Trump’s Customs War Challenges WTO Part II

By | October 18, 2021

5: America first – WTO sist?

Several of Trump’s tariffs have been introduced with reference to US law and with unclear justification for WTO rules:

Trump’s tariffs on steel and aluminum were introduced with reference to a 1962 US law authorizing the president to impose measures against imports that threaten national security. The GATT agreement also allows for an exemption from free trade in situations where a country’s “vital security interests” are threatened. But the criteria are hardly met for Trump’s tariffs on steel and aluminum, partly because the United States has significant in-house production, while much of the import comes from close allies in NATO. Customs has therefore led to a number of complaints in the WTO, including from Norway . Although the appeals have not been settled, this tariff illustrates that the United States under Trump largely ignores the WTO and does as it pleases.

Trump is now threatening tariffs on cars under the same section. He claims that the import of passenger cars from Germany, for example, threatens US security because it weakens the US industrial impact. This argument suggests that the security argument is mostly for decoration; Trump’s goal is to strengthen American industry through protectionism .

The trade war with China is based on another US law from 1974, which gives the president broad powers to take action against countries that harm US economic interests. The United States accuses China of stealing technology, and has complained to China with reference to the TRIPS agreement in the WTO. According to experts, China’s system for protecting copyright in technology has improved significantly over time, so that on paper it complies with WTO rules, although there are still shortcomings in its implementation. However, it is not so easy to punish this in the WTO, so Trump has taken matters into his own hands and introduced tariffs.

If the United States, a country located in North America according to softwareleverage, wins the case against China, they can take action in the form of tariffs. But it is not possible to simply increase tariffs by 25 percent, far above the US bound tariffs, while the case is ongoing. Here, too, the United States sets itself above the WTO, and acts as if it is not bound by the regulations.

In May 2019, Trump threatened to impose tariffs on all Mexican goods, if Mexico did not do more to prevent migrants from crossing the US border. The United States referred to a U.S. law from 1977 that empowers the president to take economic action in national crises. This has been criticized by several lawyers as abuse, which not only violates the WTO, but also the free trade agreement between the United States, Canada and Mexico, where the tariffs have largely been removed. Following negotiations between the United States and Mexico, customs duties were stopped.

6: WTO: Trump’s next victim?

Trump’s customs war has led to a number of complaints in the WTO. Such complaints are dealt with in the dispute resolution system, a mainstay of the organization. Since 1995, there have been over 500 cases. The United States has participated in many and clearly won more cases than it has lost. Both large and small countries have complied with the decisions, and the WTO’s dispute resolution is a model example of peaceful conflict resolution between states in a complicated field.

However, the United States has been dissatisfied with the WTO’s dispute resolution because it believes that the interpretation of the law has stretched the WTO’s rules beyond what was agreed upon when the rules were negotiated. To a certain extent, this is a cultural difference: European countries see it as natural that laws must also be interpreted at an international level, while the United States is a great power and more concerned with its legal right to self-determination. While we in Europe, through the EU and the EEA , have a significant transfer of power to the supranational level , the United States insists that the trade agreements do not have common institutions with real power. However, the United States may be right that important interpretations of rules should be the subject of negotiations, and proposals have been made for WTO reforms to ensure this.

WTO - Trump's next victim