Info Service on WTO and Trade Issues (Nov18/02)
5 November 2018
Third World Network
US blocks seven panel requests over steel and aluminium duties
Published in SUNS #8785 dated 31 October 2018
Geneva, 30 Oct (Kanaga Raja) - Requests for panel establishment by
seven WTO members over the additional duties imposed by the United
States under Section 232 of its trade law (on grounds of national
security) on imports of certain steel and aluminium products were
blocked by the US at a meeting of the WTO Dispute Settlement Body
(DSB) on Monday.
China, the European Union, Canada, Mexico, Norway, Russia and Turkey
submitted their first requests for panel establishment over the US
decision to impose an additional duty of 10% on imports of certain
aluminium products and an additional duty of 25% on imports of certain
All seven were first-time requests and panels establishment will be
automatic when the requests come up again before the DSB.
In turn, Canada, China, the European Union and Mexico blocked first-time
panel requests by the US over the additional duties imposed by these
members on certain products from the US.
According to trade officials, the US maintained that these duties,
imposed as "rebalancing measures" in response to the additional
duties imposed by the US on imports of steel and aluminium, violate
the WTO's most-favoured-nation principle.
Meanwhile, under a separate agenda item, the US again said it was
not in a position to agree to a joint proposal sponsored by some 68
WTO Members that called for the simultaneous launch of the selection
processes to fill four vacancies on the seven-member Appellate Body
as soon as possible. (A separate article on the AB blockage will appear
in a forthcoming issue of SUNS).
In a related development, the US made a long statement concerning
the issuance of "advisory opinions" by WTO panels and the
Appellate Body on issues not necessary to resolve a dispute (more
details of the US statement to follow in a forthcoming issue of SUNS).
MATTERS RELATING TO STEEL AND ALUMINIUM
In the disputes over the additional duties imposed by the US on steel
and aluminium, China, the European Union, Canada, Mexico, Norway,
Russia and Turkey were of the view that while the US claims that the
measures at issue were taken due to national security reasons, it
appeared that the duties, in their content and substance, were safeguard
measures imposed because the imports of steel products and aluminium
products were deemed to be in such increased quantities and under
such conditions as to cause or threaten injury to domestic producers
of these products.
According to trade officials, the seven complainants said that as
a result, the imposition of the additional duties was intended to
protect the US steel an d aluminium industries from the economic effects
The complainants questioned the US claim that the duties were justified
as an exception from WTO rules on national security grounds. They
said that such a claim can and should be reviewed by a WTO panel.
They also pointed out that the additional duties are not administered
in a uniform manner, since Argentina, Australia, Brazil and Korea
are exempt from the additional duty on steel, while Argentina and
Australia are exempt from the additional duty on aluminium.
In addition, quotas have been established for Argentina, Brazil and
South Korea in the case of imports of steel products, and for Argentina
in the case of imports of aluminium products.
The seven complainants said the measures are inconsistent with US
obligations under the WTO's Safeguards Agreement and the General Agreement
on Tariffs and Trade (GATT) 1994.
They noted that consultations between them and the US were held over
the course of July through early October but the talks failed to resolve
the dispute, prompting the requests for establishment of panels.
According to trade officials, China said that its consultations with
the US on 19 July were very limited and failed to resolve the dispute.
It said that the tariffs, taken under the guise of national security,
are e egregiously inconsistent with the provisions cited.
China and the six other complainants believe that the US actions are
inconsistent with the core principles of the WTO and that invoking
the national security exception should only be done on a bona-fide
The US said it was not surprised by China's panel request. It claimed
that China was following a pattern of using the WTO dispute settlement
system as an instrument to promote its non-market economic policies,
policies which have led to massive excess capacity in steel and aluminium
and distortions of world markets that are damaging the interests of
market-oriented economies, its businesses and its workers.
The US said that it would not allow China's "Party-State"
to fatally undermine the US steel and aluminium industries, on which
the US military, and by extension, global security, rely on.
The US said that it has explained that the tariffs are necessary to
address the threatened impairment these imports of steel and aluminium
pose to US national security.
It maintained that what threatens the international trading system
is not invocation of the national security exception, but China attempting
to use the WTO dispute settlement system to prevent any action by
any member to address its unfair, trade-distorting policies.
