“The United States has taken the clear and unequivocal position for more than 70 years that national security issues cannot be addressed in WTO dispute settlement and that the WTO has no not the power to question a WTO member’s ability to respond to a wide range – a range of threats to its security,” he added.
The decision of a panel examining the case suggests that the United States “must stand idly by” as China and other countries flood its market with steel and aluminum that have been produced with generous government handouts, Hodge said. “The United States will not cede decision-making on its critical security to WTO panels,” he added.
Four WTO dispute settlement panels, each made up of the same people, have ruled in cases brought by China, Norway, Switzerland and Turkey. Two other challenges brought by Russia and India are still pending.
“I think this decision sends a shockwave through the system” because members have long had a history of deferring to each other on what poses a threat to national security, Wendy said. Cutler, a former top US trade official now at Asia Society Policy. Institute.
The United Steelworkers union and the American Iron and Steel Institute, an industry group, also lambasted the decision.
“The United States cannot sacrifice our national security. We must maintain these relief measures and refuse to bow to the misguided efforts of WTO lawyers,” Steelworkers President Tom Conway said in a statement.
The provocative US stance comes at a time when massive new subsidies for green technologies provided by the Inflation Reduction Act raise new concerns about the United States’ commitment to the rules-based global trading system.
Trump sparked the dispute when he dusted off a rarely used trade provision – Section 232 of the Trade Expansion Act 1962 – to restrict imports of steel and aluminum from around the world on the grounds that they threatened two industries vital to the national security of the United States.
Trading partners saw the move as a thinly disguised protectionist measure and quickly aligned themselves to challenge the action at the WTO. Many members, such as the European Union and China, have also imposed retaliation on American products.
Article 21 of the WTO’s founding document, the General Agreement on Tariffs and Trade, allows members to take actions that violate WTO commitments to treat their trading partners fairly if it is in the purpose of protecting national security.
However, it also imposes limits on when it can be used. Two cases he specifically mentions relate to cases involving material to manufacture nuclear weapons or the trafficking of weapons for the purpose of supplying a military establishment.
A third, more general exception allows countries to invoke Article 21 “in time of war or other emergency in international relations”. It was the defense of the Trump administration.
However, WTO panels examining the matter determined that Trump’s tariffs were not imposed in times of war or other emergency in international relations, and therefore he could not invoke the national security exception to break its commercial commitments.
This is a blow to the longstanding position of the United States – and the view shared by many other members – that such actions are “self-judged”, meaning that if a member decides that a commercial action is in his national security interest, so others should agree and not challenge him.
However, many believed that Trump’s actions on steel and aluminum stretched the definition of what constitutes a national security threat so much that they could not go unchallenged.
These included the EU, Canada and Mexico, as well as China, Norway, Switzerland, Turkey, Russia and India. Canada and Mexico reached a settlement with the United States in 2020 as part of the Trump administration’s efforts to secure congressional approval of the United States-Mexico-Canada deal to succeed the United States. NAFTA.
The Biden administration also brokered a deal with the EU in 2021 to resolve the dispute, and subsequent arrangements with the UK and Japan followed.
The “self-assessment” approach worked well when countries used the national security exception narrowly, but the world has changed since then, Cutler said. She blamed China for starting the trend by blocking the internet and other economic sectors for national security reasons.
The four years it took the WTO to rule on the issue reflects both the sensitivity of the concern and the constraints on the organization’s dispute settlement system.
Additionally, the Trump administration has completely shut down the WTO Appellate Body by blocking the appointment of new judges because it believes many of its rulings were flawed. This now allows him to appeal Friday’s lower panel rulings “into a vacuum” to prevent their formal passage.
There are also other decisions stemming from Trump’s action on steel and aluminum to come.
The Trump administration has filed counter-complaints challenging the retaliation imposed by a long list of nations. Agreements with Canada, Mexico and the EU have resolved those cases, while others involving China, Russia, India and Turkey are still pending.
The question in these cases is whether countries were legally entitled to unilaterally retaliate against Trump’s actions, or whether they should have taken the much longer route of formally challenging the tariffs through the dispute settlement system. of the WTO.
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