President Trump Issues Proclamation Finding National Security Threat from Automotive Imports Under Section 232; Directs USTR to Initiate Negotiations with Japan, the EU, and Other "Appropriate" Countries

White & Case LLP
Contact

On May 17, 2019, President Trump issued a Proclamation containing his determinations in the US investigation into the effects of imports of automobiles and automobile parts on the national security of the United States, pursuant to Section 232 of the Trade Expansion Act of 1962.

In the Proclamation, President Trump (1) determines that imports of automobiles and certain automobile parts threaten to impair the national security of the United States (concurring with the Secretary of Commerce's finding in the investigation); but (2) delays a final decision on potential automotive import restrictions to allow the US Trade Representative (USTR) to negotiate agreements with Japan, the EU, and any other country USTR "deems appropriate" to "address the threatened impairment of the national security[.]" The Proclamation does not state what remedies or other actions the President might take if those negotiations fail, nor does it—contrary to earlier media reports—expressly exclude any countries from potential import restrictions. Instead, the Proclamation states only that recently negotiated agreements with Canada, Mexico, and Korea "could help to address" the alleged threat to national security. As a result, trade-related tensions in the US and global auto industries will likely remain high for the foreseeable future.

We provide below an analysis of the Proclamation and its implications.

Department of Commerce Report and National Security Determination

The Proclamation provides a brief summary of the Secretary of Commerce's report on the Section 232 investigation, which was submitted to the President on February 17 but has not been made public. The Proclamation contains the following information about the Department of Commerce's report and investigation:

  • Scope. The Section 232 investigation covered "imports of passenger vehicles (sedans, sport utility vehicles, crossover utility vehicles, minivans, and cargo vans) and light trucks…and certain automobile parts (engines and engine parts, transmissions and powertrain parts, and electrical components)[.]" The categories of automobile parts covered by the investigation had not previously been disclosed. However, the Proclamation does not provide any further details (e.g., specific HTSUS codes) regarding the scope of the investigation or its findings and recommendations.
  • National security determination. The Secretary's report concluded that "the present quantities and circumstances of automobile and certain automobile parts imports threaten to impair the national security as defined in section 232." This determination was based on a finding that American-owned automotive research and development (R&D) "is critical to national security," but is threatened by automotive imports and closed foreign markets. In particular—
     
    • "The rapid application of commercial breakthroughs in automobile technology is necessary for the United States to retain competitive military advantage and meet new defense requirements…The United States defense industrial base depends on the American-owned automotive sector for the development of technologies that are essential to maintaining our military superiority." However, "increases in imports of automobiles and automobile parts…have over the past three decades given foreign-owned producers a competitive advantage over American-owned producers."
    • Furthermore, "protected foreign markets, like those in the European Union and Japan, impose significant barriers to automotive imports from the United States, severely disadvantaging American-owned producers and preventing them from developing alternative sources of revenue for R&D in the face of declining domestic sales."
    • Because "[d]efense purchases alone are not sufficient to support . . . R&D in key automotive technologies," American-owned automobile and automobile parts manufacturers "must have a robust presence in the U.S. commercial market[.]" However, American innovation capacity "is now at serious risk as imports continue to displace American-owned production." An alleged lag in R&D expenditures by American-owned producers "is weakening innovation and, accordingly, threatening to impair our national security."

In light of the above factors, the Secretary concluded that automobiles and certain automobile parts are being imported into the United States "in such quantities and under such circumstances as to threaten to impair the national security of the United States." The Secretary found that such imports are "weakening our internal economy" and that "[t]he contraction of the American-owned automotive industry, if continued, will significantly impede the United States' ability to develop technologically advanced products that are essential to our ability to maintain technological superiority to meet defense requirements and cost effective global power projection."

  • Recommendations. The Proclamation states that, based on the above findings, the Secretary recommended actions to the President to adjust automotive imports, and that "[o]ne recommendation was to pursue negotiations to obtain agreements that address the threatened impairment of national security." The Proclamation does not state what other recommendations were provided in the report (e.g., import restrictions).

As noted above, the Trump administration has not published the Secretary’s report on the Section 232 investigation, and it has not indicated when it will do so. Though the statute requires that the report be published, it does not provide a specific deadline for doing so. However, the affirmative determinations made by the Secretary and the President will likely heighten congressional and industry pressure to publish the report so that the reasoning and factual basis for the Secretary’s findings can be scrutinized.

Presidential Determinations on National Security and Appropriate Action

The Proclamation contains the following substantive sections:

  • National security determination. The President concurs "in the Secretary's finding that automobiles and certain automobile parts are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States[.]"
  • Determination on "necessary and appropriate" action. The Proclamation directs USTR to "pursue negotiation of agreements contemplated in [Section 232 (c)(3)(A)(i)] to address the threatened impairment of the national security with respect to imported automobiles and certain automobile parts from the European Union, Japan, and any other country the Trade Representative deems appropriate." The President has determined that this action is "necessary and appropriate" to remove the threatened impairment of national security.

