G-20 Tensions Simmer Over US Tariff Plan on Steel

Posted July 10, 2017

The U.S. president joined 19 of his counterparts at the G20 Summit in Hamburg, Germany, Friday, with issues on the table ranging from trade to climate change. As the meeting's first day wrapped up, leaders indicated that steel remains one of the hottest subjects of debate.

Also, invoking national security is all but taboo at the World Trade Organisation, the arbiter of worldwide trade rules, because it is largely seen as a way to wage economic warfare by citing arbitrary defense concerns. Probably not. Given China's relatively small US market share, and the fact that anti-dumping and countervailing measures already apply to China, it is not clear what could be accomplished through new barriers to imports - unless they were applied to other steel exporters. Trump's Commerce Department launched its review in April, missed a self-imposed deadline for a decision last month and is expected to announce a verdict soon. Juncker said that Europe expects to increase its exports to Japan by a third after trade barriers drop away.

The U.S., under Section 232 of its Trade Expansion Act, can impose tariffs and other trade restrictions if imports are seen as weakening industries crucial to national security. The U.S. also has accused China of shipping steel and aluminum to the U.S. through countries such as Vietnam and South Korea. Leaders are concerned about a potential trade war over steel as Trump prepares to decide whether to impose punitive tariffs as other nations complain about dumping on global markets.

The Sept. 5 communique urged the OECD to help countries "enhance communication and cooperation", take "effective steps to address the challenges", and "encourage adjustment".

"The EU is a traditional and reliable steel supplier of the U.S., the EU member states concerned are North Atlantic Treaty Organisation partners of the U.S. There is therefore no justification for targeting any steel supplies from the EU", Eurofer said.

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In fact, of the top 10 foreign steel suppliers, of which Canada is the largest, six are tied to the United States through NATO, NAFTA or bilateral defense treaties; two others, Taiwan and Brazil, are old USA friends.

Several of those exporters-Canada, Turkey, and Germany-are members of the North Atlantic Treaty Organization (NATO) and as such the Trump administration may have to show that their strategic partners in the military alliance are somehow threatening USA national security interests. Enacting Section 232 also may violate World Trade Organization rules.

US steel prices are firm so far this week, holding onto their value despite the passing of the "deadline" for the Commerce Department's Section 232 investigation results last Friday.

WTO Director General Roberto Azevedo told Reuters it would be concerning to see countries making national security demands within the WTO's dispute settlement system, the global trade court for the its 164 members.

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