Commerce Secretary Wilbur Ross cited a ‘national security’ exception outlined in World Trade Organization rules.
It “wouldn’t surprise” Commerce Secretary Wilbur Ross if countries challenge any remedy that President Trump might order pursuant to recommendations for limiting aluminum and/or steel imports, Ross said Feb. 16, but any tariff and/or quota action could be buoyed by a “national security exception” outlined in World Trade Organization (WTO) rules.
While “almost every trade action that we take gets challenged” in some venue, “there is, in the WTO rules, a national security exception,” Ross said during a Feb. 16 call with reporters, adding that his department believes any remedies Trump imposes pursuant to completed “Section 232” investigations into aluminum and steel imports would be permissible under U.S. law and WTO standards.
The Commerce Department on Feb. 16 released reports highlighting its separate investigations into the national security impacts of aluminum and steel imports. Section 232 of the Trade Expansion Act of 1962 authorizes the President to assess trade remedies, including tariffs and/or quotas, if imports of an investigated good are found to harm national security.
Trump must make a decision on any steel remedy pursuant to Section 232 by April 11, and any aluminum remedy by April 19.
During a Senate Finance International Trade, Customs, and Global Competitiveness Subcommittee field hearing in Monaca, Pa., Sen. Bob Casey, D-Pa., that panel’s ranking member, said it was a positive sign that Ross shared more information about the Trump administration’s enforcement efforts, but Casey added, “We need to hear from the President of the United States.
“All of us can talk about it, and he can make reports and all that, but the central person here, in terms of making this determination here on 232…is the President,” Casey said. “What we need is action that will lead to concrete, positive results, for both U.S. companies like U.S. Steel, as well as the United States workers.”
Potential options that Commerce recommended pursuant to each report include tariffs on a targeted group of countries, direct quotas on all imports, and tariffs on essentially all steel and aluminum imports from all countries, with a carve-out for far-downstream consumer goods.
Ross said he doesn’t believe any of the countries listed in the targeted tariff recommendations have more liberalized trade practices than the U.S.
The steel Section 232 report outlines the possibility of a 53 percent-plus tariff for imports from Brazil, China, Costa Rica, Egypt, India, Malaysia, South Korea, Russia, South Africa, Thailand, Turkey and Vietnam.
The aluminum 232 report includes an option for a 23.6 percent tariff on imports from China, Hong Kong, Russia, Venezuela and Vietnam.
“All of these other countries have much bigger restrictions on imports than we do,” Ross said.
In a selected group of 21 major traded products, the EU has “higher tariffs than we do on the vast majority of those, and China has higher tariffs on an even larger percentage,” Ross said. “So they already are very much protected.”
Ross is hopeful that putting forth a broad set of remedy ideas will spur more dialogue with other countries on reducing global steel and aluminum overcapacity.
The recommendations, “in essence,” suggest that the U.S. take a larger leadership role in that international conversation, even as other countries cope with similar import issues in steel and aluminum, Ross said. Yet those countries haven’t shown a substantial initiative in advancing overcapacity reduction efforts, he added.
Ross stressed that if steel and aluminum imports decrease, those U.S. industries will still remain competitive, as there is a large amount of unused primary capacity in this country.
Part of the goal of the recommended remedies is to raise both U.S. metal industries’ operating capacity to 80 percent, from 48 percent in the case of aluminum and from 73 percent in the case of steel, Ross said.
From 2013 to 2016, aluminum industry employment fell by 58 percent, and the number of U.S. aluminum smelters decreased from 11 to five, only two of which are currently operating at capacity, even as demand has grown considerably, Ross said.
Amid those employment trends, imports have risen from composing 60 percent of total U.S. primary demand for aluminum in 2012, to 90 percent now, he said.
It’s doubtful that any remedy action taken in line with the reports would strongly correlate to any price increase in steel- and aluminum-containing retail products, Ross said. Prices in both metals have been very volatile in recent years, he noted.
The percentage of steel in finished automobiles, for instance, is “quite small,” he said.
“As to other industries,” Ross said, “it’s even more trivial. In the case of soft drinks, beer, canned soups, it’s a fraction of one cent difference in cost that would come from any of these alternatives.”
Ross not discounting retaliation potential in Section 232 cases
