TWN Info Service on WTO and Trade Issues (Apr18/13)
19 April 2018
Third World Network

India also seeks consultations with US on steel, aluminium tariffs
Published in SUNS #8665 dated 19 April 2018

Geneva, 18 Apr (Kanaga Raja) - India 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.

India has thus now joined China and the European Union in requesting consultations with the United States over its measures 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 imposing the additional duties on steel and aluminum imports under S. 23 2, but granting exemptions from the additional tariffs to some of its strategic al lies, the US has claimed that it was doing so on grounds of "national security".

However, China, the EU and now India have looked at the "substance" of the effect of the US action, viewing it as a "safeguards" action under the WTO’s Safeguards Agreement, rather than its claims of "national security".

(See SUNS #8656 dated 6 April 2018, SUNS #8660 dated 12 April 2018 and SUNS #8664 dated 18 April 2018).

Meanwhile, the United States has informed the Dispute Settlement Body (DSB) that it is willing to enter into consultations with China over two disputes initiated by China at the WTO, one on the US actions on steel and aluminium products under Section 232, and the other on proposed additional tariffs on various Chinese goods following investigations under Section 301 of the Trade Act of 1974 (see below).

In two separate one-page communications dated 17 April 2018, one on aluminium and the other on steel, India said that in accordance with Article 12.3 rea d with Article 8.1 of the Agreement on Safeguards, it "seeks to exercise its right to consult on the specifics of the measures and its right to determine appropriate trade compensation with the United States."

India also said that it reserves the right "to raise additional issues and make further factual and legal arguments, without prejudice to any other remedies provided for under the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and the covered agreements during the course of consultation s or anytime thereafter."

India said that it looks forward to receiving a prompt reply to its request s from the United States and to setting a mutually convenient date and venue for the abovementioned consultations.

[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 with respect to imports of aluminium (G/SG/176), India said that on 8 March 2018, the United States is sued a presidential proclamation indicating that aluminum articles are being imported into the United States in such quantities as to threaten to impair the national security of the United States.

To address this situation, said India, the United States has decided to adjust imports of certain aluminum articles by imposing a 10% ad valorem tariff on such products with effect from 23 March 2018.

India considers the above-mentioned measure of the United States to be an emergency action/safeguard measure within the meaning of Article XIX of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the Agreement on Safeguards.

Accordingly, as an affected Member with significant export interest to the United States for the products at issue, India requests consultations with the United States pursuant to Article 12.3 and Article 8.1 of the Agreement on Safeguards and Article XIX:2 of the GATT 1994.

In its communication to the Committee on Safeguards with respect to imports of steel (G/SG/177), India said that on 8 March 2018, the United States issued a presidential proclamation indicating that steel articles are being imported into the United States in such quantities as to threaten to impair the national security of the United States.

To address this situation, the United States has decided to adjust imports of certain steel articles by imposing a 25% ad valorem tariff on such products with effect from 23 March 2018.

India considers the above-mentioned measure of the United States to be an emergency action/safeguard measure within the meaning of Article XIX of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and the Agreement on Safeguards.

Accordingly, as an affected Member with significant export interest to the United States for the products at issue, India requests consultations with the United States pursuant to Article 12.3 and Article 8.1 of the Agreement on Safeguards and Article XIX:2 of the GATT 1994, said the Indian communication.

US COMMUNICATIONS ON S232, S301 ACTIONS

Meanwhile, the United States has responded to the request for consultations by China which has initiated a dispute at the WTO 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 had sought consultations with the United States over these measures, which is the first step in the dispute settlement process at the WTO.

In a one-page communication circulated to WTO Members on 17 April 2018 (WT/DS544/2), the United States said that on 5 April 2018, it received Chin a's letter of the same date requesting consultations pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Article XXII of the General Agreement on Tariffs and Trade 1994 (GAT T 1994), and Article 14 of the Agreement on Safeguards.

China's request concerns tariffs on imports of steel and aluminum articles imposed by the President of the United States pursuant to Section 232 of the Trade Expansion Act of 1962 (Section 232).

According to the US communication, the President determined that tariffs were necessary to adjust the imports of steel and aluminum articles that threaten to impair the national security of the United States.

"Issues of national security are political matters not susceptible to review or capable of resolution by WTO dispute settlement," the US maintained.

Every Member of the WTO retains the authority to determine for itself those matters that it considers necessary to the protection of its essential security interests, as is reflected in the text of Article XXI of the GATT 1994, it said.

China's request purports to be pursuant to Article 14 of the Agreement on Safeguards.

"However, the tariffs imposed pursuant to Section 232 are not safeguard measures but rather tariffs on imports of steel and aluminum articles that threaten to impair the national security of the United States," the US claimed.

The United States 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.

"Therefore, there is no basis to consult pursuant to the Agreement on Safeguards with respect to tariffs imposed under Section 232."

"Without prejudice to the US view that the tariffs imposed pursuant to Sect ion 232 are issues of national security not susceptible to review or capable of resolution by WTO dispute settlement, and that the consultations provision in the Agreement on Safeguards is not applicable, the United States accepts the re quest of China to enter into consultations," said the US communication.

The United States said that it has taken note of China's notification of 29 March 2018, in which China stated its intent to suspend concessions and other obligations, purportedly under Article 8.2 of the Agreement on Safeguards.

It noted further that China put these measures into effect on 2 April 2018.

