In response to legal and political pressure from Congress, the Commerce Department finally released its February 2019 Section 232 investigation report in the autos/auto parts cases. The report is here; the appendices are here. The main recommendation was as follows:
The Secretary recommends the following actions the President could take as possible options to remove the threatened impairment of the national security:
1. Direct further discussions and negotiations to obtain agreements that address the threatened impairment of national security. Since this investigation was initiated, there have been productive discussions that could result in positive changes for the automotive industry in the United States, and the United States has signed the USMCA. If these discussions and the USMCA result in positive changes to the U.S. automotive industry, the President could determine whether those actions address the threatened impairment of the national security found in this report.
As provided in section 232(c)(3), if appropriate agreements have not been reached in a timely manner or if a negotiated agreement is not being carried out, the President could determine that further action under section 232 is necessary.OR
2. Impose tariffs of up to 25 percent (in addition to any existing duties) on imports of automobiles and certain automobile parts (engines and parts, transmissions and powertrain parts, and electrical components) in order to increase U.S. production of automobiles and parts to a level sufficient to generate additional revenue to increase R&D investments by American-owned (as well as foreign-owned) manufacturers in the United States. Imports under USMCA Side Letters would not be subject to the tariffs.
OR
3. Impose tariffs of up to 35 percent (in addition to any existing duties) on imports of SUVs and CUVs, which will increase domestic production and generate additional revenue to increase R&D investments by American-owned (and foreign-owned) manufacturers in the United States. The Department of Commerce would work with the U.S. Customs and Border Protection on the most appropriate means to implement this option if selected. Imports under USMCA Side Letters would not be subject to the tariffs.
Fortunately, this recommendation was never acted upon.
The point I want to raise in this post is how we determine if "national security" is even at issue in these sorts of cases. The scope of the definition of that term has implications for the likelihood of imposing trade restrictions under this statute. In terms of this definition, the report makes a number of statements relating to the ability of the United States to "project military power," including the following:
The automotive industry has traditionally been a great engine of economic growth throughout history and, for decades, the strength of the United States’ automotive manufacturing sector has directly contributed to the industrial base that provides the economic strength and technological innovation that enables our armed forces to project military power and maintain our status as a world power.
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Section 232 does not contain a definition of “national security.” However, both Section 232 and its implementing regulations at 15 C.F.R. Part 705 contain non-exclusive lists of factors that the Secretary must consider in evaluating the effect of imports on the national security. Congress in Section 232 explicitly provides that “national security” includes, but is not limited to, “national defense” requirements. See 19 U.S.C. § 1862(d). In the 2001 Report, the Department determined that “national defense” includes both defense of the United States directly and the “ability to project military capabilities globally.”11
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It is these factors that the report considers which have resulted in a decline in American-owned manufacturing needed to support the research and development of technologies that maintain America’s ability to cost-effectively project military power worldwide. This decline threatens the national security.
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As R&D and its related skilled workforce shifts from the United States to Mexico, the loss of specialized skills and production knowhow within the United States impedes the ability of American-owned manufacturers to access a skilled workforce and advance technologies that are critical for maintaining America’s ability to project power globally and respond in a national emergency.
(emphasis added) Footnote 11 cites to a 2001 Section 232 report on iron ore and semi-finished steel, where the Commerce Department elaborated on the scope of "national security" as follow:
1. What constitutes “national security”? Neither Section 232 nor the relevant Department regulations (15 C.F.R. Pt. 705) contain a definition of the term “national security.” In the absence of such a definition, it is incumbent upon the Secretary to employ a definition that is consistent with the statute and the intent of the drafters, and reasonable under the circumstances.
It is clear that, at a minimum, an assessment of the United States’ “national security” requirements must include a military or “national defense” component. This could range from the military defense of the U.S. homeland to, more expansively, the ability to project U.S. military capabilities globally. For the purpose of this study, we have adopted a broad definition of national defense. ...
(emphasis added)
Based on the reasoning in the 2001 report, it seems to me that the Commerce Department thinks it has a good deal of discretion in defining "national security" and "national defense." It saw a range of possibilities and adopted what it called a "broad definition." But it could also have adopted a narrower definition.
If we ever do return to a point to where the Commerce Department is considering whether to impose trade restrictions under Section 232, I would like to see this question debated a bit more. What exactly should the scope of national security be in this context? For example, does projecting military power globally help or hurt U.S. national security? The conventional wisdom in Washington has long been that projecting military power is in the interest of national security, with few limits on this notion: The more projection of power, the more secure we are. But it seems to me there is growing pushback against that idea. The skeptics are still in the minority by a wide margin in Washington political circles, but more people are willing to question it these days. While the focus of the criticism of the Section 232 cases under the Trump administration has been, with good reason, on the impact of trade restrictions on the economy, there may also be scope for arguing that national security should be interpreted more narrowly than it has been.