The U.S. International Trade Commission (USITC) has released its report assessing the likely impact of the United States-Mexico-Canada Agreement (USMCA) on the U.S. economy as a whole and on specific industry sectors and the interests of U.S. consumers. The report, United States-Mexico-Canada Agreement: Likely Impact on the U.S. Economy and Specific Industry Sectors (Investigation No. TPA-105-003, USITC Publication 4889, April 2019), was prepared at the request of the U.S. Trade Representative (USTR) and required by the Bipartisan Congressional Trade Priorities and Accountability Act of 2015.

In preparing its report, the USITC investigated the USMCA’s expected impact on the U.S. gross domestic product; exports and imports; aggregate employment and employment opportunities; and the production, employment and competitive position of industries likely to be significantly affected by the agreement. On its website, the USITC listed these main findings:

  • The elements of the USMCA that would have the most significant effects on the U.S. economy are: (1) provisions that reduce policy uncertainty about digital trade; and (2) certain new rules of origin applicable to the automotive sector. The report also notes that for many industry sectors, particularly services industries, the USMCA’s new international data transfer provisions should be of interest, including provisions that largely prohibit forced localization of computing facilities and restrictions on cross-border data flows.
  • Because NAFTA has already eliminated duties on most qualifying goods and significantly reduced nontariff measures, the USMCA’s emphasis is on reducing remaining nontariff measures on trade and the U.S. economy; addressing other issues that affect trade, such as workers’ rights; harmonizing regulations from country to country; and deterring certain potential future trade and investment barriers.
  • The USMCA would strengthen and add complexity to the rules of origin requirements in the automotive sector by increasing regional value content (RVC) requirements. The USMCA’s requirements on this matter are estimated to increase U.S. production of automotive parts and employment in the sector but also to lead to a small increase in the prices and small decrease in the consumption of vehicles in the United States.
  • The USMCA would establish commitments to open flows of data, which would positively impact a wide range of industries that rely on international data transfers. The agreement would reduce the scope of the investor-state dispute settlement (ISDS) mechanism, a change that, based on modeling results, would reduce U.S. investment in Mexico and would lead to a small increase in U.S. investment at home and output in the manufacturing and mining sectors.
  • Labor standards and rights would be strengthened, if enforced under the USMCA, including those related to collective bargaining in Mexico, which would promote higher wages and better labor conditions in that country.
  • New intellectual property rights provisions would increase protections for U.S. firms that rely on intellectual property.

Overall, based upon quantitative and qualitative model estimates, the USMCA, if fully implemented and enforced, would have a positive impact on U.S. real GDP and employment. The report concludes that the USMCA would raise U.S. real GDP by $68.2 billion (0.35 percent) and U.S. employment by 176,000 jobs (0.12 percent), which would likely have a positive impact on U.S. trade, both with USMCA partners and with the rest of the world. The USITC reports that U.S. exports to Canada and Mexico would likely increase by $19.1 billion (5.9 percent) and $14.2 billion (6.7 percent), respectively, while U.S. imports from Canada and Mexico would increase by $19.1 billion (4.8 percent) and $12.4 billion (3.8 percent), respectively. The model estimates relied upon by the USITC for conducting the analysis and preparing the report indicate that the USMCA would likely have a positive impact on all broad industry sectors within the U.S. economy, with manufacturing experiencing the largest percentage gains in output, exports, wages and employment, while in absolute terms, services would experience the largest gains in output and employment.

The USITC is an independent, quasi-judicial federal agency with broad investigative responsibilities on matters of trade, including, upon request by Congress or the executive branch, the task of gathering and reporting on trade data and other trade policy-related information.

The Office of the U.S. Trade Representative has released another list of products that have been granted exclusions from the Section 301 tariffs on imported goods from China, granting exemptions in response to 348 separate exclusion requests for products that meet 21 specially prepared product descriptions. The exclusions cover a wide range of products, including certain pumps, roller machines, water oxidizers/chlorinators, ratchet winches, elevators and conveyors, goods used on forklifts and other work trucks, parts of drill sharpening machines, outer shells, parts of mechanical awnings and shades, parts of shredders, steering wheels for watercrafts, pressure regulators, pipe brackets for air brake control valves, push pins and C-poles for solenoid valves, ball bearings, inductor baseplates, parts of soldering irons and soldering machines, motor vehicle gear shift switch assemblies, pressure switches for heat pumps and air-conditioning condensers, instruments to measure or check voltage or electrical connections.

