TWN Info Service on WTO and Trade Issues (Jul18/15)
18 July 2018
Third World Network
       
Switzerland initiates dispute at WTO over US S.232 tariffs
Published in SUNS #8722 dated 16 July 2018

Geneva, 13 Jul (Kanaga Raja) - Switzerland has initiated a dispute at the World Trade Organisation (WTO) over the additional duties imposed by the United States under Section 232 of its trade law on imports of steel and aluminium products from Switzerland.

In initiating the dispute, Switzerland has sought consultations with the United States, the first step in the formal dispute settlement process at the WTO.

Switzerland is now the eighth WTO member to initiate a dispute at the WTO over the US measures imposed purportedly on grounds of national security.

The other WTO members that have already initiated disputes against the US are China, India, the European Union, Canada, Mexico, Norway and the Russian Federation.

Switzerland's request for consultations with the US over the additional duties on imports of steel and aluminium products was circulated to WTO members on 12 July. If the consultations fail to settle the dispute within 60 days after the date of receipt of the request for consultations, the complaining party may request the establishment of a panel.

The establishment of a panel may also be requested by a complaining party during the 60-day period if the consulting parties jointly consider that the consultations have failed to settle the dispute.

In its communication to the DSB (WT/DS556/1), Switzerland said its request for consultations is with respect to certain measures imposed by the United States to adjust imports of steel and aluminium into the United States, including imposing additional ad valorem rates of duty on imports of certain steel and aluminum products and exempting certain selected WTO members from the measures.

These measures adversely affect exports of such products from Switzerland to the United States, it said.

According to Switzerland, on 8 March 2018, the United States imposed an additional import duty of 25% on certain steel products and an additional import duty of 10% on certain aluminium products from all countries except Mexico, Australia, Argentina, Brazil, Canada, the European Union and Korea, taking effect on 23 March 2018.

On 30 April 2018, the President of the United States issued presidential proclamations exempting imports from Argentina, Australia, Brazil, and Korea from the additional duties on certain steel products, and exempting imports from Argentina, Australia and Brazil from the additional duties on certain aluminium products.

The United States also extended the exemption from the additional import duties for Canada, the European Union and Mexico until 31 May 2018.

As of 1 June 2018, the additional duties on certain steel products apply to all countries of origin, except Argentina, Australia, Brazil and Korea, and the additional duties on certain aluminium products apply to all countries of origin except Argentina and Australia.

Quotas have been introduced concerning steel imports from Argentina, Brazil and Korea, and aluminium imports from Argentina.

THE MEASURES AT ISSUE

According to Switzerland, the measures at issue are the import adjustments on certain steel products and certain aluminium products.

They consist of and are evidenced by the following documents considered alone and in any combination:

1. Presidential Proclamation 9705 of 8 March 2018 on Adjusting Imports of Steel Into the United States, including the Annex, To Modify Chapter 99 of the Harmonized Tariff Schedule of the United States.

2. Presidential Proclamation 9704 of 8 March 2018 on Adjusting Imports of Aluminum Into the United States, including the Annex, To Modify Chapter 99 of the Harmonized Tariff Schedule of the United States.

3. Presidential Proclamation 9711 of 22 March 2018 on Adjusting Imports of Steel into the United States, including the Annex, To Modify Chapter 99 of the Harmonized Tariff Schedule of the United States.

4. Presidential Proclamation 9710 of 22 March 2018 on Adjusting Imports of Aluminum into the United States, including the Annex, To Modify Chapter 99 of the Harmonized Tariff Schedule of the United States.

5. Presidential Proclamation 9740 of 30 April 2018 on Adjusting Imports of Steel into the United States, including the Annex, To Modify Chapter 99 of the Harmonized Tariff Schedule of the United States.

6. Presidential Proclamation 9739 of 30 April 2018 on Adjusting Imports of Aluminum into the United States, including the Annex, To Modify Chapter 99 of the Harmonized Tariff Schedule of the United States.

7. Presidential Proclamation 9759 of 31 May 2018 on Adjusting Imports of Steel into the United States, including the Annex.

8. Presidential Proclamation 9758 of 31 May 2018 on Adjusting Imports of Aluminum into the United States, including the Annex.

9. The Effect of Imports of Steel On the National Security, An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, as Amended (US Department of Commerce, January 11, 2018).

10. The Effect of Imports of Aluminum On the National Security, An Investigation Conducted Under Section 232 of the Trade Expansion Act of 1962, as Amended (US Department of Commerce, January 17, 2018).

