AGENCY:

Enforcement and Compliance, International Trade Administration, Department of Commerce.

ACTION:

Proposed rule; request for comments.

SUMMARY:

On May 17, 2019, the United States announced joint understandings with Canada and Mexico, respectively, to eliminate tariffs imposed under Section 232 of the Trade Expansion Act of 1962, as amended, on imports of steel and aluminum products from Canada and Mexico and to establish a process for monitoring such imports. Consistent with the joint understandings, and to enhance U.S. Government monitoring and analysis of steel imports more generally, the U.S. Department of Commerce (Commerce) publishes this proposed rule to enhance its existing Steel Import Monitoring and Analysis (SIMA) system to allow for the effective and timely monitoring of import surges of specific steel products which will aid in the prevention of transshipment of steel products. Specifically, Commerce proposes to modify its regulations to require import license applicants to identify the country where the steel used in the manufacture of the imported steel product was melted and poured, and to release this data on an aggregate basis, as appropriate; to harmonize the scope of SIMA's licensing requirement with the scope of steel products subject to Section 232 tariffs; to extend the SIMA system indefinitely by eliminating the regulatory provision concerning the duration of the SIMA system; and to expand eligibility for use of the low-value license for certain steel entries. Commerce will address the monitoring of aluminum imports in a separate rulemaking.

DATES:

To be assured of consideration, written comments must be received no later than April 29, 2020.

ADDRESSES:

Submit comments through the Federal eRulemaking Portal at http://www.Regulations.gov, Docket No. ITA-2019-0008. Comments may also be submitted by mail or hand delivery/courier, addressed to Jeffrey I. Kessler, Assistant Secretary for Enforcement and Compliance, Room 1870, Department of Commerce, 1401 Constitution Ave. NW, Washington, DC 20230.

Commerce will consider all comments received before the close of the comment period. All comments responding to this document will be a matter of public record and will generally be available on the Federal eRulemaking Portal at http://www.Regulations.gov. Commerce will not accept comments accompanied by a request that part or all of the material be treated confidentially because of its business proprietary nature or for any other reason. Therefore, do not submit confidential business information or otherwise sensitive or protected information.

Any questions concerning the process for submitting comments should be submitted to Enforcement and Compliance (E&C) Communications office at (202) 482-0063 or ECCommunications@trade.gov.

FOR FURTHER INFORMATION CONTACT:

Julie Al-Saadawi at (202) 482-1930, Brandon Custard (202) 482-1823, or Jessica Link at (202) 482-1411.

SUPPLEMENTARY INFORMATION:

Background

The SIMA System

The purpose of the SIMA system is to provide steel producers, steel consumers, importers, and the general public with accurate and timely information on anticipated imports of certain steel products into the United States. Steel import licenses, issued through the online SIMA licensing system, are required by U.S. Customs and Border Protection (CBP) for filing entry summary documentation for imports of certain steel mill products into the United States.^[1] Through the monitoring tool, certain import data collected from the licenses are aggregated weekly and reported on the publicly available SIMA system website, https://enforcement.trade.gov/​steel/​license/​. This tool provides valuable data regarding certain steel mill imports into the United States as early as possible and makes such data available to the public approximately five weeks in advance of official U.S. import statistics compiled by the U.S. Census Bureau.

The SIMA system has operated under its current authority since March 11, 2005. Prior to that date, authority for steel import licensing and monitoring was derived from Presidential Proclamation 7529 of March 5, 2002 and accompanying memorandum.^[2] Pursuant to sections 201 and 203 of the 1974 Trade Act, as amended (19 U.S.C. 2251 and 2253), Proclamation 7529 implemented safeguard measures with respect to certain imported steel products, placing temporary tariffs on these steel imports and requiring the Secretary of Commerce to establish a system of import licensing to facilitate the monitoring of these steel imports. Accordingly, on July 18, 2002, Commerce issued and requested public comment on a proposed rule to establish a steel licensing system requiring all importers of the covered steel products to obtain a license from Commerce prior to completing CBP entry summary documentation.^[3] This monitoring tool ensured that the effectiveness of the border measure was not undermined by large quantities of imports originating from countries that were excluded from the tariffs. On December 31, 2002, Commerce issued a final rule implementing the Steel Import Licensing and Surge Monitoring program, which was codified at 19 CFR part 360.^[4]

