US Files Series of WTO Cases, Targeting Responses to Steel, Aluminium Tariffs

The Office of the US Trade Representative (USTR) announced on Monday 16 July that it would be filing WTO cases against Canada, China, the EU, Mexico, and Turkey, after they imposed duties on various US imports following Washington’s own tariffs on imported steel and aluminium.

The five new disputes mark the latest developments in the evolving trade skirmish that began in earnest after Washington imposed duties on the vast majority of its trading partners, specifically targeting imports of those metals with hefty tariffs.

At the time, US officials said, these tariffs were necessary given the findings of Commerce Department investigations under Section 232 of the 1962 Trade Expansion Act. The agency reports claimed that these imports were putting national security at risk. Specifically, they warned that these imports could make it harder for domestic industry to maintain the “economic viability” to meet critical national defence or infrastructure demands if needed.

That claim has drawn criticism for various reasons, with other WTO members questioning the implications of unilateral measures, particularly on national security grounds, on the multilateral system; the veracity of the national security claim, given that various US allies have been affected; and the expected economic harm both abroad and at home.

Steel imports now face a 25 percent tariff while aluminium imports face a 10 percent tariff, with the exception of those few countries who have negotiated other arrangements with the US, or those companies which have been granted product-specific exclusions.

Since then, some WTO members have filed trade disputes challenging the US duties. The members who have filed requests for consultations so far include Canada, China, the EU, India, Mexico, Norway, Russia, and Switzerland. These complaints have argued that the US Section 232 tariffs violate select provisions of the General Agreement on Tariffs and Trade (GATT) as well as the Agreement on Safeguards, with some also citing the Marrakesh Agreement Establishing the WTO, Article XVI:4 on making sure domestic laws and policies align with global trade rules.

Lighthizer: US tariffs “wholly legitimate and fully justified”

US trade officials have repeatedly argued, both in press statements and at WTO committee meetings, that the Section 232 measures should not be treated as safeguards, but rather as justified measures taken for national security purposes, which would qualify for an exception from global trade rules.

Canada, China, the EU, Mexico, and Turkey, however, have all said that the US measure appears to be a safeguard – in trade jargon, a temporary import curb in response to an actual or threatened import surge – and that they are imposing duties on various goods imported from the US essentially as a way of claiming compensation for the economic harm they have suffered.

The US’ consultations requests were not yet publicly available at press time, though a Geneva trade official confirmed that they should be released at some point this week. The USTR announcement, however, indicated that the US considers the duties imposed by these various trade partners to be “retaliatory tariffs,” suggesting that Washington will argue that the EU, China, and others have erred in notifying and applying these as so-called re-balancing measures in response to a safeguard measure.

“These tariffs appear to breach each WTO member’s commitments under the WTO Agreement. The United States will take all necessary actions to protect our interests, and we urge our trading partners to work constructively with us on the problems created by massive and persistent excess capacity in the steel and aluminium sectors,” said USTR Robert Lighthizer on Monday in announcing the new cases.

Some trading partners have already issued public responses to the US consultations requests. The Mexican Economy Secretary’s office, for example, circulated a statement arguing that the Mexican duties were “in response to the tariffs that the US government imposed in an unjustified way, on national security grounds, on imported steel and aluminium from Mexico.”

“The US purchases of steel and aluminium from Mexico are not a national security risk to the former. Rather, the solid trading relationship between Mexico and the US has led to an integrated regional market where steel and aluminium products support the region’s competitiveness in various diverse strategic sectors, such as automotive, aerospace, electric, and electronic,” the statement continued.

Should the US complaints, and the previously filed disputes from other trading partners on the Section 232 duties, all advance to the panel stage, it is unclear how differing panels will juggle these various complaints, given that they deal with different, but intrinsically related, aspects of the same trade situation.

Pence: American steel “coming back”

Back in Washington, US Vice President Mike Pence said on Monday 16 July at the US Department of Commerce that the Section 232 measures were having a positive effect on US steel sector jobs, suggesting that “American steel is coming back” as a result.

“As the President likes to say, ‘If you don’t have steel, you don’t have a country.’ And this action by this Department of Commerce and the President of the United States have put American steel, American aluminium, and American national security first,” said Pence.

The US Section 232 tariffs remain controversial domestically, however, drawing condemnation from various manufacturing groups, agricultural exporters, and lawmakers alike. Just last week, the US Senate passing a non-binding motion calling for language to be adopted in “conference” between negotiators from both legislative chambers on a separate bill that would “[provide] a role for Congress in making a determination under Section 232 of the Trade Expansion Act of 1962.”

The three Republican senators co-sponsoring the bill were Jeff Flake of Arizona, Bob Corker of Tennessee, and Pat Toomey of Pennsylvania, who have all called on their fellow lawmakers to consider a binding version of that measure. Flake and Corker are retiring from the Senate in January 2019, though Toomey will continue to serve in that chamber.

“I will continue to push for binding legislation that requires congressional approval of national security-designated tariffs. We have to rein in abuse of presidential authority and restore Congress’ constitutional authority in this regard,” said Flake.

The non-binding motion passed by an overwhelming majority, with 88 votes in favour and 11 against. However, whether a binding version would be approved by both chambers and become law – something that requires presidential signature, unless there are enough votes to override a presidential veto – is not clear.

Separately, Senate Finance Committee Chair Orrin Hatch, a Republican from Utah, warned the Trump administration that the continued use of new tariffs to tackle trade policy concerns would lead him to back legislation curbing the executive branch’s authority on trade-related matters.

“This roaring economy that we worked together to build for American workers and businesses is at risk because of the president’s trade policies. Tariffs against our allies and partners in Europe, Canada, Mexico, and around the world are already harming American farmers and manufacturers, and raising costs for the nation’s families. If this continues, our economy will suffer,” he said on the Senate floor on Tuesday 17 July.

Meanwhile, the US House Ways and Means Trade Sub-Committee held a hearing on Wednesday 18 July looking at how the Section 232 measures, the separate Section 301 measures targeting Chinese imports, and the duties imposed by various countries as a result of the US tariffs, are affecting American farm and rural communities, given that many agricultural products have been targeted by US trading partners.