The referenced statutory provision affords the President 180 days to negotiate an agreement that "limits or restricts" the subject imports and authorizes him to take additional actions if the negotiations fail, though the Proclamation itself omits the "limits or restricts" language. Under the law, if the President determines within 90 days of receiving the Secretary's report that the action that should be taken based thereupon is "the negotiation of an agreement which limits or restricts the importation into, or the exportation to, the United States" of the subject merchandise, and:

1) No such agreement is entered into before the date that is 180 days after the date on which the President makes the determination; or

2) Such an agreement that has been entered into is not being carried out or is ineffective in eliminating the threat to the national security posed by imports of such article;

the President "shall take such other actions as the President deems necessary to adjust the imports of such article so that such imports will not threaten to impair the national security."

The Proclamation does not state what "other actions" the President might take if the negotiations to be conducted by USTR fail. While the Proclamation makes no direct reference to potential import restrictions, it does not rule them out, and the Trump administration is expected to continue using the threat of such restrictions as "leverage" in the proposed negotiations and, perhaps, with other trading partners. However, the Proclamation states only that "[w]ithin 180 days of the date of this proclamation, the Trade Representative shall update [the President] on the outcome of the negotiations[.]" An accompanying White House press release simply states that "if agreements are not reached within 180 days, the President will determine whether and what further action needs to be taken."

  • Possible country exemptions. The Proclamation does not exclude any country from potential Section 232 measures on automotive imports, nor does it reference the USMCA side letters in which the United States agreed to exclude significant volumes of Canadian and Mexican automotive goods from any such measures. It states only that the President, in making his determination under Section 232, has "considered the renegotiated United States-Korea Agreement and the recently signed USMCA, which, when implemented, could help to address the threatened impairment of national security found by the Secretary." By not guaranteeing that these countries will be excluded from future Section 232 measures, this language might be intended to increase pressure on Canada and Mexico to ratify the USMCA, and on Korea to implement the revised KORUS agreement.

Outlook

The President's decision to delay a final determination on automotive import restrictions was expected, given the economic and political ramifications of such restrictions and the fact that the Trump administration's trade agenda currently is dominated by other priorities that would be disrupted by significant new Section 232 measures. These priorities include the USMCA, for which the Trump administration is currently seeking congressional approval; the nascent bilateral negotiations with Japan and the EU; and the ongoing bilateral negotiation with China, all of which would have been jeopardized by new Section 232 restrictions on automotive imports. Moreover, it appeared unlikely that the Trump administration would announce significant new tariffs on automotive imports so soon after increasing Section 301 tariffs on US$200 billion in Chinese imports and proposing similar tariffs on the remaining US$300 billion in Chinese imports earlier this month – moves that drew a negative reaction from financial markets.

Though the Trump administration has deferred temporarily a final decision regarding Section 232 restrictions on automotive imports, the Proclamation raises serious concerns that such restrictions might be imposed in the future, particularly given (1) the President's broad affirmative determination that nearly all automotive goods imports from all sources threaten national security; and (2) the implication that restrictions might be imposed if Japan, the EU, and potentially other countries do not quickly negotiate trade agreements with the United States that "address the threatened impairment" through unspecified means. Completing such negotiations within the next six months will be difficult, particularly given that the US-Japan negotiations remain in preliminary stages and the US-EU negotiations have not yet begun due to significant disagreements between the two sides over their scope.

Moreover, the negotiations could be complicated significantly by potential US demands for limitations on Japanese and EU automotive exports to the United States. Indeed, the "agreements contemplated in [Section 232 (c)(3)(A)(i)]" and referenced in the Proclamation "limit or restrict" the importation into, or the exportation to, the United States of the subject merchandise (whereas the WTO Agreements prohibit voluntary export restraints and similar measures). Japan and the EU are expected to resist strongly any commitments that would limit or restrict their automotive exports to the United States, even at volumes substantially above current trade (as Mexico and Canada agreed to in their respective side letters to the USMCA). Indeed, EU Trade Commissioner Cecilia Malmström stated after the release of the Proclamation that "[t]he EU is prepared to negotiate a limited trade agreement [including] cars, but not WTO-illegal managed trade." Japan similarly has stated that any trade agreement it reaches with the United States must be consistent with WTO rules. The United States has not publicly clarified what commitments it will seek in the forthcoming negotiations with Japan and the EU regarding automotive trade, and if they will involve limitations on automotive exports. In addition, it has not indicated what actions, if any, it plans to take with respect to automotive imports from other countries not referenced in the Proclamation. Thus, while the Proclamation has temporarily delayed a final decision in the Section 232 investigation, it has prolonged and exacerbated the uncertainty regarding the Trump administration's plans for automotive import restrictions.

The Proclamation is available here.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© White & Case LLP | Attorney Advertising

Written by:

White & Case LLP
Contact
more
less

White & Case LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.