Section 232 Archives - WITA

Protectionism or National Security? The Use and Abuse of Section 232

Alena Sanabria — Tue, 09 Mar 2021 15:45:13 +0000

President Biden took office at the height of modern American protectionism. The trade policy legacy he inherited from the Trump administration puts the United States at a crossroads. Will Biden go down the problematic path of executive overreach like his predecessor, or will he forge a new path? We may not need to wait long to find out. In his first trade action, President Biden reinstated tariffs on aluminum from the United Arab Emirates under Section 232 of the Trade Expansion Act of 1962, which authorizes the president to impose tariffs when a certain product is “being imported into the United States in such quantities or under such circumstances as to threaten to impair national security.” Though infrequently used in the past, Section 232 was a favored trade tool of the Trump administration, which was responsible for nearly a quarter of all Section 232 investigations initiated since 1962. While Congress has constitutional authority over trade policy, Section 232 gives the president broad discretion to enact protectionist measures in the name of national security.

Why is this law a problem? First, the statute’s lack of an objective definition of “national security” permits essentially anything to be considered a threat, regardless of the merits. Second, the law’s lack of detailed procedural requirements encouraged the Trump administration to cut corners in applying the law, thus breeding cronyism and confusion. Third, President Trump took advantage of the law’s ambiguity to shield key Section 232 findings from Congress and the public, undermining both transparency and accountability.

The Trump administration’s abuse of the rarely used Section 232 has allowed the statute to become an excuse for blatant commercial protectionism, harming American companies and consumers and our security interests. It’s unclear whether the Biden administration will continue this troubling trend or seek reform. The best course of action would be the latter: Biden should avoid using Section 232 and support congressional efforts to rein in presidential power, thus ensuring an end to the calamitous episodes that were common during the Trump era.

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To read the original policy analysis from the CATO Institute, please click here

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U.S.-Japan Trade Agreement Negotiations

Madelyn Cunningham — Thu, 16 Jan 2020 17:27:54 +0000

On October 7, 2019, after six months of formal negotiations, the United States and Japan signed two agreements intended to liberalize bilateral trade. The U.S.- Japan Trade Agreement (USJTA) provides for limited tariff reductions and quota expansions to improve market access. The U.S.-Japan Digital Trade Agreement covers rules on digital aspects of international commerce.

The agreements, which took effect on January 1, 2020, without formal action by Congress, constitute what the Trump and Abe Administrations envision as “stage one” of a broader U.S.- Japan trade agreement, with future negotiations expected in coming months. The Administration used delegated tariff authorities in Trade Promotion Authority (TPA) to proclaim the USJTA provisions, while the digital trade agreement, which did not require changes to U.S. law, was treated as an Executive Agreement.

As the fourth-largest U.S. trade partner, Japan is a high priority for U.S. trade negotiations, especially as recent Japanese free trade agreements (FTAs), including with the European Union (EU) and the TPP-11 (successor to the Trans-Pacific Partnership (TPP) following U.S. withdrawal), lower Japan’s tariffs on imports from several countries, placing U.S. exporters at a disadvantage.

The USJTA does not include trade commitments on motor vehicles, a long-standing area of bilateral tension. In May 2019, following an investigation by the Department of Commerce under Section 232 of the Trade Expansion Act of 1962, President Trump proclaimed motor vehicle and parts imports, particularly from Japan and the EU, a threat to U.S. national security.

Such action grants the President the authority to impose import restrictions, but some analysts question whether that authority has now expired. USJTA does not address potential Section 232 tariffs, but USTR Lighthizer stated that the Administration has no intent, “at this point,” to pursue additional Section 232 restrictions on autos.

Japan strongly opposed U.S. Section 232 tariffs on imports of steel and aluminum in place since March 2018, but did not retaliate, unlike other U.S. trade partners. Alleviating the auto tariff threat was a key objective of Japan in the trade talks.

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To view the full report, click here.

