Newspapers in recent weeks have reported the US reply to the Indian request for consultations in the WTO on tariffs imposed on auto components, stating that these are not safeguard measures but measures taken for essential security interests. Sometime back, a similar story was run regarding the tariffs imposed by the US on steel and aluminium imports and the Indian intent to retaliate. There are mentions in the media of about fifteen ongoing consultations between the US and its trading partners based on the recent tariff hikes. These stories are important for readers, particularly businesses engaged in the products concerned, but also raise a larger question: what transparency measures can benefit the stakeholders in understanding better the reasons behind such measures and possible solutions? The WTO notifications obligations provide a solution, but such obligations are hazy in parts, and not always complied in letter and spirit.
On 26 March 2025, the US President Donald Trump signed a proclamation invoking Section 232 of the US Trade Expansion Act, 1962 to impose 25% tariffs on automobiles and certain auto parts “to protect America’s automobile industry, which is vital to national security and has been undermined by excessive imports threatening America’s domestic industrial base and supply chains”. According to the proclamation, this statute provides the President with authority to adjust imports being brought into the United States in quantities or under circumstances that threaten to impair national security. The proclamation further elaborates that the imports of automobiles and parts undermines the US ability to maintain ‘resilient industrial base’ and that the tariff action will ‘protect and strengthen the US automotive sector’. Article XXI of the General Agreement on Tariffs and Trade (GATT), an exception to the WTO rules, allows a WTO Member to take any action taken in time of war or other emergency in international relations, which it considers necessary for the protection of its essential security interests. What the US President’s proclamation, however, appears to invoke is its national interests of economic security for its industry, its workers and also, though remotely, probably for the security of supplies. This proclamation has not been notified to the WTO.
Provisions exist in the WTO to safeguard national industry against sudden increase in imports that cause or threaten to cause serious injury to industry, or when the use of prohibited subsidies undermine competitiveness, or when goods are dumped into a market. Each of these permitted import restrictions can be imposed only based on an investigative process, and the WTO Member imposing the restriction must notify the WTO about its action. The US has not invoked any of these reasons. There are general exceptions available for some necessary public interest reasons, provided the import restrictions are not arbitrary and are least trade restrictive for achieving the public purpose. A security exception is available, but as was determined by a dispute panel in a case between Russia and Ukraine six years back, it is justiciable to determine whether there was in fact an emergency in international relations. In that case, in fact, the panel agreed that such an emergency existed. The US has not notified any such reasons to the WTO, leaving its trading partners wondering whether the US is following its WTO obligations.
Even if WTO Members were to access the proclamation from the US government websites in the absence of a notification to the WTO, there is little clarity whether the US wishes to use the security exception of the GATT or any other available instrument mentioned above. Subsequent proclamations, such as those issued on 2 April or 29 April also do not shed any further light. Had the US notified the WTO, such confusion could have been avoided.
WTO laid down elaborate rules on notification obligations of Members in 1996, and has updated them 31 times so far, but none refers to the kind of situation the US tariff hikes has created. WTO Members are obliged to keep their tariffs below the bound rates notified by them in their tariff schedules. The US has breached those bound rates in its current tariff hikes. Provisions exist to renegotiate bindings, but these require consultations with those having a substantial interest in exporting those goods, something the US has not done. While the WTO agreements comprise about 500 pages, the tariff schedules are 20,000 pages long, and an integral part of the treaty. Notification of changes in tariff schedules are, therefore, equally if not more important. The WTO needs to review its rules on notification obligations to cater to the situation arising from the US tariff hikes, perhaps by bringing out another revision of the rules on notification obligations, whereby the Member hiking tariffs must be required to identify the specific permissive provision of the WTO agreements that enables it to take such an action. Otherwise, India and all other trading partners will keep seeking consultations based on their own assumption of the permissive provision that may be invoked by the reneging Member, complicating an already chaotic international trade regime we are faced with today.
*Atul Kaushik is GDC Fellow at RIS. Views are personal. Usual disclaimer applies.
Author can be reached out at atul.kaushik@gdcin.org