These exclusions will apply to any product meeting the description in the annex of the notice, regardless of whether the importer filed an exclusion request. The scope of each exclusion is governed by the scope of the 10-digit Harmonized Tariff Schedule of the United States (HTSUS) headings and product descriptions in the annex; they are not governed by the product description set out in any particular exclusion request. These exclusions apply as of July 6, 2018, which was the implementation date for the tariffs implemented by the president toward imported Chinese products worth $34 billion, and will extend for one year from the date of this notice in the Federal Register (to April 18, 2020). U.S. Customs and Border Protection (CBP) will issue instructions on entry guidance and implementation.

In a series of actions on April 17, the Trump administration announced the implementation of additional sanctions on the “Troika of Tyranny” in the Western Hemisphere (see Trump and Trade Update of November 16, 2018). President Donald J. Trump and his National Security Advisor John Bolton have long held that Cuba, Venezuela and Nicaragua are the cause of great human suffering and the impetus of enormous regional instability, and have increasingly focused the administration’s attention on these three countries. In announcing these additional sanctions, Trump said in a brief press statement that “When Venezuela is free, and Cuba is free, and Nicaragua is free, this will become the first free hemisphere in all of human history.”

In remarks to the press, Secretary of State Mike Pompeo announced that under Title III of the Cuban Liberty and Democratic Solidarity Act (also known as Libertad), U.S. citizens who had their property confiscated by the Castro regime will now be able to file suit against those who traffic in such properties, effective May 2, 2019. While this provision of Libertad has been in place since 1996, all previous presidential administrations had suspended this provision. Pompeo stated that “Implementing Title III in full means a chance at justice for Cuban Americans who have long sought relief for Fidel Castro and his lackeys seizing property without compensation. For the first time, claimants will be able to bring lawsuits against persons trafficking in property that was confiscated by the Cuban regime. Any person or company doing business in Cuba should heed this announcement.” He further advised that companies doing business in Cuba investigate whether they are connected “to property stolen in service of a failed communist experiment.” Assistant Secretary for Western Hemisphere Affairs Kimberly Breier took questions during this State Department briefing, which focused on the concerns of European and Canadian companies that could be affected by any such lawsuits. Canada and the European Union released a joint statement noting their “strong opposition to the extraterritorial application of unilateral Cuba-related measures that are contrary to international law.”

National Security Advisor Bolton noted in a speech that the United States would also be re-imposing limits on the amounts of money that Cuban Americans can send to relatives on the island, as well as the frequency of transactions, and ordering new restrictions on travel to Cuba by U.S. citizens.

Regarding Venezuela, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) placed the Banco Central de Venezuela (i.e., the Central Bank of Venezuela) on the Specially Designated Nationals (SDN) List, for operating in the financial sector of the Venezuelan economy. Treasury Secretary Steven Mnuchin stated that this action was being taken in order “to prevent it from being used as a tool of the illegitimate Maduro regime, which continues to plunder Venezuelan assets and exploit government institutions to enrich corrupt insiders.” As a result of this action, all property and interests in property of the bank, and any entity that is owned, directly or indirectly, 50 percent or more by the bank that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, OFAC’s regulations generally prohibit all dealings by U.S. persons that involve the Central Bank of Venezuela. OFAC did note that it has issued amendments to current Venezuela-related general licenses and issued new general licenses, “which include authorizations to ensure that U.S. persons may continue to engage in and facilitate non-commercial, personal remittances and the provision of humanitarian assistance to the people of Venezuela.”

Rounding out the Trump administration’s tightening of sanctions on the “Troika of Tyranny,” OFAC also placed Laureano Ortega Murillo, the son of Nicaraguan President Daniel Ortega and Vice President Rosario Murillo, on the SDN List, as well as Nicaraguan bank Banco Corporativo SA (BanCorp). Sigal Mandelker, Under Secretary of the Treasury for Terrorism and Financial Intelligence stated that, “Treasury is sanctioning Laureano Ortega Murillo and BanCorp for their roles in corruption and money laundering for the personal gain of the Ortega regime.”

On April 10, 2019, the Coalition for Fair Trade in Ceramic Tile (Coalition) filed petitions with the U.S. Department of Commerce (Commerce) and the U.S. International Trade Commission (Commission) seeking antidumping (ADD) and countervailing (CVD) duties on imports of ceramic tile products from the People’s Republic of China (PRC). The Coalition consists of U.S. ceramic tile producers American Wonder Porcelain, Florida Tile, Inc., Crossville, Inc., Florim USA, Dal-Tile Corporation, Landmark Ceramics, Del Conca USA, Inc. and StonePeak Ceramics (all members of the Tile Council of North America). According to the Coalition, “a surge of imports of ceramic tile from the PRC has entered the United States at aggressively low and unfair prices” and has benefited from PRC government subsidies.

