The action during Tuesday’s Dispute Settlement Body meeting came amid a tense WTO Trade Policy Review of the U.S., which took place Monday and Wednesday.
The World Trade Organization Dispute Settlement Body (DSB) on Tuesday approved the United States’ second request for formation of a dispute panel to review the legality of Russia’s tariffs in response to U.S. Section 232 tariffs on steel and aluminum, according to a WTO notice.
Russia blocked the first U.S. request during a Dec. 4 DSB meeting.
As with other WTO cases involving U.S. Section 232 tariffs, the U.S. claimed the actions are fully justified under Article XXI of the General Agreement on Tariffs and Trade (GATT) and claimed that WTO members are “pretending” the U.S. actions are safeguards, even though the U.S. hasn’t utilized its domestic law on safeguards to impose the tariffs, the WTO said.
The WTO notice states the U.S. claimed that several WTO members’ “unilateral” retaliatory duties constitute suspension of substantially equivalent concessions under the WTO’s Safeguards Agreement.
“Russia’s duties are nothing more than duties in excess of its WTO commitments and are applied only to the U.S., contrary to Russia’s most favored nation (MFN) obligation, the U.S. said,” according to the WTO statement.
Russia said it was disappointed with the second U.S. request and bewildered to hear that Russia was, in fact, undermining the dispute settlement system while the U.S. has arbitrarily imposed additional duties on steel and aluminum and used them as a means to get trade concessions from certain members.
The U.S. has attempted to make so-called improvements to the WTO dispute settlement system through paralysis, and Section 232 tariffs are another effort “to turn the WTO house upside down,” Russia said, according to the WTO.
The U.S. has blocked the appointment of new panelists to the seven-member WTO Appellate Body, which considers appeals of DSB decisions and issues binding determinations.
The Appellate Body currently has three members, the minimum number of panelists needed to function, and will be unable to operate by next December, when one of the members’ terms is set to expire.
The DSB also has established panels requested by the U.S. to consider whether duties imposed by Canada, China, the EU and Mexico on the U.S. in response to Section 232 tariffs comply with WTO rules.
On the flip side, nine WTO panels currently are reviewing various WTO members’ complaints that U.S. Section 232 duties aren’t in alignment with WTO rules.
The U.S. took heat from fellow WTO members during the first day of its biennual WTO Trade Policy Review (TPR) on Monday, during which most of the 19 delegations taking the floor during a morning session expressed a “deep concern” at what they considered a harmful unilateral U.S. approach to trade and a “deliberate and detrimental” U.S. effort to block Appellate Body functioning, which the members claimed jeopardizes the existence of the multilateral trading system itself, a Geneva trade official said in an email.
By making tariffs a central plank of its trade policy and suggesting that trade wars can have winners, the U.S. is putting at risk its achievements brought through its leadership of multilateral trade liberalization since the 1948 formation of GATT, Ambassador Marc Vanheukelen of the EU said during the TPR’s first day, according to the Geneva source.
Vanheukelen continued, saying the U.S. is at the epicenter of a deep crisis in the multilateral trading system because the U.S. is the most important trading partner of many WTO members and because U.S. “ambivalence” about the WTO rules it has consistently sought to uphold casts a “long shadow” to the future, according to the Geneva official.
He also expressed concern with the United States’ approach to Appellate Body vacancies, saying harming the independence of adjudicators on the body won’t lead to reform but to a collapse of a multilateral system that has benefited WTO members writ large.
Canada took issue with U.S. Section 232 measures, “Buy American” procurement policies and U.S. antidumping and countervailing duties on softwood lumber from Canada.
The Geneva trade official cited Ambassador Stephan de Boer of Canada as expressing concern that other countries may follow the United States’ lead in using duties similar to Section 232 tariffs to restrict legitimate trade.
But during the second day of the United States’ TPR on Wednesday, U.S. Ambassador to the WTO Dennis Shea fired back at accusations that the U.S. is central to the current trading crisis by naming China as the most responsible party for problems in the multilateral trading system.
Shea pointed to a fundamental incompatibility of China’s trade-distorting, non-market economic regime with an open, transparent and predictable international trading system, the Geneva trade official said.
China will force transfer of technology and “outright steal it when it sees fit” to become the pre-eminent producer, particularly in strategic industries; as well as subsidize and maintain excess capacity in several industries, dump its product in other markets, all while claiming if the U.S. “musters a response,” it is abusing its power and acting irresponsibly, the Geneva source cited Shea as saying.
Ambassador Zhang Xiangchen of China responded by accusing the U.S. of not taking its WTO responsibility seriously.
Zhang noted that in the first day of the TPR, the U.S. mentioned China nine times and repeated it several times on Wednesday. He said WTO members convened to review the trade policies of the U.S., not China, adding, “We reject the role of scapegoat.”
WTO panel to review Russia retaliatory duties on U.S.
