TWN Info Service on WTO and Trade Issues (Jul17/04)
11 July 2017
Third World Network
Goods Council debates national security exceptions to WTO rules
Published in SUNS #8496 dated 6 July 2017
Geneva, 5 Jul (Kanaga Raja) -- A meeting of the WTO Goods Council on 30 June
debated the issue of national security exceptions to the WTO rules, with a
number of members voicing concerns over the "systemic risks" posed by
the investigations initiated by the United States earlier this year into steel
and aluminium imports under Section 232 of the Trade Expansion Act of 1962.
Apart from the discussions that took place over the Section 232 investigations
on the implications to US national security of imports of steel and aluminium,
the Goods Council also heard Qatar expressing deep concern over trade
restrictions imposed on it earlier this month by several Gulf States, which
claimed these measures were in accordance with Article XXI of the GATT
(relating to security exceptions).
According to trade officials, the Russian Federation initiated the discussion
on the US Section 232 investigations on steel and aluminium imports, arguing
that for the sake of the stability of world markets, the US should refrain from
applying trade-restrictive measures.
[According to a fact sheet issued by the US Department of Commerce, under
Section 232 of the Trade Expansion Act of 1962, the Secretary of Commerce is
authorised to conduct comprehensive investigations to determine the effects of
imports of any article on the national security of the United States.
[The fact sheet cited the Section 232 investigations as including the
consideration of the following: domestic production needed for projected
national defence requirements; domestic industry's capacity to meet those
requirements; related human and material resources; the importation of goods in
terms of their quantities and use; the close relation of national economic
welfare to US national security; loss of skills or investment, substantial
unemployment and decrease in government revenue; and the impact of foreign
competition on specific domestic industries and the impact of displacement of
any domestic products by excessive imports.]
At the Goods Council meeting, the Russian Federation highlighted its strong
interest in this matter, pointing out that it is the fifth largest supplier of
iron and steel to the US market, and the third largest in respect of aluminium.
The Russian Federation queried why the US found it necessary to apply more
trade measures on top of the trade defence measures already allowed under WTO
According to the Russian Federation, concerted action was instead needed within
the G20 against excess steel capacity.
According to trade officials, the European Union underlined that the scope of
security exceptions in the General Agreement on Tariffs and Trade (GATT) did
not apply to the US situation.
Article XXI of the GATT describes specific circumstances for when WTO members
can use security interests to justify deviations from WTO commitments.
Article XXI on Security Exceptions states:
"Nothing in this Agreement shall be construed
(a) to require any contracting party to furnish any information the disclosure
of which it considers contrary to its essential security interests; or
(b) to prevent any contracting party from taking any action which it considers
necessary for the protection of its essential security interests
(i) relating to fissionable materials or the materials from which they are
(ii) relating to the traffic in arms, ammunition and implements of war and to
such traffic in other goods and materials as is carried on directly or
indirectly for the purpose of supplying a military establishment;
(iii) taken in time of war or other emergency in international relations; or
(c) to prevent any contracting party from taking any action in pursuance of its
obligations under the United Nations Charter for the maintenance of
international peace and security."
At the Goods Council meeting, the European Union pointed out that no exception
in the GATT is capable of justifying an import restriction taken outside of the
framework of trade remedies for the purpose of protecting a domestic industry
against foreign competition.
The European Union may end up bearing the brunt of import restrictions since
Chinese exports are already largely subject to US trade defence measures, while
Canada and Mexico will likely be excluded from the measures, it said.
It further emphasised that a proliferation of actions from the Section 232
investigations and outcomes would pose "unacceptable" systemic risks.
The European Union made clear that it will "be firm in taking all
necessary actions" if import restrictions are applied to EU exports.
According to trade officials, Brazil, Australia and Chinese Taipei echoed the
concerns voiced by the European Union over the "systemic risks" posed
by the US Section 232 investigations.
Brazil expressed concern about the implications on the global trading system if
members do not follow time- tested practices.
It said that the possibility of restrictive measures "could lead to
results that would not be in the interest of any."
Australia pointed out that "international trade rules should be
upheld" in addressing this global challenge.
