Info Service on WTO and Trade Issues (Jul18/03)
2 July 2018
Third World Network
US panicky over escalating retaliations against its S.232 tariffs?
Published in SUNS #8710 dated 28 June 2018
Geneva, 27 Jun (D. Ravi Kanth) - The United States on Tuesday seemed
to be in a state of panic over the escalating retaliatory trade measures
launched against Washington's additional duties of 25% on steel and
10% on aluminium under its national security provisions.
The US Trade Representative Ambassador Robert Lighthizer complained
that the "new tariffs" by "certain World Trade Organization
(WTO) Members, including the European Union" undermined the global
In a detailed statement released on Tuesday (26 June), the USTR lashed
out at the EU and China for imposing retaliatory duties on American
On Tuesday, President Trump defended his decision to impose additional
duties on steel and aluminium after his national brand Harley-Davidson
signalled its move to shift some production facilities to the EU following
the retaliator y duties imposed by Brussels on Harley-Davidson motorcycles
and other items.
"We are going to intensify our fight against the US actions and
if we don't stand firm then the US will simply walk over other countries,"
a trade envoy of a dominant trading nation told SUNS on Tuesday.
The USTR said Washington is justified to "take actions on trade
in steel an d aluminum to protect our national security interests"
under its Section 232 provisions, which are "wholly legitimate
and fully justified, both as a matter of US law and WTO rules."
"By contrast," according to the USTR, "the European
Union has concocted a groundless legal theory to justify immediate
tariffs on US exports."
"Other WTO members, including China, have adopted a similar approach,"
Ambassador Lighthizer said.
"These retaliatory tariffs underscore the complete hypocrisy
that govern so much of the global trading system," the USTR maintained.
"For months, the EU, China, and others have criticized the trade
policy of the United States, while claiming to champion the WTO,"
Ambassador Lighthizer said, arguing that "their recent tariffs
prove that they simply ignore WTO rules whenever doing so is convenient."
The USTR went on to assert that "Article XXI [security exceptions]
of the General Agreement on Tariffs and Trade gives broad authority
to WTO Members to take action necessary to protect essential security
"For decades, the United States has consistently held the position
that act ions taken pursuant to Article XXI are not justiciable by
any panel of the WTO," Ambassador Lighthizer said.
"In other words," he argued, "each sovereign country
must have the power to decide, for itself, what actions are essential
to its security."
"Any other reading of the Article would represent an unacceptable
constrain t on the freedom and independence of all WTO Members,"
Ambassador Lighthizer said, setting a new precedent that unilateral
crowbar trade measures under national security provisions are justified
and they cannot be challenged under the multilateral dispute settlement
"President Trump's actions regarding steel and aluminum plainly
fall within the legitimate scope of Article XXI," said Ambassador
"Faced with massive excess capacity that puts the very future
of our steel and aluminum industries at risk, President Trump took
certain measures that he deemed essential to the national security
of the United States," he said, arguing that "these measures
were implemented only after long and careful analysis, and after all
trading partners had the chance to address our concerns."
"While the United States has acted responsibly here, the European
Union and its followers have not," the USTR said.
"Rather than work with the United States, they have retaliated
with tariffs designed to punish US companies and workers," Ambassador
Further, "in an effort to give cover to this blatant disregard
for WTO rule s, they claim to be acting in reliance on a narrow exception
that applies only in response to a safeguard measure," Ambassador
"That exception [under a safeguard action] does not apply here,
however, because the United States has not taken a safeguard measure,"
Because "the President's actions here were taken under a US national
security statute - not under the separate US statute for safeguard
measures," there "is no credible basis for the EU's legal
theory," Ambassador Lighthizer carped.
Also, "when the EU and others falsely assert the US steel and
aluminum duties are safeguard measures, and impose retaliatory duties
under this pretense, they do great damage to the multilateral trading
system," the USTR claimed.
"Indeed, they show that they are willing to distort WTO rules
to mean whatever they want, whenever they want," Ambassador Lighthizer
Therefore, "faced with these unjustified tariffs, the United
States will take all necessary actions under both US law and international
rules to protect its interests," he said.
It is not clear what the USTR implies by "international rules"
as there are only multilateral (trade) rules that are administered
by the World Trade Organization dispute settlement system.
