Playing on the wrong side – United States’ Section 232 measures held inconsistent with WTO law

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The United States imposed additional duties of 25% ad valorem on steel imports into the country. Section 232 of the Trade Expansion Act of 1962 imposed additional duties. Several provisions of the General Agreement on Tariffs and Trade ('GATT') were violated, most notably the security exception in Article XXI. The US argued that the measures were justified under GATT Article XXI (b)(iii), which allows a WTO Member to take measures necessary to protect its essential security interests. The panel determined that this did not negate the requirement that such action be taken in accordance with the conditions and circumstances specified in clause XXI. The panel in Russia – Traffic in Transit has also explained what might constitute an 'essential security interest ‘While it has recognized that every Member has the discretion to define what it considers to be its essential security interests, it has drawn a red line by stating that this does not mean that a Member is free to elevate any concern to that of an 'essential security interest', and the designation of any concern as an essential security interest must be in 'good faith ‘In this context, the panel's ruling in Russia – Traffic in Transit set an important precedent for the present dispute in holding that the measure must be connected and be plausible in relation to the essential security interest articulated by the defending Member. This excess capacity, according to the US, constituted an 'emergency in international relations’. The panel further held that the Section 232 steel and aluminum reports issued by the US Department of Commerce did not identify or address the existence of an 'emergency in international relations'. It was expected that the US Government would tone down its nihilistic rhetoric towards the multilateral trading system and withdraw measures that seemingly violate WTO law. The US is quite likely to appeal the panel report to the Appellate Body, which ironically, the US has driven to the ground.
Audio Source: An article published on the LKS website in December 2022
Playing on the wrong side – United States’ Section 232 measures held inconsistent with WTO law | Lakshmikumaran & Sridharan Attorneys (lakshmisri.com)
Author: Jayant Raghu Ram, Partner (LKS)