Will Section 232 Action Against Foreign Steel Be Vunerable to Court Challenges

Written by John Packard

This afternoon there was a press conference in Washington hosted by the American Institute for International Steel. Many of the large press organizations attended the conference, and even though we were unable to personally attend, we did receive notes about the content and especially the questions that interested the press corps.

There appears to be a lot of interest in the federal agencies that are “pushing back” against a DOC/President Trump ruling against foreign steel for national security reasons. We have heard Treasury, Defense, NEC and Agriculture, and there may be others. This is one of the main reasons why the Department of Commerce has not yet released its report and recommendations.

There were many questions of the presenters about who might be able to file suit against the findings of the DOC/President. Trade attorney Lewis Leibowitz told those assembled that essentially any person aggrieved by the Commerce findings could potentially sue. The potential plaintiffs are not limited by statute (unlike the AD/CVD laws).

There is also the potential of a WTO action. Leibowitz advised there is no law in the WTO about the scope of the Article XXI exemption for national security reasons. If the U.S. gives broad relief, our trading partners could challenge the relief in the WTO, invoke national security for their own pet projects – such as agriculture, or both. The two approaches are not mutually exclusive.

In his prepared remarks, attorney Leibowitz stated the following:

“Import restrictions on fairly traded steel under Section 232 threaten steel consumers, ports, distributors and workers with disaster. Our steel consumers are dependent on imports because of lack of production by domestic suppliers of many sizes and grades of steel, and uncompetitive pricing. This problem is not new, but the solution is decidedly not to deprive steel consumers of needed supplies. The losses to steel consumers will swamp any gains to the domestic steel industry. And lost jobs in the steel-consuming sector would likely exceed the total employment of steel production workers nationwide, as they did in 2002-03. This 232 investigation is the wrong proceeding at the wrong time for America.

“Section 232 is also wrong because it cannot explore the real problems or provide the correct solutions to address those problems. Tariffs or quotas won’t do it, but those are the options under 232.

“The elephant in the room is China. The global community has begun to explore the causes and potential solutions to global excess steel production. Now producing half the steel in the world, China’s steel capacity exceeds its domestic demand. The solution is to work together to rationalize steel capacity and approach comparable pricing and availability. Unfortunately, U.S. import restrictions will not do anything to solve that problem. They will raise prices in the U.S. and chase steel consumers away to other markets.

“The 232 is also wrong because it will send a very damaging message to other countries that a flimsy national security pretext can justify protectionist measures on many products, including some important exports from America, such as agricultural exports. If the U.S. wants to sue other countries in the WTO, they will get a suit in return on steel and maybe aluminum, too.

“On behalf of steel consumers everywhere, and their logistics partners (ports, distributors, transporters), we call on the administration to think before applying the wrong measures for the wrong reasons. Steel imports do not pose a genuine threat to the national security.

“The Consuming Industries Trade Action Coalition was created to support consuming industries, those that need imports in the U.S. market to maintain global competitiveness. Never has attention to the needs of consuming industries been more compelling. Fortunately, Secretary Ross has indicated that he understands these needs. We need his actions to match his words. What does the law say? Imports of an article must actually threaten to impair national security, based on evaluation of defense readiness AND economic health. Neither is impacted by steel imports.

“There are at least five industries to investigate—flat, long, semifinished, pipe & tube, and stainless. Trade remedies can address unfairness, and those remedies have worked—imports are down substantially since 2014, caused by trade case filings in 2015 and 2016. The trade laws work to limit imports—sometimes they do too much restricting. But the point is that additional measures are not needed, and the steel industry has not shown that they are.”

Latest in Economy