Leibowitz on Trade: WTO to Review Section 232

The steel and aluminum tariffs were on the agenda last week. Seven countries, including China, Russia, the EU, Canada, Mexico, Turkey and Norway, had brought cases before the DSB challenging the steel and aluminum tariffs on most countries. Under the DSB, a WTO member must first request consultations with the other WTO member that imposed measures that the complaining member contends are inconsistent with the WTO agreements. If consultations are not successful in resolving the dispute, the complaining country may request that a three-member panel be appointed to decide the case. The defending WTO member may, in its discretion, block the formation of a panel the first time it is requested, but may not do so again. 

Last week was the second meeting. The DSB, therefore, instituted a panel to decide the complaints brought by the six WTO members against the Section 232 tariffs. The U.S. could not block the panels any longer. The cases will move ahead. 

Also moving ahead are U.S. challenges to the retaliatory tariffs imposed by four countries (Canada, Mexico, the EU and China) in response to the steel and aluminum tariffs. Another case against China for imposing retaliatory tariffs in response to U.S. tariffs imposed under Section 301 of the Trade Act of 1974 will also move ahead, as November was the second request for panel formation. 

Under the WTO rules, the panels will be appointed in the next few weeks. Trade diplomats in Geneva are generally selected for these three-member panels. The panelists may not be accredited by WTO members that are parties to the disputes. The panel will set procedures and time limits for briefing the case and for an oral hearing. The general rule is that panel reports are to be issued to the parties to the dispute within six months after the composition of the panels; this deadline is frequently missed, but a reason must be given for any delays. The final report is issued to the DSB within nine months after the composition of the panel (three months after the parties receive the report). 

If these deadlines are met in these cases, the report of the panels will likely be issued next autumn. It will take a few weeks to constitute the panels. These are significant cases, and there could be disputes about the panelists selected, as well as the “terms of reference,” which is an important document that states the issues each panel must resolve. These terms often involve intense negotiations between the parties and the panelists. 

As of this week, the jousting over the establishment of panels is over and the process of deciding these cases begins. 

In the United States, a case is pending on the constitutionality of Section 232 under the U.S. Constitution. That case is scheduled for oral argument on Dec. 19 in New York.  If the court decides that the statute is unconstitutional, the WTO cases will likely become moot. If the court decides the statute is constitutional, there could be more litigation in the U.S. courts about the Section 232 proceedings, and/or the administration may go forward with other Section 232 cases, including two now pending on autos and auto parts and uranium. 

Interesting days ahead. 

Lewis Leibowitz

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