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03 August 2018
On 18 July 2018 Secretary of Commerce Wilbur Ross announced the initiation of a Section 232 investigation into the impact of uranium imports on US national security. As required under Section 232, Ross sent a formal notice to Secretary of Defence James Mattis informing him of the investigation and that input from the Department of Defence would be needed. On 25 July 2018 the US Department of Commerce Bureau of Industry and Security published a notice in the Federal Register seeking the public's comments. The Department of Commerce will have 270 days to submit a report to President Trump on whether uranium imports threaten to impair national security. The president will then have 90 days to determine what action should be taken to address any adverse effects of the imports.
This action is the fourth national security investigation under Section 232 of the Trade Expansion Act 1962 initiated by the Department of Commerce in April 2017. The previous investigations focused on the national security effects of imports of steel, aluminium and automotive products (vehicles and parts) (for further details, see "Section 232 adjustments on US steel and aluminium imports").
In a recent statement, 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 that the Department of 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 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 the Department of Commerce will consult with the Department of Defence 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 others have negatively affected 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:
The two petitioning companies have requested a remedy with two components:
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 1 January 2018 be US-sourced.
The Department of Commerce will have 270 days to submit a report to 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.
The scope of this investigation is still unknown, as is how (or if) the Department of Commerce will introduce an exclusion process, such as a product exclusion, country exclusion or other use-based exclusion.
This latest action follows similar investigations on aluminium and steel products and a pending investigation into automotive products. In the aluminium and steel Section 232 investigations, the administration concluded that there was a need for double-digit tariffs and earlier this year began imposing:
In regard to the automotive investigation, a public hearing was held on 18 July 2018 in Washington and a decision on whether and when to impose auto-related tariffs is expected soon.
In each of the first two previous tariff impositions (steel and aluminium), the Department of Commerce provided a public comment period and a product exclusion request process. In the steel Section 232 investigation, the administration also adopted a quota allocation approach for certain trading partners which agreed to quota restraints in lieu of duties (eg, South Korea).
Companies are urged to be strategic in considering a request for exclusion, as there are several factors to be considered apart from the data required.
For further information on this topic please contact Matthew Clark, Teresa Polino, Diana Quaia or Birgit Matthiesen at Arent Fox LLP by telephone (+1 202 857 6000) or email (email@example.com, firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Arent Fox LLP website can be accessed at www.arentfox.com.
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