26 May 2017
DOC Considering Potential National Security Review of Semiconductors, Seeks Input on Review of Aluminium Imports
U.S. Commerce Secretary Wilbur Ross recently indicated that the U.S. Department of Commerce is considering whether to initiate a section 232 national security investigation of imported semiconductors because of their “huge defence implications” and the fact that mainland China is ramping up its domestic production. Section 232 investigations can result in the imposition of tariffs, quotas or other restrictions. The DOC is already conducting section 232 investigations of imported steel and aluminium and President Trump has directed that both be expedited.
However, a Reuters article quoted Semiconductor Industry Association President John Neuffer as saying his organisation does “not believe a Section 232 investigation is the right tool to be applied to our industry.” Instead, the article states, the SIA “advocates open trade and increased access to international markets” because 80 percent of U.S. production is exported and nearly half of U.S. chipmakers’ production capacity is located overseas. The SIA is seemingly willing to work with the Trump administration to find ways to persuade Beijing to develop a more market-driven approach, however.
The SIA recently welcomed a series of recommendations agreed to by global semiconductor industry leaders at the 21st annual meeting of the World Semiconductors Council to strengthen the industry through greater international collaboration. According to SIA Chairman Tunç Doluca, the recommendations “will ensure free and fair trade, expand consumer’s access to technology, and strengthen the global semiconductor industry well into the future.” The WSC also reaffirmed its commitment to ensure that government policies are guided by market-based principles and adopted a set of guidelines and best practices on how to implement semiconductor support programmes that are consistent with international rules and avoid harmful trade distortions.
Meanwhile, the DOC has announced that it will hold a public hearing on 22 June and will accept written comments, data, analyses and other pertinent information through 29 June in connection with its on-going section 232 investigation into the national security effects of aluminium imports. If the DOC’s determination is affirmative, and the president concurs, the president has the authority to adjust imports, including through the use of tariffs and quotas. Although the law gives the DOC up to 270 days to conclude a section 232 investigation and submit its report and recommendations, President Trump has directed the DOC to expedite this investigation. The DOC states that it is particularly interested in comments and information on the following factors.
- quantity of or other circumstances related to the importation of aluminium
- domestic production and productive capacity needed for aluminium to meet projected national defence requirements
- existing and anticipated availability of human resources, products, raw materials, production equipment and facilities to produce aluminium
- growth requirements of the aluminium industry to meet national defence requirements and/or requirements to assure such growth
- impact of foreign competition on the economic welfare of the aluminium industry
- displacement of any domestic aluminium causing substantial unemployment, decrease in government revenues, loss of investment or specialised skills and productive capacity, or other serious effects
- relevant factors that are causing or will cause a weakening of the national economy
- any other relevant factors