National security's link to trade a hot issue at WTO

US, Arab states cite such concerns to justify actions planned or taken

GENEVA • A debate has broken out in the World Trade Organisation (WTO) about whether countries can cite national security as a reason to curtail imports or impose trade restrictions.

A plan by US President Donald Trump to restrict imports of steel and aluminium on similar grounds came under fire at a WTO meeting last Friday with China, the European Union, Brazil, Australia, Taiwan and Russia raising concerns.

Bahrain was reported to have told the same meeting that trade restrictions imposed on Qatar by Saudi Arabia, Bahrain and the United Arab Emirates were justified on national security grounds.

Invoking national defence is all but taboo at the WTO, the arbiter of international trade rules since 1995, because some experts think it could make it easy for countries to escape their trade obligations.

Mr Trump's recourse to a Cold War-era trade law would allow him to restrict imports of goods deemed critical to national defence.

China and the EU both told the WTO's Goods Council that the "section 232" tariffs could not be justified on national security grounds, said a trade official who attended the meeting, while others were concerned about a potential risk to the world trading system itself.

The Trump administration is studying the case for the potential new tariffs but is delaying publication of the eagerly awaited study until after the President has spoken with Group of 20 leaders in Germany later this week, according to an administration official last Thursday.

That did not stop a few pre-emptive strikes at the WTO, with the EU's representative at the meeting saying the bloc might bear the brunt of American tariffs because Chinese exports were already largely subject to US restrictions, and Canada and Mexico are likely to be exempt.

The EU would "be firm in taking all necessary actions" if its exports are restricted, the official said, adding that a proliferation of such tariffs would cause unacceptable systemic risks - a concern echoed by other countries at the meeting.

The trade diplomat from Russia, which called the debate on the issue, asked for details such as the timeframe and scope of potential tariffs, and also questioned the commercial justification for further US limitations on imports of steel and aluminium.

Australia warned that the US could face retaliation, while Japan's representative said that Tokyo had an interest and was following the US government's actions closely.

The American diplomat at the meeting responded by saying that if Commerce Secretary Wilbur Ross found steel or aluminium was being imported "in such quantities or in such circumstances as to threaten to impair national security", he would recommend actions to be taken to "adjust the imports of steel and aluminium".

Meanwhile, speaking on behalf of all four countries that have imposed trade restrictions on Qatar, Bahrain's representative told the WTO's Goods Council the measures were "in accordance with Article XXI of the General Agreement on Tariffs and Trade", which allows the usual rules to be broken for national security reasons, a trade official said.

The head of Qatar's WTO office last Thursday told Reuters that his country was exploring all legal avenues to challenge the "blockade", including a complaint to the WTO. He also said that a national security defence could be challenged on the grounds of necessity and proportionality.

The feud erupted last month when Qatar's three Gulf neighbours - Saudi Arabia, the United Arab Emirates and Bahrain - along with Egypt severed diplomatic and travel links with Doha, accusing it of supporting terrorism as well as regional foe Iran. Qatar denies the accusations.

REUTERS

A version of this article appeared in the print edition of The Sunday Times on July 02, 2017, with the headline 'National security's link to trade a hot issue at WTO'. Print Edition | Subscribe