TWN Info Service on WTO and Trade Issues (Mar18/07)
12 March 2018
Third World Network
       
US under fire at General Council over proposed unilateral actions
Published in SUNS #8638 dated 9 March 2018

Geneva, 8 Mar (Kanaga Raja) - The United States once again came under fire from many members of the World Trade Organisation (WTO), both developed and developing, over its announced intention to impose steep tariffs on imports of steel and aluminium purportedly on national security grounds.

The criticisms of the US plans came at the formal meeting of the WTO's General Council on Wednesday, when China, that had inscribed the item of "Other Business" on the GC agenda, took the floor to express its concerns.

The Chinese criticism was followed by 17 other WTO members who all expressed strong concerns over the announced US intention to impose steep tariffs on steel and aluminium under Section 232 of the Trade Expansion Act of 1962.

On 5 March, at the informal Heads of Delegation (HOD) meeting of the Trade Negotiations Committee (TNC), many members had voiced strong concerns over the US move (see SUNS #8636 dated 7 march 2018).

Nearly every member that had spoken at that informal HOD/TNC meeting had also expressed strong concerns over the impasse in the filling of three current vacancies in the WTO's seven-member Appellate Body.

The United States has repeatedly blocked efforts to launch the selection process to fill these vacancies on the Appellate Body.

At the formal General Council meeting on Wednesday, apart from China, the other members who expressed concerns over the US intention to impose tariffs on steel and aluminium were the European Union (comprising 28 member states), Canada, Chinese Taipei, Turkey, the Russian Federation, Hong Kong-China, Australia, Norway, South Korea, Japan, Pakistan, Switzerland, Mexico, Uganda, India, Brazil and Venezuela.

While the WTO members that spoke at the informal HOD/TNC meeting on 5 March did not name the United States in their interventions and instead referred to it as "one member", at the formal General Council meeting, however, China mentioned the United States by name, as did the EU, Canada, Turkey, the Russian Federation, Norway, Japan, Switzerland, Uganda and India.

According to trade officials, many members that spoke expressed both commercial and systemic concerns over the US move. Many of them also referred to the "elastic" use by the US of national security exceptions, saying that these had consequences.

"Many said they feared tit-for-tat retaliation which could spiral out of control, damaging the global economy and the multilateral trading system," said WTO spokesman Keith Rockwell, at a media briefing following the General Council meeting on Wednesday.

Asked how "we will know if we are in a trade war," Rockwell said: "There is no clear definition of a trade war. But the Director-General has made very clear he is concerned about the escalating nature of this situation, and he is prevailing upon the membership to keep cool heads and not let things spiral out of control."

The point is nothing has actually been implemented yet, he added.

Rockwell declined to comment when asked about President Donald Trump's remarks about the WTO being "a catastrophe" (see separate story).

Asked what the WTO or the Secretariat in particular can do to prevent a tit-for-tat trade retaliation, Rockwell said "use trade diplomacy in every way possible. Reach out to all parties, continue to explain to everyone the nature of the situation and the possible consequences for missteps."

Rockwell said that the Director-General has clearly expressed his concerns for the system.

Rockwell recalled two other times when a Director-General has done this. One was in 2008 when the global financial crisis was underway and the other was in 1998 when the Asian financial crisis was unfolding. In each case the concern was systemic.

Rockwell also said that DG Azevedo has been reaching out to a great number of members.

STRONG CONCERNS FROM MEMBERS

According to trade officials, China said that it has grave concerns about the national security exception that the United States has cited for the proposed tariffs on steel and aluminium. This will significantly impact trade in steel and aluminium.

China also voiced systemic concerns, and said that the US investigation was completely unilateral and it will undermine the rules-based multilateral trading system.

Pointing out that section 232 is a domestic law and not a WTO rule, China said the United States had not carried out an investigation in a transparent way, and it has already imposed more than 200 trade remedies within the last year on steel and aluminium.