Ceramic tile products are articles containing a mixture of minerals including clay (generally hydrous silicates of alumina or magnesium) that are treated to develop a fired bond. The products the Coalition seeks to include in the scope of the investigations include ceramic flooring and wall tile, countertop tile, paving tile, hearth tile, porcelain tile, mosaic cubes, finishing tile and the like, whether it is glazed or unglazed, is or is not on a backing, regardless of the water absorption coefficient by weight, regardless of the extent of vitrification, and regardless of end use, size, thickness and weight. The Coalition states that ceramic tile products enter the United States under Harmonized Tariff Schedule of the United States (HTSUS) subheadings 6907.21.10.05, 6907.21.10.11, 6907.21.10.51, 6907.21.20.00, 6907.21.30.00, 6907.21.40.00, 6907.21.90.11, 6907.21.90.51, 6907.22.10.05, 6907.22.10.11, 6907.22.10.51, 6907.22.20.00, 6907.22.30.00, 6907.22.40.00, 6907.22.90.11, 6907.22.90.51, 6907.23.10.05, 6907.23.10.11, 6907.23.10.51, 6907.23.20.00, 6907.23.30.00, 6907.23.40.00, 6907.23.90.11, 6907.23.90.51, 6907.30.10.05, 6907.30.10.11, 6907.30.10.51, 6907.30.20.00, 6907.30.30.00, 6907.30.40.00, 6907.30.90.11, 6907.30.90.51, 6907.40.10.05, 6907.40.10.11, 6907.40.10.51, 6907.40.20.00, 6907.40.30.00, 6907.40.40.00, 6907.40.90.11, 6907.40.90.51. The product may also enter the United States under HTSUS subheadings 6914.10.80.00, 6914.90.80.00, 6905.10.00.00 and 6905.90.00.50. The scope excludes ceramic bricks properly classified under HTSUS 6904.10.00.10 through 6904.90.00.00.

Products covered would also include ceramic tile produced in the PRC that undergoes minor processing in a third country before importation into the United States, as well as ceramic tile produced in the PRC that undergoes minor processing after importation into the United States. Such minor processing includes, but is not limited to, one or more of the following: beveling, cutting, trimming, staining, painting, polishing, finishing, or any other processing that would otherwise not remove the ceramic tile from the proposed scope of the investigation if performed in the PRC of the in-scope product.

According to the Coalition, ceramic tile imports from the PRC during the 2016-2018 period increased 18.6 percent while keeping a flat average unit value during that period. In providing historical context for the growth in imports from the PRC, the Coalition states that imports of ceramic tile from the PRC were less than 300 million square feet in 2009 but had risen to nearly 700 million square feet by 2018. As a result, the Coalition claims that subsidized and unfairly priced ceramic tile imports from the PRC are having significant, negative price effects causing lost sales and lost revenue to the domestic industry. The Coalition argues that the imports threaten even more harm in the absence of any relief due to the massive production capacity of PRC producers and the many export-oriented subsidy programs offered by the PRC government.

The petition lists a large number of foreign producers and exporters that shipped ceramic tile products to the United States at allegedly dumped and subsidized prices from the PRC, as well as U.S. importers of those products.

Commerce will determine by April 30, 2019, whether to formally initiate the investigations and, if Commerce does, the Commission will decide within 25 days after that whether there is a reasonable indication of existing material injury or threat of material injury to the ceramic tile domestic products industry that will require continuation of the investigations.

Thompson Hine is monitoring this matter closely. For additional information or to obtain a copy of the petitions, please contact us.

On April 9, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a $639,023,750 settlement with Standard Chartered Bank (SCB), a UK-based financial institution, over potential civil liability related to alleged violations of the now-repealed U.S. economic sanctions on Burma and Sudan and the continuing sanctions on Cuba, Iran and Syria. Separately, SCB agreed to pay $18,016,283 to settle potential liability for alleged sanctions violations involving Zimbabwe. This agreement is part of a $1.1 billion global settlement among SCB, OFAC, the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, the U.S. Department of Justice, the U.S. Attorney’s Office for the District of Columbia, the New York County District Attorney’s Office, the New York State Department of Financial Services and the UK’s Financial Conduct Authority.

