Info Service on WTO and Trade Issues (Apr18/18)
26 April 2018
Third World Network
US faulted at WTO Safeguards Committee over S.232 actions
Published in SUNS #8669 dated 25 April 2018
Geneva, 24 Apr (Kanaga Raja) - Several members of the World Trade
Organisation (WTO) on Monday voiced sharp concern and disappointment
over the decision by the United States to impose additional tariffs
on imports of certain steel and aluminium products under Section 232
of the Trade Expansion Act of 1962.
The Russian Federation, Venezuela, Turkey, Norway, Switzerland, India
and Singapore all joined China in criticising US imposition of additional
tariffs on imports of certain steel and aluminium products, claiming
"national security" and purporting to act under S.232 of
the US Trade Expansion Act of 1962.
This criticism of the US actions came at a formal meeting of the Committee
on Safeguards, under an agenda item requested by China on measures
taken by the US following its Section 232 investigations.
In recent weeks, a growing number of WTO members have been seeking
consultations with the US under Article 12.3 of the WTO's Agreement
on Safeguards over its S. 232 actions.
So far, China, the European Union, India, the Russian Federation and
Turkey have requested consultations with the US over its measures
following the Presidential Proclamations on Steel and Aluminium issued
by President Donald Trump under Section 232 of the Trade Expansion
Act of 1962 imposing additional tariffs on these products. (See SUNS
#8668 dated 24 April 2018).
Also at the meeting of the Safeguards Committee on Monday, Korea,
the Philippines, the European Union, China, Singapore, Switzerland,
Norway and Malaysia criticized the recent US decision to impose safeguard
tariffs on imported solar cells.
Korea, China, and Mexico also criticized a similar action taken by
the US targeting imported large residential washers.
Meanwhile, Korea, Turkey, Argentina, China, Egypt, Vietnam, Chile
and India voiced criticism over the decision by the EU on 26 March
to initiate a safe guard investigation on imports of 26 steel products.
According to trade officials, at the meeting of the Safeguards Committee
on Monday, the Russian Federation, Venezuela, Turkey, Norway, Switzerland,
India and Singapore joined China in voicing their concerns over the
US actions under Section 232.
In a strong statement, China said that on 8 March US President Trump
issued a proclamation finding that steel and aluminium were being
imported into the US market in such quantities as to pose a national
security threat to the United States, and imposed tariffs of 25% and
10% on imports of steel and aluminium, respectively.
China said that although the measures were imposed under the guise
of national security, these are safeguard measures and that the US
should have responded to its request for consultations under the Safeguards
According to trade officials, China underlined that the Section 232
actions severely damage the stability of the multilateral trading
system and distort international supply chains, with considerable
negative follow-up effects.
For example, it pointed out, some members have been forced to take
measures because of concerns regarding trade diversion arising from
the steel and aluminium tariffs.
China warned that if such measures deliberately undermining the multilateral
trading system cannot be curtailed, the multilateral system will face
the risk of collapse.
China also emphasised that the US decision to exempt certain exporters
from the tariffs, including some of the largest suppliers to the US
market, clearly violated the WTO's most favoured nation principle.
In an apparent reference to the US-Korea free trade agreement, China
said another example is the US use of the exemptions to push another
member to agree to voluntary export restraints on steel in their bilateral
trade agreement, which is clearly forbidden under multilateral trading
China said that it opposes the US approach and that members cannot
allow this unilateralist momentum to continue.
A member is not allowed to use tariff measures as a threat to pressure
other members unilaterally, said China, adding that the answer is
to respect the multilateral trading system.
According to trade officials, the US reiterated what it had said in
an earlier submission to the Safeguards Committee (G/SG/168), in that
the tariffs are not safeguard measures, and therefore, there was no
basis to conduct consultations under the Safeguards Agreement with
respect to these measures, and that there was nothing to justify China's
imposition of "rebalancing" tariffs under Article 8.2 of
the Safeguards Agreement.
