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Lawmakers Seek to Limit President’s Authority to Restrict Imports

Monday, February 04, 2019
Sandler, Travis & Rosenberg Trade Report

The Congressional Trade Authority Act (S. 287 and H.R. 940), introduced in the House and Senate Jan. 31, would limit the president’s authority to restrict imports on national security grounds under Section 232 of the Trade Expansion Act of 1962.

Currently the Department of Commerce conducts Section 232 investigations, with non-binding input from the secretary of defense. If the DOC concludes that imports of certain goods threaten national security, the president may proclaim trade actions (tariffs, quotas, etc.) to adjust those imports.

A fact sheet on the CTAA states that Section 232 actions have historically been narrow in scope, targeting a few product lines and/or imports from specific countries such as Iran and Libya. In addition, prior to 2018, the last time a president imposed trade actions under Section 232 was in 1983.

However, the Trump administration has used Section 232 to impose 25 percent tariffs on foreign steel and 10 percent tariffs on imported aluminum and to threaten tariffs on auto imports. These actions “have been economically disruptive,” the fact sheet states, causing U.S. importers to pay additional taxes on roughly $23 billion in steel imports and $17 billion in aluminum imports and harming downstream consumers by increasing domestic prices for these products. The tariffs have also damaged U.S. relationships with allies such as Mexico, Canada, Japan, the European Union, and India, many of which have retaliated with their own tariffs against U.S. exports.

In response, the CTAA would limit future Section 232 investigations to goods with applications in military equipment, energy resources, and/or critical infrastructure that also constitute a substantial cause of a threat to impair U.S. national security. In addition, the bill would transfer investigative authority from the DOC, which since 2001 “has used a broad definition of national security to assess imports, explicitly including goods ‘beyond those necessary to satisfy national defense requirements,’” to the Defense Department. The DOC would still determine the appropriate remedy in the event of a positive finding, but remedies would have to be specifically approved by Congress to take effect. Finally, the bill provides for an exclusion process for future Section 232 restrictions that would be administered by the International Trade Commission.

Other provisions of the legislation would (a) repeal the existing Section 232 tariffs on steel and aluminum, and restrictions on automobiles and auto parts if imposed, if Congress does not pass an approval resolution within 75 days after the CTAA’s enactment and (b) require the ITC to report to Congress on the industry-specific and downstream effects of any Section 232 actions taken within the past four years as well as any future Section 232 actions.

The CTAA has already received support from a coalition of business and consumer groups, which said the measure’s “commonsense reforms would reduce the misuse of alleged national security threats for costly, protectionist ends.” The bill would also allow Congress to reclaim its constitutional authority to impose tariffs and regulate foreign commerce “to prevent damaging trade policies that could hurt our economy, farmers, American workers, and consumers.”

The legislation is also generating interest among lawmakers. A total of 11 senators and 18 representatives, both Republicans and Democrats, have signed on as co-sponsors to date. However, Sen. Pat Toomey, R-Pa., said there needs to be “much broader support” before the bill is likely to be brought up for a vote. There is some speculation that if the bill does not pass on its own it could be attached to the National Defense Authorization Act, which has been enacted each year for nearly six decades.

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