The U.S. and the United Kingdom (U.K.) have reached an agreement to institute a tariff-rate quota (TRQ) system to exempt imports of U.K. steel and aluminum from 25% and 10% Section 232 duties, respectively, beginning June 1, 2022. Although the agreement will be subject to a later Presidential Proclamation(s) with additional details, the Department of Commerce announcement provides the following information:
- U.K. steel “melted and poured” in the U.K. with a U.K. country of origin will be eligible for in-quota TRQ treatment without Section 232 duties. Prior to June 1, 2022, the U.S. will develop a mechanism to allow U.K. TRQs for steel imports which are melted and poured in the U.K. but with an E.U. country of origin based on further processing in the E.U.
- U.K. semi-finished (wrought) aluminum must not contain primary aluminum from the People’s Republic of China, Russia, or Belarus, and importers are required to supply a certificate of analysis for smelted (i.e., unalloyed) primary aluminum.
- U.K. steel is covered by 54 TRQ product categories, and U.K. aluminum is covered by 16 TRQ product categories.
- The TRQs are “first-come, first-served,” and once a TRQ is filled, the 25% steel and 10% aluminum over-quota duties apply.
- U.K. steel and aluminum TRQ product category quantities are administered on a quarterly basis, calculated based on historical import amounts.
- The Section 232 product exclusion process remains in place for U.K. steel and aluminum. Approved product exclusions exempt U.K. steel and aluminum from Section 232 duties, and importers may still seek additional Section 232 product exclusions.
- U.K. derivative articles of steel and of aluminum will not be subject to 25% or 10% Section 232 duties effective June 1, 2022.
- Beginning no later than September 1, 2022, the U.S. will evaluate TRQ usage every 3 months and, if requested by the U.K., consult to address under-usage.
Both governments agreed, in a U.S.-U.K. Joint Statement, to increase coordination on trade remedies and customs matters, including monitoring and sharing steel and aluminum import data. The U.S. and U.K. will take steps to establish more market-oriented conditions for steel and aluminum, such as antidumping and countervailing duties and safeguard measures. The U.S. and U.K. will confer on global steel and aluminum arrangements to address both global non-market excess capacity as well as the carbon intensity of the steel and aluminum industries, including conferring on methodologies for calculating steel and aluminum carbon-intensity and sharing steel and aluminum emissions data.
Unlike the E.U. and Japan Section 232 agreements, for the first time the U.S. will also require any U.K. steel producer owned or controlled by a Chinese entity to provide an attestation that there is no evidence of market distorting practices by the U.K. producer. The attestation must be supported by an annual strategic audit conducted by an independent third party of the U.K. steel producer including the financial records of it and any U.K. parent company to identify any subsidies provided by a government controlled or directed entity in China. The results of such audit must be provided to the United States. It is noted that British Steel was acquired by a Chinese group in 2020.
In exchange for the deal, the U.K. has agreed to suspend its retaliatory tariffs imposed on U.S. whiskey, blue jeans, and motorcycles.
Questions remain on a variety of Section 232 subjects. No guidance has been provided yet for U.K. steel or aluminum in foreign-trade zone (FTZ) Privileged Foreign (PF) status before June 1, 2022 and entered thereafter or U.K. steel or aluminum admitted into FTZs on or after June 1, 2022.