The US maintained that China's response on 2 April in imposing "rebalancing"
tariffs on 128 US products (G/SG/N/12/CHN/1) has no basis under the
WTO's Safeguards Agreement, since these are not safeguard measures.
It also claimed that China has not asserted any other legal basis
for its action, therefore, there appears to be no basis for China's
actions under the WTO rules.
The US maintained that China has adopted non-market-oriented policies
in these sectors, leaving WTO members with no other choice to address
According to the US, it is important to put first things first and
discuss such distortions.
The US maintained that China doesn't appear to be addressing this
but in fact appears to be increasing state intervention under its
"Made in China 2050" industrialization and innovation programme.
The US said until China alleviates the global problem it has created,
members will have no choice but to address the problem in the form
they consider most appropriate.
According to trade officials, noting that this issue was already raised
in the Goods Council, Russia believed, like China, that the US action
was in essence a safeguard measure.
According to Russia, the whole process leading up to the imposition
of tariffs lacked transparency and deprived foreign producers the
right to provide evidence in the hearings.
What is most outrageous, said Russia, are the exclusions exempting
certain suppliers, including the biggest suppliers, from the tariffs.
Russia said it cannot understand how the US intends to achieve its
goal of protecting the US industry when the biggest exporters are
The US actions only cause instability in trade, lead to increased
trade barriers, and create a lose-lose situation for all members,
Turkey said that it was not convinced by the national security argument
and that such claims should only be used in exceptional circumstances.
According to Turkey, the G20's Global Forum on Steel Excess Capacity
provides a venue to discuss the problem of excess capacity, and that
such problems should be resolved through coordinated efforts, rather
than resort to unilateralism.
Norway said that it was deeply concerned by the US actions. While
these act ions are harming Norwegian steel producers, Norway said
what it is most concerned about is that the actions are undermining
the multilateral trading system.
Switzerland shared the concerns of the other Members regarding the
unilateral US actions. It said that it did not understand the rationale
of exempting certain members while similar members are subject to
According to trade officials, India said that such unilateral actions
have no place in the international trading system and that it was
watching the situation closely.
Singapore said that the US actions adversely affect global supply
chains and downstream US industries.
China pointed out that it was working with other members to resolve
their relevant concerns and that the G20's Global Forum on Steel Excess
Capacity and other fora exist to discuss the issue.
Good discussions have already taken place, and China has already made
significant progress in reducing domestic steel production and is
continuing to further reduce capacity, it said.
US ACTIONS ON SOLAR CELLS, LARGE RESIDENTIAL WASHERS
Meanwhile, the US made a long statement under the agenda item on US
safeguards on solar cells and large residential washers (G/SG/N/8/USA/9,
According to trade officials, with respect to the imposition of safeguard
duties in January on imported solar cells and large residential washers,
the US maintained that the investigation into both products was carried
out in a very open an d transparent manner, with WTO members notified
of the progress in the US investigation during every step of the process.
WTO members were given ample opportunity to present written arguments,
Recommendations were forwarded to the president, who took the measures
he considered necessary to remedy the situation.
Members were also given the opportunity to consult with the US on
its actions under the Safeguards Agreement, with those requesting
consultations holding talks with the US from February to April.
The US said that it then submitted to the WTO joint notifications
with nearly all members it held consultations with, and most of the
notifications contained a specific date regarding the date by which
members can take actions of maintaining substantially equivalent levels
With regards to the safeguard on solar cells, the US said that it
was still considering requests for exclusions and that it expected
an announcement on this in the coming months.
According to trade officials, Korea said that it considered the US
measures to be excessive and inconsistent with the WTO agreements
with respect to the alleged significant increase in imports, serious
injury to competing US producers, and direct causation between the
increased imports and the injury suffered.
Korea informed that it had failed to agree with the US on compensation
for both the safeguard measures and has notified the WTO of its plans
to suspend concessions against the US.
