United States: US Commerce Announces Section 232 Investigation Into Imports Of Vanadium

On Tuesday, June 2, 2020, the US Department of Commerce (the "Department" or "Commerce") announced that on May 28, 2020, the Secretary of Commerce initiated an investigation under Section 232 of the Trade Expansion Act of 1962 ("Section 232") into imports of vanadium. The investigation is in response to a November 19, 2019, petition filed by domestic producers and will focus on whether vanadium is being imported into the United States in quantities or under circumstances that threaten to impair national security.

This is the third Section 232 investigation announced within the past 30 days. Previously, Commerce announced investigations into imports of key electrical transformer components, discussed in our earlier Legal Update, and imports of mobile cranes, which petitioners alleged have harmed the domestic crane manufacturing industry through low prices and intellectual property infringement.

Potential Impact of Investigation

As explained in the Department's announcement, vanadium is "a metal used in production of metal alloys and as a catalyst for chemicals across aerospace, defense, energy, and infrastructure sectors." Vanadium has been designated a strategic and critical material, and it is used for national defense and critical infrastructure applications. Examples of vanadium use include the manufacture of aircraft, jet engines, ballistic missiles, energy storage, bridges, buildings, and pipelines. Vanadium is also "integral to certain aerospace applications" due to its "strength-to-weight ratio." US demand for the aerospace sector is supplied entirely through imports.

In their November 19, 2019, petition, petitioners asserted that the domestic industry is adversely impacted by "unfairly traded low-priced imports, limited export markets due to value-added tax regimes in other vanadium producing countries, and the distortionary effect of Chinese and Russian industrial policies."

If Commerce determines that these imports threaten to impair national security, Commerce will have 270 days from the initiation date of the investigation to submit its remedy recommendations, if any, to the President. According to Section 232, the President then has 90 days to decide whether to concur with the recommendations and take action-either those recommended by Commerce or an alternative approach, such as negotiations-to adjust imports to a level that will not threaten to impair national security. Once the President has made his determination, the statute grants him 15 days to implement the action and 30 days to submit a written statement to Congress explaining the action. The statute also instructs the President to publish his findings in the Federal Register.

Commerce's Bureau of Industry and Security will conduct the investigation, and interested parties are invited to submit written comments, data, analyses, or other information pertinent to the investigation by July 20, 2020. Commerce will publish its notice of initiation in the Federal Register regarding the investigation on June 3, 2020.