TWN Info Service on WTO and Trade Issues (Apr18/12)
19 April 2018
Third World Network

EU requests consultations with US on steel, aluminium tariffs
Published in SUNS #8664 dated 18 April 2018

Geneva, 17 Apr (Kanaga Raja) - The European Union has requested consultations with the United States under Article 12.3 of the WTO's Agreement on Safeguards over the additional tariffs imposed by the United States on imports of certain steel and aluminium products.

In a one-page communication dated 16 April 2018, the European Union noted that on 8 March 2018, the United States adopted "safeguard measures" in the form of a tariff increase on imports of certain steel and aluminium products, effective from 23 March 2018 and with an unlimited duration.

On 22 March, the effective date of the tariff increase with respect to the European Union was deferred to 1 May 2018, it said.

[Article 12.3 of the WTO Agreement on Safeguards states: "A Member proposing to apply or extend a safeguard measure shall provide adequate opportunity f or prior consultations with those Members having a substantial interest as exporters of the product concerned, with a view to, inter alia, reviewing the information provided under paragraph 2, exchanging views on the measure and reaching an understanding on ways to achieve the objective set out in paragraph 1 of Article 8."

[Article 8.1 states: "A Member proposing to apply a safeguard measure or se eking an extension of a safeguard measure shall endeavour to maintain a substantially equivalent level of concessions and other obligations to that existing under GATT 1994 between it and the exporting Members which would be affected by such a measure, in accordance with the provisions of paragraph 3 of Article 12. To achieve this objective, the Members concerned may agree on any adequate mea ns of trade compensation for the adverse effects of the measure on their trade ."]

In its communication to the Committee on Safeguards (G/SG/173), the EU pointed out that notwithstanding "the United States' characterisation of these measures as security measures, they are in essence safeguard measures."

The United States failed to notify the WTO Committee on Safeguards under Article 12.1(c) on taking a decision to apply safeguard measures, the EU said.

The EU further said that it "is a major exporting Member of the products involved."

Thus, having a substantial interest as an exporter in this case, the European Union requests consultations with the United States under paragraph 3 of Article 12 of the Agreement on Safeguards.

The EU said that the aim of the consultations is, inter alia, to exchange views and seek clarification regarding the proposed measures and reaching an understanding on ways to achieve the objectives set out in Article 8.1 of the Agreement on Safeguards.

The European Union suggests holding the consultations "as soon as possible."

The European Union said that it looks forward to a prompt reply by the United States in order to set a mutually convenient date and venue for these consultations.

"The European Union reserves all its rights under the Agreement Establishing the World Trade Organization and its Annexes including the Agreement on Safeguards," said the EU communication.

Last month, China had requested similar consultations with the United States, under Article 12.3 of 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.

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

In a two-page communication (G/SG/168) to the Committee on Safeguards, the United States had said that the premise for China's requests for consultations under Article 12.3 of the Agreement on Safeguards is that the Steel and Aluminum Proclamations (issued by President Trump) are safeguard measures f or purposes of that Agreement.

The United States said the President issued the Steel and Aluminum Proclamations pursuant to Section 232 of the Trade Expansion Act of 1962, "under which the President determined that tariffs are necessary to adjust imports of steel and aluminum articles that threaten to impair the national security of the United States."

The United States maintained that these actions are not safeguard measures, and therefore, "there is no basis to conduct consultations under the Agreement on Safeguards with respect to these measures."

The United States had said it did not take action pursuant to Section 201 of the Trade Act of 1974, which is the law under which the United States imposes safeguard measures.

It did not submit notifications with respect to these measures because they are not safeguard measures, the US had said.

According to the US, Article 12.3 of the Agreement on Safeguards states that a "Member proposing to apply or extend a safeguard measure shall provide adequate opportunity for prior consultations" with Members having a substantial interest in exports of the product concerned.

However, the United States said it is not proposing "to apply or extend a safeguard measure" with respect to steel or aluminum, and therefore Article 12.3 does not apply.

"Accordingly, China's requests for consultations pursuant to Article 12.3 have no basis in the Agreement on Safeguards," the US had maintained. (See SUNS #86 56 dated 6 April 2018 and SUNS #8660 dated 12 April 2018).

Meanwhile, China has initiated a dispute at the World Trade Organisation (W TO) over the additional duties imposed by the United States on imports of certain steel and aluminium products from China.

In a communication circulated to WTO Members on 9 April, China has sought consultations with the United States over these measures.

The request for consultations is the first step in the dispute settlement process at the WTO (see SUNS #8660 dated 12 April 2018).