US Tariff on Steel and Aluminum: Security Exception Issue in WTO Suits

On March 7, the U.S. announced a decision to impose tariff on steel imports and aluminum. [1] The decision was intended to protect both industries from unfair trade which the US determined is a threat to national security under the Trade Expansion Act of 1962. [2] Backing away from its previous announcement, the US has exempted its North American Free Trade Agreement (NAFTA) partners, namely Canada and Mexico, and left the possibility open for excluding other “allies” in the future. [3] If the U.S. proceeds with its decision, it will open the floodgates to cases against the U.S. at the World Trade Organization’s Dispute Settlement Body (DSB). [4]

If the case is disputed in the DSB, the US will argue that the tariff decision is based upon a national security threat. [5] When it comes to national security threat, WTO has given deference to the imposing country’s self-judgment. [6] In other words, WTO will normally accept the argument, as long as it is reasonable and not arbitrary.

Nonetheless, it is unlikely that the U.S.’s argument will succeed in the DSB. First, it is difficult to prove a national security threat considering that two-thirds of the U.S. consumed steels are generated domestically and the U.S.’s close ally, Canada provides the largest amount of the remainder. [7] [8]

Moreover, it is dubious whether the current state of U.S. national security will satisfy the “time of war or other emergency in international relations” requirement of GATT Article XXI(b)(iii). Arguably, the U.S. is engaged in military conflicts around the world, and in comparison, its relationships with most nations from which it imports steel and aluminum do not seem to meet the required threshold.

A surge of DSB suits are expected once the tariff imposition is finally determined. [9] Considering that the proceedings take years, the US might attain its short-term intentions. However, there is a clear lesson from the past: in 2003, the DSB decided against the US tariff on steel. [10] Given that the current justification behind the recent tariff decision is not different, it is likely to be a re-run of the last show.

This post is a student blog post and in no way represents the views of the Fordham International Law Journal.