Matthew Nolan at IREPAS: WTO is not an immediate solution to Section 232 measures

Monday, 17 September 2018 15:51:22 (GMT+3)   |   Istanbul

Speaking about US trade measures and their potential impact on world trade rules and the steel trade at the SteelOrbis 2018 Fall Conference & 79th IREPAS Meeting held in Istanbul on September 16-18, Matthew Nolan, partner at Arent Fox, said that the America First Trade Policy announced by the Trump administration is a zero-sum approach to trade policy, where the US is the winner, while the rest loses.

Mr. Nolan said that the Section 232 investigation on auto and auto parts changes the dynamic, because steel is relatively a small part of the US economy, while the automotive and auto parts industry is a lot bigger, and therefore it will have a direct impact. He added that even major US auto companies such as GE are against the investigation as there is no such thing as a fully US-made automobile, Mr. Nolan said that auto parts are coming in all from over the world, so it will generate a lot more lobbying activity which will be more difficult to combat.

Regarding the retaliatory tariffs introduced by many countries which are affected by the Section 232 duties, Mr. Nolan said that the countries who are taking these compensatory measures argue that they are allowed to do so under the World Trade Organization rules, while the US argues that this case should be an exception and compensatory measures should not be allowed, because it is a national security issue. He thinks that in this case the WTO is not an immediate solution since it will take years and duties will not be recovered. He also pointed out that, as per recent economic studies, tariffs would increase US steel employment and non-ferrous metals (primarily aluminum) employment by 26,280 jobs over the first one to three years, but would reduce net employment by 432,747 jobs throughout the rest of the economy, for a total net loss of 400,445 jobs.

He also mentioned some problems that could arise at customs because of the Section 232 duties, namely in relation to undervaluation, classification and country of origin. He said that full value of goods should be declared and that tariffs cannot be included in the full value of the goods. He also stated that customs officers now have to be careful with classification as the enforcement of Section 232 is different than antidumping duties.

Answering a question about the fate of the NAFTA deal, Mr. Nolan said Trump is not “going to drop the Canadians” as he has been threatening to do. “There is a pretty good shot that there is going to be a (NAFTA) deal with Canada and likely to cover Section 232, especially for auto parts,” he added. He went on to say that he expects a three sided-deal and believes that Canada has come to the table with some proposals, possibly about the sunset clause.

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