According to China, this over-protected domestic industry will never be able to solve its problems through protectionism.

The EU expressed great concerns about the actions planned by the United States. It said the information that has been made available suggests that this will be made under the guise of national security.

This is a fundamental concern to the entire organisation, the EU emphasised, adding that the response of other members to this action is not the issue at this stage.

All members should comply with WTO agreements where there is ample space to use various safeguard measures, and they can do this under WTO rules in a legal and consistent manner.

The EU urged the United States to show restraint and to enter into dialogue. The EU said it will consider all possible responses including dispute settlement activity and WTO-consistent re-balancing measures.

Canada expressed very strong concerns about the planned safeguard tariffs announced by the United States. It had both systemic and commercial concerns.

It is concerned about the suggestion of national security. It is certainly inconceivable that Canadian exports could possibly be a threat to US national security, it said.

Canada said that it is concerned about the impact of this action on its own steel and aluminium industries.

With respect to the national security issue, Canada said, "We fear that the United States may be opening a Pandora's Box that we would not be able to close."

Chinese Taipei said that it has serious concerns about the national security-based tariffs on steel and aluminium.

The toll is very high and we have to be very careful here. Any unjustifiable action could lead to proliferation and tit-for-tat responses, it said.

Turkey also voiced similar concerns particularly with respect to the national security based tariffs.

The Russian Federation urged the United States to abide by WTO rules, while Hong Kong-China also expressed concerns.

Australia said that international trade rules must be upheld.

Norway expressed deep concern over the Section 232 process. It said this represents a serious challenge to the multilateral trading system. It urged the United States to re-consider.

Korea also expressed serious concerns over the US move. It said that GATT Article XXI (on security exceptions) must be used in a measured and strict manner.

Japan also shared the concerns over the unilateral actions taken by the United States.

Pakistan said that this should be of major concern for developing countries. They depend on the multilateral trading system and anything which threatens that could foretell consequences for developing countries.

Switzerland also expressed concerns about the US action and the potential consequences for the WTO.

Mexico said that no one benefits from going against the rules.

Uganda said although it did not export steel and aluminium to the United States, there could be consequences for them. It will be affected by this if the trading system is damaged. We must be very watchful, it said.

According to trade officials, India also expressed its concerns. It said that we must be careful not to misuse the national security exception under the GATT.

Unilateral measures have no place in the multilateral trading system, India pointed out.

Brazil said it has deep concerns about an elastic or broad application of the national security exception.

Venezuela said it is joining the group that has expressed its concerns particularly about the unilateral nature of the US actions.

According to trade officials, the United States did not take the floor under this agenda item.

Meanwhile, also under Other Business, Canada said that it will be hosting a workshop on trade and gender (one of the issues that failed to garner multilateral consensus at the Buenos Aires Ministerial Conference) on 16 March.

OTHER MATTERS

Under the agenda item of Report by the Chairman of the Trade Negotiations Committee and Report by the Director-General, Burkina Faso, on behalf of the Cotton-4 countries, said that it was disappointed with the results at Buenos Aires.

According to trade officials, after 14 years, Burkina Faso said that it had hoped to have had more progress with respect to the reductions in trade distorting domestic support for cotton.

It called on WTO members to come up with proposals. It had also done this at Buenos Aires, it said.

Burkina Faso said that it had called for sharp focus in terms of analysis of the numbers and in terms of finding a solution.

It was disappointed that this did not give rise to constructive commitments by members. It disappointed Ministers from the C-4 countries in that they did not get a chance to negotiate outcomes.

The issue was basically taken off the table and was not even the subject of negotiation, it said.

It expressed great frustration over this, saying that there will be a meeting of the C-4 focusing on this issue on 9-12 April.

According to trade officials, DG Azevedo did not take the floor under this agenda item. His statement at the informal HOD/TNC meeting on 5 March will be read into the record as well as the statements of some 45 delegations at that same informal meeting.