The alleged violations consisted of a total of 9,335 transactions, worth $437,553,380, processed by SCB to or through the U.S. financial system from June 2009 and June 2014 involving persons from or in the sanctioned countries. A majority of the transactions involved Iran-related accounts maintained by SCB Dubai and processed to or through SCB’s branch in New York or other U.S. financial institutions. SCB also settled alleged violations that the transactions involved persons or entities included on the Specially Designated Nationals (SDN) List.

In addition to several compliance measures taken since 2012, SCB agreed to implement further procedures to guarantee that (1) its management team is committed to a culture of compliance and (2) SCB (a) conducts regular risk assessments, (b) continues to implement internal policies and procedures (internal controls) outlining its sanctions compliance program, (c) conducts regularized testing and audits, (d) provides frequent and adequate OFAC-related training and (e) submits an annual certification confirming the implementation of such measures for a period of five years. For further information see the Settlement Agreement.

SCB issued a press release accepting full responsibility for the violations, which involved “two former junior employees” who conspired with two customers’ Iranian connections to break the law. The statement notes that SCB has undergone a comprehensive and positive transformation since the conduct occurred and cooperated fully with all relevant authorities.

In recent weeks the U.S. government has taken two notable steps to further sanction and pressure the Islamic Republic of Iran. On March 26, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) took action against 25 individuals and entities by placing them on the Specially Designated Nationals (SDN) List. This list includes a network of front companies based in Iran, the United Arab Emirates and Turkey that OFAC stated has transferred over a billion dollars and euros to the Islamic Revolutionary Guard Corps (IRGC) and Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL). As a result of this action, all property and interests in property of these targets that are in the United States or in the possession or control of U.S. persons are now blocked and must be reported to OFAC. In addition, U.S. persons are now prohibited from engaging in activities that involve any property or interests in property of these blocked or designated persons. Persons that engage in certain transactions with these individuals and entities may themselves be exposed to sanctions or subject to an OFAC enforcement action. Unless an exception applies, any foreign financial institution that knowingly facilitates a significant transaction for any of these individuals or entities could be subject to secondary U.S. sanctions.

Treasury Secretary Steven Mnuchin stated, “We are targeting a vast network of front companies and individuals … to disrupt a scheme the Iranian regime has used to illicitly move more than a billion dollars in funds …. The IRGC, MODAFL, and other malign actors in Iran continue to exploit the international financial system to evade sanctions, while the regime funds terrorism and other destabilizing activities across the region.” In particular, OFAC stated that Ansar Bank used its Iran-based foreign currency arm, Ansar Exchange, and its network, to convert Iranian rials ultimately to hundreds of millions of dollars and euros. To provide this funding to Ansar Bank, MODAFL and the IRGC, Ansar Exchange relied upon a network of front companies and agents in Turkey and the UAE. OFAC provided a detailed chart describing Ansar Bank’s sanctions evasion scheme.

On April 8, 2019, the White House and Department of State announced that as of April 15, the United States will designate as a Foreign Terrorist Organization (FTO) the Islamic Revolutionary Guard Corps (IRGC) in its entirety, including the Qods Force. The FTO list includes 67 other terrorist organizations including Hizballah, Hamas, Palestinian Islamic Jihad, Kata’ib Hizballah and al-Ashtar Brigades. This designation is the first time that the United States has designated a part of another government as an FTO. According to a State Department spokesperson, the IRGC “has been directly involved in terrorist plotting; its support for terrorism is foundational and institutional, and it has killed U.S. citizens. It is also responsible for taking hostages and wrongfully detaining numerous U.S. persons, several of whom remain in captivity in Iran today.” This designation builds upon previous sanctions, including the sanctioning of more than 900 Iran-related individuals, entities, aircraft and vessels by the Trump administration for human right abuses, censorship, ballistic missile program, malign cyber activities, support to terrorism or associations with the Iranian government.

Both of these actions are intended, per the White House statement, “to increase financial pressure and raise the costs on the Iranian regime for its support of terrorist activity until it abandons its malign and outlaw behavior.”

A World Trade Organization (WTO) dispute settlement panel ruling, Russia – Measures Concerning Traffic in Transit, issued last week on a member’s use of the WTO’s so-called “national security exception” under Article XXI of the General Agreement on Tariffs and Trade (GATT) may have a significant impact on the Trump administration’s application of that exception under U.S. law, Section 232 of the Trade Expansion Act of 1962, to impose tariffs on imports worldwide. Currently, the Trump administration’s Section 232 tariffs on steel and aluminum imports are the subject of nine WTO members’ complaints. This decision is the first time that a WTO dispute settlement panel has opted to examine and adjudicate the WTO’s national security exception. Article XXI of the General Agreement on Tariffs and Trade (GATT) allows a member to take “any action which it considers necessary for the protection of its essential security interests.” This ruling can still be appealed to the WTO’s Appellate Body (AB).

