[Global Times-Global Network Reporter Ni Hao] On January 27, representatives of China and the United States held a heated debate at the WTO headquarters in Geneva, Switzerland. Pagan, Deputy Permanent Representative of the United States to the WTO, declared on the same day that the United States "has appealed to the WTO on a trade lawsuit with China".
This trade lawsuit, which originated in the Trump period of former US President, involved China, Switzerland, Norway and Turkey. On December 9 last year, it was recognized by the WTO expert group that the United States violated the relevant WTO regulations. According to reports, the United States immediately issued a strongly worded statement after losing the case, refusing to accept the ruling of the WTO and not intending to cancel the tariff increase on these countries. On January 27th, Pagan also pointed the finger at the WTO, claiming that "the United States cannot support the adoption of these fundamentally flawed and destructive reports".
On January 29th, Yang Guohua, the executive vice president of the Law Research Institute of the World Trade Organization in china law society and a professor at Tsinghua University Law School, was interviewed by Global Times, and pointed out the root cause of the US losing the case on the trade lawsuit between China and the United States, which lasted for more than four years.
It is rare for the United States to launch Section 232 investigation.
Everything originated from the rare resumption of the dusty Section 232 investigation in the United States in 2017. On April 19, 2017, the US Department of Commerce launched an investigation on "the impact of imported steel on national security" in accordance with Article 232 of the Trade Expansion Act of 1962. On January 11, 2018, the US Department of Commerce submitted a report to the then US President Trump, arguing that steel is of vital importance to US national security. A large number of steel imports from the United States have adversely affected the US industry and seriously weakened the US economy. Subsequently, this investigation was made to imported aluminum products in the same way. On March 8, 2018, the President of the United States announced the imposition of tariffs of 25% and 10% on imported steel and aluminum, respectively, which took effect on the 23rd of that month. However, after that, the United States reached an agreement with the European Union, Britain and Japan, and this global trade war initiated by the United States finally triggered a lawsuit against the United States by China, Switzerland, Norway and Turkey in the WTO.
The Trump administration’s actions make the world stunned, because Section 232 of the US trade law is little known and rarely acted on it. Many countries consider this as a protectionist act, while the European Union and China clearly express their opposition. The EU said that the US measures are not based on so-called "national security" considerations, but "disguised" safeguards. On March 26, 2018, China formally requested to consult with the United States in accordance with Article 12, paragraph 3, of the WTO Agreement on Safeguards, but the United States refused. On April 5th of that year, China was forced to formally sue the United States in the WTO.
In November 2018, the WTO Dispute Settlement Body held a meeting and agreed to set up an expert group to review the steel and aluminum tariff measures announced by the United States to confirm whether the measures violated WTO rules. On December 9, 2022, the WTO expert group believed that the United States had violated a number of relevant WTO regulations, and the United States had no justifiable reason to implement this tariff measure.
However, the United States does not accept the result of losing the case. In a statement issued on December 9 last year, the Office of the United States Trade Representative (USTR) said that the United States will not cede the decision-making power on its basic security to the WTO expert group, nor does it intend to cancel Article 232 tariffs because of these disputes. USTR believes that the tariff measures of the United States are based on the security exception clause of Article 21 of the General Agreement on Tariffs and Trade (GATT), and that the United States can levy tariffs in a national emergency.
According to US media reports, Pagan continued to argue that "for more than 70 years, the position of the United States has always been very clear, and the WTO dispute settlement mechanism cannot review national security issues." She stressed that the WTO has no right to predict the ability of its members to deal with national security.
The United States believes that "national security" is threatened.
Yang Guohua told the Global Times reporter that, specifically, in the investigation of Article 232 in 2017, the US Department of Commerce cited the third situation in paragraph (b) under Article 21 of GATT, including that WTO members (1) may impose restrictions on atomically divisible substances or raw materials for manufacturing the substances; (2) restrictions may be imposed on the transportation of weapons, ammunition or other articles that can be directly or indirectly provided for military purposes; (3) Measures taken in time of war or other emergency in international relations.
However, in the original text of the clause, there is a text expression of "which it considers necessary". Yang Guohua said that it is obvious that the United States has judged by itself that it is in a "period of tension in international relations", so it can implement tariff measures.
Yang Guohua believes that "it can be seen from USTR’s statement and Pagan’s recent statement that the United States has always believed that according to this clause, no country, including the WTO, has the right to determine the national security status of the United States, which must be decided by the United States itself."
Then, can the United States invoke the security exception clause of Article 21 of GATT, and whether the "national emergency" it has ruled by itself is established or not?
American "sophistry" has shocked the industry.
According to Yang Guohua’s introduction, historically, the security exception clause of Article XXI of GATT was rarely cited, until 2015, when the Russian transit transport case attracted much attention was cited.
According to reports, after the Crimean crisis in 2014, Russia announced that it would ban Ukraine from transporting its products to countries in Central Asia through or using Russian roads or railways. Ukraine believes that Russia has violated the transit transport rights guaranteed by Articles 5 and 10 of GATT. Russia, on the other hand, cited the provisions of Article 21 (b) and Article III of GATT Agreement, and believed that the transportation restriction on Ukraine was a necessary measure implemented during the period of tense international relations, which was just and legal. Ukraine formally filed a lawsuit with the WTO in 2016, and the WTO expert group made a ruling on April 5, 2019, arguing that when Russia invoked Article 21 (b), Article III of the GATT Agreement, Russia and Ukraine were objectively in a period of "tension in international relations" and could decide to take measures to protect their national security interests.
This ruling explains the application of Article XXI of GATT for the first time, which restricts the arbitrary expansion of the interpretation of national security by WTO members, denies Article XXI of GATT as a self-censorship clause, and reserves the right to review the application of this clause in the WTO dispute settlement mechanism. Members should accept the objective inspection of the WTO when citing the security exception clause. This ruling has won the support and affirmation of WTO members including the European Union and China.
Yang Guohua said, "The WTO case number between Russia and Ukraine is 512, while the case number between China and the United States is 544. The time distance between the two cases is very close, which means that the Russian-Ukrainian case is very crucial to the adjudication of cases between China and the United States. Therefore, the WTO has the right to determine whether the United States can invoke the security exception clause of Article XXI of GATT, and it can also decide what the United States calls ’ National emergency ’ Whether it is established or not. "
Sure enough, according to the report of "Deutsche Welle", on December 9, 2022, WTO experts ruled that the relevant measures of the United States were inconsistent with many GATT provisions, and these inconsistencies could not be justified by the security exception of Article XXI of GATT, because the relevant security exception only applied to wartime or serious international tensions, which was not the case when the United States imposed tariffs.
Four years later, the United States finally failed to gain support from the WTO. Yang Guohua told the Global Times reporter that the "sophistry" of the United States in this case has shocked the industry. Moreover, due to the obstruction of the United States, the WTO Appellate Body has been in a state of "suspension". The United States is well aware of this, but it still insists on appealing, which is a typical abuse of WTO rules.
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