The USTR's statement, however, raises several questions as well as
reveals the first signs of panic setting within the Trump administration
following the retaliatory measures imposed by China, the EU, and other
dominant trading nations in equal measure to Washington's unilateral
To start with, why is the US concerned/worried with the retaliatory
measure s imposed by China, the EU, Canada, Mexico, and other countries
under the WTO safeguard provisions and other rules such as non-violation
concerns when it feels secure and confident that their actions are
legally groundless while the actions taken by Washington are under
national security provisions?
Surely, the US can easily prove the "inconsistency" of the
retaliatory actions by China, the EU, and other countries before a
WTO panel and the Appellate Bod y.
Washington can also establish before a panel and the Appellate Body
that it is justified in imposing the additional duties under Article
Further, it can ask the panel and the AB to clarify the "broad
authority to WTO Members to take action necessary to protect essential
security interests" under Article XXI.
The US maintains that "actions taken pursuant to Article XXI
are not justiciable by any panel of the WTO."
Curiously, it has omitted the Appellate Body in its statement and
only mentioned "panel" which, in turn, raises another set
[So far, the WTO has not had a dispute involving claims of national
security exception under Art. XXI. Prior to the WTO, in the 1980s,
the US had (under President Reagan) invoked this provision of GATT
1947 to deny the Sandinist a regime of Nicaragua a sugar quota. Under
the old GATT, the dispute went before a panel, chaired by Norway's
Martin Huslid, but the panel found itself unable to give a ruling,
knowing that the US could block adoption.
[While the WTO, with its negative consensus for adoption of rulings,
has not had to deal with such a dispute to hand down a ruling, the
International Court of Justice at the Hague has given its view on
the scope for self-judgement in such clauses. In a dispute between
Djibouti and France under their treaty over Certain Questions of Mutual
Assistance in Criminal Matters, interpreting Article 2 (c) of the
1986 Convention on Mutual Assistance in Criminal Matters (which provide
s that the requested State may refuse a request for mutual assistance
"if it considers that execution of the request is likely to prejudice
[the] sovereignty, ... security, ... ordre public or other ... essential
interests" of the State), the ICJ gave its views on the scope
of such "self-judging" provisions.
[In its ruling in that case, the ICJ said: "... that, while it
is correct, as France claims, that the terms of Article 2 provide
a State to which a request for assistance has been made with a very
considerable discretion, this exercise of discretion is still subject
to the obligation of good faith codified in Article 26 of the 1969
Vienna Convention on the Law of Treaties (...)" (cited by Prof
Regis Bismuth, Professor at Sciences, PO Law School, France), in a
comment posted at the I ELP blog: (http://worldtradelaw.typepad.com/ielpblog/2018/04/the-us-china-national-securitysafeguardstariff-fight.html#comments)
After all, the US along with other countries had created the Appellate
Body to ensure that the rulings and recommendations of the Dispute
Settlement Body are implemented on the basis of the negative consensus
In short, why a rule-bound largest member of the global trading system
feel s diffident about its actions?
Why is the US preempting other members from taking what they reckon
as legally sound retaliatory measures under safeguard provisions?
Why is the US dismissing those actions as "hypocritical"
and legally "groundless"?
The short answer is the US is increasingly worried that it will not
be able to prevent a panel or the AB ruling against its national security
provisions a s wholly inconsistent with Article XXI.
The US also fears that a panel or the AB would justify the retaliatory
measures imposed by China, the EU, and other members under the WTO
Moreover, the ongoing trade disputes against the additional duties
by the US on steel and aluminum can take more than two years to be
By end-2019, the Appellate Body will disappear following the repeated
unilateral action by the US to block the selection process for filling
the three vacancies.
Therefore, the US could be worried that the additional duties imposed
by China, the EU, and other major countries will remain in place for
a long period without the issue being resolved by the dispute settlement
The US statement has vindicated the Thucydides' Melian Dialogue of
more than 2,500 years ago after the Peloponnesian war: "Right
is a question that only has meaning in relations between equals in
power. In the real world, the strong will do what they will and the
weak suffer what they must."
Clearly, the US is finding it difficult to face retaliatory actions
by Chin a and the EU which are certainly its "equal" powers
in global trade.
The US would not have to bother if the retaliatory measures are imposed
by other countries but not China and the EU which are its equals in
the global trading system. +