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SHOCKER: US sides with Russia over Ukraine in WTO case

What actions can countries take in the name of national security, even if it violates their WTO commitments?

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Typically, Washington is against anything that benefits Moscow, and is for anything which bolsters the position of US puppet regime Ukraine. But, at ongoing cases before the World Trade Organization, that narrative isn’t applicable.

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This is so because if Washington slams Moscow for its actions relative to Kiev, it would provide a case against Trump’s metals tariffs. However, by standing with Russia on this issue, Washington thinks that it can save its own trade actions, namely Trump’s metals tariffs.

Politico reports

The Trump administration is siding with Russia in a potential landmark case over an issue that threatens to tear the World Trade Organization apart: What actions can countries take in the name of national security, even if it violates their WTO commitments?

The panel’s decision, expected later this year, could be consequential for a number of cases brought against the U.S. over President Donald Trump’s use of steel and aluminum tariffs.

However, the case involving Russia stems from a different type of action — namely, transit restrictions that Moscow imposed on Ukraine in January 2016 that cut off key markets in Central Asia and the Caucuses, which Ukrainian exporters can only reach by Russian roads. The move came amid continuing conflict between the two nations over Russia’s annexation of Crimea in March 2014 and a war in eastern Ukraine that’s now in its fifth year.

Although the U.S. backs Ukraine in the larger territorial conflict, both the U.S. and Russia argue the WTO has no right to weigh in on the case Ukraine brought against the transit restrictions.

That’s because Moscow says it imposed its restrictions as a national security measure under Article 21 of the General Agreement on Tariffs and Trade, which allows members to take actions that violate their WTO commitments for purposes of national security.

The U.S. government argues that “the dispute involving essential security is political in nature and, therefore, beyond the proper authority and competency of the WTO to assess.”

It’s the same argument the Trump administration is using to justify its steel and aluminum tariffs. Both Washington and Moscow insist Article 21 claims are “non-justiciable” — meaning WTO panels can’t rule on any dispute invoking the national security exemption.

In the other words, they argue “as soon as anybody says the word ‘Article 21’ out loud, the panel has to stop and go home,” Jennifer Hillman, a former WTO Appellate Body judge, said in a recent speech.
The Office of the U.S. Trade Representative declined to comment, but directed to POLITICO to documents on its website explaining its position in the Russia-Ukraine dispute.

“A dispute involving essential security is political in nature and, therefore, beyond the proper authority and competency of the WTO to assess,” the U.S. government said during an oral presentation on the case earlier this year. “The panel should fulfill its function by noting the invocation of Article 21(b)(iii) in its report to the [WTO Dispute Settlement Body] and make no other findings.”

Some other WTO members, such as Canada, believe countries should at least be required to say why they’re invoking Article 21. However, Russia and the U.S. counter that the provision is “self-judging” — that is, once a country decides an action is in its national security interests, it doesn’t have to explain the decision to other members.

Trump’s steel and aluminum tariffs come closest to a safeguard action, but that would require the U.S. to compensate other WTO members for lost trade, something Trump didn’t want to do.

“The text of Article 21 contains no requirement for a member to detail reasons or events to invoke the security exception. The text instead provides only that a member ‘considers’ the action necessary for the protection of its essential security interests in time of war or other emergency in international relations,” the U.S. said in another legal brief in the case.

However, Hillman contends the provision isn’t as broad as the Trump administration argues, since the text indicates it can only be used in situations involving nuclear weapon materials; trade in implements of war or goods to supply a military establishment; or in the time of war or some “other emergency in international relations.”

In Russia’s case, the country has been reluctant to admit any military role in Ukraine, so identifying the reason for its national security exception could be awkward for Moscow, she said.

Trump imposed duties on steel and aluminum in March following a pair of investigations that found imports of the two metals threatened to impair national security by weakening the U.S. economy. A rarely used U.S. law known as Section 232 of the 1962 Trade Expansion Act allows the president to restrict imports in the case of a national security threat, but most commanders in chief have been loathe to use the authority.

