Washington - In a time of warfare, a country doesn't want to suddenly
discover that it relies on far-off trading partners for the goods its people or
military need. It's far better for a country to be able to produce the basic
stuff of survival within its own borders. To ensure those domestic industries
survive, a country may need to take action against foreign competition.
It's the argument the Trump administration is considering
about steel. It has also been China's
argument about wheat for years. The Trump administration is preparing to
release, perhaps within days, what could be its biggest step on trade yet - the
results of an investigation that could impose limitations on imported steel and
aluminum on the grounds of protecting US national security.
But that prospect is sparking concern among some US industries,
which argue that other countries may turn to the same explanation to bar
American products from their markets. Agricultural products, one of America's
biggest exports, could be particularly vulnerable.
European officials have told US officials and business
groups that they may respond to restrictions on steel and aluminum with their
own tariffs, and that US
agriculture could be a target, according to people familiar with the exchange.
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In its public comments about the administration's
investigation, US Wheat Associates, an export promotion group for the wheat
industry, said it was "extremely concerned about the potential
ramifications of import protections based on national security arguments,"
adding "the results could be devastating."
"Wheat is probably the commodity most associated with
food security in the world. We're proud of that," said Ben Conner, the
group's director of policy. "We just don't want that to get turned around
on us."
Any investigation that leads to new tariffs on imports could
spark retaliatory duties or tariffs on US products, said a spokesperson for a
separate farm industry group, who spoke on condition of anonymity because of
the sensitivity of upcoming North American Free Trade Agreement negotiations.
"As we've seen historically, agricultural products tend to be on the front
line for retaliation."
Industries and trade experts say they are concerned that the
administration, by using a justification as broad as national security, could
set a precedent for other countries to follow suit.
The administration has turned to a little-used statute that
gives it broad purview to impose restrictions on any imports that it deems a
threat to national security. The Trump administration hasn't specified how it
defines national security, but statements from Commerce Secretary Wilbur Ross
and others suggest that their definition may go beyond defence equipment to
include broader security issues, like infrastructure and the industrial base.
The World Trade Organization, which typically polices
international trade actions, gives countries a lot of autonomy when it comes to
dealing with national security matters. Supporters say the Trump
administration's actions could offer relief for the domestic steel and aluminum
industries, which have struggled as a flood of overcapacity from China
has weighed on prices.
But others say that citing on national security as a reason
for limiting trade could prove to be a dangerous precedent. "You could
imagine extending this argument to almost anything, and I think that's one of
the difficulties with employing it at all," said Chad Bown, a senior
fellow at the Peterson Institute for International Economics. "Once you
open that Pandora's box, it's really an argument you can apply almost
limitlessly."
Other countries have tried to protect seemingly unrelated
industries on national security grounds, sometimes with laughable results. In
1975, Sweden
famously put restrictions on shoes, arguing that the drop-off in domestic
production was a threat to shodding its emergency defense services. The move
was ridiculed domestically, especially given Sweden's long history of remaining
neutral in conflicts, and the country revoked the measure two years later.
Far less humorously, China
has cited national security as justification for its cybersecurity law, which
requires companies to store their data within China's borders and individuals to
register on social media services with their real names.
Critics describe the law as a tool for China to
compromise the intellectual property of foreign countries, crack down on
dissidents and restrict freedom of speech. Under the law, companies as diverse
as banks and power providers may need to provide Beijing with their program source code and
other details of their intellectual property, which critics fear could be
passed to Chinese competitors.
When it comes to food, countries like China and India have cited security concerns
as a reason for protecting their domestic industries. India has been fighting at the WTO for years to
carve out exemptions for developing countries to stockpile food, something that
agricultural exporters like the United States
and Canada
firmly oppose.
Depending on the results of the Trump administration's
investigation, the US
agriculture sector could become a focus of retaliation because of its heavy
dependence on global markets. The United States exports roughly half
of all the soybeans and wheat it grows.
Foreign governments are also likely searching for the right
pressure points to persuade the Trump administration to alter their trade
policies, and they may conclude that the president's base of support among
voters in the Midwest makes agriculture a good
target, said Bown of Peterson.
Bown also points out that US
agriculture has served as a choke point in the past, including the other major
incident in history in which a US
president imposed restrictions on imported steel.
In 2003, the Bush administration opted to lift its
20-month-old tariffs on steel after the WTO ruled they were illegal and
European countries vowed to impose sanctions on up to $2.2 billion in US exports.
The Europeans' threats included restrictions on orange juice
and other citrus exports from Florida
- a key swing state that President George W. Bush was then looking to win in
the 2004 presidential election.
WASHINGTON POST