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Trump Administration Launches National Security Trade Investigation on Uranium

On July 18, 2018, Secretary of Commerce Wilbur Ross announced the initiation of a Section 232 investigation into the impact of uranium imports on America’s national security.

As required under Section 232, Ross sent a formal notice to the Secretary of Defense, James Mattis, informing him of the investigation and that input from the Department of Defense would be needed.

This action is the fourth national security investigation under Section 232 of the Trade Expansion Act of 1962 initiated by Commerce since April 2017. The previous investigations focused on the national security effects of imports of steel, aluminum, and automotive products (vehicles and parts).

In a statement yesterday, Secretary Ross stated that "our production of uranium, necessary for military and electric power, has dropped from 49 percent of our consumption to 5 percent” and stated further that Commerce “will conduct a thorough, fair and transparent review to determine whether uranium imports threaten to impair the national security.

Little information is available at this time but the letter from Ross makes clear that the White House is asking Secretary Mattis for information on the Department’s need for uranium in its national security mandate. As part of a Section 232 investigation, it is expected that Commerce will consult with the Department of Defense regarding methodological and policy questions raised in the investigation and may seek information and advice from other government agencies.

Unlike the three previous Section 232 investigations, this investigation was initiated by Ross in response to a petition filed in January 2018 by two of the three active uranium mining operations in the United States, Ur-Energy and Energy Fuels Resources Inc. The two petitioning companies have alleged that imports of uranium from state-sponsored companies in Russia, Kazakhstan, Uzbekistan, China and other countries have negatively impacted the United States’ ability to produce uranium products. Major import suppliers of uranium to the United States include Kazakhstan, Canada, and Russia.

The Department of Commerce’s Bureau of Industry and Security has been tasked with the investigation, including presumably managing a public comment process, a possible public hearing on the matter and a final recommendation to the White House whether or not to impose new tariffs, a quota arrangement, or other actions to limit imports With respect to remedies, the two petitioning companies have requested a remedy with two components: (1) a quota that would reserve a limited portion of the US market (25 percent) for US uranium and (2) a Buy America policy for US government agencies that utilize uranium. Petitioners cite a “Buy American and Hire American” executive order issued by President Trump in April 2017, which, they argue, supports their proposed remedy. The proposed remedy would require that all uranium and conversion services purchased by the Government, for any purpose, that are not subject to existing contracts as of January 1, 2018, be US- sourced.

Commerce will have 270 days to submit a report to President Trump on whether uranium imports threaten to impair national security. The President then has 90 days to determine what action should be taken to address any adverse effects of the imports.

We do not know yet the scope of this investigation and how (or if) Commerce will introduce an exclusion process such as a product exclusion, country exclusion, or other “use” exclusion.

This latest action follows similar investigations on aluminum and steel products and a pending investigation on automotive products. In the aluminum and steel 232 investigations, the Administration concluded the need for double digit tariffs and earlier this year began imposing 10 percent tariffs on certain aluminum products and 25percent tariffs on certain steel imports. In regard to the automotive investigation, a public hearing was held on July 18, 2018 in Washington and a decision on whether and when to impose auto related tariffs is expected later this month.

Readers of our alerts will know that in each of the first two previous tariff impositions (steel and aluminum), Commerce provided a public comment period as well as a product exclusion request process. In the steel 232 investigation, the Administration also adopted a quota allocation approach for certain trading partners who agreed to quota restraints in lieu of duties (e.g., South Korea).

In earlier actions, the team at Arent Fox LLP worked with company executives to submit timely and well-argued product exclusion requests. We have also developed a program for analyzing the products on these various tariff impositions to determine the impact from these tariffs on the company’s production, its supply base and its customer needs. In addition, we assist companies in developing strategic duty mitigation alternatives.

We are urging companies to be strategic in considering a request for exclusion as there are several factors to be considered apart from the data required. To receive a tariff analysis of your company’s exposure, please contact any of the authors of this Alert or the Arent Fox professional who usually handles your matters.

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