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TWN
Info Service on WTO and Trade Issues (Mar25/08) Geneva, 13 Mar (D. Ravi Kanth) — The European Union and Canada on 12 March separately announced retaliatory measures against the United States for imposing a 25% tariff on imports of steel and aluminium in an escalating trade war that has seemingly upended the multilateral trading system (MTS) and turned the rules- based World Trade Organization on its head, said people familiar with the development. The EU has announced that it intends to impose additional tariffs on American goods worth some 26 billion euros. The EU’s proposed retaliatory tariffs on American goods will come into effect in April, around the time that the US is slated to unveil a new wave of reciprocal tariffs on its trading partners. In what appears to be a response reminiscent of the proverbial pot calling the kettle black, the new US Trade Representative (USTR), Ambassador Jamieson Greer, on 12 March criticized “the EU’s punitive action” on grounds that it “completely disregards the national security imperatives of the United States – and indeed international security…” Interestingly, the USTR’s statement does not even mention the World Trade Organization and whether it is important to comply with the WTO rules. As regards the US tariffs on steel and aluminium, the European Commission President, Ms Ursula von der Leyen, said the 25% tariffs on steel and aluminium were “bad for business, and even worse for consumers.” “These tariffs are disrupting supply chains” while bringing “uncertainty for the economy,” she said. The list of American goods that are being targeted by the EU’s retaliatory tariffs could include goods such as cosmetics, clothes, wood, soybeans, chicken, beef and other agricultural produce, according to a news report in the Financial Times on 12 March. According to a news report in the Wall Street Journal on 12 March, the EU is planning to impose 50% tariffs on imports of American whiskey (Kentucky bourbon), motorcycles (Harley-Davidson) and motor boats beginning on 1 April. The WSJ report suggested that “a second set of EU levies is due to take effect in mid-April.” Despite announcing the retaliatory measures, the EU also indicated that it remained open to an agreement with the US to reverse these measures. Meanwhile, a powerful US trade lobby, the US Chamber of Commerce, cautioned that the US duties on steel and aluminium as well as the EU’s retaliatory measures “will only harm jobs, prosperity and security on both sides of the Atlantic.” It urged the two sides to de-escalate from the tariff tensions and “find a negotiated outcome urgently.” Surprisingly, the EU has not suggested whether it will simultaneously invoke dispute settlement proceedings against the US at the WTO over the steel and aluminium tariffs. CANADA RETALIATES Canada on 12 March also retaliated against the Trump administration’s allegedly unilateral tariffs on steel and aluminium, suggesting that it would impose a levy on an additional $20.6 billion worth of goods imported from the US, according to media reports. Announcing the retaliatory measures, the Canadian finance minister Dominic LeBlanc suggested that his government is going to adopt a “dollar-for-dollar” approach with a 25% tariff on American goods that would come into effect on 13 March. The finance minister also suggested that the proposed tariffs on American goods will cover steel products worth $8.8 billion, aluminium products worth $2 billion and other products like computers and sports equipment. He blamed the US administration for inserting “disruption and disorder into an incredibly successful trading partnership and raising the costs of everyday goods for Canadian and American households alike.” Meanwhile, in a separate development concerning Canada, China has filed an addendum to its earlier trade dispute against Ottawa’s “surtax measures on certain products of Chinese origin, including, inter alia, Chinese- made electric vehicles, steel and aluminium products, batteries and battery parts, solar products, critical minerals, semiconductors, permanent magnets, and natural graphite from China.” Though China is yet to announce retaliatory measures against the US, Beijing made it clear that it “will take all necessary measures to defend its lawful rights and interests.” A spokesperson of the Chinese foreign ministry said that “what the US did severely violates the WTO rules, harms the rules-based multilateral trading system, and does no good to solving problems.” China said that the best way to resolve problems is through “cooperation”, as it will bring mutual benefit and win-win (benefits), adding that it will take countermeasures in response to arbitrary pressure. In a separate development, Australia also criticized the US for its “entirely unjustified” imposition of tariffs. In a short statement issued in response to the EU’s proposed retaliatory measures against the US, the USTR, Ambassador Greer, rebuked Brussels for its seemingly hypocritical stand. “For years, the European Union has opposed the United States’ efforts to re-industrialize,” said Ambassador Greer. According to the USTR, “the EU has rejected attempts under successive US administrations to cooperate effectively on dealing with global excess capacity on steel, aluminium, and other sectors, employing measures that are too little and too late.” The USTR was implicitly pointing a finger at the EU in that it did not cooperate fully with Washington in the fight against China, which allegedly caused the problem of global excess capacity in steel and aluminium, said people familiar with the development. “If the EU acted as quickly to address global excess capacity as it does to punish the United States, we likely would be in a different situation today,” the USTR argued. Ambassador Greer said that “the EU’s punitive action completely disregards the national security imperatives of the United States – and indeed international security – and is yet another indicator that the EU’s trade and economic policies are out of step with reality.” In a nutshell, it appears somewhat clear that the Trans-Atlantic relations between the US and the EU, whether in trade or in defence, are gradually inching towards a tipping point, which President Donald Trump has repeatedly alleged is largely due to the EU’s “bad behaviour”. +
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