Trump Gets Trade Setback With WTO Ruling That May Foil U.S. Strategy
(Bloomberg) -- The debate over whether the World Trade Organization has the authority to rule on disputes involving countries’ national security was put to rest Tuesday, setting up a battle with the U.S., which has asserted the Geneva-based body doesn’t have the standing to make such decisions.
Russia and Ukraine said they won’t appeal a landmark trade decision in which the WTO upheld Moscow’s right to claim a key exemption to international trade rules that allows governments to take “any action which it considers necessary for the protection of its essential security interests.”
Even though Ukraine lost its complaint against Russia’s transit restrictions, Kiev’s Ministry of Economic Development and Trade said the ruling would prevent “protectionist and discriminatory” trade measures that could violate the principles of the WTO. Russia also declined to appeal the ruling, Yekaterina Mayorova, the head of department of trade negotiations at the Russian economy ministry, said in a phone interview.
The decision could provide hurdles to President Donald Trump’s administration, which has used the national-security justification to impose tariffs on allies and adversaries alike. The ruling said that while every member can define their essential security interests, the WTO may review whether a country’s claim was made in good faith.
Many have questioned how genuine the U.S. tariff justifications were, with some of America’s closest allies those most affected by the duties, such as the EU, Canada and Mexico. Russia and eight other WTO members have separately challenged the Trump administration’s decision to impose the levies, which target foreign steel and aluminum.
Officials from the affected countries have cited a memo from former U.S. Secretary of Defense James Mattis that said the tariffs are not “necessary to meet national defense requirements.”
The WTO has long avoided a politically fraught confrontation over national-security disputes for fear that doing so would open a Pandora’s box of protectionist measures and tit-for-tat retaliation.
An uncontested ruling in the Ukraine-Russia dispute makes it more likely that the WTO will also undertake an analysis of whether Trump’s metal tariffs are actually necessary to secure America’s essential security interests.
Russian Economy Minister Maxim Oreshkin previously welcomed the WTO ruling as a victory because he said it provides a “weighty” precedent in Russia’s separate dispute over Trump’s steel and aluminum tariffs.
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