The US launches WTO dispute actions to retaliatory tariffs

The US launches WTO dispute actions to retaliatory tariffs. Recently, China, Turkey, Canada apart from Mexico and the European Union have enforced retaliatory tariffs on the US. This imposition of tariffs was retaliation to the duties levied by the US on steel and aluminum. The retaliatory tariffs have targeted US exports of over $28.5 billion and are claimed to be illegal under WTO rules by the US.

The US President Trump has condemned WTO for not taking any action against the “errant” countries. World Trade Organization (WTO) is an intergovernmental organization, which helps its member countries to negotiate trade agreements, and serves as a platform where members come together to resolve their disputes. The WTO’s separate Dispute Settlement Body deals with disputes between member countries and establishes dispute panels to sort out matters of disagreement. The members are required to adhere to the rules made by the organization. So, the US has launched five separate dispute actions challenging the retaliatory tariffs to oppose the countries involved. The US is determined to protect its interests. The Trade Representative of US stands firm on the fact that the duties imposed on the two metals by the US abide by the WTO rules and are in the interest of the country’s national security.

Background

In March 2018, Trump announced to levy tariffs as heavy as 25 percent on aluminum and steel imports from the EU, China and other regions like Mexico, Turkey and Canada. All of the countries that are being attacked by Trump’s brutal decisions have reacted fiercely.

China retaliated with a 15 to 25 percent rise in duties imposed on a total of $3 billion of US imports. The EU retorted by striking tariffs in two parts. The first being in June 2018, the imposition of 10 to 25 percent of duties affecting $3.2 billion worth of US imports. The Second will be effective from June 2021 where EU will enforce 10 to 50 percent further duties that will affect $4.2 billion of US imports. Turkey’s retaliatory tariffs became operative from June 2018 and imposed 4 to 70 percent of duties in addition to the earlier ones and affecting $1.4 billion of US imports. Canada’s imposition of 10 to 25 percent affected $12.7 billion worth of imports from its neighbor. Mexico’s retaliatory tariffs went into effect in two different tranches, on June 5, 2018, and July 5, 2018.  In total, Mexico is imposing duties to the extent of 7 to 25 percent on $3.6 billion in U.S. imports (based on 2017 trade values).

Opposition

The EU has upheld that the imposition of retaliatory tariffs is in accord with WTO rules and regulations. Canada has also maintained that its tariffs are permitted under the World Trade Organization and North American Free Trade Agreement (NAFTA). The Government of Mexico has agreed to answer to the US government in the next few days. It also said that the US’s reason for imposing such duties was unjustified. The current scenario seems to be the start of a bruising trade war that will engulf the entire world.