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Wheat growers worried steel industry requests could disrupt trade

Commerce Department submits to White House results of Section 232 investigation into national security implications of steel imports.

The U.S. Wheat Associates (USW) sounded an alarm in reaction to the U.S. Department of Commerce’s announcement that it has submitted to the White House the results of its Section 232 investigation into the national security implications of steel imports. Done at the prodding of a large segment of the U.S. steel industry, the investigation and its potential results likely ignore the disastrous implications for other U.S. sectors from extreme trade protections for commonly traded steel.

The World Trade Organization’s (WTO) national security exception from normal trade rules traditionally has been narrowly defined for truly exceptional products deemed necessary to maintain essential security interests. There is a good reason for this cautious approach that's respected by virtually every country: Common usage of the exception would undermine decades of carefully negotiated trade rules that foster peaceable global trade. These types of restrictions on a commonly traded product like steel blows apart that exception.

The U.S. pioneered global trade rules after World War II precisely to avoid the types of protectionist trade policies that exacerbated tensions and led to the global conflict. Since national security exceptions are self-declared and unenforceable, the U.S. said using that exception as a loophole could lead to a major breach in the system of global trade rules, with unpredictable consequences.

Specifically, USW believes that there is no greater national security interest for a country than being able to feed its people, which is best achieved through open markets. So, if the U.S. restricts steel imports under a national security claim, some countries may use the same pretense to restrict imports of U.S. wheat and other agricultural products.

“While we don’t yet know the contents of (the Commerce Department’s) recommendations to President (Donald) Trump, if they’re anything like what the steel industry has proposed, we hope the President will do the right thing and reject it,” USW president Vince Peterson said. “Under the pretense of asking for fair trade, the steel industry is looking for sweeping protection, and that threatens to undermine the global trade rules that have helped keep our country secure and our farmers competitive.”

The steel industry supplied about two-thirds of the domestic market in 2017 and has nearly 150 existing trade remedies in place against imported steel products. Section 232 is a different type of remedy that could allow unprecedented and sweeping trade restrictions that disregard carefully negotiated WTO rules. While it may, in part, target Chinese steel, China did not even break the top 10 sources of U.S. steel imports in 2017.

“The domestic steel industry already has more protection in place than any other industry, so there is no reason to blow up trade rules to restrict imported steel," said USW chairman Mike Miller, a farmer from Ritzville, Wash. “As a farmer, I know that I always have to work hard to stay competitive; if steel companies can’t do that with dozens of trade remedies already in place, maybe they should look for solutions that address the real problems instead of just restricting trade.”

View USW’s previous statement on the Section 232 investigation here.

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