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Section 232 Auto Investigation

Jasmine Mitchell — Mon, 17 Jun 2019 15:23:57 +0000

On May 17, 2019, President Trump announced his Administration’s determination that U.S. imports of automobiles and certain automotive parts threaten to impair U.S. national security. Under Sec. 232 of the Trade Expansion Act of 1962 (19 U.S.C. § 1862, as amended), this determination gives the President broad authority to respond to the threat, including potentially imposing unilateral import restrictions. The President is seeking a negotiated solution, instructing the U.S. Trade Representative (USTR) to reach agreements with Japan and the European Union (EU) to address the threat. The USTR is to report on its progress within 180 days.

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[To view the original report, click here]

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Are Quotas Worse Than Tariffs?

Mary Jane MacArthur — Thu, 23 May 2019 16:36:24 +0000

With all the focus on tariffs these days, it is easy to overlook the return of another protectionist tool: quotas.

Just over a year ago, the Trump Administration controversially used Section 232 of the Trade Expansion Act of 1962 to impose tariffs of 25% on specified steel imports, and 10% on specified aluminum imports. U.S. steel and primary aluminum producers continue to face extreme competitive pressure as a result of sustained global excess capacity originating primarily from China. The Trump Administration argues that U.S. production capacity has been eroded to the extent that it threatens U.S. national security, and that Section 232 tariffs applied globally are an appropriate response.

Three countries – South Korea, Brazil, and Argentina – made agreements with the United States to apply quotas to their steel exports in lieu of the Section 232 tariffs. Argentina also agreed to quotas on its aluminum exports.

According to numerous reports, U.S. negotiators were seeking similar agreements with Canada, Mexico, Japan, and the European Union (EU). On May 17, 2019, though, the governments of the United States, Canada, and Mexico announced that they had reached a deal to lift steel and aluminum tariffs without imposing quotas, choosing instead to adopt a monitoring system with the right to re-impose tariffs only on these products if surges are detected in the future. This deal could also serve as a template for agreements with Japan and the EU to address their steel and aluminum tariffs.

As a protectionist measure, however, quotas are still on the table in other sectors. This report explores the potential impacts of quotas versus tariffs.

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Read the full report here

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The 2018 US-China Trade Conflict After 40 Years of Special Protection

James Dail — Mon, 29 Apr 2019 19:41:50 +0000

In 2018, the United States suddenly increased tariffs on nearly 50 percent of its imports from China. China immediately retaliated with tariffs on more than 70 percent of imports from the United States. This paper assesses what happened in 2018 and attempts to explain why.

It first constructs a new measure of special tariff protection to put the sheer scope and coverage of the 2018 actions into historical context. It then uses the lens provided by the 2018 special tariffs to explain the key sources of economic and policy friction between the two countries. This includes whether China’s state-owned enterprises and industrial subsidies, as well as China’s development strategy and system of forcibly acquiring foreign technology, were imposing increasingly large costs on trading partners.

Finally, it also examines whether the US strategy to provoke a crisis—which may result in a severely weakened World Trade Organization—was deliberate and out of frustration with the institution itself.

US-China Trade Conflict

[To read the original paper, click here.]

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Pending Section 232 Litigation and Broader Trade Trends: Will the US Courts Restrict Presidential Authority from Relying Upon ‘National Security’?

James Dail — Thu, 21 Mar 2019 21:00:12 +0000

February 28, 2019 | This article discusses American Institute for International Steel v. the United States, which is pending in the little-known United States Court of International Trade in New York. It involves an attempt to declare that the US legislation delegating authority to the president to impose trade restrictions is an unconstitutional delegation of legislative authority. A loss would legally curtail the president’s discretionary power to use national security as a reason to impose punitive measures against trading partners. The article identifies legal trends, where this case fits into the trade policy debates, and why it is so important. The article concludes that domestic U.S. litigation in 2019 may well have a tremendous impact on U.S. law and the global trading system. Many in the domestic and international trading communities (as well as those in the foreign policy and national security communities) are waiting for the results of this little-known steel litigation.

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[To read the original paper, click here.]