As a result, the US said it does not agree to the establishment of
In response, China said that the long arguments made by the US regarding
China's economic system were not part of the US Department of Commerce
report on which the Section 232 tariffs on steel and aluminium are
It seems that the US is again using Section 232 as a pretext for protectionist
measures, China said.
Brazil said that it was concerned about the restrictive US Section
232 measures and in particular the "elastic interpretation"
of the concept of national security.
The EU said in its request for a panel that the US actions have prompted
significant reactions over the past several months, both in the US
It noted that the request by the seven complainants was unprecedented
in that one member was being targeted with so many panel requests
in one day, which was a sign of the degree of objection the US actions
were eliciting from members.
The US arguments justifying its actions are simply wrong, the EU said.
The US tariffs are in effect safeguard measures designed to protect
domestic industries from imports, the national security justification
under Article XXI of the GATT can be reviewed in WTO adjudication,
and the Article XXI exception does not apply in this case, it said.
It's a very dangerous proposition to suggest that members can invoke
national security in order to protect the prosperity of domestic industries,
the EU said.
In response, the US said that it was deeply disappointed with the
EU's request for a panel and that the EU's action was misdirected.
Rather than supporting the international trading system by taking
action to resolve underlying concerns regarding non-market economic
conditions, the EU is undermining the system by asking the WTO to
do what it was never intended to do - it is simply not the role of
the WTO to review a sovereign nation's judgment of its essential security
interests, the US claimed.
The EU has supported the US interpretation of Article XXI in the past,
notably in 1982 when certain EU actions were examined before the GATT
Council. The US supported the EU at that time, it said.
The US said it wishes to be clear - if the WTO were to undertake to
review an invocation of Article XXI, this would undermine the legitimacy
of the WTO's dispute settlement system and even the viability of the
Infringing on a sovereign's right to determine what is in its own
essential security interest would run exactly contrary to the WTO
reforms that are necessary in order for this organization to maintain
any relevancy, the US said.
It said that it was not in a position to accept the EU's panel request.
According to trade officials, Canada, Mexico, Norway, Russia, and
Turkey also described the US actions as, for all intents and purposes,
safeguard measures and questioned the national security exception
cited by the US as a justification for its action.
Canada said that it was inconceivable that exports of steel and aluminium
to the US could threaten US national security and that it was very
concerned that these measures could undermine the integrity of the
global trading system.
Mexico said using the national security exception as the US has done
would frustrate the object and purpose of the WTO dispute settlement
Norway said that in making its panel request, it is joining six other
co-complainants in seeking to bring the US steel and aluminium tariffs
before a WTO panel.
This collective resort to dispute settlement reflects the serious
concern of the WTO membership over the US' actions. It also reflects
trust and confidence in the WTO as a forum for resolving international
The seven panel requests reflect a shared conviction among the co-complainants:
the US steel and aluminium tariffs are inconsistent with the US' WTO
obligations, it said.
It appreciated that the US does not characterise the steel and aluminium
tariffs as "safeguard measures" as a matter of US municipal
law. However, the question is not one of municipal law, said Norway.
Rather, the question is whether, as a matter of WTO law, the steel
and aluminium tariffs constitute "safeguard measures" under
the Agreement on Safeguards.
Norway said it is deeply concerned about the US action in this case,
and the negative impact it will have on the WTO system, if left unchallenged.
Norway is worried that the US would adopt measures so evidently inconsistent
with obligations fundamental to the rules-based trading system and
offer a purported justification that is so evidently divorced from
real-world security concerns, it said.
Russia said it fully shares the views expressed by the EU that the
unprecedented number of complainants is a sign towards shared understanding
of the inconsistency of the US measures with the cited agreements.
Taking into account that there are seven analogous requests for the
establishment of a panel against the US measures on steel and aluminium,
Russia requested the establishment of one single panel under Article
9.1 of the DSU.
In rejecting the panel requests, the US said that the Section 232
tariffs were necessary for the protection of its essential security
interests and were thus justified under Article XXI.
