Recently, the United States of America imposed an additional 25% tariff on imports of steel and an additional 10% tariff on imports of aluminum originating from all exporter countries (initially excluding Canada, Mexico, Australia, Argentina, Brazil, South Korea and the European Union),[1] on the grounds of national security through two proclamations signed by President Donald Trump on March 23, 2018. These extra customs duties were imposed pursuant to Section 232 of the Trade Expansion Act of 1962, as amended ("Act"). According to the opinion of the Secretary of Commerce, these additional duties were necessary because the amount and circumstances of steel products imported into the United States threatened to impair the country's national security. The Secretary advised the President that the current levels of imported steel products and the global excess capacity for producing steel were weakening the domestic United States economy, resulting in the persistent threat of further shutdowns of domestic steel production facilities.

Section 232 of the Act authorizes the President of the U. S. to adjust the imports of goods from other countries, if the President deems the quantities or circumstances of imports pose a threat to national security. Under Section 232 of the Act, the Secretary of Commerce may initiate an investigation on his own authority, or an interested party may request an investigation be launched through an application, and the findings must be reported to the President within 270 days as of the date of the initiation of the investigation. If the President formally concurs with the report within 90 days, his executive authority under Section 232 allows him to amend or restrict the imports as necessary.

Turkey made a consultation request to the United States in relation to the additional duties, pursuant to Article 12.3 of the World Trade Organization's ("WTO") Safeguards Agreement ("Agreement"). Article 12.3 sets forth and regulates the obligation of a WTO member proposing to apply or extend a safeguard measure to provide adequate opportunity for prior consultations with WTO members who have a substantial interest in the proposed measure as exporters of the product concerned, with a view to review the information, exchange views on the measure and reach an understanding on potential ways to achieve the objective set out in Article 8(1) of the Agreement. Accordingly, Article 8(1) of the Agreement sets out the objective of maintaining a substantially equivalent level of concessions and other obligations under the General Agreement on Tariffs and Trade ("GATT").

The United States rejected Turkey's consultation request, declaring that the measures in question were not imposed based on the Agreement and stating that, consequently, there was no basis to conduct consultations with respect to the measures under the Agreement. On May 22, 2018, Turkey notified the WTO's Council for Trade in Goods, which is responsible for the operation and implementation of GATT, that it would impose substantially equivalent additional duties on 22 goods included in the Annex to its Notification, by way of exercising its legal rights under Article 8(2) of the Agreement. The relevant Article regulates that, in the event the parties cannot reach an agreement within 30 days, exporting members who are affected by the safeguard measure will be free to suspend the application of substantially equivalent concessions or other obligations under GATT to the trade of the member applying the safeguard measure (in this case, the United States), the suspension of which the Council for Trade in Goods does not disapprove.

Indeed, the Turkish Council of Ministers decided to implement the abovementioned duties against imports from the United States as of June 21, 2018. The decision was published in the Official Gazette on June 25, 2018. The duties under consideration are worth approximately 266.5 million US Dollars, according to the Turkish Ministry of Trade (formerly, the Turkish Ministry of Economy).

[1] On June 1, 2018, the United States imposed a 25% tariff on imports of steel, and a 10% tariff on aluminum, on the European Union, Canada, and Mexico.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in September 2018. A link to the full Legal Insight Quarterly may be found here.

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