Trade Cases

Section 232 Investigation Worries U.S. Allies

June 20, 2017

The United States’ NATO allies are worried about the upcoming decision on the Section 232 investigation of steel imports and their impact on national security. European officials warn that restrictions on EU imports could add to the anti-American sentiment already building in Europe over Russian sanctions, the withdrawal from the Paris climate accord and President Trump’s wavering attitude on NATO itself.

U.S. Defense Secretary James Mattis has been contacted by military officials from Germany and the Netherlands who fear that broad-based import restrictions will harm America’s allies, according to a report by Reuters. Mattis is said to be aligned with Gary Cohn, head of the National Economic Council, in urging restraint on any trade actions.

The European Commission is considering retaliation options if the EU is caught up in the U.S. import action. Axel Eggert, chief of the European steel association EUROFER, told Reuters that the association will likely lodge a complaint with the World Trade Association. “The EU is a NATO partner of the U.S., therefore this doesn’t make sense. The EU should have a full exemption from 232 measures,” he said. “We fear there could be a broad application of Section 232 that would be reason enough to provoke a reaction from the EU under WTO rules. The Commission is looking into all the options.”

UK Steel, the trade association for the United Kingdom’s steel industry and downstream steel producers, called the national security investigation “a fundamentally wrong approach” to resolving commercial trade issues. In a report to the U.S. Commerce Department, UK Steel noted that the United Kingdom exported 250,000 metric tons of higher value steel products to the United States last year, none of which met dumping criteria.

UK Steel urged the Section 232 committee to address specific points in its investigation:

• Limit the investigation to national security, not broader commercial or “national interest” considerations
• Differentiate between steel products
• Identify which steel products are actually pertinent to national security
• Determine whether identified products can be made in the U.S. or provided by allies; if so, no further action should be considered.

UK Steel questioned the logic of the “broad brush” approach of the Section 232 investigation. “Given the deep and long-established security ties between the U.S. and the UK (along with like-minded allies), it is not reasonable to assert that the continued supply of steel products from the UK to the U.S. could present a threat to national security,” UK Steel wrote in its report. “Our security needs are so closely entwined through a whole host of agreements and treaties, not least NATO membership, that disruption to U.S. national security would equate to disruption of our own. This will arguably be the case for all U.S. allies.”

U.S. Secretary of Commerce Wilbur Ross acknowledged there will be resistance to any Section 232 restrictions. “We assume that if there is any affirmative action that comes out of either one, there probably will be either a domestic legal challenge or a WTO challenge, so we have that very much in mind,” Ross told reporters at a SelectUSA investment summit.

Ross expects the investigation to conclude and the president to make a decision by the end of June.