Subsequently, Presidential Proclamation 7741 of December 4, 2003 terminated the steel safeguard measures, but directed the Secretary of Commerce to continue the monitoring system until the earlier of March 21, 2005, or such time as the Secretary of Commerce established a replacement program.^[5] On December 9, 2003, Commerce published a notice stating that the system would continue in effect as described in Proclamation 7741 until March 21, 2005.^[6] On August 25, 2004, Commerce published an advanced notice of proposed rulemaking soliciting comments on whether to continue the SIMA system (formerly known as the Steel Import Licensing and Surge Monitoring System), beyond March 21, 2005 and whether the system should be modified.^[7]

Commerce determined that there continued to be a need to collect import data, and published an interim final rule revising 19 CFR part 360 to extend the SIMA system for four years under the authority of the Census Act of 1930, as amended (13 U.S.C. 301(a) and 302), and expand the coverage of the system to include all basic steel mill products, while also removing certain downstream steel products.^[8] Commerce also provided an exception to the requirement for obtaining a unique license for each CBP entry where the total value of the covered steel portion of an entry was less than $250 (i.e., the low-value license).^[9] Commerce explained that the purpose of the SIMA system is to provide statistical data on steel imports entering the United States seven weeks earlier than is otherwise publicly available, and that the data collected on the licenses are made available to the public in an aggregated form weekly after Commerce review.^[10]

On December 5, 2005, Commerce published a final rule that did not make any changes to the interim final rule.^[11] However, in light of certain comments, Commerce agreed to a discrete change to the SIMA system via its website that did not require regulatory changes.^[12]

The SIMA system was subsequently extended several times through the rulemaking process, with the most recent extension of the SIMA system continuing until March 21, 2022.^[13] Therefore, unless further extended, the SIMA system is set to expire on March 21, 2022.^[14]

Section 232 Tariffs on Steel Imports

Presidential Proclamation 9705 of March 8, 2018, which was issued pursuant to Section 232 of the Trade Expansion Act of 1962, as amended, adjusted imports of steel articles by imposing a 25 percent ad valorem tariff on certain steel articles imported from most countries, to address the threatened impairment to the national security of the United States by such imports from those countries.^[15] Presidential Proclamation 9711 of March 22, 2018 amended certain aspects of Presidential Proclamation 9705, providing for duty exemptions for certain countries, including Canada and Mexico, which were to expire on May 1, 2018 unless agreement was reached with respect to a satisfactory alternative means to address the threatened impairment to the national security of the United States by steel imports from those countries.^[16] Presidential Proclamation 9740 of April 30, 2018 further amended certain aspects of the prior proclamations, continuing the duty exemptions for certain countries, including Canada and Mexico, until June 1, 2018.^[17] Presidential Proclamation 9759 of May 31, 2018 further amended certain aspects of the prior proclamations, continuing the duty exemptions for certain countries, which did not include Canada and Mexico, on a long-term basis.^[18] Presidential Proclamation 9772 of August 10, 2018, Presidential Proclamation 9777 of August 29, 2018, and Presidential Proclamation 9886 of May 16, 2019 further amended certain aspects of prior proclamations.^[19]

As a result of the aforementioned proclamations, effective June 1, 2018, all steel imports from Canada and Mexico were subject to Section 232 tariffs. However, Presidential Proclamation 9705 provided that any country with which the United States has a security relationship is welcome to discuss alternative ways to address the threatened impairment of the national security caused by imports of steel articles from that country. Subsequently, on May 17, 2019, the United States announced that such discussions had yielded joint understandings with Canada and Mexico, respectively, to remove the Section 232 tariffs for steel imports from those countries.^[20] As part of the joint understandings, the United States and Canada, and the United States and Mexico, agreed to implement effective measures to prevent the transshipment of steel products made outside of the United States, Canada, and Mexico, among other commitments. Additionally, the joint understandings allow for the countries to establish an agreed-upon process for monitoring steel trade between them, and, further, in monitoring for surges, to treat products made with steel that is melted and poured in North America separately from products that are not. In light of the joint understandings, Presidential Proclamation 9894 of May 19, 2019 provided that a satisfactory alternative means had been agreed upon and, effective May 21, 2019, steel imports from Canada and Mexico would no longer be subject to Section 232 tariffs.^[21]

Explanation of Proposed Rule

Commerce proposes to amend the SIMA system as follows.

