American Oil and Gas Reporter - April 2018 - 98

Steel Import Tariff

Impact On Upstream Is Hard To Judge
WASHINGTON-Tariffs imposed in
March by the Trump administration on
imports of steel and aluminum will have
an impact on the price oil and gas producers pay for oil country tubular goods
and possibly their ability to procure
them. But the size of the impact and
how much relief the exclusion process
outlined by the Department of Commerce
will provide have yet to be determined,
evaluates Lee Fuller, executive vice president for the Independent Petroleum Association of America.
On March 8, President Donald Trump
signed Proclamation 9704 imposing a 25
percent ad valorem tariff on steel imported
from all countries except Canada and
Mexico, and Proclamation 9705, imposing
a 10 percent tariff on aluminum imported
from all countries except Canada and
Mexico.
Both proclamations contend that steel
and aluminum imports are "weakening
(the United States') internal economy"
and "threaten to impair the national security as defined in Section 232 of the
Trade Expansion Act of 1962" as a result
of losing domestic production capacity,

which may make the country unable to
meet demand in a national emergency.
A statement issued the following day
by the Department of Commerce points
out that the United States "has only one
steel mill that can produce the advanced
alloys used in armored-vehicle plating;
one aluminum smelter that makes the highgrade aluminum needed for defense aerospace applications; and one steel mill that
makes the materials needed for infrastructure
(such as) electrical transformers."
However, the presidential proclamations
authorize Commerce to provide exclusions
from the tariffs for steel and aluminum
articles "determined not to be produced
in the United States in a sufficient and
reasonably available amount or of a satisfactory quality."
On March 19, Commerce published a
Federal Register notice that outlined how
the exclusion process would work. As always, Fuller muses, the devil is in the
details.
Exclusion Process
The Federal Register notice states,
"Only individuals or organizations using

Commerce To Impose Import Duties
On Certain Steel Fittings And Flanges
WASHINGTON-On the same day
President Trump announced tariffs on
imported steel and aluminum, the Department of Commerce released a preliminary determination of a countervailing
duty (CVD) on forged steel fittings imported from China. Twelve days later,
the department announced a preliminary
determination for an anti-dumping duty
(AD) on stainless steel flanges from
China and India.
The March 8 announcement maintained Chinese manufacturers had received subsidies equal to 13.79 percent
of the value of forged steel fittings exported to the Unites States, and directed
U.S. Customs and Border Protection to
collect cash deposits from importers
equal to that amount. The March 20
determination said Chinese and Indian
exporters had sold stainless steel flanges
in the United States at 257.11 percent
and 18.10-145.25 percent less than fair
value, respectively.
Commerce expresses plans to issue
98 THE AMERICAN OIL & GAS REPORTER

a final AD determination on stainless
steel flanges by June 5 and a final CVD
determination on forged steel fittings
by July 24.
In general, Commerce says, flanges
subject to the anti-dumping duty include
all pressure classes of ASME B16.5
and range from 0.5 to 24.0 inches nominal pipe size. Excluded are cast stainless
steel flanges manufactured to specification ASTM A351.
Included in the CVD, commerce
goes on, are carbon and alloy forged
steel fittings, including but not limited
to elbows, tees, crosses, laterals, couplings, reducers, caps, plugs, bushings
and unions. Excluded are fittings made
entirely of stainless steel, as well as
flanges, butt-weld fittings and nipples.
Also excluded, Commerce adds, are fittings certified to API specifications 5CT,
5L and 11B.
The preliminary decision memoranda
are available for viewing at https://access.trade.gov.
r

steel (or aluminum) articles identified in
(the presidential proclamations) in business activities in the United States may
submit exclusion requests. Approved exclusions will be made on a product basis,
and will be limited to the individual or
organization that submitted the specific
exclusion request, unless Commerce approves a broader application of the product
based exclusion request to apply to additional importers."
The notice also provides, "Separate
exclusion requests must be submitted
for steel products with chemistry by percentage breakdown by weight, metallurgical properties, surface quality and distinct critical dimensions covered by a
common HTSUS (harmonized tariff
schedule of the United States) subheading.
Separate exclusion requests also must
be submitted for products falling in more
than one 10-digit HTSUS statistical reporting number."
Any individual or organization in the
United States may file an objection to an
exclusion request, although Commerce
says it will "consider only information
directly related to the request that is the
subject of the objection. Organizations
submitting an objection . . . should provide
specific information on the product their
compan(ies) can provide that is comparable
to the steel or aluminum product that is
the subject of the exclusion request."
Objections must be filed within 30
days of the exclusion request, and Commerce says it will rule on exclusion requests within 90 days.
OCTG And Line Pipe
Fuller comments that the exclusion
procedure appears to have been designed
for big projects with large steel demands
and long lead times, "but it applies to
everybody." He describes the online exclusion form as "really detailed."
In the event a user obtains an exclusion,
he adds that it is not yet clear whether it
will apply only to a specific project (i.e.,
an individual well or drilling project) or
all of that user's imports of that particular
product.
The former, especially, would place a
very large burden on independent producers, he observes, which lack the manpower or resources to apply for numerous
exclusions.
"We are going to be meeting-as are
others-with the administration to try to
explain our situation better and see whether
http://access.trade.gov http://access.trade.gov
American Oil and Gas Reporter - April 2018

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