The World Trade Organization’s gift to Joe Biden

On Dec. 9, the World Trade Organization (WTO) said that the U.S. steel and aluminum tariffs are illegal. No surprise there. The tariffs attracted outsized interest because the U.S. used a national security exception to defend them. It didn’t work. But the WTO was sparing in its ruling, making it easier for the Biden administration to comply and finally get rid of the absurd tariffs.

Instead, the Biden administration says it won’t comply with the ruling, calling it “flawed.” This would be a terrible mistake. The ruling bends over backwards not to embarrass Washington. It doesn’t raise several issues that would have increased the domestic political costs for Biden to comply. Recalcitrance will hurt U.S. exporters and consumers, exposing them to copy-cat tariffs at home and abroad.

The backstory, in brief, goes like this. In 2018, President Trump slapped 25 percent tariffs on steel and 10 percent tariffs on aluminum. Provocatively, he used Section 232 of the Trade Expansion Act of 1962 to justify the tariffs on the grounds of national security. Nine countries responded by suing the U.S. at the WTO. Trump got deals with Canada, the European Union and Mexico, among others. Six other countries went ahead with their cases, while India and Russia dropped out, leaving the WTO to rule on four cases, which it did on Dec. 9, handing “wins” to China, Norway, Switzerland and Turkey.

These cases were especially salient because a national security exception was in play. This exception allows a country to do “what it considers necessary…in time of war or other emergency in international relations.” It’s an affirmative legal defense, meaning that, even if the tariffs were found to be WTO-illegal, they’d get a pass if the national security exception held up. But the panel said no. More interestingly still, the panel didn’t say much else.

All four rulings are short. Each comes in at under 100 pages and sings from the same song sheet. The exception gets fewer than 10 pages. The panel finds that a “global excess capacity” in steel and aluminum does not constitute an “emergency in international relations.” And that’s it.

First, the panel says nothing about the legal reasoning in the two prior disputes in which this exception came up. A single footnote mentions that “previous panels have assessed Security Exceptions.” But other than that, there isn’t a word about “Russia—Measures Concerning Traffic in Transit” or “Saudi Arabia—Intellectual Property Rights.” This is striking. It’s as though the panel was inclined to give the U.S. a blank slate.

For example, the U.S. argued that the exception is “self-judging,” meaning the WTO cannot rule on it. Unlike in the previous two cases, the panel spends little time on this issue. This is rather surprising given that the U.S. makes a lot of references to the negotiating history of the exception. In “Russia—Traffic in Transit,” the panel rehearsed this history at length and used it to raise serious questions about how we’d know if the exception had been used in “good faith.” This term doesn’t come up in “US—Steel and Aluminum Products.”

Second, the panel avoids commenting on anything that could be construed as a theory of how the exception is supposed to work. “Russia—Traffic in Transit” and “Saudi Arabia—Intellectual Property Rights” are chalk full of insights along these lines. By way of contrast, “US—Steel and Aluminum Products” reads as if written in a vacuum.

For example, the panel talks about the timing of the tariffs, because the exception is supposed to pertain to measures that are taken “in time of war or other emergencies in international relations.” The panel had good data from the Department of Commerce, and was well positioned to speak to this, just as it did in “Russia—Traffic in Transit” and “Saudi Arabia—Intellectual Property Rights.”

Similarly, the panel mentions how the U.S. used the exception for domestic reasons, rather than international ones. But again, it fails to link this to “Saudi Arabia—Intellectual Property Rights,” which involved a complex mix of the two, or even “Russia—Traffic in Transit,” which framed “public disorder” as a correlate of war.

It’s not that the panel lacked interest in these issues. In February 2020, after the first round of submissions, the panel asked the U.S. nearly 50 questions about its use of the exception.

So why didn’t the panel follow through? Simply, to say more than “no” in this ruling would have made it difficult for the U.S. to comply. The ruling isolates the whole tariff saga as an aberration. The U.S. mistook a “global excess capacity” of steel and aluminum for an emergency in international relations. This was incorrect. No additional commentary is needed.

Nothing more to see here. Move on, and leave those steel and aluminum tariffs behind.

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service at Georgetown University. Follow him on Twitter @marclbusch.