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Will the United States Turn the National Security Exception into the Rule in Trade?

By Devin Russo

The Trump Administration has made bolstering American industry against imports from other nations one of its keystone issues. The President’s preferred method to achieve this goal has been mainly through tariffs. The implementation of these tariffs has largely been through the powers granted to him in the Trade Expansion Act’s §232 on national security. Congress in §232 failed to provide a definition for “national security” which grants the president wide discretion in its interpretations.

Congress’s  failure to define is seen explicitly by President Trump’s implementation of steel and aluminum tariffs through his §232 powers in 2018, applying an additional 25% and 10% tariff respectively to normal tariff rates ad valorem. §232 allows the president to implement defensive trade restrictions on imports that threaten national security. But by imposing these two tariffs through §232, President Trump has used a power twice that, prior to his administration, has only been relied upon six times since its conception in 1962. His actions signal that steel and aluminum are now products of national security concern. This classification is striking, as the Commerce Department in 2001 found steel imports not to be of any concern while conducting a §232 investigation, despite its heavy importation, because it was supplied by reliable producers (most of whom were our allies).

Currently, it appears that the administration is basing its “national security” claims to boon the domestic economy, and not from a pressing international conflict. The Trump Administration may have shown its hand with its new §232 investigation into titanium imports for national security purposes, after being prompted to do so by the domestic producer Timet. This investigation began shortly after the United States International Trade Court (ITC) found that no harm was done to the domestic industry, namely Timet, from imported titanium in an anti-dumping, countervailing duty investigation. The Supreme Court in Federal Energy Administration v. Algonquin found that the President has the delegated authority to enact measures at his discretion to safeguard the nation against imports that impair national security, conditioned only that there must be a finding by the treasury secretary that import quantities threaten national security. A finding by the treasury secretary is complicated by the ITC’s finding that there is no harm being done to the titanium industry from imports using data from this administration’s commerce department.  In short, the administration will have to solve the quagmire of demonstrating harm to the domestic titanium industry from imports which are threatening our national security, in spite of the ITC finding there has been no harm to the industry from imports.

If a case is brought against a §232 finding about titanium, the matter would provide the courts with an opportunity to reinterpret the broad discretion and authority they have afforded the presidency in determining if national security is threatened by an import. The courts will have the opportunity to scale back or qualify the broad discretions afforded the president in §232 that Algonquin provided. Such a case would be a very rare opportunity for the courts to revisit §232 powers as they have been very cautiously and sparingly used in the past, providing for limited opportunities to review the statute.

However, there are also international considerations to these tariffs. Article XXI of the GATT provides wide latitude to countries to take actions to curb their potential impairments to their “essential security” from imports. Unfortunately, “essential security” is also a term left undefined. While the scope of what is considered a valid justification of Article XXI’s invocation, and the amount of deference it affords nations to decide if their national security is threatened by imports are neither defined nor interpreted clearly. Thus, Article XXI is uncharted territory that can be easily abused by any nation as it is currently understood. A recent WTO decision regarding Russian tolls against the Ukraine were upheld, but the WTO relied strongly upon the fact that an armed conflict between the nations was present, and thus gave great deference to determine what was important to the “essential security.” While the ruling does set a bar for where to apply deference, it does not explain if armed conflicts are the bar needed for Article XXI, or if they are simply recognized as sufficient to be given Article XXI deference.

Without a clear definition of “essential security”  under Article XXI, nations may use the national security exceptions to remedy their adverse trade situations, which in turn may break the WTO. If it is found that the Trump administration is attempting to obtain Article XXI exemption for purely economic purposes with regards to titanium, and far worse still if the WTO recognizes their “essential security” concerns in these matters, then it may set a normative standard that will be repeated by many nations. The exception could become the rule and international trade could collapse having eaten itself.

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