First, as discussed above, the joint understandings provide that, in monitoring for surges of steel imports, the United States, Canada, and Mexico may treat products made with steel that is melted and poured in North America separately from products that are not. As discussed further above, the SIMA system is a critical trade monitoring program which collects timely detailed statistics on anticipated steel imports and provides stakeholders with information about import trends in this sector in advance of official U.S. import statistics. Under the system, importers of certain steel mill products must apply for a steel import license through the online SIMA licensing system, which requires the name and address of the importer, type of steel product, and country of origin of the steel imports, along with additional information. This information is detailed at 19 CFR 360.103(c). These licenses are required by CBP for filing entry summary documentation for imports of certain steel mill products into the United States. The SIMA system currently does not collect information with regard to the country where the steel used in the manufacture of the imported steel product was melted and poured. Therefore, consistent with the joint understandings, and to enhance U.S. Government monitoring and analysis of steel imports more generally, Commerce proposes to amend the SIMA system to require identification of the country where the steel is melted and poured as an additional requirement to obtaining an import license. Commerce proposes to effectuate these changes by amending 19 CFR 360.103(c) as well as the SIMA import license form.

Additionally, as discussed above, pursuant to 19 CFR 360.104 certain aggregate information obtained from the steel licenses are reported on the SIMA system website on a monthly basis, which are refreshed each week. Commerce proposes to make minor amendments to 19 CFR 360.104(a) to align more closely with Commerce's practice of replacing outdated license data with official U.S. import statistics compiled by the U.S. Census Bureau, where available, as well as to clarify that certain import data are reported by general steel mill “product groups” (i.e., flat, long, pipe and tube, semi-finished, and stainless steel products), which are further broken down by specific steel mill “product categories” (currently reflecting 52 types of steel products).

Moreover, consistent with the joint understandings, Commerce also proposes to amend 19 CFR 360.104(a) to identify that Commerce will report aggregate data obtained from the steel licenses on a monthly basis by country of origin, steel mill product group, and the country where the steel used in the manufacture of the imported product is melted and poured. In reporting such aggregate data, Commerce will include import quantity (metric tons), import CBP value (U.S. $), and average unit value ($/metric ton). We find that this level of detail offers the greatest level of data dissemination to the public that does not contribute to an increased risk of inadvertent disclosure of proprietary data. Commerce is not otherwise altering 19 CFR 360.104(a). Consistent with the current regulatory provision, the provision of aggregate data may be revisited over concerns regarding the possible release of proprietary data.

Second, Commerce also proposes to expand the scope of steel products covered by the SIMA system so that it covers all steel products subject to Section 232 tariffs (see Appendix I of this document for a list of these additional products). This will allow for more consistent and complete monitoring for surges and transshipment.^[22] Commerce proposes to amend 19 CFR 360.101(a) to indicate that the products covered by the SIMA system will be listed on the SIMA website and identified by HTS codes. The HTS codes, which are maintained by the U.S. International Trade Commission, may be updated periodically to reflect revisions to the codes.

Third, Commerce proposes to extend the SIMA system indefinitely by eliminating the regulatory provision, 19 CFR 360.105, which makes the SIMA system temporary. In the past, Commerce has considered whether to extend the SIMA system every four years, which is done under the authority of the Census Act of 1930, as amended (13 U.S.C. 301(a) and 302).^[23] Although the SIMA system is not set to expire until March 21, 2022, Commerce proposes to extend the system indefinitely given that the program is a well-established and important trade monitoring tool that has strong support from the trade community over its near-twenty year history.^[24] Therefore, Commerce proposes to eliminate 19 CFR 360.105 as indicated below, and make conforming amendments to 19 CFR 360.104(a).