In the report, the panel determined that Russia acted within the scope of Article XXI when it blocked road and rail transport from Ukraine during the countries’ border conflict, finding that Russia acted in “good faith” in its response to an “emergency” situation that was within the parameters of Article XXI and that allowed for the imposition of trade restrictions. The panel rejected Russia’s argument that a WTO member can unilaterally determine what constitutes “national security.”

In its third-party submissions for this proceeding, the U.S. government argued that the national security exception is entirely “self-judging” and that the WTO lacks jurisdiction to conduct that analysis. The panel found, however, that the WTO has jurisdiction to determine whether a WTO member’s use of the national security exception satisfies the requirements of Article XXI of the GATT and to analyze the parameters of the exception. The panel found that an action is within the scope of the exception if it satisfies any of the requirements in the enumerated subparagraphs of Article XXI(b).

In its analysis, the panel provided, “It would be entirely contrary to the security and predictability of the multilateral trading system established by the GATT 1994 and the WTO Agreements, including the concessions that allow for departures from obligations in specific circumstances, to interpret Article XXI as an outright potestative condition, subjecting the existence of a member’s GATT and WTO obligations to a mere expression of the unilateral will of that member,” and “for {an} action to fall within the scope of Article XXI(b), it must objectively be found to meet the requirements in one of the enumerated subparagraphs of that provision.”

The panel’s interpretation of the national security exception may have a major impact on the ongoing WTO challenges to the Trump administration’s Section 232 tariffs on steel and aluminum imports. Although the panel ultimately found that the Russia-Ukraine conflict satisfied certain Article XXI criteria, it remains to be seen how a new panel will view the Trump administration’s decision to consider steel and aluminum imports a national security threat.

The Office of the U.S. Trade Representative (USTR) has released its annual National Trade Estimate Report on Foreign Trade Barriers that addresses the status of foreign trade and investment barriers to U.S. exports around the world. This report is the U.S. government’s major annual report on the barriers to trade, investment and services that U.S. exporters and other businesses encounter around the world. It covers 65 countries, customs territories and regional associations, including each U.S. free trade agreement partner and all of the 50 largest export markets for U.S. goods.

The report classifies foreign trade barriers in 11 categories, covering “government-imposed measures and policies that restrict, prevent, or impede the international exchange of goods and services, unduly hamper U.S. foreign direct investment or U.S. electronic commerce.” The categories include:

  • Import policies (e.g., tariffs and other import charges, quantitative restrictions, import licensing, customs barriers and shortcomings in trade facilitation, and other market access barriers);
  • Technical barriers to trade (e.g., unnecessarily trade restrictive standards, conformity assessment procedures, or technical regulations, including unnecessary or discriminatory technical regulations or standards for telecommunications products);
  • Sanitary and phytosanitary measures (e.g., trade restrictions implemented through unwarranted measures not based on scientific evidence);
  • Subsidies, including export subsidies (e.g., export financing on preferential terms and agricultural export subsidies that displace U.S. exports in third country markets) and local content subsidies (e.g., subsidies contingent on the purchase or use of domestic rather than imported goods);
  • Government procurement (e.g., “buy national” policies and closed bidding);
  • Intellectual property protection (e.g., inadequate patent, copyright, and trademark regimes and inadequate enforcement of intellectual property rights);
  • Services barriers (e.g., prohibitions or restrictions on foreign participation in the market, discriminatory licensing requirements or regulatory standards, local-presence requirements, and unreasonable restrictions on what services may be offered);
  • Barriers to digital trade (e.g., barriers to cross-border data flows, including data localization requirements, discriminatory practices affecting trade in digital products, restrictions on the provision of internet-enabled services, and other restrictive technology requirements);
  • Investment barriers (e.g., limitations on foreign equity participation and on access to foreign government-funded research and development programs, local content requirements, technology transfer requirements and export performance requirements, and restrictions on repatriation of earnings, capital, fees and royalties);
  • Competition (e.g., government-tolerated anticompetitive conduct of state-owned or private firms that restricts the sale or purchase of U.S. goods or services in the foreign country’s markets or abuse of competition laws to inhibit trade); and
  • Other barriers (barriers that encompass more than one category, e.g., bribery and corruption, or that affect a single sector).

