STEEL: THOUGHTS IN ADVANCE OF A DECISION

"They're dumping steel and destroying our steel industry. ... I'm stopping it. There are two ways -- quotas and tariffs. Maybe I'll do both."

Donald J. Trump

July 12, 2017

As Air Force One was winging its way toward France on Wednesday evening, President Trump spoke with the reporters on the plane about his pending decision on steel. Steel has been the subject of numerous antidumping and countervailing duty orders over the years, but this case is different. This is a case under Section 232 of the Trade Expansion Act of 1962, and the issue is national security. Specifically, are steel imports into the United States undermining the country's security? Secretary of Commerce Wilbur Ross formally initiated an investigation into that question on April 19.

Reportedly, a draft of the Commerce Department's findings and recommendations is being reviewed by other agencies and may soon be public, possibly as early as next week. Once that happens, it will be up to the President to decide just what, if any, action should be taken. Judging from his remarks en route to France, one assumes he will do something. 

Today's featured quote is from a Politico story by Doug Palmer on the President's recent remarks. Here are the paragraphs containing today's somewhat truncated quote:

We are not going to try to advise the President on what he should do.

We would note, however, that Section 232 is one of two provisions of U.S. trade law that are getting a lot of press these days. The other is Section 201. Both are expressions in U.S. domestic law of concepts that can be found in the General Agreement on Tariffs and Trade, the GATT. For national security, this is GATT Article XXI, and for the escape clause (Section 201 of the Trade Act of 1974), this is GATT Article XIX.  It is not at all clear to the layman -- and probably not to the experts -- just how other WTO members will react to any actions President Trump might take under either Section 232 (the statute at issue with respect to today's quote) or Section 201.

It is interesting that, whereas the GATT has a fair amount to say about the responses available to those adversely affected by escape clause actions (Section 201/Article XIX), it is essentially silent on that issue in national security cases (Section 232/Article XXI). That doesn't mean that a U.S. action under Section 232 will not provoke responses. The EU, for example, has clearly suggested that it will retaliate. They have even named a product: Kentucky bourbon.

The larger worry with Section 232 is not so much retaliation as it is imitation, namely the concern that, should its use become widespread, the WTO-based global trading system could unravel.

Then again, think of a fire in an apartment building.  Surely, you want someone to pull the alarm, to ring the bell, to get help.

But which is the more apt metaphor? Opinions don't just vary. They are starkly at odds.

On August 1, the Global Business Dialogue will host a public discussion of both Section 201 and Section 232. This event: