WTO Dispute Over Metal Tariffs Delayed With Countries Blocking Action

(Bloomberg) -- Requests for the World Trade Organization to hear disputes related to U.S. steel and aluminum tariffs were delayed on procedural grounds Monday, putting off any action until November.

In a volley of filings this month, WTO members including the European Union, China and the U.S. escalated disputes over the new metal duties, justified on national security grounds, and the European response to them. Each member can block an initial call for a dispute panel once -- a fairly standard WTO maneuver -- meaning the applications could be granted at the next meeting in November.

The move sets the stage for a showdown that some fear could lead to the U.S. abandoning the Geneva-based WTO. If officials avoid that outcome, they could see a flood of new protectionist measures invoking the same national security argument used by the Trump administration, a ploy that has rarely been used in the past.

The U.S. has disputed claims that it risks undermining the international trading system by invoking national security threats.

“This is erroneous, and completely backwards,” Deputy U.S. Trade Representative Dennis Shea wrote in a statement on Monday. “What threatens the international trading system is that China is attempting to use the WTO dispute settlement system to prevent any action by any member to address its unfair, trade-distorting policies.”

Major WTO Showdown Looks Harder to Avoid as U.S., China, EU Spar

China, the EU, Canada, Mexico, Norway, Russia and Turkey requested that the WTO investigate the American tariffs, according to an Oct. 19 WTO statement. And the U.S. asked for reviews of the retaliatory actions of Canada, China, the EU and Mexico.

Blaming China

The requests blocked on Oct. 29 may be reconsidered at the WTO's Nov. 21 dispute settlement meeting. The disputes could advance at an earlier date if a special meeting is called before that.

Shea reiterated the U.S. position that "issues of national security are political in nature and are not matters appropriate for adjudication in the WTO dispute settlement system."

Shea blamed China for creating "massive excess capacity" in global steel and aluminum markets that "undermine the basic fairness of international trade" and threaten the survival of core U.S. industries.

"We will not allow China's party-state to fatally undermine the U.S. steel and aluminum industries, on which the U.S. military, and by extension global security, rely," Shea said.

Shea also warned China against using the WTO's dispute settlement system to defend its "non-market" economic policies. "If this is the case, then the WTO and the international trading system will lose all credibility and support among our citizens," he said.

To contact the reporter on this story: Bryce Baschuk in Geneva at bbaschuk2@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Ben Sills, Richard Bravo