duty (CVD)
Narrower trade remedies are available in the form of AD and CVD duties. There are approximately 50-100 such cases prosecuted per year with minimal retaliatory effects. Companies can petition the Department of Commerce and U.S. International Trade Commission to impose AD/CVD duties on dumped and/or subsidized imports that cause “material injury” to U.S. producers. Provisional duties can be applied in five to seven months, with final orders taking effect in 13 months.
Key considerations for the imposition of AD/CVD duties are that countries need to be specifically targeted, a narrow product sector must be defined (e.g., crankshafts, gear blanks) and an adverse trend during the past three years must be shown. Remedies last at least five years and often last for decades.
Section 201 Process (Safeguard)
Companies can petition to impose tariffs and/or quotas on surging import volumes that cause “serious injury” to domestic producers. The entire process takes eight months. Recent safeguard cases include washing machines (2018) and solar panels (2018). These were the first Section 201 safeguard investigations since steel in 2002, indicating a return to Section 201 safeguard measures under the Trump administration.
What Can Your Company Do Right Now
Become an FIA member and contribute data so your trade association can fight for what’s fair to the North American forging industry. FIA looks forward to serving the industry and leading the fight for fair trade. Consider us your resource for the next steps in fair trade.
Please refer any questions or comments to James R. Warren, FIA president and CEO (left). He can be reached at 216-781-6260 or firstname.lastname@example.org. Thomas M. Beline (right) is a partner at FIA’s trade attorney firm, Cassidy Levy Kent LLP in Washington, D.C.