Fourth, Commerce proposes to amend 19 CFR 360.103(f) to expand eligibility for use of the low-value license for certain steel entries from a $250 value to a $5,000 value to align with current practice. The low-value license is an optional multiple-use license that allows a company to apply once for a steel import license and use it on multiple occasions for entries of covered steel products with a limited customs value. A re-usable low-value license number can be obtained with respect to an entry for which the portion covered by the steel licensing requirement is less than the limited amount and may be used by those companies listed on the license. The low-value license is processed on the SIMA website in the same manner as a typical steel license. Commerce's low-value license application form provides that such a license may apply to covered steel products with a value of $5,000 or less per entry. Accordingly, Commerce proposes to make conforming edits to 19 CFR 360.103(f) to reflect this requirement.

Classifications

Executive Order 12866

The Office of Management and Budget (OMB) has determined that this proposed rule is significant for purposes of Executive Order 12866.

Executive Order 13771

This proposed rule is not expected to be subject to the requirements of Executive Order 13771 because this proposed rule is expected to result in no more than de minimis costs.

Paperwork Reduction Act

This proposed rule contains collection of information requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35 (PRA). Prior to this proposed rule, the existing collection of information requirements under the SIMA system and related license form have been approved by OMB (Control No.: 0625-0245; Expiration Date: 01/31/2021). Public reporting for this existing collection of information is estimated to be less than 10 minutes per response, including the time for reviewing instructions, and completing and reviewing the collection of information.

As described above, there are two revisions in this proposed rule which will have an impact on the public reporting for this collection of information. First, in addition to existing data fields on the license form (i.e., the name and address of the importer, type of steel product, country of origin of the steel imports, along with additional information), license applicants will need to identify the country where steel is melted and poured. Commerce does not anticipate any additional burden on the public because of the extra data field. This is based on the assumption that the importer will have access to fulsome information about the product being imported, including the mill test certification (which would indicate country of melt and pour). Because the mill test certification is not currently required by CBP for entry purposes or required by Commerce for antidumping and countervailing duty purposes, Commerce cannot guarantee each importer would have a copy of the mill test certification. However, Commerce expects that the mill test certification would be included with the standard sales documentation for steel mill imports and therefore would be readily available to the importer.

Second, the licensing requirement will be expanded to apply to all steel products, including 8 additional HTS categories in addition to the approximately 780 HTS categories currently covered by the SIMA system. We estimate conservatively that this will generate a public burden of approximately 317 hours per year. This is based on the fact that in 2018, the number of unique entry summaries for the 8 HTS categories was less than 1900, and it takes less than 10 minutes to fill out a license application.

The regulatory text change to expand eligibility for use of the low-value license for certain steel entries from a $250 value to a $5,000 value will not have an impact on the public reporting for this collection of information. Commerce has already included its current practice of the expanded eligibility in its prior PRA estimates.

Therefore, the Paperwork Reduction Act Data for the existing collection of information requirements is unchanged in this proposed rule.

Paperwork Reduction Act Data:

OMB Control Number: 0625-0245.

ITA Number: ITA-4141P.

Type of Review: Regular Submission.

Affected Public: Business or other for-profit.

Estimated Number of Registered Users: 3,500 for regular licenses, including 250 for low-value licenses.

Estimated Time per Response: Less than 10 minutes.

Estimated Total Annual Burden Hours: 93,195 hours, including 21 hours burden for low-value licenses.

Estimated Total Annual Costs: $0.00.

Notwithstanding any other provision of law, no person is required to respond to nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the

requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB Control Number.

Request for Comments: Comments are invited on (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and costs) of the proposed collection information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or forms of information technology.

Submit comments as instructed in the ADDRESSES section above; or to OMB by email to OIRA_submission@omb.eop.gov, or by fax to 202-395-5806. All comments on the proposed revisions to the information collection requirements will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.