Fact Sheets:

On March 27, 2019, Cooper Natural Resources, Inc., Elementis Global LLC and Searles Valley Minerals, Inc. filed a petition on behalf of the domestic industry with the U.S. Department of Commerce (Commerce) and the U.S. International Trade Commission (Commission) seeking antidumping duties on imports of sodium sulfate anhydrous (SSA) from Canada. According to the petition, SSA imports from Canada are being sold at less than fair value in the United States, causing material injury and threatening further material injury to the U.S. industry if antidumping duties are not imposed.

SSA, also known as disodium sulfate, is a white or off-white, granular, crystallized powder containing 43.64 percent sodium oxide and 56.36 percent sulfur trioxide, with a molecular weight of approximately 142.04, which is registered under the Chemical Abstracts Service (CAS) number 7757-82-6. The product subject to this investigation is sodium sulfate (Na2SO4) that does not contain water, regardless of purity, grade, color, production method and form of packaging, in which the percentage of particles between 20 mesh and 100 mesh ranges from 10-95 percent and the percentage of particles over 100 mesh ranges from 5-90 percent. It is used in the production of several products, including, but not limited to, detergents, pulp and paper, glass, textiles, starch, carpet deodorizers and livestock mineral feed. In their petition, the petitioners state that SSA enters the United States under Harmonized Tariff Schedule of the United States (HTSUS) subheadings 2833.11.50.10, 2833.11.10.00, 2833.11.50.50 and (incorrectly classified under) 2833.19.00.00.

According to the petition, imports of Canadian SSA increased from 39,910 short tons (ST) in 2016, to 55,495 ST in 2017, and to 55,819 ST in 2018, while its average unit value declined from $121/ST in 2016 to $109/ST in 2017, and to $107/ST in 2018. As a result, the petitioners claim that unfairly priced SSA imports are having direct, significant adverse effects on the domestic industry, such as price suppression, resulting in lost in sales and revenue to the U.S. industry.

The petition mentions Saskatchewan Mining and Minerals as the only exporter of the product to the United States at allegedly dumped prices from Canada. The petition does not make public the list of U.S. importers known to import SSA from Canada.

Commerce will determine by April 24, 2019, whether to formally initiate the antidumping investigation and, if Commerce does, the Commission will decide 25 days thereafter whether there is a reasonable indication of existing material injury or threat of material injury to the domestic SSA industry that will require continuation of the investigation.

Thompson Hine is monitoring this matter closely. For additional information or to obtain a copy of the petition, please contact us.

On March 25, 2019, the U.S. Court of International Trade (CIT) denied a challenge to the constitutionality of Section 232 of the Trade Expansion Act of 1962 in a lawsuit brought by the American Institute of International Steel and other steel importers. In a 2-1 decision, the three-judge panel in American Institute for International Steel Inc. et al. v. United States et al., case number 1:18-cv-00152, rejected the plaintiffs’ claims that Section 232 “constitutes an improper delegation of legislative authority in violation of Article I, Section 1 of the U.S. Constitution and the doctrine of separation of powers.”

The panel determined that the court is bound by the U.S. Supreme Court’s 1976 decision in Federal Energy Administration v. Algonquin SNG Inc., which concluded that Section 232’s standards are “clearly sufficient to meet any delegation doctrine attack” and easily satisfied the intelligible principle standard for the delegation doctrine established by the Supreme Court in its 1928 J.W. Hampton, Jr., & Co. v. United States decision.

The CIT panel acknowledged, however, that “the broad guideposts of subsections (c) and (d) of section 232 bestow flexibility on the President and seem to invite the President to regulate commerce by way of means reserved for Congress, leaving very few tools beyond his reach,” and added that “[o]ne might argue that the statute allows for a gray area where the President could invoke the statute to act in a manner constitutionally reserved for Congress but not objectively outside the President’s authority, and the scope of review would preclude the uncovering of such a truth.” The panel concluded that “such concerns are beyond this court’s power to address, given the Supreme Court’s decision in Algonquin.”

The CIT decision was accompanied by a dubitante opinion issued by Judge Gary S. Katzmann. In his opinion, Katzmann admitted that the court is bound by the Supreme Court’s 1976 Algonquin decision. Referencing previous Supreme Court decisions involving a delegation question and laying out the “unbridled discretion” of the president under Section 232, he noted, however, that “[i]f the delegation permitted by Section 232, as now revealed, does not constitute excessive delegation in violation of the Constitution, what would?”