|
||
|
TWN
Info Service on WTO and Trade Issues (Jun25/02) Geneva, 30 May (D. Ravi Kanth) — After suffering what amounts to a humiliating defeat over its reciprocal tariffs at the United States Court of International Trade on 28 May, the Trump administration has asked a federal appeals court to stay its ruling on grounds that it would harm US national security and trade interests at a time when US President Donald Trump is trying to negotiate trade deals with other countries. The Trump administration has sought a stay on the ruling issued by the US Court of International Trade on 28 May against the reciprocal tariffs and the global basic tariff of 10%, stating that it would undermine its national security and trade interests, particularly at this critical juncture when it is negotiating with around 130 countries. The ruling came as a proverbial “shot in the arm” to countries that are being forced to negotiate with the US administration over the reciprocal tariffs announced by President Trump on 2 April. The US Court of International Trade on 28 May ruled that President Trump lacked the authority to impose allegedly punitive tariffs against many countries, causing a global tariff and trade war. In what appears to be a huge blow to the Trump administration, the US Court of International Trade ruled that the Trump administration seemingly misused its executive power under the International Emergency Economic Powers Act (IEEPA) of 1977. “The court does not read IEEPA to confer such unbounded authority and sets aside the challenged tariffs imposed thereunder,” the three-judge panel wrote. The panel of judges ruled that the IEEPA “does not authorize any of the Worldwide, Retaliatory, or Trafficking Tariff Orders.” The judges provided a graphic account of the “Trafficking Tariff Orders” issued by the Trump administration on 2 February, beginning with the 25% tariff on Canada and Mexico and a 10% tariff on China on account of the alleged failure of these three countries to stop the illegal trafficking of the drug fentanyl into the US, and finally culminating with the differing levels of reciprocal tariffs imposed against countries, together with a global basic tariff of 10% on all goods entering the US. The three judges ruled that “the Worldwide and Retaliatory Tariff Orders exceed any authority granted to the President by IEEPA to regulate importation by means of tariffs.” “The Trafficking Tariffs fail because they do not deal with the threats set forth in those orders,” the three judges said, suggesting that there is no emergency economic situation that warranted such reciprocal or basic tariffs at this juncture. According to the ruling, “this conclusion entitles Plaintiffs to judgment as a matter of law; as the court further finds no genuine dispute as to any material fact, summary judgment will enter against the United States.” Further, the judges pronounced that “the challenged Tariff Orders will be vacated and their operation permanently enjoined,” adding that “there is no question here of narrowly tailored relief; if the challenged Tariff Orders are unlawful as to Plaintiffs they are unlawful as to all.” The ruling, however, has left the 25% tariff on steel and aluminium and the 25% tariff on automobiles and auto parts under Section 232 of the Trade Expansion Act of 1962 to continue without any change. The tariffs that are untouched by this ruling amounts to a large portion of America’s international trade, said an analyst. “This ruling is very specifically about the tariffs that were announced from the White House garden on April the 2nd, which in some ways were the most attention-grabbing because they were universal, they applied to all countries in the world, including some bizarre geographical entities that very few people had even heard of, but also because they so much were part of President Trump’s political rhetoric about what tariffs should be used for,” the analyst said, in an interview with the BBC. Interestingly, a World Trade Organization dispute panel had ruled against the Section 232 tariffs imposed by the Trump administration on steel and aluminium on grounds of national security, during its first term. In a report (DS564) issued in December 2022, the panel considered that an “emergency in international relations” under Article XXI(b)(iii) of the GATT 1994 refers to situations of a certain gravity or severity and international tensions that are of a critical or serious nature in terms of their impact on the conduct of international relations. “Having considered the evidence and arguments submitted in this dispute,” the panel said it did not find that the measures at issue were “taken in time of war or other emergency in international relations” within the meaning of Article XXI(b)(iii) of the GATT 1994. The panel therefore found that the inconsistencies of the measures at issue with certain provisions of the GATT 1994 were not justified under Article XXI(b)(iii) of the GATT 1994. However, the US appealed the panel’s