TWN Info Service on WTO and Trade Issues (May18/19)
30 May 2018
Third World Network
   
WTO Members propose retaliation over US steel, aluminium tariffs
Published in SUNS #8687 dated 25 May 2018

Geneva, 24 May (Kanaga Raja) - Several members of the World Trade Organisation have over the past few days notified the WTO's Council for Trade in Goods of their plans to suspend concessions and other obligations on imports of goods from the United States in response to the US imposition of additional tariffs on imports of steel and aluminium products.

On 22 May, Japan, the Russian Federation and Turkey submitted their notifications to the Goods Council under Article 12.5 of the Agreement on Safeguards, while earlier on 18 May, the European Union and India also submitted their notifications to the Goods Council with regards to the US measures.

Separately, India has also initiated a dispute at the WTO against the US measures on steel and aluminium products.

It has requested consultations with the United States, the first step in the dispute settlement process at the WTO (see separate story).

[All the notifications to the Goods Council make similar points with varying nuances. These include: the US measures, invoking Sec. 232 of the US Trade Expansion Act of 1962, on imports of steel and aluminium all have characteristics of safeguard measures and hence Article XIX of GATT 1994 and the Agreement on Safeguards are applicable to them, even though the US has not notified t hem as such. Some of the notifications also point to the extent they have been app lied selectively, namely against imports from some countries while exempting others, thus flagging violation of Article 1 of GATT 1994 (MFN principle). Each of the notifications has also listed a range of articles imported from the US on which counter-duties will be levied so long as the safeguard measures are in force. Some of the countries notifying have also separately raised disputes with the US over the measures. SUNS]

In its notification to the Goods Council (G/SG/N/12/JPN/4) on 22 May, Japan said the US measures in question are tariff increases and other import adjustment measures imposed by the United States on imports of steel and aluminium from certain WTO members including Japan under Section 232 of the Trade Expansion Act of 1962.

These measures have been applied by the United States since 23 March 2018. Although the United States has not notified these measures under the Agreement on Safeguards, Japan noted that these measures appear to have the characteristics of the measures to which Article XIX of GATT 1994 and the Agreement on Safeguards are applicable.

According to Japan, the proposed suspension of concessions referred to in Article 8.2 of the Agreement on Safeguards will take the form of an equivalent increase in duties on selected products originating in the United States.

In this respect, Japan noted that application by the United States of the increased duty of 25 per cent on imports of steel from Japan would result in $414,820 ,277 of duty collection by the United States with regard to Japanese exports (based on the export value in 2017 ($1,659,281,106), as may need to be updated with most recent export data) and the increased duty of 10 per cent on the imports of aluminium from Japan would result in $25,122,737 of duty collection by the United States with regard to Japanese exports (based on the export value in 2017 ($251,227,373), as may need to be updated with most recent export data).

It said details of the said suspension of concessions based on an equivalent increase in duties based on the most recent export data, including the proposed date from which it will come into effect, will be provided to the Council f or Trade in Goods before the suspension of concessions is actually applied. The suspension will continue to apply until the US measures are lifted.

Japan said that based on available statistical information, it estimates that, among the aforementioned duty collection by the United States, at least $264,354, 296 of duty collection is with regard to products the imports of which have not increased in absolute terms.

With respect to this amount, therefore, Japan considers that it is free to suspend substantially equivalent concessions immediately upon the expiration of the 30 days from the day on which the written notice of such suspension is receive d by the Council for Trade in Goods, as per Article 8.2 of the Agreement on Safeguards.

Without prejudice to the effective exercise of its right to suspend substantially equivalent concessions or other obligations referred to in Article 8.2 of the Agreement on Safeguards, and to the extent that the measures have been take n as a result of an absolute increase in imports, Japan also reserves its right to implement the proposed suspension not earlier than 23 March 2021, or the fifth day following the date of a decision from the WTO Dispute Settlement Body that the measures imposed by the United States are not in conformity with the WTO Agreement, whichever is earlier, said the Japanese notification.

In its notification (G/SG/N/12/RUS/2), the Russian Federation said the measures imposed by the United States consist of an increase in tariff on imports of certain steel and aluminium products. The measures are effective from 23 March 2018 with unlimited duration.