The position of the United States for over 70 years has been that
actions taken pursuant to Article XXI are not subject to review by
the WTO. Because the US has invoked Article XXI, there is no basis
for a WTO panel to review the cl aims of the complainants and no reason
for this matter to proceed further.
The US maintained that Russia was not even acting consistently with
views it expressed last year when the US agreed with Russia's understanding
of Article XXI that WTO members have sole discretion to determine
what is necessary to protect its essential national security interests.
Meanwhile, the US requested establishment of four panels over the
increased duties imposed by Canada, China, the European Union, and
Mexico on certain US imports.
The measure applies only to products originating in the US and do
not apply to like products originating from any other WTO Member.
As a result, the duties appear to be inconsistent with the most-favored
nation obligation under Article I of the GATT 1994, said the US.
Moreover, the additional duties applied by Canada, the EU and China
result in rates of duty greater than the rates of duty set out in
their schedule of concessions, and thus appears inconsistent with
Article II of the GATT 1994.
The US said that members claim the US is breaching WTO rules by imposing
tariffs on steel and aluminum imports, but at the same time they are
unilaterally retaliating against the US based on the pretense that
the US actions are safeguards.
This is the height of hypocrisy, the US claimed. It said that it has
not invoked WTO safeguard provisions for its actions, and because
the US has not done so, other members cannot simply act as if these
provisions have been invoked and use that pretense to apply safeguard
rules that are simply inapplicable.
According to trade officials, Canada, China, the European Union and
Mexico generally argued that the US tariffs are, for all intents and
purposes, safeguard measures, and the increased duties imposed by
the four members are completely justified counter-measures in accordance
with the WTO's Safeguards Agreement.
If it looks, acts and quacks like a safeguard, then it probably is
a safeguard, the EU said.
China said the US refused to hold consultations with China on possible
compensation for the steel and aluminum tariffs, leaving it no choice
but to impose rebalancing measures.
Mexico said its action was not in the purview of the WTO and that
it was rightly taken in line with its NAFTA commitments.
The four members said they were not in a position to accept the US
request for panels establishment.
Japan said that the US measures appeared to be safeguards, while Brazil
said that any unilateral measures taken by members undermine multilateral
The DSB agreed to establish a panel, at the second request of the
United Arab Emirates (UAE), to examine anti-dumping measures imposed
by Pakistan on imports of biaxially oriented polypropylene film from
The US, the EU, China, Saudi Arabia, Japan, Russia and Afghanistan
reserved their third party rights to the dispute.
The DSB also agreed to a second panel request from Japan over Korea's
decision to maintain anti-dumping duties on imports of stainless steel
bars from Japan.
The US, the EU, China, India, Kazakhstan, Russia and Chinese Taipei
reserved their third party rights to the dispute.
Russia blocked a request for the establishment of a compliance panel
by the EU to determine whether Russia had implemented an earlier WTO
ruling over Russian measures on the importation of live pigs, pork
and other pig products from the EU.
This was a first-time request and panel establishment will be automatic
when the request comes up again before the DSB.
Meanwhile, China blocked a panel request from the US over certain
measures imposed by China concerning the protection of intellectual
According to trade officials, the US said China agreed when it joined
the WTO to provide certain protections for intellectual property rights
(IPRs), among them to protect exclusive rights of patent holders and
to accord to nationals of other WTO members treatment no less favourable
than that it accords to its own nationals with regards to protection
However, China's policies consistently seek to disadvantage foreign
patent holders for the benefit of Chinese companies, the US claimed.
According to the US, these policies deny foreign patent holders, including
US companies, basic patent rights to stop a Chinese entity from using
the technology after a licensing contract ends and impose mandatory
adverse contract terms that discriminate against, and are less favourable
for, imported foreign technology.
These policies are in violation of the WTO's TRIPS Agreement, the
The US said that it held consultations with China on the matter in
July, but the consultations did not resolve the dispute, prompting
the US request for a panel.
China said it was disappointed with the US request for panel establishment
and that it positively responded to the questions posed by the US
in the consultations held on 18 July.
The accusations made by the US in its request for consultations are
meritless, said China, adding that it is not in a position to accept
the establishment of a panel.
This was also a first-time request and panel establishment will be
automatic when the request comes up again before the DSB.