U.S. Government Appeals WTO Rulings Against Metals Tariffs
On Friday, January 27, the U.S. government filed an appeal against a series of World Trade Organization (WTO) rulings involving China, Turkey, Norway, and Switzerland that had determined the U.S. Section 232 steel and aluminum tariffs that had been put into place by former President Donald Trump’s administration violated WTO rules.
As Connecting the Dots reported at the time, the most recent decision came this past December. That ruling came despite the fact that Article 21 of the WTO’s foundational document, the General Agreement on Tariffs and Trade, allows member countries to take actions that violate WTO commitments if it is for purposes of protecting that country’s own national security. (Section 232 of U.S. trade law deals specifically with national security.)
In the face of December’s WTO ruling, the Biden administration pledged it would not remove the Section 232 penalties and strongly condemned the WTO’s decision, saying it provided additional proof that the WTO dispute settlement system needs to be reformed.
If the United States ultimately loses the case, the countries in question would be able to impose retaliatory tariffs on U.S.-made products.
China’s ambassador to the WTO, Li Chenggang, spoke at a WTO meeting on trade disputes shortly after the United States lodged its appeal. “These troubling behaviors of the U.S. have clearly depicted an image of the U.S. as a unilateral bully, a rule breaker, and a supply chain disruptor,” he said.
It is unclear what will happen next. That is because the WTO will not be able to review the case since its top appeals court does not have quorum due to the fact that the U.S. government has blocked the approval of new judges.
As a reminder, when it comes to Section 232 tariffs, Connecting the Dots is reporting the results of this case for members’ information only. MSCI consistently has argued that global overcapacity and other unfair trading practices, particularly by China, have harmed the U.S. steel and aluminum markets.
To address this circumvention, MSCI has advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements, including the United States Mexico Canada Agreement (USMCA). MSCI also asked that Canada and Mexico be excluded from any trade penalties.
Click here to review all of MSCI’s advocacy on Section 232 tariffs.