Korea expressed hope that the measures would be withdrawn as soon
The Philippines said that it had held consultations with the US on
the safe guard on solar cells and that both sides agreed to continue
their discussion while maintaining their rights under the Safeguards
According to the Philippines, they also agreed that the Philippines
had the right to suspend concessions after 6 February 2021 or following
any decision by the Dispute Settlement Body declaring the safeguard
to be in violation of WTO rules.
The EU said it was very concerned about the use of safeguards by the
US, which was not a traditional user of such remedies, having last
imposed a safeguard in 2002.
The EU maintained that the safeguard on solar cells is not appropriate
because the problem was primarily the increased imports from a number
of Asian producer s but was causing collateral damage to others.
EU imports were not the problem, it claimed.
According to trade officials, China voiced concerns over both the
investigations on solar cells and large residential washers.
With respect to the investigation on solar cells, almost all important
data was kept confidential, and particular key indicators were redacted,
China said the US failed to consider how its domestic industry was
affected by the global market downturn in the solar cells market,
instead, attributing injury to imports.
Furthermore, the US did not impose the tariffs in response to unforeseen
circumstances as required under the Safeguards Agreement.
Singapore said it was concerned about the US action and that the tariffs
will only dampen growth and increase costs to US producers.
Switzerland expressed deep disappointment with the US decision. It
said that blocking all imports, even those not contributing to the
problem, was not a proper solution.
Norway said that it regretted the US decision and had doubts that
it met the criteria for imposition of a safeguard under WTO rules.
Malaysia said the US solar safeguard was causing serious injury to
its domestic producers and that it had agreed to continue discussions
with the US on the matter.
Mexico said it was very concerned about the US change of position
on the use of safeguards and that safeguards should only be used in
Mexico also pointed to a US International Trade Commission finding
that exports of washing machines from Mexico do not harm the US industry.
EU SAFEGUARD INVESTIGATION ON STEEL PRODUCTS
On the agenda item on the European Union safeguard investigation on
certain steel products (G/SG/N/6/EU/1), the EU said that its safeguard
investigation on imports of 26 steel products was still in the initial
phase, with interested parties being registered and questionnaires
It maintained that the investigation would be carried out in line
with WTO requirements.
According to trade officials, Korea expressed concern over the increasing
threat to global trade due to the protectionist measures imposed by
Korea argued that the EU investigation is not in response to any sudden,
sharp increase in imports, nor is it in response to unforeseen circumstances.
It is also difficult to argue that the EU industry has suffered injury
since its financial situation has improved since 2017.
Korea said that it hoped the investigation would be terminated without
any safeguard being imposed.
Turkey expressed disappointment over the EU action. It said the EU
should contribute to stopping protectionism, not making the problem
more difficult to resolve.
Argentina said it should be exempted from the investigation on de
minimis grounds, since its steel producers account for less than a
tenth of one per cent of EU steel imports.
China viewed the EU's actions as an incorrect move that will only
damage the global steel order. It urged the EU to follow WTO rules.
Egypt also questioned whether the EU investigation was in response
to a sharp, significant increase in imports.
Egypt, along with Vietnam, asked to be exempted from the investigation
as a developing country exporter accounting for de minimis shares
of the EU market.
Chile said that the EU notification of the investigation was unclear
about the exact products targeted.
According to trade officials, India said that the evidence provided
by the EU for justifying the investigation does not meet the standards
of the Safeguards Agreement.
Under the agenda item on India - solar cells (G/SG/N/8/IDN/17), the
EU said that safeguard measures should only be imposed under exceptional
circumstances, particularly if the imports causing problems come from
predominantly one source.
The EU claimed that India's injury analysis on imported solar cells
is inconclusive and its causal analysis doubtful. Injury to other
domestic producers needs to be assessed, it said.
The EU said it trusts that India will refrain from imposing any definitive
Japan said an investigation should include reasonable public notice
and other appropriate means to ensure interested parties can present
According to trade officials, India said that it had informed members
in January that a preliminary safeguard of 70% was notified to WTO
members in January and that this was followed by a challenge to the
measure in the domestic courts, so the matter is sub judice.