Although the United States did not provide notifications of the measures under paragraphs 1(b) and 1(c) of Article 12 and pursuant to Article 9 (Footnote 2) of the Agreement on Safeguards, the Russian Federation said it is of the view that the measures are in essence safeguard measures, and the Agreement on Safeguards and Article XIX of the General Agreement on Tariffs and Trade 19 94 (GATT 1994) are applicable to them.

The proposed suspension of substantially equivalent concessions and other obligations under the GATT 1994 to the trade with the United States takes the form of an increase in duty on selected products originating in the United States.

According to the Russian notification, the additional duty amounts to USD53 7.6 million.

Without prejudice to the effective exercise of its right to suspend substantially equivalent concessions or other obligations referred to in Article 8.2 of the Agreement on Safeguards, the Russian Federation hereby reserves its right to apply the proposed suspension upon the expiration of 30 days from the day on which Council for Trade in Goods has been notified thereof, it said.

In its notification (G/SG/N/12/TUR/6), Turkey cited the applied measures ta ken by the United States on imports of steel and aluminum from 23 March 2018.

Turkey considers them as safeguard measures which are not consistent with the provisions of the Safeguard Agreement.

The proposed suspension of substantially equivalent concessions and other obligations under GATT 1994 to the trade of the United States takes the form of an increase in tariffs on selected products originating in the United States.

Without prejudice to the effective exercise of its right to suspend substantially equivalent concessions or other obligations referred to in Article 8.2, the Government of Turkey reserves its right to effectuate the proposed suspension from 21 June 2018 and adjust the products as well as the tariff rates, said the notification from Turkey.

Turkey has proposed to impose US$266.5 million in additional duties on some 22 tariff lines.

The products include amongst others fresh or dried nuts, rice, un-manufactured tobacco, coal, beauty or make-up preparations and preparations for the care of the skin, uncoated paper and paperboard, articles of plastics, machines and mechanical appliances, motor cars and other motor vehicles, and apparatus based on the use of x-rays.

Meanwhile, in its notification on 18 May (G/SG/N/12/EU/1), the European Union said 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 (at rates of 25% and 10%, respectively), effective from 23 March 2018 and with an unlimited duration.

The effective date of the tariff increase with respect to the European Union was deferred to 1 May and subsequently to 1 June 2018.

Notwithstanding the United States' characterisation of these measures as security measures, they are safeguard measures, the EU underlined.

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

According to the EU notification, the proposed suspension of substantially equivalent concessions and other obligations under GATT 1994 to the trade of the United States takes the form of an increase in duty of 10%, 25%, 35% and 50 % on selected products originating in the United States, as indicated in Annex I (a group of products identified in its notification) and Annex II (an additional group of products).

The European Union said, with regards to Annex I, it reserves its right to apply the proposed suspension from 20 June 2018 and until Annex II applies; and with regards to Annex II, from 23 March 2021 or from the fifth day following the date of the adoption by, or notification to, the WTO Dispute Settlement Body of a ruling that the United States' safeguard measures are inconsistent with the relevant provisions of the WTO Agreement, if that is earlier, and until the United States' safeguard measure is lifted.

The list of products in Annex I and Annex II of its notification include amongst others sweet corn, rice, peanut butter, orange juice, bourbon whiskey, cigars and cigarettes, T-shirts, steel products, motorcycles, sailboats and yachts, cranberries, textile fabrics, footwear, tableware and kitchenware, glass products, articles of jewellery, digital flight-data recorders, and motor vehicles for the transport of goods.

According to the EU notification, the substantially equivalent concessions or other obligations under GATT 1994 were calculated as follows: the US measures affect at least US$7.2 billion imports of the relevant steel and aluminium product s from the European Union into the United States in 2017.

Application of the US measures would result in theoretical additional duty collected for 2017 of US$1.6 billion, it said.

Therefore, a suspension of trade concessions on the products in Annex I and Annex II up to a level which reflects and does not exceed the amount that would result from the application of the United States' measures to the imports o f the steel and aluminium products from the European Union into the United States represents an appropriate suspension of the application of substantially equivalent trade concessions in line with the Agreement on Safeguards, said the EU.

