How a blacklisted Russian firm got a tariff break
Published 12:00 am Friday, August 10, 2018
WASHINGTON, D.C. — Hundreds of companies have asked the Trump administration for a special break from its sweeping aluminum tariffs. Few have succeeded. One that managed to get an exemption is a Russian firm currently subject to Treasury Department sanctions.
How Rusal America — a branch of a Russian metals giant controlled by an oligarch with close ties to President Vladimir Putin — managed to win an exclusion highlights the chaotic and unwieldy process surrounding President Donald Trump’s tariffs.
While Rusal and its controlling stakeholder, Oleg Deripaska, are restricted by U.S. sanctions, one of the company’s exemption requests was granted by the Commerce Department in July, apparently for the simple reason that no U.S. manufacturer objected.
Department officials reversed the decision this week, after concluding that an American aluminum manufacturer had meant to object, but made a mistake in its paperwork.
Rusal is an unlikely company to win an exemption. Deripaska, its major shareholder, was blacklisted by the U.S. in April as part of an effort to punish members of Putin’s inner circle for interference in the 2016 election and other Russian aggressions.
Deripaska and six other wealthy Russians were hit with sanctions that restricted their ability to travel to the United States or do business with any company in the West. As part of that effort, Rusal and other entities were also constrained from engaging in transactions with Western companies.
Despite the cloud of sanctions, Rusal filed more than 100 requests for exclusions that would allow it to import aluminum products from its Russian parent company to produce furniture, portable ladders and other goods. An American aluminum titan, Century Aluminum, filed objections to all but a few of those requests.
Rusal’s first 19 requests were denied by Commerce Department officials. In late July, its 20th request was granted. To date, Commerce Department officials say they have never approved a request that another company objected to properly.
Democrats in Congress who noticed the exclusion were prepared to protest what they called suspicious timing, given that the exemption coincided with Trump’s summit meeting with Putin in Finland.
Commerce Department officials dismissed that criticism last week, saying they had coordinated with the Treasury Department unit that oversees sanctions in considering the Rusal application.
Treasury officials, however, denied that they had played a role in the exclusion request.
This week, the department reversed course on the exclusion, after The New York Times inquired about whether Century Aluminum had, in fact, filed an objection, given its pattern of objecting to nearly every other Rusal application.
Department officials determined that Century had meant to file an objection to Rusal’s request, but had erred in submitting the paperwork. The department effectively fixed Century’s error, then ruled that the objection was valid — and that Rusal’s exclusion was void.