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The Bureau of Industry and Security of the United States Department of Commerce (Commerce) has initiated an investigation under Section 232 of the Trade Expansion Act of 1962 to determine the impact of imported neodymium iron boron (NdFeB) permanent magnets on the national security of the United States. Products are widely used in critical defense and civil applications. This is the first 232 investigation initiated by the Biden administration, based on a recommendation in the White House supply chain review. This White House review found that only China has active capacity at all supply chain levels in the NdFeB industry-which means that this imbalance may become the focus of investigations and any resulting remedial measures.
The investigation will assess whether NdFeB permanent magnets are imported into the United States in quantity or circumstances to threaten national security. If the Department of Commerce makes an affirmative ruling, US President Joe Biden will be authorized to take actions he deems necessary to “adjust” the import of neodymium iron boron permanent magnets and their “derivatives” so that such imports will not threaten national security. . Such actions may include imposing tariffs or other measures designed to ensure that the national security of the United States is not dependent on foreign supplies.
Companies interested in this procedure have the opportunity to provide comments to the Ministry of Commerce before November 12, 2021.
Background of the problem product
NdFeB permanent magnets have a permanent magnetic field, and they contain rare earths, which can increase the strength of the magnet. These magnets are used in a wide range of products, including:
Given that these magnets are often embedded in technology, one of the challenges of this investigation is that it may be difficult to determine the source of such magnets.
This investigation is part of the U.S. government’s intense focus on the importance of key minerals and rare earth elements to the U.S. supply chain.
The Ministry of Commerce has invited stakeholders to submit comments before November 12, 2021, including any data, analysis or information related to its investigation.
Although stakeholders are free to submit comments on any subject related to the investigation, the Ministry of Commerce has expressed particular interest in comments on the following topics:
According to the law, the U.S. Secretary of Commerce (Secretary) has 270 days from the date of initiation to June 18, 2022 to submit the findings and recommendations of the Department of Commerce to the President. If the Minister finds that the quantity or circumstances of NdFeB permanent magnets imported into the United States pose a threat to national security, the Minister shall make recommendations to the President on the investigation results and remedial recommendations in her report.
Once the minister submits such a report to the president, the president has 90 days to decide whether he agrees with the minister's findings. If so, the President will determine the nature and duration of actions that must be taken to adjust "imports of goods and their derivatives" so that such imports do not threaten national security. Usually, remedies involve tariffs or quantitative restrictions.
For questions about the potential impact of this investigation on your business, assistance in submitting comments, or other opportunities to participate in this process, please contact an experienced lawyer in the McDermott International Trade team.
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