Commerce IG Says BIS Has 'Created Perception of Undue Influence' in Section 232 Exclusions

The Inspector General at the Commerce Department criticized some actions at the Bureau of Industry and Security in granting or denying Section 232 exclusions from steel tariffs and quotas and from aluminum tariffs. The memo, published Oct. 28, said that department officials and interested parties had conversations that were not part of the official record of requests or objections, and "following some of these off-record communications, Department officials took subsequent action consistent with such communications, giving the appearance that the Section 232 exclusion request review process is not transparent and that decisions are not rendered based on evidence contained in the record."

The IG also said that the Bureau of Industry and Security changed an internal criterion used in the review process at the request of an objector, and that also creates "the perception of undue influence."

The IG recommended that all decisions should be final once they are posted, unless the rules are amended to allow for appeals; that all discussions be documented and email conversations be at commerce.gov addresses, so that they are preserved for the official record; and that there should be a formal process for modifying internal criteria.

Rep. Jackie Walorski, R-Ind., who has made the Section 232 exclusion process a signature issue, told International Trade Today in a hallway interview that she feels vindicated now that the IG substantiated some of her staff's complaints about the process. She said she was not surprised that at least one party seems to have lobbied and then gotten a decision reversed. She said as their data showed inconsistencies in how stated criteria were applied, her office engaged more fiercely than they had before. She said she was pleased the IG backed up what they had been seeing. "I'm not pleased it was happening, it's a bad thing, should not be happening," she added. Although Walorski's power is limited because she is in the minority in the House, she noted she has put together bipartisan letters on the issue. "When it comes to trade, it comes to tariffs, this is not a Republican or a Democratic issue, this is an American issue that is killing companies."

Walorski previously said the Commerce Department responded dismissively to her office's complaint that they were not being open (see 1910290036), and Secretary Wilbur Ross said at a public forum recently that he is proud of how Commerce has handled exclusions. "I think when the message is delivered from the IG, and not a member of Congress, hopefully they'll take it more seriously," Walorski said.

A spokesman for the Department of Commerce said: "The Department ... formalized its guidance regarding ex parte communications. Moreover, the Department plans to further improve transparency with industry in order to provide a level playing field for domestic producers. The Department takes this alert seriously and looks forward to working with the Office of Inspector General to gain additional information about the underpinnings of their findings.”

A spokesman for Senate Finance Committee Chairman Chuck Grassley, R-Iowa, said, "More information is needed regarding these specific conclusions, but any indication that the 232 exclusion process is lacking transparency or objectivity would be highly concerning and deserve immediate attention."

Finance Committee Ranking Member Sen. Ron Wyden, D-Ore., said, "The Inspector General’s report reveals that Commerce wasn’t just incompetent, but also willfully flouted due process to benefit certain interests over others. I will be following up on this report. If administration officials are using this process to reward political cronies, someone needs to be held accountable.”