The total amount of additional ad valorem duties of a maximum rate of 25% i n Annex I reflects the United States' tariff increase of 25% on imports of "carbon and alloy flat products" and "carbon and alloy long products" from the European Union into the United States.

These are the steel products for which the United States' safeguard measures have not been taken as a result of an absolute increase in imports, said the EU.

The total amount of additional ad valorem duties of a maximum rate of 10%, 25%, 35% and 50% on imports of the products listed in Annex II reflects the United States' tariff increase of 10% on imports of the aluminium products and of 25% on imports of "carbon and alloy pipe and tube products", "carbon and alloy semi-finished products" and "stainless steel products" from the European Un ion into the United States.

These are the products for which there appears to have been an absolute increase in imports, the EU said.

On the basis of US International Trade Commission statistics for 2017, the world imports into the United States of carbon and alloy flat products and of car bon and alloy long products did not increase in absolute terms over the period 2012 -2017, the EU added.

In its notification to the Goods Council also on 18 May (G/SG/N/12/IND/1), India said the measures at issue were imposed by the United States as a definitive safeguard measure on imports of:

(a) "Aluminum Articles" defined in the Harmonized Tariff Schedule (HTS) as: (a) unwrought aluminium (HTS 7601); (b) aluminium bars, rods, and profiles (HTS 7604); (c) aluminium wire (HTS 7605); (d) aluminium plate, sheet, strip, an d foil (flat rolled products) (HTS 7606 and 7607); (e) aluminium tubes and pipes and tube and pipe fitting (HTS 7608 and 7609); and (f) aluminium castings and forgings (HTS 7616.99.51.60 and 7616.99.51.70), including any subsequent revisions to these HTS classifications.

The measure was issued through Proclamation No. 9704 of 8 March 2018, 83 Fed. Reg. 11619 (8 March 2018), published on 15 March, 2018, and with the effective date of 23 March, 2018.

(b) "Steel Articles" defined at the Harmonized Tariff Schedule (HTS) 6-digit level as: 7206.10 through 7216.50, 7216.99 through 7301.10, 7302.10, 7302.40 through 7302.90, and 7304.10 through 7306.90, including any subsequent revisions to these HTS classifications.

The measure was issued through Proclamation No. 9705 of 8 March 2018, 83 Fed. Reg. 11625 (8 March 2018), published on 15 March, 2018, and with the effective date of 23 March, 2018.

India said that it takes the view that the above-mentioned measures of the United States are safeguard measures although they are in the name of national security.

India believes the measures taken by the United States are not consistent with its obligations under the relevant provisions of the GATT 1994 and Safeguards Agreement.

India also pointed out that the United States has not notified the measures at issue to the WTO.

According to the Indian notification, the proposed suspension of concessions or other obligations takes the form of an increase in tariffs on selected products originating in the United States, based on the measures of the United States.

The suspension will come into effect earlier than 21 June 2018, in case the United States decides to continue the period of application of the measures in accordance with Article 7 of the Agreement on Safeguards. The suspension of concessions will continue to apply until the United States' safeguard measures are lifted.

India noted that the United States declined India's request for consultations. Thus, consultations within the meaning of Article 12.3 of the Agreement on Safeguards have not taken place.

According to India, the United States has thereby imposed definitive safeguard measures without giving affected Members any opportunity for consultations on the proposed safeguard measures and without the possibility of adjusting the measures in light of the comments of those Members.

India also considers that various other aspects of the measures are inconsistent with the United States' obligations under Article XIX of the GATT 1994 and the Agreement on Safeguards.

Without prejudice to the effective exercise of its right to suspend substantially equivalent concessions or other obligations referred to in Article 8.2, India reserves its right to effectuate the proposed suspension immediately and adjust the products as well as the tariff rates, it said.

According to the Indian notification, it has proposed to impose additional duties of 5-50% on some 20 tariff lines totalling US$165.56 million, equivalent to the effects on India's trade due to the measures of the United States.

Among the goods covered are peas; chickpeas; cashew nuts; almonds; walnuts; fresh apples; coffee; wheat; soya bean crude oil; cocoa beans; cocoa powder; chocolate and chocolate products; vehicles specially designed for travelling on snow, golf car and other similar vehicles; other goods vehicles; and motorcycles.