Leibowitz on Trade: Busy Week in Washington

The May 1 deadline for country exemptions, including the European Union, is fast approaching. President Macron will press President Trump to make permanent the EU exemption from steel and aluminum tariffs. It may be a tough sell.

• Chancellor Angela Merkel of Germany will follow President Macron to Washington on Thursday, along with EU Trade Commissioner Cecilia Malmstrom. The Commissioner has already ruled out any concessions in exchange for a permanent exemption—so success is in doubt.

• Various WTO members are criticizing the U.S. for the steel and aluminum tariffs, and the fallout from them. Russia, China, Korea and India have all requested consultations under the WTO Safeguards agreement. All but Korea (which reached a VRA-style quota agreement and thereby escaped the steel tariffs) are claiming that the steel and aluminum tariffs are actually safeguard measures. Article 8 of the Safeguards Agreement requires consultations at the request of other WTO members. In the event negotiations do not result in agreement on adequate compensation for safeguard measures, other WTO members may withdraw concessions (a fancy way of saying retaliation). If a safeguard measure is not in accord with the terms of the agreement, or is not based on absolute increases in imports, the retaliation may take effect immediately. Otherwise, any retaliation must be delayed for three years. The countries seeking consultations claim the measures were not in accord with the agreement. Therefore, retaliation need not be delayed.

• At a meeting of the WTO Safeguards Committee Monday in Geneva, several countries complained about the steel and aluminum tariffs, which they claim are thinly disguised safeguard measures. As previously reported, the U.S. claims the unrestricted right to invoke “national security” as a reason for any trade-related measure, and further claims that the WTO may not review the measure beyond finding that “national security” was invoked.

• The Korea agreement is, according to reports, a quota-type arrangement. In trade parlance, a voluntary export restraint agreement (the U.S. had them during the 1980s) is a “gray area measure” that was outlawed by the Safeguards Agreement in the Uruguay Round. Clearly, the U.S. will claim that, if national security is the reason for a trade-related measure, the WTO rules against “gray area measures” are not applicable. That will be a tough argument.

• Japanese Prime Minister Shinzo Abe returned home from Mar-a-Lago empty-handed. No trade agreement and no country exemption from steel or aluminum tariffs was reached. Japan is the only major U.S. ally to have failed in its effort to receive an exemption. More will be heard on this.

• Commerce posted 74 more steel product exclusion requests on Friday and Monday. That more than doubles the posted steel exclusion requests. Maybe it’s a coincidence, but the letter from Senators Hatch and Wyden on April 19 bitterly criticized the product exclusion process, asserting that 3,800 requests had been submitted (don’t know the source for that number), but fewer than 100 had actually been posted on the regulations.gov website. Presto—the number of posted requests has doubled. Taking the 3,800 number as accurate, we are less than 3 percent of the way toward posting them all. Moreover, the March 22 proclamation pronounced that exclusions would be approved retroactively, but only for entries on or after the date the request was posted. The lag between submission and posting is increasing, and some have been posted up to four weeks after submission. The 30-day limit for posting objections will come due beginning April 30. Then it will get interesting to see how many requests draw objections and what will happen to requests that are not objected to (if any).

• Monday was the deadline to submit requests to appear at a hearing at USTR on the “section 301” tariffs that were proposed early this month. The hearing will be on May 15. Written comments are due by May 11, and rebuttal comments are due on May 22. Tariffs are not likely for at least several weeks after the conclusion of the hearing.

Lewis Leibowitz

The Law Office of Lewis E. Leibowitz
1400 16th Street, N.W.
Suite 350
Washington, D.C. 20036

Phone: (202) 776-1142
Fax: (202) 861-2924
Cell: (202) 250-1551