Are the New US Tariffs on Steel and Aluminum Justifiable Under WTO Trade Agreements?
On March 8, President Donald J. Trump announced tariffs of 25% on steel and 10% on aluminum. He justified his decision on national security grounds. Specifically, Section 232 of the Trade Expansion Act of 1962 (19 U.S.C.§1862) empowers the president to impose quantitative import restrictions on certain articles whose importation in certain quantities impairs national security. However, the president may only impose such restrictions after the responsible state agency has carried out investigations of the effects of the imported quantities of the article on national security. The import restrictions the president may impose include setting tariff rates or modifications of tariffs on the imported articles.
On January 19, 2018, the Secretary of Commerce presented President Trump with an investigative report on how the quantities of steel and aluminum being imported into the country impair the country’s national security. The report stated that the quantities of aluminum imports left the United States almost totally reliant on foreign producers for high-purity aluminum essential to military systems. The report also concluded that with time the domestic aluminum industry would become unable to satisfy existing national security needs or respond to a national security emergency that requires a large increase in domestic production. Based on this report, the president imposed the aforementioned tariffs on imports of the same from the rest of the world with the exception of Mexico and Canada, citing the common national security interests these countries share with the United States.
Justifications in International Trade
As member of the World Trade Organization (WTO), the United States has an obligation to abide by WTO agreements, including the General Agreement on Trade and Tariffs (GATT) 1994. The tariffs recently imposed on national security grounds are supported by the GATT 1994, which deals with the regulation of transnational trade in goods. Article XXI(b) of GATT 1994 provides that nothing in the Agreement may be construed to prevent any contracting party from taking any action that they consider necessary for the protection of essential national security interests. Unlike all other WTO rules, this national security exception is unreviewable by other states. It is a self-judging provision that a Member State can invoke whenever it considers a measure to be necessary for the protection of national security, no justification to or approval by other WTO members is required.
Similarly, WTO’s dispute settlement panels have claimed they lack jurisdiction to review national security measures adopted by member States. There have been several claims regarding Article XXI, but no binding WTO or GATT panel has interpreted the security exception. For instance, in United States-Trade Measures affecting Nicaragua, the panel noted the different arguments of the parties on whether the United States invocation of Article XXI(b)(iii) was justified, but concluded that this issue was not within its terms of reference.
The reasons for the reluctance of WTO dispute settlement panels to review security exception provisions in Article XXI are unclear. However, the most probable reason is that the object and purpose of Article XXI is different from that of other GATT 1994 provisions. Article XXI seeks to protect national security interests, while the object and purpose of the entire GATT Agreement is trade liberalization. Additionally, Article XXI is the only self- judging provision and the only provision not subject to judicial review by WTO’s dispute resolution mechanisms.
In summary, the United States tariffs on steel and aluminum proposed in the interest of national security are justified under the international trade regime. The United States is exercising its right to regulate trade and establish economic measures in the interest of national security under Article XXI of the GATT. Other member States opting to take counter measures in response to United States tariffs on steel and aluminum will have to ensure that their measures are consistent with WTO agreements.
Stella Obita is a student enrolled in the traditional LLM program at NYU School of Law, with a concentration of international trade and investment law. She is an advocate of the High Court of Uganda. Prior to NYU, she was an Aryeh Neier Fellow at Open Society Foundations, New York and State Attorney in the Ministry of Justice, The Gambia.