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Measuring Trump’s 2018 Trade Protection: Five Takeaways

Nikhil Raj — Fri, 15 Feb 2019 14:36:36 +0000

President Donald Trump’s 2018 tariff spree has resulted in 14.9 percent of US imports now being covered by some sort of special trade protection. Most of those affected imports were hit by Trump’s own actions. But some had already been subjected to tariffs imposed in previous administrations, with the Trump tariffs added on top. This fact complicates not only the challenge of measuring the impact of Trump’s actions so as to avoid double counting but also the implications for retaliation.

In 2018, Trump applied five sets of tariffs under a vast array of rarely used US trade laws, including claims that tariffs were needed to protect America’s national security. Many accounts have blurred the issue by counting the same tariffs twice. Furthermore, some of his tariffs have hit China exclusively, and some have hit China along with other countries. The tariffs also disproportionately targeted goods traded as part of global supply chains, making measurements of the impact even more difficult.

[Read more here.]

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The United States-Mexico- Canada Agreement: Overview and Analysis

Matt Style — Tue, 11 Dec 2018 21:51:09 +0000

If the United States-Mexico-Canada Agreement (USMCA) is approved, this modified and modernized version of NAFTA will govern most economic relationships in North America. David A. Gantz, the Will Clayton Fellow in Trade and International Economics, reviews the USMCA and discusses its positive and negative elements.

To view the original posting of this report on the Baker Institute website, click here.

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Imports and National Security – An Update

Matt Style — Wed, 24 Oct 2018 13:05:31 +0000

Governments have many tools that they use to protect a nation’s security. In the United States, one can think of the traditional military action, diplomacy, export controls, sanctions, immigration controls, and border controls as among the tools that can be used to protect the homeland from various types of threats.

U.S. trade law has included Section 232 provisions for at least sixty-four years that are designed to limit trade liberalization where such liberalization could cause or has caused harm to our national security, including our national economic security. While the law – specifically Section 232 of the Trade Expansion Act of 1962, as amended – was seldom used for most of its existence, the Trump Administration has taken a more aggressive approach to using the law. Steel and aluminum were the first U.S. industries examined and the Secretary of Commerce found threats to our national security in both investigations and the President through Executive Orders has imposed duties of 25% on steel mill products and 10% on aluminum products. The duties have applied generally to imports from all countries, absent a bilateral agreement with the US for some other treatment of these goods from a particular country. Many trading partners, taking a much narrower view of national security, have retaliated against the U.S. with tariffs of their own. Countries have also filed cases at the WTO challenging whether the US action is a violation of WTO obligations.

Not surprisingly, what type of actions the Trump Administration has taken on steel and aluminum or may be considering in other ongoing investigations on autos and on uranium is of broad interest to businesses and workers in the U.S. and around the world, to governments and to U.S. legislators. At the XIV Symposium on International Trade hosted on October 24th by the ABCI Institute and the American University Washington College of Law, one of the panels considered the topic of Section 232 and repercussions. Terence Stewart was one of the panelists on the 232 panel. The paper and powerpoint by Mr. Stewart and Shahrzad Noorbaloochi that review the origins, history and use of Section 232 were provided to attendees and can be found here and here.

The Repercussions of Section 232 Tariffs – Paper – Final

To view the original posting of this article, click here to view on the Stewart and Stewart website.

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A 10-Point User Guide to the Trump Tariff Wars

Mariapia Carbajal — Mon, 09 Jul 2018 18:55:05 +0000

Summary

President Trump has announced plans to impose tariffs on steel and aluminum from a wide variety of countries, on $50 billion worth of Chinese exports (including products ranging from aircraft to chicken incubators), and has floated the idea of placing tariffs on automobile imports as well. The president justifies all of this on the grounds that other nations are not acting fairly, because if they were then the United States wouldn’t be running significant trade deficits. President Trump recently tweeted that: “The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!” Trump’s approach has drawn widespread criticism, sparking a debate in which partisans for and against the president’s policies have made all sorts of claims and counter-claims. This briefing untangles the prevailing arguments and sets the record straight on 10 important points of fact.

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