On Monday, the United States asked the World Trade Organization to swat down retaliatory duties levied by China, the European Union, Canada, Mexico, and Turkey on U.S. exports as a violation of WTO rules. The move is the latest in the tit-for-tat trade war that began in April when major U.S. trading partners retaliated against President Trump’s tariffs on imported steel and aluminum, imposed in the name of national security.
The five complaints filed by the Trump administration make the same argument used by U.S. trading partners in announcing their tariffs: The other side is breaking WTO rules. The United States says WTO members have broad leeway under Article 21 to protect “essential security interests.” China, Canada, Mexico, the EU, and Turkey say their tariffs were justified because the United States violated Article 19 on import safeguards.
China is the culprit behind a global steel glut, according to U.S. trade representative Robert Lighthizer, and the tariffs will assure the prosperity of the U.S. domestic steel industry.
“Instead of working with us to address a common problem, some of our trading partners have elected to respond with retaliatory tariffs designed to punish American workers, farmers, and companies,” said Lighthizer in announcing the WTO challenges. “These WTO members have unfairly retaliated against products originating in the United States,” he said.
The United States has used the national security exemption to justify its decades-old economic embargo on Cuba. Article 21 allows countries to ignore the usual rules of trade during wartime or emergencies, to block dealings in fissionable materials or other weapons and ammunition, or to protect strategic production. WTO members are “self-judging” when it comes to Article 21 exemptions, so the trade world relies on the goodwill of WTO members to act responsibly and not undermine the WTO framework, said trade expert Scott Miller in a 2017 blog.
A U.S. farm group, the American Soybean Association, proposed that the administration rescind its latest round of tariffs against China, aimed at high-tech products, and “work toward a negotiated solution … that does not include tariffs.” Although China is the world’s largest importer of U.S. soybeans, it put a high duty on them in response to the Section 301 tariffs, which took effect early this month. The USDA estimated that U.S. soybean exports will drop by a quarter-billion bushels in 2018-19 because of the Chinese tariffs.
Eight trading partners, including China, Canada, Mexico, and the EU, have filed WTO complaints against the U.S. steel and aluminum tariffs.
A Canadian Foreign Ministry spokesman told the Financial Post that the U.S. tariffs “are unacceptable and illegal.” Mexico said the national security rationale for the tariffs was unjustified, reported the Canadian newspaper. The EU, for its part, essentially shrugged and said it would defend itself at the WTO.
“The latest U.S. litigation could force the WTO to decide whether the United States misused a national security exception under WTO rules,” said Politico. “A ruling that goes against the United States could reinforce Trump’s distrust of the WTO and strengthen his desire to withdraw, while a decision that duties are legal under WTO rules could encourage other countries to impose their own import barriers in the name of national security.”