On October 28, 2019, the Commerce Department’s Office of the Inspector General (the “Office” or “OIG”) issued a memorandum to Secretary of Commerce Wilbur Ross to communicate the Office’s concerns about the process for reviewing and granting requests for exclusions from national security tariffs on imports of steel and aluminum. According to the OIG, multiple issues arising out of the process “give the perception” that the “exclusion request review process is neither transparent nor objective.”

In March 2018, President Donald Trump imposed national security tariffs of 25 percent on imports of steel and 10 percent on imports of aluminum under section 232 of the Trade Expansion Act of 1962. Soon after the tariffs went into effect, Commerce initiated a process under which U.S. individuals or organizations could request an exclusion from the tariffs. As part of this process, Commerce publishes exclusion requests on a website after it verifies that the requests meet a threshold of completeness and accuracy. U.S. parties can object to a request within 30 days of when the request is posted online.

On October 29, 2018, the OIG initiated an audit to review Commerce’s exclusion request processes and procedures. In the audit, the OIG discovered the following:

1. At the request of an objecting party, Commerce officials reconsidered several exclusion requests that had been approved and posted online, even though Commerce’s regulations do not permit an appeals process.

2. Prior to making exclusion requests available to the public online, and days after receiving a communication from an objecting party, Commerce revised a criterion for reviewing a specific attribute as part of clearing the exclusion requests for completeness and accuracy. The OIG found no evidence that other interested parties were aware of the communication or that they were able to comment on the issue.

3. There were more than 100 meetings and telephone conversations between Commerce and interested parties for which there was no official record of the topics discussed. In at least some of these meetings, interested parties planned to discuss information about pending exclusion requests with Commerce. If any such discussions occurred, the OIG found, they are not part of the official record of Commerce’s review.

The OIG stated that it believed that “these issues give the perception that the Section 232 exclusion request review process is neither transparent nor objective.” “{T}o ensure the transparency of the Section 232 exclusion request review process,” the OIG proposed that Commerce treat all decisions as final once they are posted online (or amend the rules to create an appeals process), create a formal process for modifying criteria for assessing the completeness and accuracy of exclusion requests, and properly document all discussions with interested parties. The OIG also said that it would consider any concerns expressed by Commerce and any responsive action by Commerce in future audits.