Mon | Mar 25, 2019

US looks to the WTO to reign in metals tariff detractors

Published:Tuesday | July 17, 2018 | 12:10 AM
Inside the World Trade Organisation headquarters in Geneva, Switzerland.

The Trump administration on Monday brought cases against China, the European Union, Canada, Mexico and Turkey at the World Trade Organization (WTO), for retaliating against American tariffs on imported steel and aluminium.

The United States has imposed tariffs of 25 per cent on steel and 10 per cent on aluminium on the grounds that the imported metals pose a threat to US national security. China, the EU, Canada, Mexico, and Turkey have counterpunched with taxes on more than US$24 billion worth of US exports.

US Trade Representative Robert Lighthizer said that their retaliation violates the rules of the Geneva-based WTO, which mediates trade disputes.

"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," Lighthizer said.

In taxing imported steel and aluminium from some countries in March and others in June, President Donald Trump deployed a little-used weapon in American trade policy: Under the Trade Expansion Act of 1962, presidents are empowered to impose unlimited tariffs on imports that the Commerce Department asserts are threats to America's national security.

The WTO gives countries broad leeway to determine national security interests. But there was long an unwritten agreement that WTO member countries would use the national-security justification only very sparingly to avoid abuses.

Trump's steel and aluminium tariffs broke that taboo. Now, the US Commerce Department is pursuing another, bigger national-security case against auto imports. Hearings on the proposed auto tariffs are set for Thursday and Friday in Washington.

Separately, Trump is engaged in a trade war with China over the aggressive tactics Beijing has used to challenge US technological dominance. According to the Trump administration, these include outright cybertheft and forcing US companies to hand over trade secrets in exchange for access to the Chinese market.

Last week, the administration announced 10 per cent tariffs on US$200 billion worth of Chinese goods, which won't take effect until at least September. On Monday, China said that it had filed a WTO challenge against those proposed US tariffs.