WTO Says Turkey's Retaliatory Duties on US Section 232 Measures Violate Global Trade Rules

Turkey levied additional taxes between 4% and 70% on goods from the U.S., "including nuts, rice, food preparations, ethyl alcohol, tobacco, coal, beauty and make-up preparations, certain chemical substances, firewood, certain paper products, certain kinds of pumps, certain x-ray parts, and certain automotive parts." The duties were imposed as part of Turkey's retaliatory action against the U.S. government's Section 232 national security duties set on Turkish steel and aluminum.

An Office of U.S. Trade Representative spokesperson said the U.S. "is pleased with the" report, which recognized that the Section 232 measures are national security measures, and that Turkey "violated WTO rules by adopting retaliatory tariffs disguised as safeguard measures." Turkey's "decision to pursue this dispute highlights the contradiction of both suing the United States in the WTO and at the same time unilaterally retaliating with tariffs."

The use of the dispute settlement mechanism to challenge the national security actions "undermines the WTO," the spokesperson said, adding that the WTO doesn't "have the authority to second-guess a WTO Member’s response to threats to its security" and WTO reform "must ensure that issues of national security cannot be reviewed in WTO dispute settlement."

The spokesperson also said the WTO has "proven ineffective at addressing non-market excess capacity" from China, Turkey and other countries. They called this an "existential threat to market-oriented steel and aluminum sectors and, through the effects on imports, a threat to U.S. national security, including by eroding U.S. steel and aluminum manufacturing capacity."

The U.S. brought the dispute, arguing that the duties violate GATT 1994's Articles I, II and XIX:3(a) as well as Article 8.2 of the Agreement on Safeguards. The dispute panel said that determining whether the duties are a "safeguard measure" is a "necessary analytical step in determining the applicability" of Article 8.2. If a measure is deemed a safeguard, it is excluded from claims under Articles I and II.

The panel said Turkey's additional duties don't amount to safeguards and that the U.S. Section 232 duties also are excluded from the scope of the Agreement on Safeguards. In ruling on the U.S. measures, the panel said Trump imposed the duties for legitimate national security reasons, barring them from being considered safeguard measures. The Section 232 duties' reference to "the economic welfare of the United States' domestic industries" is merely one consideration in the duties' imposition, which "cannot be divorced from [the statute's] background and context, which reflect the measures' national security objectives and confirms that they were sought, taken, or maintained pursuant to Article XXI of the GATT 1994." This article governs security exceptions to trade rules.

The ruling cuts against a separate WTO panel's ruling that the Section 232 duties violated Article XXI (see 2212090060).

The panel first turned its attention to the U.S. argument that Turkey's duties violated GATT's Article I, which calls for reciprocal tariff treatment among WTO members. Although Turkey didn't contest this argument, the panel still ruled in favor of the U.S., saying the duties tax goods only from the U.S. and no other country, creating an undue "advantage" for other nations.

As a result, "the United States has demonstrated that the additional duties measure is inconsistent with Article I:1 of the GATT 1994 because, with respect to customs duties imposed on or in connection with importation, it fails to accord an advantage granted to products originating in other countries immediately and unconditionally to products originating in the United States," the panel said.

The U.S. government's Article II claims said that if a measure leads to duties beyond those laid out in a member's "bound Schedule," the measures violate Article II. This article specifically states that each signatory "shall accord to the commerce of the other contracting parties treatment no less favorable than that provided for in the appropriate Part of the appropriate schedule annexed to this Agreement."

Looking to each tariff line on which Turkey assessed duties, the dispute panel said the U.S. "has demonstrated that Türkiye's additional duties measure is inconsistent with Article II:1(b) of the GATT 1994 because it results in the imposition of ordinary customs duties on imports from the United States under 201 tariff lines in excess of the rates set forth in Türkiye's bound Schedule."