International Trade Update

Steel Update

Single WTO Panel To Hear Member Complaints Against US Steel Measures

New Zealand became the seventh member of the WTO, on June 8, to seek a ruling that the United States violated WTO provisions when it imposed safeguard measures on steel. It will join the joint panel formed on June 24 when the WTO's Dispute Settlement Body decided to convene a single dispute settlement panel to hear the complaints of China, Norway and Switzerland following their second requests for the establishment of a panel. (Once a second request is made, a panel is automatically established.) The WTO combined the panel created for China, Norway and Switzerland with the panel created previously for the European Union, Japan and South Korea. The seven countries will have their complaints heard by a single, three-Member panel. The United States reportedly favors this decision, preferring to defend the measures in one proceeding rather than in separate panel proceedings. Other Members are expected to join the challenge to the US steel measures at the WTO. Brazil is supposedly waiting for the 60-day consultation period to expire before requesting a panel and Venezuela is expected soon to take the first steps in challenging the US measures before the WTO by requesting formal dispute settlement consultations. The action established several important precedents. This is the first panel requested by China since it joined the WTO in December 2001. It is also the first dispute settlement case initiated by Switzerland and Norway since the WTO was established in 1995.

A panel ruling is expected for the middle of next year. In the meantime, Taiwan has requested consultations with China over that country's decision to impose a provisional safeguard on steel imports.

In addition to requesting WTO dispute settlement consultations, Members continue to threaten the United States with retaliation in the form of increased tariffs if it fails to offer compensation to offset the impact of the 201 measures. Although compensation is authorized by the WTO Agreement on Safeguards, the United States has refused to provide any definitive offers of compensation, likely due to potential domestic political consequences. It was reported that European Trade Commissioner Pascal Lamy said the decision on whether to pursue short-term retaliation measures depends on what the EU receives from the US in the form of "compensation and/or exclusions." The EU continues to signal that it will delay, at least until August and possibly until October, a decision to retaliate. The Japanese government temporarily has halted the imposition of retaliatory import tariffs on US manufactured steel after additional product exclusions were granted.

US Steel 201 Exclusions Process Continues

On July 11 the Department of Commerce (DOC) and the US Trade Representative (USTR) announced the fourth batch of steel products excluded from the safeguard tariffs. The announcement follows three previous announcements of exclusions granted on June 7, June 17 and June 24. Earlier, on June 9, USTR released a codification of the 224 product exemptions including new language and tariff numbers on affected products that reflect the exclusions, except the July 11 exclusions. This codification may affect how the tariffs, as high as 30 percent, are applied, and includes official language on approved tariff exclusions from the N-designated and X-designated groups of requests. Exclusion requests were filed in response to the March 5 US safeguard measures on steel. The USTR and DOC issued X numbers, denoting numbers assigned during the Steel 201 process, to all requests filed on April 23 and a list of those X-numbered exclusion requests found sufficient for further consideration was compiled and posted on the USTR website. Parties not on the...