“The United States has held the clear and unequivocal position, for more than 70 years, that national security issues cannot be reviewed in WTO dispute settlement and the WTO has no authority to question the ability of a member of the WTO to respond to a wide range of threats to its security,” he added.
The ruling by a panel reviewing the case suggests that the United States “should stand idly by” as China and other countries flood its market with steel and aluminum that has been produced with generous amounts of government support, Hodge said. “The United States will not cede decision-making about its essential security to the WTO panels,” he added.
Four WTO dispute settlement panels, each made up of the same people, issued a ruling in the cases brought by China, Norway, Switzerland and Turkey. Two other challenges from Russia and India are still pending.
“I think this ruling sends a shock wave through the system,” as members have long been in the habit of deferring to each other on what constitutes a threat to national security, said Wendy Cutler, a former US trade official. USA now in Asia Society Policy. Institute.
The United Steelworkers union and the American Iron and Steel Institute, an industry group, also criticized the decision.
“America cannot give up our national security. We must uphold these relief measures and refuse to give in to the misguided efforts of WTO lawyers,” Steelworkers Chairman Tom Conway said in a statement.
The defiant US stance comes at a time when massive new subsidies for green technologies provided by the Inflation Reduction Law they are raising new concerns about the US’s commitment to the rules-based global trading system.
Trump sparked the row when he dusted off a rarely used trade provision: Section 232 of the Business Expansion Act of 1962 — to restrict imports of steel and aluminum from around the world on the grounds that they threatened two industries vital to the national security of the United States.
Trading partners saw the move as a thinly disguised protectionist move and quickly lined up to challenge the action at the WTO. Many members, such as the European Union and China, also retaliated against US products.
Article 21 of the founding document of the WTOThe General Agreement on Tariffs and Trade allows members to take actions that violate WTO commitments to treat trading partners fairly if it is to protect national security.
However, it also imposes limitations on when it can be used. Two instances that he specifically mentions are for cases involving material to build nuclear weapons or arms trafficking in order to supply a military establishment.
A third, more general exception allows countries to invoke Article 21 “in time of war or other emergency in international relations.” That was the defense of the Trump administration.
However, the WTO panels charged with reviewing the matter determined that Trump’s tariffs were not imposed in times of war or other emergency in international relations and, therefore, he could not invoke the national security exception to breach his obligations. commercial commitments.
That deals a major blow to the long-standing US position, and the view shared by many other members, that such actions are “self-critical,” meaning that if a member decides that a trade action is in the for national security, then others should agree and not. challenge him.
However, many believed that Trump’s steel and aluminum actions broadened the definition of what constitutes a threat to national security so far that they could not go unnoticed.
They included the EU, Canada and Mexico, as well as China, Norway, Switzerland, Turkey, Russia and India. Canada and Mexico reached an agreement with the United States in 2020 as part of the Trump administration’s efforts to gain congressional approval of the Agreement between the United States, Mexico, and Canada to succeed NAFTA.
The Biden administration also negotiated a deal with the EU in 2021 to resolve the dispute and subsequent deals with the UK and Japan followed.
The “self-assessment” approach worked well when countries used the national security exception in a limited way, but the world has changed since then, Cutler said. He blamed China for starting the trend by blocking the Internet and other economic sectors for national security reasons.
The four years it took for the WTO to rule on the issue reflect both the sensitivity of the concern and the stress on the organization’s dispute resolution system.
Furthermore, the Trump administration completely shut down the WTO Appellate Body by blocking the appointment of new judges because it believes many of its decisions were wrong. That now allows you to appeal Friday’s bottom panel rulings “in a vacuum” to prevent them from being formally adopted.
There are also more decisions stemming from Trump’s steel and aluminum action to come.
The Trump administration filed counter-complaints challenging retaliation imposed by a long list of nations. Agreements with Canada, Mexico and the EU resolved those cases, while others involving China, Russia, India and Turkey are still pending.
At issue in those cases is whether countries had a legal right to unilaterally retaliate against Trump’s actions, or whether they should have taken the much longer route of formally challenging the tariffs through the WTO’s dispute resolution system.