In Indonesia—Safeguards, as Simon has pointed out, the AB had an opportunity to consider the definition of “safeguard” for purposes of Article XIX of GATT and Article 1 of the Safeguards Agreement. (Note also the interesting discussion begun by Steve Charnovitz on this issue.)
Indonesia had imposed a specific duty pursuant to its safeguards legislation, but on a product, galvalume, for which it had no tariff binding. Indonesia also excluded 120 countries from the measure. The Panel had found that this was not a safeguard because, in part, a safeguard only exists where all the conditions for imposition are satisfied. Panel Report 7.15. On appeal, the U.S. argued that a measure is only a safeguard if it is asserted to be a safeguard by the acting state. Para. 5.51. The Appellate Body rejected this position. In para. 5.60 of its decision, the Appellate Body made the following statement:
In order to determine whether a measure presents such features, a panel is called upon to assess the design, structure, and expected operation of the measure as a whole. In making its independent and objective assessment, a panel must identify all the aspects of the measure that may have a bearing on its legal characterization, recognize which of those aspects are the most central to that measure, and, thereby, properly determine the disciplines to which the measure is subject.195 As part of its determination, a panel should evaluate and give due consideration to all relevant factors, including the manner in which the measure is characterized under the domestic law of the Member concerned, the domestic procedures that led to the adoption of the measure, and any relevant notifications to the WTO Committee on Safeguards. However, no one such factor is, in and of itself, dispositive of the question of whether the measure constitutes a safeguard measure within the meaning of Article 1 of the Agreement on Safeguards.
From the last sentence, I infer that the national characterization of the measure is not dispositive. The AB rejected the Panel’s approach, which seemed to conflate the issue of whether a measure is a safeguard with whether it is a permissible safeguard (that is, one that meets all the conditions). But the design, structure, and expected operation must be assessed in relation to the two essential features of a safeguard measure: (i) whether it withdraws a GATT obligation or concession, and (ii) whether it is designed to prevent or remedy serious injury. Para. 5.64.
What does this mean for the U.S. “national security” measures based on Section 232 of the 1962 Act, in relation to aluminum or steel. If those measures can be characterized only as safeguards measures, then they are illegal if they fail, as they do, to comply with Article XIX and the SA. If those measures can be characterized as Article XXI national security measures, and as safeguards measures, then they are permitted under Article XXI. But other states may be permitted to re-balance under Article XIX(3) or under SA Article 8, without waiting for DSB determination under DSU Art. 23. I do not think that the permission under Article XXI removes the authorization for rebalancing under the safeguards provisions, but perhaps there is an argument that these provisions do not apply cumulatively.
Are the US Section 232 measures safeguards? National characterization is not dispositive. Referring to the AB decision in para. 5.64, the U.S. measures definitely withdraw a GATT obligation. There is factual evidence, not just in tweets and public statements, but also in the Commerce Department report, that support the proposition that the U.S. measures are also designed to prevent or remedy serious injury. The latter point is plausible, but not certain. Can there be both a national security and a serious injury rationale? I think the U.S. Commerce Department report suggests that this is the case. It emphasizes the economic, and economic security, aspects of the situation of the steel and aluminum industries. If both rationales pertain, then as I suggested above, it is possible that response by other states under Article XIX and the SA, without awaiting DSB determination, would be permissible, and not a violation of DSU Art. 23. Of course, it is also possible that a panel would find that there is no national security defense in this case under Article XXI.
I would also note a point that Rob Howse has made: Article XIX is a facility for national safeguards action: unless a state purports to act under Article XIX, it is not relevant. This was the U.S. position, and it is attractive given the evident purpose of Article XIX. However, assuming that the essential character of the U.S. measure is that of a safeguard, the permission for rebalancing in Article XIX becomes attractive. Indeed, rebalancing may be attractive even in a “pure” national security case, so as to ensure that the action is truly about national security, rather than reneging on trade commitments.