Switzerland said the measures at issue appear to be inconsistent with the United States' obligations under several provisions of the GATT 1994 and the Agreement on Safeguards, in particular, but not necessarily exclusively:

* Article I:1 of the GATT 1994, because, by applying selectively the additional import duties on certain steel and aluminium products originating in different Members, including by providing exemptions or applying alternative means to certain countries, the United States fails, with respect to customs duties and charges of any kind imposed on or in connection with importation and with respect to all rules and formalities in connection with importation, to accord immediately and unconditionally any advantage, favour, privilege or immunity granted to products originating in other countries to like products originating in Switzerland;

* Article II:1(a) and (b) of the GATT 1994, because, through the measures a tissue, the United States fails to accord to the commerce of most other WTO Members, including Switzerland, treatment no less favourable than that provided for in the appropriate part of the United States' Schedule of Concessions, and fails to exempt products of most WTO Members including Switzerland from ordinary customs duties in excess of those set forth and provided in the United States' Schedule of Concessions and from all other duties or charges in excess of those imposed on the date of the GATT 1994 or those directly and mandatorily required to be imposed thereafter by legislation in force in the United States on that date;

* Article X:3(a) of the GATT 1994 as the United States has failed to administer its laws, regulations, decisions and rulings in relation to the measures at issue in a uniform, impartial and reasonable manner;

* Article XI:1 of the GATT 1994, because, through the measures at issue, the United States has instituted restrictions other than duties, taxes or other charges, made effective through quotas, on the importation of products of the territory of other Members;

* Article XIX:1(a) of the GATT 1994, because the United States has suspended tariff concessions without the products at issue being imported into the territory of the United States in such increased quantities and under such conditions as to cause or to threaten serious injury to domestic producers in the United States of like or directly competitive products, as a result of unforeseen developments and of the effect of the obligations incurred under the GATT 1994;

* Article 2.1 of the Agreement on Safeguards, because the United States app lies safeguard measures to the products in question without first having determined, pursuant to the subsequent provisions of the Agreement on Safeguards, that such products are being imported into its territory in such increased quantities , absolute or relative to domestic production, and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products;

* Article 2.2 of the Agreement on Safeguards, because the United States does not apply the safeguard measures to imported products irrespective of their source;

* Article 3.1 of the Agreement on Safeguards, because the United States applies safeguard measures to the products in question without first properly conducting an investigation and publishing a report that sets forth findings and reasoned conclusions on all pertinent issues of fact and law;

* Article 4.1 of the Agreement on Safeguards, because the United States has not properly determined that there is serious injury, or threat thereof, to a domestic industry as provided for in that provision;

* Article 4.2 of the Agreement on Safeguards, because the United States has failed to properly evaluate all relevant factors having a bearing on the situation of the domestic industry; has failed to demonstrate the existence of a causal link between increased imports and serious injury or the threat thereof; has failed to ensure that the injury caused by factors other than increased imports was not attributed to increased imports; and has failed to publish a detailed analysis and demonstration of its conclusions;

* Article 5.1 of the Agreement on Safeguards, because the United States is applying safeguard measures beyond the extent necessary to prevent or remedy serious injury and to facilitate adjustment;

* Article 7 of the Agreement on Safeguards, because the United States is applying safeguard measures without making provision for their application only for the period necessary to prevent or remedy serious injury and to facilitate adjustment, without limitation to four years, and without making provision for progressive liberalisation at regular intervals;

* Article 11.1(a) of the Agreement on Safeguards, because the United States has taken emergency action on imports of particular products as set forth in Article XIX of the GATT 1994, without such action conforming with the provisions of Article XIX applied in accordance with the Agreement on Safeguards;

* Articles 12.1, 12.2 and 12.3 of the Agreement on Safeguards and Article X IX:2 of the GATT 1994, because the United States has failed to comply with any of the notification and consultation obligations set out in these provisions.

In addition, said Switzerland, Section 232 of the Trade Expansion Act of 19 62, as amended (19 U.S.C. =A71862), as interpreted by the United States' authorities, including in the context of the above and other measures, appears to be inconsistent with the provisions set forth in the covered agreements, in particular those set out above, in a manner that is also inconsistent with Article XVI :4 of the WTO Agreement.

Section 232, as interpreted by the United States' authorities, provides for the imposition of measures (such as additional import duties or quotas) that re strict imports from other WTO Members to shield the domestic production in the United States from the competition with foreign products on the grounds of an alleged threat to the national security in a manner inconsistent with the
disciplines set out in the GATT 1994 and the Agreement on Safeguards.

In the alternative, Switzerland argued that the ongoing use of Section 232 by the United States' authorities so as to afford protection to the domestic production by restricting imports from other WTO Members on the grounds of the alleged threat to national security is inconsistent with the United States' obligations under the covered agreements, in particular those listed above.

The above-mentioned measures appear to nullify or impair the benefits accruing to Switzerland directly or indirectly under the covered agreements.

According to the communication, in addition to, and independently of, the multiple violations of the WTO obligations identified above, Switzerland considers that, as a result of the application of the measures at issue, the benefits accruing to Switzerland under the GATT 1994 are being nullified and impaired and that the attainment of the objectives of the GATT 1994 is being impeded within the meaning of Article XXIII:1(b) of the GATT 1994.