Executive Order 13132

This proposed rule does not contain policies with federalism implications as that term is defined in section 1(a) of Executive Order 13132, dated August 4, 1999 (64 FR 43255 (August 10, 1999)).

Regulatory Flexibility Act

The Chief Counsel for Regulation has certified to the Chief Counsel for Advocacy of the Small Business Administration under the provisions of the Regulatory Flexibility Act, 5 U.S.C. 605(b), that the proposed rule if adopted, would not have a significant economic impact on a substantial number of small entities as that term is defined in the Regulatory Flexibility Act, 5 U.S.C. 601 et seq (RFA). A summary of the factual basis for this certification is below.

This proposed rule will not have a significant economic impact on a substantial number of small entities. This rule, if implemented, would: (1) Require import license applicants to additionally identify the country where steel used in the manufacture of the imported steel product was melted and poured; (2) harmonize the scope of SIMA's licensing requirement with the scope of steel products subject to Section 232 tariffs; (3) indefinitely extend the SIMA system; and (4) to modify the regulations regarding low value licenses to align with our current practice. The entities that would be impacted by this rule are importers and brokerage companies that import steel mill products. These entities are already required to provide information, including the name and address of the importer, type of steel product, and country of origin of the steel imports, along with additional information, to obtain steel import licenses through the online SIMA licensing system for filing entry summary documentation required by CBP for U.S. imports of steel mill products. Based on statistics derived from current license applications, of the approximately 562,857 licenses issued each year, Commerce estimates that less than two percent of the license applications would be filed by importers and brokerage companies considered to be small entities.

Based on the current usage of the SIMA system, Commerce does not anticipate that these four changes to the SIMA system required under this proposed rule will have a significant economic impact. Companies are already familiar with the licensing of certain steel products under the current system. In most cases, brokerage companies will apply for the license on behalf of the steel importers. Most brokerage companies that are currently involved in filing documentation for importing goods into the United States are accustomed to CBP's automated entry filing systems. Today, CBP filings are handled electronically. Therefore, the proposed modifications to the license application should not be a significant obstacle to any firm. Should an importer or brokerage company need to register for an account or apply for a license non-electronically, a fax/phone option is available at Commerce during regular business hours. There is no cost to register for a company-specific steel license account and no cost to file for the license. Each license form is expected to take less than 10 minutes to complete and collects much of the same information required on the CBP entry summary documentation. The steel import license is the only additional U.S. entry requirement that the importers or their representatives must fulfill in order to import each covered steel product shipment under 19 CFR part 360.

Commerce does not charge fees for licenses. Commerce estimates that the likely aggregate license costs incurred by small entities in terms of the time to apply for licenses as a result of this proposed rule would be less than two percent, or an estimated $37,523.00, of the estimated total $1,876,190 cost to all steel importers to process the on-line automatic licenses. These calculations are based on an hourly pay rate of $20.00 multiplied by the estimated 93,195 total annual burden hours. The vast majority of licenses are for large companies. The average cost of a single license is less than $3.33 based on the estimate that one license requires less than 10 minutes of the filer's time.

Therefore, the proposed rule would not have a significant economic impact on a substantial number of small business entities. For this reason, an Initial Regulatory Flexibility Analysis is not required and one has not been prepared.

List of Subjects in 19 CFR Part 360

• Administrative Practice and Procedure
• Business and Industry
• Imports
• Reporting and Recordkeeping Requirements
• Steel

For the reasons stated in the preamble, the Department of Commerce proposes to amend 19 CFR part 360 as follows:

PART 360—STEEL IMPORT MONITORING AND ANALYSIS SYSTEM

1. The authority citation for 19 CFR part 360 continues to read as follows:

Authority: 13 U.S.C. 301(a) and 302.

2. Amend § 360.101 by revising paragraph (a)(1) to read as follows:

3. Amend § 360.103 by revising paragraphs (c)(1) and (f) to read as follows:

4. Amend § 360.104 by revising paragraph (a) to read as follows:

5. Section 360.105 is removed and reserved.

Note:

The following appendix will not appear in the Code of Federal Regulations.

Footnotes