Info Service on WTO and Trade Issues (Nov18/04)
5 November 2018
Third World Network
US threatens to hold "WTO reforms" hostage over panel
Published in SUNS #8785 dated 31 October 2018
Geneva, 30 Oct (D. Ravi Kanth) - The United States threatened at the
World Trade Organization on Monday that it would hold the proposed
"WTO reforms" a hostage to the invocation of dispute settlement
panel proceedings by seven members against Washington's steel and
aluminum tariffs imposed under the US Section 232 security provisions.
Warning the seven complainants - China, the European Union, Canada,
Mexico, Norway, Turkey and Russia - who made their first-time panel
requests, the US issued bellicose threats: "if the WTO were to
undertake to review an invocation of Article XXI [by the US], this
would undermine the legitimacy of the WTO dispute settlement system
and even the viability of the WTO as a whole."
"Infringing on a sovereign right to determine, for itself, what
is in its own essential security interests would run exactly contrary
to the WTO reforms that are necessary in order for this organization
to maintain any relevancy," the US told the seven members.
At a Dispute Settlement Body (DSB) meeting on Monday, the US came
down heavily on China, the European Union, Canada, Mexico, Norway,
Turkey and Russia for requesting a panel to rule against the additional
import duties of 25% on steel and 10% on aluminum imposed by the Trump
administration under its Section 232 security provisions.
In separate responses to the first-time requests from the seven complainants,
the US issued dire threats of serious consequences to the WTO if parties
"under take to review an invocation of Article XXI" dealing
with security exceptions.
Effectively, the US told the so-called "reformers" of the
WTO such as the EU, Canada, Norway, and Mexico among others, who are
the complainants against the Section 232 tariffs on steel and aluminum,
not to proceed with their second-time requests at the DSB next month.
For all practical purposes, the US has held the WTO reforms a hostage
to how members undertake to review "an invocation of Article
XXI of the GATT [General Agreement on Tariffs and Trade] 1994"
under which the US President Donald Trump "has determined that
these [Section 232] measures are necessary to address the threatened
impairment that imports of steel and aluminum articles pose to the
US national security."
The US accused Norway of "undermining the trading system by asking
the WTO to do what it was never intended to do."
"It is simply not the WTO's role, nor its competence, to review
a sovereign nation's judgment of its essential security interests,"
the US argued.
Further, "issues of national security are political matters not
susceptible to review or capable of resolution by WTO dispute settlement,"
the US maintained.
The US said that it has all along been its position for over 70 years
that "issues of national security are not matters appropriate
for adjudication in the WTO dispute settlement system."
Citing the European actions before the GATT Council in 1982, the US
said the European Economic Community (EEC) and its member States had
stated that Article XXI was a reflection of a Member's "inherent
The EEC, according to the US, had maintained that "the exercise
of these rights constituted a general exception, and required neither
notification, justification, nor approval, a procedure confirmed by
thirty-five years of implementation of the General Agreement... [since]
every contracting party was - in the last resort - the judge of its
exercise of these rights."
The US told Norway that it had supported the EEC and its member States,
Canada, and Australia in their invocation of Article XXI by stating
that "in taking the measures .... [they] did not act in contravention
of the General Agreement."
The sharp exchanges between the US on the one side and the seven members
on the other offered a glimpse of how the US is going to proceed in
the coming days and months on a range of issues at the WTO.
It is clear as daylight that the US intends to decimate the dispute
settlement system which operates under the Appellate Body while forcing
plurilateral negotiations in areas of its interest as well as imposing
burdensome and intrusive requirements for notifications, said several
trade envoys, who asked not to be quoted.
The proposed reforms by the EU and Canada along with 11 countries
last week at their Ottawa meet are meaningless because the US will
not enable any progress on the DSB reform, said a South American trade
envoy, who asked not to be quoted.
The seven members said that the US steel and aluminum duties violated
several core provisions such as the most-favoured-nation treatment,
the integrity of scheduled commitments, and various provisions in
the Safeguards Agreement.
They called for a single panel, saying that their "requests reflect
a shared conviction among the co-complainants that the US steel and
aluminum tariffs are inconsistent with the United States' WTO obligations."
Though the US "does not characterize the steel and aluminum tariffs
as "safeguard measures" as a matter of US municipal law,"
the question is not one of municipal law, Norway said.
The complainants asserted that the US steel and aluminum tariffs constitute
"safeguard measures" under the Agreement on Safeguards.
In a sharp response, the US raised two sets of criticisms against
The US singled out China by saying that it is not the only member
which expressed concern that China's non-market economic system is
at the source of the international steel and aluminum glut.
A joint proposal from the EU, Japan, Mexico, and the US had warned
that "overcapacity is a major cause of distortions to international
"China's non-market economic system and the policies it generates
in the steel and aluminum sectors are recognized as a global problem,"
the US maintained.
"China's choice to pursue dispute settlement against members
defending their legitimate interests would make WTO rules an instrument
for China to protect its non-market behaviour," rather than promoting
"fair, market- based competition that improves the welfare of
all our citizens," the US maintained.
The US levelled the second set of criticisms against the EU, Norway,
and four other members, saying that "issues of national security
are political matters not susceptible to review or capable of resolution
by WTO dispute settlement."
More ominously, the US warned that "infringing on a sovereign's
right to determine, for itself, what is in its own essential security
interests would run exactly contrary to the WTO reforms that are necessary
in order for this organization to maintain any relevancy."
The US, however, will not be able to prevent the establishment of
a panel if the seven countries make a second request at the next DSB
meeting next month.
But it remains to be seen how the EU, Canada, Mexico, and Norway -
who are the signatories to the Ottawa communique for reforming the
WTO last week - will proceed next month at the DSB. If they fail to
bring their second requests for establishing the panel at next month's
DSB meeting, then they will lose their credibility for pursuing reforms,
trade envoys said.