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TWN
Info Service on WTO and Trade Issues (May26/11) Geneva, 18 May (D. Ravi Kanth) -- Amid "heightened trade turbulence" and moves by the European Union and the United Kingdom to sharply increase tariffs on steel products, China plans to deliver a statement on 20 May at the World Trade Organization's Council for Trade in Goods (CTG) on the proper use of "GATT Article XXVIII rules on modification of schedules to collectively support the multilateral trading system." Against the backdrop of the EU's ongoing Article XXVIII consultations with members to raise steel tariffs by 50 percent, there is growing concern among members over the systemic impact that such measures could have on the multilateral trading system. The United Kingdom has also initiated Article XXVIII consultations with members to raise its scheduled steel tariffs - a move that has come under intense scrutiny, according to people familiar with the development. Under agenda item seven of the restricted convening notice (WTO/AIR/CTG/33/Rev.2) dated 12 May, reviewed by the SUNS, China intends to make a statement at the CTG on "Properly Using the GATT Article XXVIII Rules on Modification of Schedules to Collectively Support the Multilateral Trading System During Heightened Trade Turbulence." China's proposed statement may be an attempt to highlight systemic concerns over members seemingly resorting to modifying a broad range of scheduled tariff commitments under Article XXVIII of the GATT 1994, said people familiar with the development. Article XXVIII of the GATT 1994 - which governs the modification of tariff schedules - has been invoked by the EU, which appears to have launched the required negotiations with all principal suppliers of steel products. The EU's move appears to be aimed at China, which is frequently criticized by the US, the EU, Japan, and other industrialized nations for its alleged excess steel capacity, according to people familiar with the development. Last year, Brussels proposed raising the steel duty bindings - or commitment ceilings - from 0 to 50 percent under GATT Article XXVIII. The UK made an identical proposal in March of this year. However, both proposals have raised systemic issues, as nearly 400 tariff lines covering various steel products in HS chapters 72 and 73 have been opened up for a sharp increase in tariff bindings (from 0 to 50 percent) under GATT Article XXVIII. This provision is generally considered relevant for limited adjustments in tariff commitments, where the member concerned proposes to raise tariff bindings for certain products or tariff lines and offers compensatory reductions on other tariff lines to maintain an overall balance in tariff concessions, said a negotiator who asked not to be quoted. That two major steel-producing members like the EU and the UK are seeking to amend their schedules for 400 tariff lines raises a systemic question: whether Article XXVIII is intended for such large-scale amendments to tariff concessions via negotiations in a very confined setting - as opposed to multilateral negotiations where one might modify tariff bindings more broadly, such as under the unfinished Doha Development Agenda (DDA) negotiations, which remain dormant at this juncture, the negotiator added. The requests for Article XXVIII negotiations have been triggered by the expiration of safeguard actions on steel, as such temporary measures cannot be maintained indefinitely, said another negotiator who asked not to be quoted. According to the minutes (G/C/M/132) of the CTG meeting held on 27-28 November last year, the EU's move generated considerable opposition from members. Japan severely questioned the EU's action, stating that it has "many doubts and serious concerns about the necessity and legitimacy of these measures, as each measure was taken without appropriate consideration of the trade-restrictive effects of other related measures." According to Japan, the EU "has been imposing a limitation on the maximum volume that one single Member can export under the residual TRQ for product category 1 (hot rolled plate products) since July 2024, and for product category 2 (cold rolled plate products) since July 2025." As a result of the EU's measures, Japan said, "imports of those products from Japan have drastically decreased since then." Japan urged "the European Union to rectify the aforementioned cumulative trade-restrictive measures on steel products. In this regard, Japan reserves the right to take action under the relevant Agreements." In a similar vein, Turkiye expressed sharp concern over the EU's move, noting that "the global steel industry remains a cornerstone of sustainable industrial growth while facing mounting pressures from global excess capacity." Ankara said that it is "cooperating with the EU and others to find solutions to meet this challenge; however, ensuring a fair and predictable trading environment that is consistent with the WTO and other international rules is essential for the benefit of all." Turkiye said that "the excess capacity pressures must be addressed in a manner that does not unfairly and unnecessarily restrict international trade," adding that "increasing protectionism in international trade has unfairly impacted countries which are not responsible for the excess capacity." "Protectionist measures are a source of concern for the future of the sector," it maintained. Ankara further argued that "proposing a 47% reduction in import quotas and doubling the level of out-of-quota duty to 50%" marks a critical shift. Several other members, including Chinese Taipei, India, and Korea, also raised multiple concerns about the EU's proposed Article XXVIII negotiations on steel. In response, the EU defended its move in requesting Article XXVIII negotiations, stating, "A WTO Member can take legitimate action, such as increasing its tariff commitments under the WTO, in compliance with the rules. In this case, the procedure is regulated by Article XXVIII of the GATT 1994." The EU said that several members "acknowledged the rationale for the EU to act against overcapacity." The EU argued that "the only way to avoid the proliferation of unilateral measures is collectively to address the root issue of overcapacity." Brussels said that it "remains fully committed to advancing on that objective together with like-minded partners, both bilaterally and in the context of the Global Forum on Steel Excess Capacity (GFSEC)." +
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