President Donald Trump has become the most prominent advocate of Article 21, telling other countries they can't challenge his steel and aluminum duties. | Alex Wong/Getty Images Trade Trump's steel and car tariffs hit major legal hurdle

Donald Trump is in danger of losing his favorite trade weapon.

The president argues he is allowed to impose tariffs on other countries' steel and cars because they pose a threat to America's "national security," but that position appears increasingly hard to justify after a bombshell ruling set to be adopted at the World Trade Organization on Friday.


The Geneva-based body will set a very high bar for countries to invoke the controversial Article 21 "national security" justification to impose trade restrictions. Although the decision refers to a Russia-Ukraine border dispute, the implications are likely going to be much wider since it's the first time the WTO has ruled on the powerful security clause.

Trump has become the most prominent advocate of Article 21, telling other countries they can't challenge his steel and aluminum duties (as well as potential auto tariffs) because they fall under the national security exemption.

The WTO ruling, however, sets a high threshold for invoking the security clause. It cites the need for an "emergency in international relations" that must be essentially linked "to the 'hard core' of war or armed conflict." In the case at hand, the judges saw this requirement as fulfilled — given an armed conflict in eastern Ukraine — and allowed Moscow to impose security restrictions against Kiev.

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But the same definition raises serious questions about whether Trump's tariffs meet such criteria, or whether judges would instead identify them as a protectionist measure, as is argued by the EU, China and others.

"It’s an extremely significant ruling," said Lorand Bartels, a trade law expert from the University of Cambridge. "The U.S. is going to be furious. It certainly doesn’t suit their legal argument."

Although the panel decision has no official precedent value, Bartels said it sets a threshold "that cannot be ignored" by future rulings on national security cases. Significantly, the EU, China and four other countries last year launched WTO cases against Trump's steel and aluminum duties, which are expected to be ruled on in 2020.

Robert McDougall, a former Canadian trade official, agreed the Russia-Ukraine ruling "will have persuasive value" for similar WTO lawsuits because it sets thresholds "as prudent and as well-reasoned as one could expect for a national security case."

Remarkably, the ruling went beyond the required scrutiny in the Russia-Ukraine border dispute and included provisions that could also directly apply to Trump's tariffs, according to Bartels and McDougall: "The panel was conscious of the implication this would have for the steel and aluminum tariffs. They took a tougher line than was necessary," Bartels said.

In Trump's sights

The case is likely to fuel criticism of the WTO coming from the highest level of the U.S. administration. Trump last year called the multilateral trade body "the single worst trade deal ever made” and threatened to withdraw "if they don't shape up." Washington also accuses the WTO's Appellate Body of overreach and has blocked the nomination of new judges, thereby threatening to throw the appeals court into a limbo by December when the number of arbitrators will be down to two.

The Russia-Ukraine ruling was not issued by the Appellate Body but by a lower ranking dispute settlement panel. The decision did not make it to the higher stage because neither Moscow nor Kiev filed an appeal.

Although Ukraine lost the case, it accepted the outcome for political reasons, because it sees the panel's finding as a "recognition" of Russia's meddling in eastern Ukraine, a charge that Moscow has constantly denied.

By refraining from an appeal, Kiev also avoided the likely risk of the case becoming stuck in the looming Appellate Body paralysis — something the U.S. may have secretly hoped for. Instead, Ukraine took a swipe at Washington by welcoming the ruling as creating "greater clarity" on the circumstances under which countries can use the Article 21 security exemption, which "should reduce the occurrence of protectionist and discriminatory trade measures contravening to fundamental WTO principles."

In a remarkable diplomatic front, the United States last year sided with Russia in the trade dispute, despite supporting Ukraine in the wider territorial conflict. Washington argued that national security claims, such as the one brought forward by Russia in this case, are "non-justiciable." Essentially, the WTO should keep out of it.

Yet, in another sign of defeat for the Trump administration, the ruling also rejected that argument. The judges "found that WTO panels have jurisdiction to review aspects of a member's invocation" of Article 21, the Geneva-based trade organization said in a summary of the ruling.

A spokesperson for the Office of the U.S. Trade Representative, however, declared Washington would stick to its arguments: "It is not the WTO’s function, nor within its authority, to second guess a sovereign’s national security determination," the spokesperson said, quoting from a statement previously issued to the WTO panel. "WTO members did not abdicate their responsibilities to their citizens to protect their essential security interests when they formed the WTO."

The EU has warned that misusing the Article 21 security exemption would open Pandora’s box and allow every country to introduce arbitrary trade barriers. A European Commission official welcomed the WTO panel decision: "The legal reasoning in this ruling strikes a balance between the legitimate policy space for WTO members to maintain and adopt security measures and the need to prevent potential abuses of the security exceptions."

Holger Hestermeyer, a trade lawyer at King's College London, said the ruling had underlined that Trump's tariff justification was "legally untenable."

He cautioned, however, that the practical effect on Trump's tariffs could be limited. "Even if the WTO panel dealing with the steel tariffs follows the reasoning of the Ukraine-Russia decision, the U.S. could always appeal that ruling, knowing that the Appellate Body is caught in a limbo unless Washington resolves its blockade," he said.

"From a legal point of view, they can always claim that their measures were not held to be in violation of WTO law."

This report first appeared on POLITICO.EU on April 26, 2019.