World Trade Organization declares US tariff hike illegal, rules in South Korea’s favour

Sunday, January 24, 2021

The World Trade Organization (WTO) ruled in favour of South Korea on Thursday over what it deemed excessive US tariffs on some of its products.

The eight duties, covering large power transformers and four grades of steel, were enacted in 2012 and 2016, during the Barack Obama administration. The US Department of Commerce defended the high rates, ranging from 9.49 to 59.72% on steel and 60.81% on transformers, by citing the “adverse facts available” (AFA) provision.

The AFA calls on accused companies to provide comprehensive information, or otherwise face significant anti-dumping and countervailing tariffs. After negotiation failed, South Korea formally filed a suit with the global trade body in February 2018.

A three-person WTO panel concluded the US Commerce Department had failed to specify in detail what information South Korean companies were to supply, and improperly ignored or rejected some of what was submitted. The tariffs imposed on Hyosung Heavy Industries, Hyundai Electric & Energy Systems, Hyundai Steel, and POSCO, therefore, were considered inconsistent with WTO guidelines.

However, the panel did not uphold South Korea’s claim US authorities had an “unwritten measure” encouraging its use of adverse facts to justify higher duties.

The United States may appeal within 60 days. However, due to restrictions imposed by former President Donald Trump on the Appellate Body, it has less than a quorum.

The European Union joined the case, citing as justification the plight of British, Dutch, and Italian steelworkers under US practice.

A 2018 ruling between the United States and Canada also found evidence of negligence involving the provision.

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