Canada's "As Such" Complaint Against Section 232

This is from Canada's consultations request on the Section 232 tariffs:

In addition, Section 232 of the Trade Expansion Act of 1962 and its associated regulations appear to be "as such" inconsistent with Articles I:1 and II:1 of the GATT 1994 and does not appear to be justifiable under Article XXI:(b) of the GATT 1994 because they require the United States to account for economic welfare and other factors that are not necessary for the protection of its essential security interests, in a manner that is inconsistent with Article XVI:4 of the WTO Agreement.

Canada says that Section 232 "requires" the United States "to account for economic welfare and other factors that are not necessary for the protection of its essential security interests." Let's look at the statute:

(d) Domestic production for national defense; impact of foreign competition on economic welfare of domestic industries

For the purposes of this section, the Secretary and the President shall, in the light of the requirements of national security and without excluding other relevant factors, give consideration to domestic production needed for projected national defense requirements, the capacity of domestic industries to meet such requirements, existing and anticipated availabilities of the human resources, products, raw materials, and other supplies and services essential to the national defense, the requirements of growth of such industries and such supplies and services including the investment, exploration, and development necessary to assure such growth, and the importation of goods in terms of their quantities, availabilities, character, and use as those affect such industries and the capacity of the United States to meet national security requirements. In the administration of this section, the Secretary and the President shall further recognize the close relation of the economic welfare of the Nation to our national security, and shall take into consideration the impact of foreign competition on the economic welfare of individual domestic industries; and any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports shall be considered, without excluding other factors, in determining whether such weakening of our internal economy may impair the national security.

I think Canada is right about what the Section 232 statute requires ("shall take into consideration the impact of foreign competition on the economic welfare of individual domestic industries"). But is that unjustifiable under Article XXI:(b)? Perhaps it depends on how the Commerce Department and the President use their discretion under the statute. If the statute were applied only to products that were closely related to national security (e.g., fighter jets and hand grenades), then the economic welfare language might make sense. I can understand why governments would want to make sure that domestic industries supplying crucial military goods existed. Arguably, then, the Commerce Department and the President have the discretion under the statute to apply it in a way that is consistent with GATT Article XXI, simply by focusing on goods that closely relate to security. While there is a strong argument that the recent application of Section 232 has not been consistent with Article XXI, the discretion to apply it consistently is still there.