The United States on Monday launched World Trade Organization disputes against Canada, Mexico, the EU, Turkey and China over recent retaliatory tariffs the countries imposed against generally global U.S. tariffs on steel and aluminum set by the U.S. in recent months, according to an announcement by the Office of the U.S. Trade Representative (USTR).
The U.S. has cited security exceptions included in General Agreement on Tariffs and Trade (GATT) Article XXI as justification that its national security tariffs on steel and aluminum pursuant to Section 232 of the Trade Expansion Act of 1962 are compliant with WTO obligations.
A June 1, 2017, article by Center for Strategic and International Studies (CSIS) senior adviser Scott Miller in TradeVistas, a joint publication initiative of CSIS and the Hinrich Foundation, noted that because WTO members have rarely challenged use of the exception up to this point, the exception hadn’t featured significantly in formal dispute settlement under the original iteration of the GATT (GATT 1947) or at the WTO.
But the article noted a 1949 GATT panel ruling on a dispute between the United States and Czechoslovakia giving countries broad authority to make trade decisions based on national security.
GATT Article XXI reiterates a statement made during that dispute proceeding that “every country must be the judge in the last resort on questions relating to its own security. On the other hand, every contracting party should be cautious not to take any step which might have the effect of undermining the General Agreement.”
Miller noted that WTO members may determine their own interests under Article XXI exception claims, and members operate on the presumption that the discretion will be exercised in good faith.
USTR’s announcement states that the United States’ steel and aluminum duties are justified under “international agreements” approved by the U.S. and its trading partners, but the retaliatory duties by the five abovementioned countries “are completely without justification under international rules.”
“These tariffs appear to breach each WTO member’s commitments under the WTO agreement,” U.S. Trade Representative Robert Lighthizer said in a statement. “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 aluminum sectors.”
USTR noted that, based on 2017 trade values, China’s retaliatory tariffs are 15 percent to 25 percent on $3 billion in U.S. imports; the EU’s retaliatory tariffs are currently 10 percent to 25 percent on $3.2 billion in U.S. imports; Canada’s retaliatory tariffs are 10 percent to 25 percent duties on $12.7 billion in U.S. imports; Mexico’s retaliatory tariffs are 7 percent to 25 percent on $3.6 billion in U.S. imports; and, Turkey’s retaliatory tariffs are 4 percent to 70 percent on $1.8 billion in U.S. imports.
China’s tariffs cover goods including various steel and iron tubes and pipes, various fresh fruits, dried fruits and nuts, various meat products, and wine.
The EU’s tariffs are hitting goods including motorcycles, iron and steel products, bourbon, blue jeans, rice, sweet corn, tobacco, T-shirts, cranberry juice, and orange juice.
Canada’s retaliation affects goods including steel and iron products, aluminum products, dishwashing machines, washing machines, motorboats, mattresses, sleeping bags, pens, refrigerators, yogurt, coffee, maple syrup, meat, pizza, strawberry jam, orange juice, ketchup, detergents, whiskey, tableware, plywood, paper products, and beer kegs.
Included in Mexico’s retaliation list are flat steel, lamps, pork products, sausages and food preparations, apples, grapes, blueberries, and various cheeses.
Finally, Turkey’s tariffs cover products including rice, tobacco, coal, beauty products, plastics, paper products, pumps, and machines.
The EU, China, and Turkey notified the WTO of planned retaliation in accordance with Article 8.2 of the WTO Safeguards Agreement, but Canada and Mexico have not.
Sixty days must pass before the U.S.’s case—which takes the form of a request for WTO consultations—can escalate to the phase of formal adjudication by the WTO Dispute Settlement Body.
WTO Director-General Roberto Azevedo recently has sharply criticized the global rise in trade restrictions.
"The fallout from these measures is already being felt - companies are
hesitating to invest, markets are getting jittery, some prices are
rising," he Tweeted July 5.
"The rapid spread of trade restrictive measures between major trading
partners is of growing concern," he said in another Tweet on Thursday. "I continue to urge all sides to show
restraint and to begin a dialogue aimed at avoiding further escalation."