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World Trade Organisation (WTO)

United States challenges China, EU, Canada, Mexico, Turkey at WTO over steel tariffs

US trade representative says countries’ retaliation to import taxes violates rules of Geneva-based World Trade Organisation

PUBLISHED : Tuesday, 17 July, 2018, 2:32pm
UPDATED : Wednesday, 01 August, 2018, 4:04pm

The United States on Monday brought cases against China, the European Union, Canada, Mexico and Turkey to the World Trade Organisation for retaliating against American tariffs on imported steel and aluminium.

Washington 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 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 the retaliation violated the rules of the Geneva-based WTO, which mediates trade disputes.

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“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,” he said.

If the WTO agrees that the retaliatory duties violate its rules, it would assess the damage and calculate the tariffs that the United States would be entitled to impose in response – retaliation for the retaliation. But WTO proceedings can drag on for years.

In taxing imported steel and aluminium from some countries in March and others in June, US 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 commerce department is pursuing another, bigger national security case against car imports. Hearings on the proposed those tariffs are set for Thursday and Friday in Washington.

Separately, Trump is engaged in a trade dispute with China over the 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, Washington announced 10 per cent tariffs on US$200 billion worth of Chinese goods, that will not take effect until at least September. On Monday, China said that it filed a WTO challenge against those proposed US tariffs.