"Because the tariffs imposed pursuant to Section 232 are not safeguard measures, the United States considers that Article 8.2 of the Agreement on Safeguards does not justify China's suspension of concessions or other obligations," said the US.

"China has asserted no other justification for its measures, and the United States is aware of none. Therefore, it appears that China's actions have no basis under WTO rules."

The United States however told China: "We stand ready to confer with officials from your mission on a mutually convenient date for these consultations."

In a separate communication (WT/DS543/2), circulated to WTO Members also on 17 April 2018, the United States signalled that it stands ready to confer with China on a mutually convenient date for consultations requested by China, i n a dispute that China had initiated at the WTO concerning proposed US tariff measures on certain Chinese goods under Section 301 of the Trade Act of 197 4.

In its communication, the United States said that on 4 April 2018, it received China's letter of the same date requesting consultations pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) and Article XXIII of the General Agreement on Tariffs and Trade 1994. The letter has been circulated as WT/DS543/1.

The United States considers that China's April 4 letter does not meet the requirements of Article 4 of the DSU.

By its own terms, the United States maintained, China's letter addresses "proposed tariff measures".

"As China acknowledges in its letter, and as China well knows, the United States has adopted no tariff measures with respect to China."

Consequently, said the United States, the issues raised in China's April 4 letter are not "measures affecting the operation of any covered agreement taken within the territory of" a Member, within the meaning of DSU Article 4.2.

China's letter therefore does not "identif[y] the measures at issue" pursuant to DSU Article 4.4 as there are no tariff measures in existence.

For these reasons, the US maintained, China's April 4 letter does not conform to the requirements of DSU Article 4.

"Nonetheless, the United States is willing to enter into consultations with China, without prejudice to the US view that China's letter does not comply with D SU requirements."

At such consultations, the United States said it looks forward to hearing from China how it intends to address China's "trade-distorting policies" addressed in the US investigation mentioned in China's letter to support fairness in the international trading system.

Further, the United States said it takes note of the 2018 Public Notice No. 34 of the Ministry of Commerce of the People's Republic of China entitled Public Notice on Imposing Additional Tariffs on Certain Imported Products Originating from the United States.

The public notice was issued on 4 April 2018, the same date as China's letter requesting consultations.

According to the United States, the public notice refers to the US investigation mentioned in China's April 4 letter and states that China will "take measures to impose additional tariffs, at a tariff rate of 25%, on soybeans and other agricultural products, automobiles, chemical products, airplanes, and other products originating from the United States, which concerns approximately $ 50 billion of the value of China's imports from the United States in 2017."

At the consultations, the United States said that it looks forward to hearing China's justification for deciding to impose these additional tariffs. "We stand ready to confer with officials from your mission on a mutually convenient d ate for these consultations," said the United States.

In its request for consultations with the United States over this issue (WT/DS543/1), dated 4 April 2018, China had said that on 22 March 2018, the United States published related documents of the Section 301 investigations against China.

On 3 April, the United States published a list of products of Chinese origin, as identified in the Annex to the Notice of Determination and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301 , that an additional ad valorem duty of 25 percent is proposed to be imposed.

The proposed duties would be only applied to China's products and in excess of the United States' bound rates in its Schedule of Concessions and Commitments annexed to the GATT 1994.

According to China, the legal documents through which the United States implements its proposed tariff measures include:

1. Section 301-310 of the Trade Act of 1974, as amended (19 U.S.C., paragraphs 2411-2420);

2. Findings of the investigation into China's acts, policies and practices related to technology transfer, intellectual property and innovation under Section 301 of the Trade Act of 1974, dated 22 March 2018;

3. Actions by the United States Related to the Section 301 Investigation of China's Laws, Policies, Practices, or Actions Related to Technology Transfer, Intellectual Property, and Innovation, dated 22 March 2018;

4. Notice of Determination and Request for Public Comment Concerning Proposed Determination of Action Pursuant to Section 301: China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Proper ty, and Innovation, dated 3 April 2018.

According to the Chinese communication, these measures appear to be inconsistent with the relevant provisions of the WTO covered agreements including:

1. Article I.1 of the GATT 1994, because the measures at issue fail to extend immediately and unconditionally to China an "advantage, favour, privilege or immunity" granted by the United States "[w]ith respect to customs duties an d charges of any kind imposed on or in connection with" the importation of products originating in the territory of other Members.

2. Article II.1(a) and (b) of the GATT 1994, because the measures at issue fail to accord to the products originating in China identified in the above mentioned documents the treatment no less favourable than that provided for in the United States' Schedule of Concessions and Commitments annexed to the GATT 1994.

3. Article 23 of the DSU, because the measures at issue fail to recourse to , and abide by, the rules and procedures of the DSU, when the United States seek the redress of a violation of obligation or other nullification or impairment of benefits under the covered agreements or an impediment to the attainment of any objective of the covered agreements.

[Meanwhile, the EU trade commissioner Cecilia Malmstrom, in remarks at Brussels (according to the Financial Times) addressed to the US, has said that the EU has only been exempted from the additional steel and aluminum tariffs till 1 May (pending negotiations with the US), and added that the EU had not offered anything to the US, and did not plan to offer any, in order to be exempt fr om the additional duties which are WTO-illegal.

[The EU, Malmstrom said, was always willing to discuss trade issues with an y trade partner, but not under threat, and hence would not offer or discuss any trade concession with the US for making permanent the exemption till 1 May. SUNS]