ruling before a dysfunctional Appellate Body to ensure that the dispute remains voided, said people familiar with the dispute. Ironically, the US trade court has put paid to the Trump administration’s seemingly unilateral actions for the time being while providing some “breathing space” to countries to consider whether they should negotiate with the US over the reciprocal tariffs, said a former trade envoy, who asked not to be quoted. TEMPORARY RELIEF The ruling by the US Court of International Trade, which is being sought to be stayed, provides policy space for countries at a critical juncture in the global trading system. Barring China, which stood its ground and reportedly forced the Trump administration to negotiate over its tariffs, some 130 other countries entered into negotiations with the US without knowing whether they will secure any relief from the reciprocal tariffs within the 90-day pause period. According to a report in the Wall Street Journal (WSJ) on 29 May, the Court ruling “blows a hole in global trade talks, already under way with more than a dozen nations, which began after the reciprocal tariffs were imposed. It also throws into question recent agreements with the UK and China.” The ruling also provided a glimpse into the authority on tariff determination enjoined by the US Congress, though the Congress has delegatedmany powers to the US President over the decades. The Trump administration justified the tariffs under a national emergency arising from the ongoing $1 trillion US trade deficit, which it claims has severely weakened the economy and posed an unusual and extraordinary threat. The ruling by the three judges at the Court of International Trade clarified that “IEEPA’s provisions impose meaningful limits on any such authority it confers [on the President].” According to the ruling, “the Worldwide and Retaliatory Tariffs lack any identifiable limits,” and that IEEPA’s limited authorities may be exercised only to “deal with an unusual and extraordinary threat with respect to which a national emergency has been declared … and may not be exercised for any other purpose.” In short, the ruling by the Court of International Trade suggested that it would be unconstitutional for Congress to delegate “unbounded tariff power” to the president. “An unlimited delegation of tariff authority would constitute an improper abdication of legislative power to another branch of government,” the court said. The panel of judges maintained that the US trade deficit prima facie did not fit the law’s definition of an unusual and extraordinary threat. Though several challenges were brought against the reciprocal tariffs in the Court of International Trade and in federal courts around the country, the Court of International Trade, which has nationwide jurisdiction over tariffs and trade disputes, was the first to rule on requests for injunctions after holding hearings in two cases, according to the WSJ report. “ANGRY” RESPONSE In a seemingly angry response to the ruling issued by the panel of three judges at the US Court of International Trade, White House spokesperson, Mr Kush Desai, said, “It is not for unelected judges to decide how to properly address a national emergency.” “President Trump pledged to put America first, and the administration is committed to using every lever of executive power to address this crisis and restore American Greatness,” he insisted. According to a report in the Financial Times on 29 May, senior White House officials said the administration would immediately appeal against the decision, and move to stay, or put a hold on the order. “We think we have a strong case,” said Peter Navarro, the chief advisor on tariffs to President Trump, adding that: “Yes, we will immediately appeal and try to stay the ruling.” It remains to be seen what other powers the Trump administration will avail of in pursuit of its controversial trade goals. “The administration has previously contemplated imposing duties under Section 301 of the Trade Act of 1974, which allows for tariffs that counter unfair foreign trade practices,” the WSJ suggested. Attorneys at the Justice Department said that the tariffs were necessary to address a US trade deficit that had increased by 40% in the last five years, arguing that the deficit led to “a cumulative effect on the country’s economy, threatening its supply chain, manufacturing and military preparedness,” according to the WSJ report. Brian Marshall, a lawyer at the attorney-general’s office in the state of Oregon, said at a hearing for the state’s case that President Trump’s tariffs were unprecedented and untenable. “The government argues that so long as the president says he’s confronting an unusual and extraordinary threat that he can set tariffs of any amount from any country for any length of time, and no court may review it,” Marshall said during the hearing. “That’s a position that no court has ever embraced and, until this year, power no president has ever asserted.” +
|
||
