Brussels is fuming at Washington’s latest insult against the World Trade Organization as a forum to resolve trade fights.
U.S. Trade Representative Katherine Tai lashed out at the international trade body Monday for ruling against former U.S. President Donald Trump’s tariffs on steel and aluminum imports. She said that the WTO is walking on “very, very thin ice” when it judged that a democracy like the U.S. didn’t have solid national security reasons for imposing tariffs on metal coming from China, Norway, Switzerland and Turkey.
It’s another sign that what’s left of internationally recognized trade rules are eroding as geopolitical tensions run high between the U.S., China and the EU, European lawmakers and experts say.
“The USA’s reaction of simply rejecting the ruling is incomprehensible,” said Bernd Lange, who chairs the European Parliament’s international trade committee. “We have to have an honest discussion with the U.S. if they are moving away from a rules-based trading system, and if and how we can rescue the existing system,” said Lange, of the center-left Socialists & Democrats group.
Washington also slapped similar tariffs on EU producers, but the two sides struck a partial truce back in 2021.
For the Europeans, Tai’s comments add insult to years of injury. Tai — who represents the country that single-handedly tore down the WTO’s Appellate Body in 2019 under Trump and has refused to restore it ever since — said that the ruling “really challenges the integrity of the system.”
She also blamed the decision on “unelected, not really accountable decision-makers in Geneva [who] second guess” America’s national security judgment.
Brussels had hoped that Washington’s bullying of the WTO would come to an end when President Joe Biden, a Democrat, stepped into the White House in January last year. But that didn’t happen: The Biden administration also questions the relevance of the multilateral trade forum because of its systemic rivalry with China, which is also a WTO member.
“A lot of people in Europe and Geneva have completely misunderstood … that the United States have already moved on — they are already in a post-WTO reality,” said Hosuk Lee-Makiyama from the Brussels-based economic think tank ECIPE. He cites as proof Biden’s multi-billion incentive package for Americans to buy green technology that’s made in the U.S., which experts agree violates WTO rules.
But by now, EU trade diplomats aren’t that surprised at Tai’s bombastic statement, and some even think that she has a point when she says the WTO shouldn’t be judging what is or isn’t a national security concern.
“I don’t know if we need to dramatize it too much,” one EU diplomat said. Another said that Washington has always questioned the validity of court decisions taken outside the U.S., so this is no different.
What’s certain though is that the U.S. and other countries’ use of the national security exception is tearing at the seams of rules-based trade.
“If everyone starts using ‘national security reasons’ to protect economic interests, then this exception becomes the rule,” said Luisa Santos from the industry group BusinessEurope. “A country’s international commitments become meaningless and trade quite uncertain.”
Tai’s disparaging comments about the recent ruling don’t bode well either for ongoing discussions in Geneva about how to reform the WTO.
“I don’t see how the U.S. can be serious about maintaining the institution if it is not prepared to support the one mechanism that is designed to make sure that everybody plays by the rules,” said Lorand Bartels, an international law professor at the University of Cambridge. “I think that the U.S. barely cares about the WTO.”
Camille Gijs, Barbara Moens and Doug Palmer contributed reporting.