Ongoing Section 232 Steel and Aluminium Investigations Page: 2 of 2
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Aluminum stakeholders are similarly mixed in their view of the 232 investigation as to the national security risk and
need for potential remedies as demonstrated by a recent survey of international supply chain representatives. At the
Commerce Department hearing, the Aluminum Association, representing aluminum producers, and some companies
voiced support for the investigation. However, they advocated a targeted response, such as a negotiated agreement with
The Congressional Aluminum Caucus Members sunpport U.S. action to restrict aluminum imports, whereas other
Members favor a more directed response or exemptions for certain segments, such as rolled-can sheets used for food
and beverage products.
According to a June U.S. International Trade Commission report, competitiveness of the U.S. industry varies across
segments and, globally, the production costs are affected by government policies.
Selected Policy Implications
The Section 232 investigations and potential actions raise multiple policy issues. These include:
" Global overcapacity. Global overcapacity in steel and aluminum is at the root of many industry concerns.
Fostered by government policies, China is the world's leading manufacturer of steel and aluminum, and its excess
capacity has driven down global prices. While the Trump Administration raised the overcapacity issue during the
recent meeting of the U.S.-China Comprehensive Economic Dialogue, no agreement was reached. The G-20
reached an agreement that aimed to resolve the issue multilaterally through the OECD Global Forum on Steel
Excess Capacity. The Forum's report with specific policy recommendations is due in November. Separately, as
both Mexico and Canada are top U.S. steel suppliers, the United States may raise the issue during negotiations
with Mexico and Canada to update the North American Free Trade Agreement (NAFTA), in addition to working
through the North American Steel Trade Committee (NASTC), which has identified potential impediments to
intra-NAFTA steel trade.
" Consistency with World Trade Organization (WTO) commitments. Questions have been raised about whether
trade restrictive action under Section 232 would be consistent with U.S. WTO obligations. U.S. trading partners
could challenge potential U.S. action under WTO dispute settlement, as China stated it would do. If challenged,
the United States may very likely invoke Article XXI of the General Agreement on Tariffs and Trade (GATT),
which allows WTO members to take measures in order to protect "essential security interests." Whether actions to
protect a specific industry constitute an essential security interest is subject to debate. While some state that the
national security definition should include defense and critical infrastructure needs, others warn that U.S. actions
could create a slippery slope as to what products are considered to have "national security" implications. For
example, some have raised concerns that countries may increase tariffs on agricultural products in the name of
" Retaliation by U.S. trading partners. Some observers, including former chairs of the President's Council of
Economic Advisers, note the possibility of trade retaliation by affected trading partners. The president of the
European Commission, for example, has indicated that the European Union (EU) is prepared to impose counter-
measures to U.S. potential actions, which could possibly lead to increased tariffs or other barriers on certain U.S.
" Scope and impact of U.S. actions. Should the President act to restrict imports, the scope and impact on domestic
constituencies and U.S. allies is unclear. On the one hand, domestic producers may see higher prices for their
goods, but costs may rise for consumers and manufacturers using steel inputs. The President has discretion to
exclude specific product categories, countries, or provide other exemptions from any import restrictions. Some
U.S. allies, such as Canada and Australia, have asked to be exempt from any potential action.
" Implementation. Should the President impose tariffs or quota under Section 232, Commerce, USTR, and U.S.
Customs and Border Protection would oversee implementation and enforcement. One question is whether the
agencies have the necessary resources to effectively administer the 232 trade enforcement action or to defend
challenges to it.
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Fefer, Rachel F. Ongoing Section 232 Steel and Aluminium Investigations, report, July 28, 2017; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc1042458/m1/2/: accessed February 23, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.