Panel on WTO Section 232 Decisions Say Suits Should Not Have Been Brought
The victories that countries won at the World Trade Organization over American steel and aluminum tariffs (see 2212090060) will only complicate the discussion on how to bring back binding dispute settlement, panelists said at a Washington International Trade Association event.
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Bruce Hirsh, principal at Tailwind Global Strategies, said flatly, "The case probably should not have been brought."
Simon Lester, president of WorldTradeLaw.net and a former staffer for the WTO, said that generally, if a government invokes the national security exception to WTO rules, "it's basically a statement it's not going to change the measure," even if it loses. So, he said, it weakens the rules-based trading system when there's publicity that governments are refusing to comply with panel decisions.
"So, as a result, I don’t think litigation is very productive here," he said.
Lester said it would be better if countries could negotiate in Geneva, and those facing the purported national security tariffs could say they deserve to balance out the tariffs without claiming the country imposing the tariffs is breaking the rules.
"This wouldn’t be a totally unsupervised process," he said, since if the two countries didn't agree on how much trade was affected, there would be an arbitration process to determine that.
Timothy Keeler, who noted his comments do not represent the views of his employer, Mayer Brown, said he didn't blame the countries for bringing the cases, but instead, blames the panelists for the decisions, which he called "deeply irresponsible."
He said it's preposterous for panelists to be deciding for the U.S. government what is an emergency that deserves a trade response under the rubric of national security. He said the decisions were "catastrophic" for the goal of a return to a binding appellate body in Geneva.
"It feels to me like the panelists, like the appellate body before them, just did not have the humility to say something is not legally justiciable," he said.
Because the WTO charter says none of its rules prevent a country from taking "any action which it considers necessary for the protection of its essential security interests," there is no real boundary on what is a national security matter, the panelists agreed. WITA CEO Ken Levinson asked if a country could invoke climate change as a reason to impose tariffs, and Lester said yes.
Hirsh said countries in Geneva will be talking about issues just like that as they grapple with how to reconstitute binding dispute resolution.
"It is those conversations -- rather than a panel -- that are going to establish the bounds of what should and shouldn’t be invoked" as national security, he said. But those conversations will not create a written rule, he said, rather, they will establish a norm.
Hirsh noted that before the WTO was created, the General Agreement on Tariffs and Trade had no binding dispute settlement, but countries still tried to comply with decisions, since it would encourage other countries to also comply.
The same is true for not throwing out the national security rationale too often, he said.
"The interest of the United States and others, in ensuring the system would work, meant there was a restraint in exercising the exemption," he said. For the WTO to be healthy, that has to be true in the future, too, he believes.