Trade Cases
WTO Rules in Crosshairs of Section 232 Dispute
Written by Sandy Williams
October 30, 2018
The United States has denied initial requests by World Trade Organization members to establish dispute settlement panels over Section 232 tariffs, claiming that once a national security measure is invoked under Article XXI, it cannot be litigated by a WTO panel.
The United States may block a request for a dispute panel one time, but not a second, leaving the door now open to China, the European Union, Canada, Mexico, Norway, Russia and Turkey to initiate another request.
The group maintains that use of Article XXI under WTO rules for national security was abused by the United States. Article XXI states that the agreement will not “prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests.” The agreement typically applies to the areas of nuclear material, arms trafficking and actions taken in a time of war or international emergency.
The U.S. claims it was within its legal rights to invoke Article XXI to curtail imports of steel and aluminum that threaten the national security of the United States. The Section 232 tariffs are de facto safeguard measures, countered the seven countries.
“It is not the WTO’s function, nor within its authority, to second guess a sovereign’s national security determination,” said Dennis Shea, U.S. ambassador to the WTO. “WTO members did not abdicate their responsibilities to their citizens to protect their essential security interests when they formed the WTO. Because the United States has invoked Article XXI, there is no basis for a WTO panel to review the claims of breach raised by the European Union.
“The United States wishes to be clear,” Shea said. “If the WTO were to undertake to review an invocation of Article XXI, this would undermine the legitimacy of the WTO’s dispute settlement system and even the viability of the WTO as a whole.”
Canada, Mexico, the EU and China are “hypocritical” to call the U.S. measures safeguards and then to insist their retaliatory measures are “substantial equivalent concessions,” Shea added. The U.S. has requested dispute panels against all four countries for their retaliatory tariffs, all of which were blocked.
“Just as those members appear to be ready to undermine the dispute settlement system by throwing out the plain meaning of Article XXI and 70 years of practice,” Shea said, “so too are they ready to undermine the WTO by suggesting they are following WTO rules while taking measures blatantly against those rules.”
Sandy Williams
Read more from Sandy WilliamsLatest in Trade Cases
Leibowitz: When the shutdown should end
There is no doubt that the current government shutdown reflects the vast divisions between the extremes of American politics, society, and even geography. Almost all Americans agree that government is necessary, but voters disagree...
Price: The U.S. Steel shutdown that wasn’t and a call to stop ‘valuation cheating’
How can the U.S. government block U.S. Steel’s Granite City rolling mill closure without harming other American steelmakers? Reducing imports should be the first step. Foreign producers continue to aggressively target the U.S. market, especially now as they find themselves displaced by Chinese exports.
US steel industry applauds ITC final determination in coated trade case
Domestic mills praised the US International Trade Commission’s (ITC's) final determination that imports of corrosion-resistant (CORE) steel from 10 countries pose a threat to them.
ITC’s final ruling: Dumped, subsidized CORE imports are harming domestic market
The US International Trade Commission (ITC) finds that corrosion resistant steel (CORE) imports from 10 countries have caused material damage to domestic product producers, according to the ITC’s statement.
Leibowitz: Trump’s tariffs confront a weakening market
Signs of weakness are already appearing in the tariff wall. The economy has slowed to the point that the Federal Reserve cut interest rates by 0.25%, or 25 basis points, last week. The cut came even as the rate of inflation continues to hover well above the Fed’s 2% target rate.