It warned that "any unjustifiable measures could further exacerbate global
market distortions and result in retaliation and tit-for-tat measures."
Chinese Taipei said that it too had a "systemic concern" and was
closely monitoring the issue. Japan said that it had an interest in the issue
and was "closely following the US government's actions to address
According to trade officials, China said that the Section 232 investigations
were inconsistent with GATT Article XXI. It added that imports of steel and
aluminium were not a threat to national security.
The US should avoid creating trade barriers in the name of national security,
China also voiced concern with what it viewed to be a rushed investigation,
saying that it was concerned about the due process and accuracy of the process.
According to trade officials, the United States provided an explanation of what
factors were under consideration in the investigation, the public hearing
process, as well as its rationale.
"The Secretary of Commerce has initiated these investigations in light of
the critical role steel and aluminium serve in the US national security
industrial base and the continued increase in steel and aluminium
imports," the US maintained.
The US said that if the Commerce Secretary finds that steel or aluminium is
being imported into the US "in such quantities or in such circumstances as
to threaten to impair national security," the Commerce Secretary shall
recommend actions to be taken to "adjust the imports of steel and
Separately, under other agenda items that were taken up at the meeting, the
United States reiterated its concern over the Chinese government's intervention
and support to "key industrial sectors, such as steel and aluminium."
The United States further expressed concern about the timeliness and
completeness of China's notifications of its subsidies.
According to trade officials, the European Union, Japan and Canada likewise
expressed their concerns over the issue of global overcapacity in steel and
In turn, China complained about the "abusive" use of trade defence
measures by the United States.
China said that it had already phased out some of its production capacities and
eliminated 65 million tons of steel capacity.
It was wondering what fellow WTO members have done to contribute to addressing
this global problem.
The G20 forum on addressing global overcapacity was the appropriate forum for
this discussion, stated China.
Meanwhile, Qatar expressed its "deep concern" over
(trade-restrictive) actions taken earlier this month by Saudi Arabia, the United
Arab Emirates (UAE) and Bahrain.
According to trade officials, Qatar said it regrets that measures imposed at
that time continue to be applied and that these were in violation of
cornerstone WTO regulations and commitments.
(Qatar had earlier raised this matter at a meeting of the Council for Trade in
Services held on 13-16 June 2017.)
Bahrain, speaking also for Saudi Arabia and the UAE, maintained that these
measures were in accordance with Article XXI of the GATT.
Bahrain said that this provision allows, in cases of an emergency in
international relations, for a WTO member to limit actions that would affect
national security interests.
The UAE said the situation in the Gulf is very serious and it involves at the
core the issue of national security.
The UAE maintained that the matter does not fall under the competence of the
Goods Council nor of the WTO.
Egypt said that the trade restrictions fall under the "exceptional
circumstances", and thus were consistent with WTO rules.
According to trade officials, the US urged all the parties to remain open to
negotiations. It said that this was the best way to resolve this matter.
The US further said it would not get ahead of current diplomatic discussions,
particularly not in this Council.
The US added that it will continue to stay in close contact with all parties
and will continue to support the mediation efforts of the Emir of Kuwait.
The US said it believed its allies and partners are stronger when they are
working together towards countering security threats.
The US pointed out that each country involved had something to contribute to
Turkey expressed its hope that this matter will come to a quick resolution. It
underlined the "hundreds of years of fraternal and strong ties" among
the parties involved.
According to trade officials, China reiterated its call for WTO members to
"honour" their commitments as provided for under China's Protocol of
Accession of 2001, as it relates to the use of third party prices or costs in
calculating anti-dumping margins as of 11 December 2016.
China said this was a legal issue that should not be politicized and it is an
international issue that should not be circumvented by domestic laws.
Meanwhile, after inviting delegations to take the floor and express their views
on the ongoing discussions on e-commerce, the Chair of the Goods Council,
Ambassador Choi Kyonglim of Korea, summarised: "There continues to be a
very strong interest in e-commerce and very strong exchange of experiences, practices
and views... However, there remains differences in views. I did not see a
convergence in a particular direction."
The Chair encouraged members to continue to reflect on the issue, and said that
his door was open for further consultations. +