Container ship © Fotolia/pitrs

Container ship © Fotolia/pitrs

Fair Trade or Protectionism? Trade Enforcement Measures Taken by the United States

That the United States – like many other countries – uses trade defense instruments to counter unfair competition is nothing new. But both the rapid increase in the use of such instruments during the last years and the justification for deploying them are alarming. This reflects the Trump administration’s deep skepticism towards free trade and multilateral institutions.

Over the past two decades, the United States has been the second largest initiator of trade defense instruments in the world. These include anti-dumping and countervailing measures to offset unfair competition and safeguard measures. The latter allow temporary import restrictions to give sectors a reprieve in international competition and allow structural adjustments. The fact that the United States uses trade defense measures is nothing new – even under President Barack Obama they were an important component of U.S. trade policy. Under President Trump, however, they were used even more frequently.

The Trump administration conducted 222 trade policy investigations against 43 countries, including 146 anti-dumping and 76 countervailing investigations (as of December 2020). In 179 cases, or 81 percent, trade policy measures were taken on the basis of these investigations.

China at the Forefront

Of the 43 countries on six continents that were subject to investigation (antidumping and countervailing), China came under suspicion most frequently – with 65 investigations. One of these 65 investigations was initiated by the government itself, the first time since 1985. Normally, investigations are conducted at the request of companies. 22 investigations were directed against India, 16 against South Korea. In addition, there were ten investigations against Canada and against Turkey, eight against Taiwan and Thailand. The steel sector was the most affected, with 76 investigations. Other investigations concerned fossil fuels, aluminium, metals, resin, polyester, and silicon.

In addition, the Trump administration has so far initiated three safeguard investigations: one on washing machines, one on solar cells and modules, and one on crystalline silicon photovoltaic cells. These investigations are based on Section 201 of the Trade Act of 1974, which allows the United States to temporarily restrict imports if, due to unforeseen developments or as a result of obligations under the WTO GATT agreement, imports increase to such an extent that they cause or threaten to cause serious damage to domestic industry. In all three cases, measures in the form of safeguard measures were imposed.

Cases Against Germany

Imports from Germany were suspected in four cases: cold-drawn tubes, stainless-steel kegs, forged steel fluid end blocks, and aluminum sheets. In the case of cold-drawn tubes, the Department of Commerce (DOC) ruled in April 2018 that German products were dumped (margin of 3.11 to 209.06 percent) on the U.S. market and thus imposed anti-dumping measures on these imports. In October 2019, the DOC concluded that German stainless-steel kegs were also dumped on the U.S. market (margin of 7.47 percent). Imported stainless steel kegs from Germany were thus also subject to anti-dumping measures. The International Trade Administration has so far set a provisional anti-dumping rate on fluid end blocks of German companies ranging from 0 to15.47 percent. The final decision in this case will be made in January 2021, according to the U.S. authorities. In the case of aluminium sheets, German companies are subject to provisional anti-dumping duties ranging from 51.18 percent to 352.71 percent. A final decision is expected in this case for April 2021.

At Odds with Multilateral Trade Law?

Trade defense instruments are compatible with the WTO if used either to counteract unfair competition or to grant an industry a breathing space in which to undertake structural reform. Tariffs can also be imposed if national security, the environment, or the health of the general public is at risk. However, there is one important condition: the measures taken must be in accordance with WTO regulations. The numerous dispute settlement cases at the WTO delineate that this is not always the case. Moreover, the high number of restrictions leads to significant problems in trade.