India said it has nothing further to add at this stage other than
to say that its investigation will be carried out in line with WTO
On the agenda item on Thailand's request to review suspension of concession
s under the Safeguards Agreement (G/SG/158/Rev.1), Thailand asked
the Safeguards Committee to review Turkey's imposition of "rebalancing"
tariffs on imports of air conditioners from Thailand in response to
Thailand's earlier imposition of a safeguard on non-alloy hot rolled
steel flat products in co ils and not in coils.
Thailand first imposed a three-year safeguard in 2014 and then decided
last June to extend the safeguard for a further three years, until
Thailand said that consultations were held with Turkey in April 2017
on the extension of the measure and that there was no discussion on
the issue relating to maintaining a substantially equivalent level
of concessions due to the fact that Turkey's import share of the subjected
goods counted only for 5.14% of Thai land's total imports.
Nevertheless, Turkey announced plans in August 2017 to suspend concessions
in the form of a 9.27% tariff on imported Thai air conditioners for
a three-year period, taking as its reference a period when imports
of Thai air conditioners to Turkey were particularly high.
Thailand said it considers the tariff imposed by Turkey is not "substantially
equivalent" to the lost trade arising from the Thai safeguard
on steel, and that the substantially equivalent concessions for Turkey
should be at most a 5.7% additional duty.
Thailand therefore asked that, in line with Article 13.1(e) of the
Safeguards Agreement, the Committee review the Turkish action and
determine whether it can be considered "substantially equivalent".
According to trade officials, the Chair of the Safeguards Committee,
Mr. Kensuke Tsunoda of Japan, said that in line with Article 13.1(e),
the role of the Committee is to review the matter and report to the
WTO's Goods Council as appropriate.
Since it was unlikely that members would reach consensus on Thailand's
request, the Chair said that discussions would have to continue beyond
today's meeting and that his successor would have to convene meetings
on the matter.
Turkey said its notification on the suspension of concessions was
appropriate and in full conformity with the Safeguards Agreement.
Contrary to Thailand's claim, said Turkey, nothing in the Agreement
requires the suspension of concessions to be determined in a three-year
period preceding the original safeguard measure.
It also refuted Thailand's claim that the two sides never discussed
maintaining a "substantially equivalent" level of concessions.
The US said that Thailand's request was similar to the one presented
to the Committee in 2011, albeit under Article 13.1(b) of the Safeguards
Agreement concerning differences over whether procedural requirements
under the Agreement were followed.
At that time, the Chair provided a factual report to the Goods Council
on the Committee's discussions.
The US suggested that the Committee consider engaging on the issue,
listen to views, and come up with a result consistent with Article
Australia also pointed to the earlier discussions in 2011 that resulted
in a Chair's report to the Goods Council, and that provisions needed
to be in place to ensure the Committee carries out its required functions
on the matter.
The Chair said that he would ask the Committee's incoming chair to
hold consultations with members on the issue as soon as possible.
Meanwhile, the US, EU, Argentina, Australia, and New Zealand voiced
concern s over Chile's initiation of a safeguard investigation on
imports of powdered milk and Gouda cheese, particularly with respect
to the speed of the investigation and lack of apparent support from
the local industry.
Chile said there were exceptional circumstances justifying the speed
of the investigation (G/SG/N/6/CHL/20).
The US and New Zealand reiterated concerns over the continued absence
of notifications from some WTO members regarding their safeguards
The US said that it submitted a revised proposal on how to improve
compliance with notification requirements across the board to the
March meeting WTO's Goods Council (JOB/CTG/10/Rev.1) and that it would
begin meeting with interested WTO members to discuss the initiative.
According to trade officials, Japan again voiced concerns with global
overcapacity in the steel sector, saying that much of the increased
safeguard activity was a result of oversupply in steel.
This was mainly caused by emerging economies expanding capacity beyond
what was economically rational, it claimed.
Members should avoid resorting to restrictive measures that are inconsistent
with the WTO agreements, Japan said.
The Committee confirmed the appointment of Mr Hyouk Woo Kwon of Korea
as its new chair for 2018.