TWN Info Service on UN Sustainable Development (Apr18/05)
12 April 2018
Third World Network
  
China initiates dispute on US tariffs on steel, aluminium
Published in SUNS #8660 dated 12 April 2018

Geneva, 11 Apr (Kanaga Raja) - China has initiated a dispute at the World Trade Organisation (WTO) over duties imposed by the United States on imports of certain steel and aluminium products from China.

In initiating the dispute, China sought consultations with the United States, in a communication circulated to WTO members on 10 April.

The request for consultations is the first step in the dispute settlement process at the WTO.

If the consultations fail to settle a dispute within 60 days after the date of receipt of the request for consultations, the complaining party may request the establishment of a panel.

The establishment of a panel may also be requested by a complaining party during the 60-day period if the consulting parties jointly consider that the consultations have failed to settle the dispute.

China requested the consultations with respect to "certain measures by the United States to adjust imports of steel into the United States and to adjust imports of aluminum into the United States, including but not limited to, imposing additional ad valorem rate of duty on imports of certain steel and aluminum products and exempting certain selected WTO Members from the measures."

Last month, China had requested consultations with the United States, under Article 12.3 of the Agreement on Safeguards, following the Presidential Proclamations on Steel and Aluminium issued by President Donald Trump under Section 232 of Trade Expansion Act of 1962 imposing additional tariffs on these products.

However, in response to China's request, the United States has informed China on 4 April that there was no basis for consultations under the Safeguards Agreement, saying that the Proclamations were aimed at adjusting imports of steel and aluminium products that threaten to impair the national security of the United States.

According to the United States, its actions did not constitute safeguard measures, and therefore there was no basis for conducting consultations under the Safeguards Agreement (see SUNS #8656 dated 6 April 2018).

In response to the US measures, China has also proposed a list of some 128 products from the United States that have been targeted for additional tariffs of up to 25%, with the targeted products amounting to some $3 billion.

In its request for consultations with the United States, China has pointed out that the United States imposed 25 percent and 10 percent of additional import du ty respectively on certain steel products and aluminum products, from all countries except Canada, Mexico, Australia, Argentina, South Korea, Brazil and the European Union, which took effect from 23 March 2018.

It is indicated that the president of the United States would consider further adjustments to the additional import duties, alternative means, or implementation of quota.

According to China, the measures at issue in its request include, but are not limited to:

* Adjusting Imports of Steel into the United States, including the Annex, To Modify Chapter 99 of the Harmonized Tariff Schedule of the United States (Presidential Proclamation 9705, issued on 8 March 2018).

* Adjusting Imports of Aluminum into the United States, including the Annex, to Modify Chapter 99 of the Harmonized Tariff Schedule of the United States (Presidential Proclamation 9704, issued on 8 March 2018).

* Adjusting Imports of Steel into the United States (Presidential Proclamation 9711, issued on 22 March 2018).

* Adjusting Imports of Aluminum into the United States (Presidential Proclamation 9710, issued on 22 March 2018).

* Requirements for Submissions Requesting Exclusions From the Remedies Instituted in Presidential Proclamations Adjusting Imports of Steel Into the United States and Adjusting Imports of Aluminum Into the United States; and the Fi ling of Objections to Submitted Exclusion Requests for Steel and Aluminum (US Department of Commerce).

* Section 232 Tariffs on Aluminum and Steel, Additional Duty on Imports of Steel and Aluminum Articles under Section 232 of the Trade Expansion Act of 1962 (US Customs and Border Protection).

* Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. =A71862), cited in the Presidential Proclamations above for vesting authorities in the President of the United States to take the actions therein.

* The Effect of Imports of Steel on the National Security, An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, As Amended (US Department of Commerce, 11 January 2018)

* The Effect of Imports of Aluminum on the National Security, An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, As Amended (US Department of Commerce, 17 January 2018).

The measures also include any amendments, or successor, replacement, or implementing measures.

China said that the measures at issue, operating separately or together, appear to be inconsistent with the United States' obligations under:

* Articles XIX:1(a), XIX:2 of the GATT 1994 and Articles 2.1, 2.2, 4.1, 4.2 , 5.1, 7, 11.1(a), 12.1, 12.2 and 12.3 of the Agreement on Safeguards, because with regard to the measures at issue which constitute safeguard measures in substance, the United States has failed to make proper determination and to provide reasoned and adequate explanation of "unforeseen developments", imports "in such increased quantities" and "under such conditions", and "cause or threaten to cause serious injury to domestic producers"; and the United States has also failed to follow proper procedural requirements including, for example, notification and consultation procedures, and has failed to apply the measures in a proper manner, for example, application irrespective of source of supply and only for necessary period of time.

* Article II:1(a) and (b) of the GATT 1994, because the United States has imposed import duties on certain steel and aluminum products in excess of the duties set forth and provided in the United States' Schedule of Concessions and Commitments annexed to the GATT 1994, and has failed to exempt products of China subject to the measures at issue from ordinary customs duties in excess of those set forth and provided in the United States' Schedule of Concessions and Commitments annexed to the GATT 1994 and from all other duties or charges in excess of those imposed on the date of the GATT 1994 or those directly and mandatorily required to be imposed thereafter by legislation in force in the United States on that date.

* Article I:1 of the GATT 1994, because the selective application by the United States of the additional import duties on certain steel and aluminum products originating in different Members, including providing exemption or applying alternative means, has failed to extend immediately and unconditionally to China any "advantage, favor, privilege or immunity" granted by the United States "[w]ith respect to customs duties and charges of any kind imposed on or in connection with" the importation of products originating in the territory of other Members, as well as with respect to "the method of levying such duties and charges" and the "rules and formalities in connection with importation".

* Article X:3(a) of the GATT 1994, because the United States has failed to administer its laws, regulations, decisions and rulings in relation to the measures at issue in a uniform, impartial and reasonable manner.

As a result of the foregoing, China underlined the measures at issue appear to nullify or impair benefits accruing to China directly or indirectly under the cited agreements.

China said that it reserves the right to raise additional factual and legal claims and matters regarding the above mentioned measures during the course of the consultations and in any future request for panel proceedings.

[Referring to China's complaint against the US Section 232 measures, in a post on the IELP blog, Prof Simon Lester, a trade law academic, said that there is some disagreement about whether the US measures "constitute safeguard measures in substance".

["When I was having that conversation in the comments, I was thinking about the issue in the context of whether the US would be bringing a WTO complaint against the Chinese rebalancing/retaliation measures. But I think all the same arguments apply when you turn it around and have China challenging the US measures as violating the GATT/WTO safeguards obligations," he said.

[According to Prof Lester, the GATT Articles I and II claims "seem pretty straightforward, and the issue there is really going to be about the US Article XXI defense. Presumably the Article XXI defense will also apply to the safeguards claim, although it gets tricky because some of the safeguards obligations are under the Safeguards Agreement rather than the GATT. I don't see a non-violation nullification or impairment claim in there, which is disappointing on a personal level."

[Prof Lester posed a couple of questions: "Will this dispute actually get litigated, or will a settlement be reached? Will the US file a WTO complaint against China's retaliation, which, as noted, is based on the idea that the US measure is really a safeguard measure?" (See: http://worldtradelaw.typepad.com/ielpblog/2018/04/chinas-wto-complaint-agai nst-the-section-232-tariffs.html )]