Countries responded to Trump’s trade restrictions both by retaliating against U.S. exports and by challenging the move at the WTO, accusing the U.S. of imposing an illegal trade barrier.

“Nobody’s declaring war on Canada, or saying they’re an unfriendly neighbor. They’re obviously not” — U.S. Trade Representative Robert Lighthizer

Under WTO rules, countries that want to impose additional duties on imports can do so through a temporary “safeguard” action; through countervailing and anti-dumping duty proceedings; or through negotiations with other WTO members. Trump’s steel and aluminum tariffs come closest to a safeguard action, but that would require the U.S. to compensate other WTO members for lost trade, something Trump didn’t want to do.

While the EU, China, Canada, Mexico and others believe the tariffs are illegal, the U.S. makes the same charge against countries that have retaliated.

“Instead of working with us to address a common problem [of global steel and aluminum excess capacity], some of our trading partners have elected to respond with retaliatory tariffs designed to punish American workers, farmers and companies,” U.S. Trade Representative Robert Lighthizer said in statement announcing WTO cases against five trading partners. “These tariffs appear to breach each WTO member’s commitments under the WTO agreement.”

Lighthizer repeated that sentiment Thursday during a Senate Appropriations subcommittee hearing, where he was challenged to explain how steel and aluminum exports from a longtime ally like Canada pose a threat to national security.

“Nobody’s declaring war on Canada, or saying they’re an unfriendly neighbor. They’re obviously not,” Lighthizer replied. “They’re a great ally and certainly one of America’s closest friends and closest trading partners. But if you decide that you need to protect an industry, you can’t be in a position where the protection is of no value because everything comes in … from Canada.”
That doesn’t mean the countries themselves are a national security threat, just their exports, he explained, adding that once the U.S. has decided to restrict imports, it has to ensure there’s “no hole in the net” that defeats the purpose of the original action. Still, many close allies are offended by the Trump administration’s use of the national security argument to keep out their products.

“This goes against all logic and against all history. We simply cannot accept this,” European Commission President Jean-Claude Juncker said Wednesday, just hours after he and Trump agreed to launch negotiations to reduce trade barriers across the Atlantic. Those talks could lead to removal of the steel and aluminum tariffs and Europe’s retaliatory duties on $3.3 billion of American exports.

But still looming is another probe into whether auto and auto part imports, including from Europe, pose a risk to U.S. national security.

Although Trump agreed to hold off on imposing new tariffs on the EU as long as negotiations are making progress, he’s directed Commerce Secretary Wilbur Ross to continue the Section 232 auto investigation to keep the option of additional restrictions on the table.

In the meantime, the cases that China, the EU and others have brought against the U.S. steel and aluminum tariffs are proceeding at the WTO, as well as the more recent cases brought by the U.S. against the retaliatory tariffs.

A narrow ruling that restricts the right of WTO members to use the exception could reinforce Trump’s perception.

If WTO judges get over the first hurdle and decide they can rule in cases invoking Article 21, there’s a fear they could either decide the case too narrowly or too broadly, a senior European official said last week.

A narrow ruling that restricts the right of WTO members to use the exception could reinforce Trump’s perception that the rules-based global trading is unfairly tilted against the U.S. and encourage him to disregard its decisions.

A broad ruling, meanwhile, could open the door for countries to use the national security exception every time they want to unilaterally raise duties or take some other action in contravention of their WTO obligations.

The second possibility presents a particularly interesting situation, where countries could potentially invoke the “self-judging” Article 21 exception to justify their retaliatory duties on the U.S.

Trade restrictions are bad, and Moscow is bad no matter what. But when it suits American interests, however, the situation can be radically different, as in this case.

Here, at these WTO proceedings, trade restrictions on the basis of national security are awesome and Russia is perfectly okay using them, because it happens to work out in Washington’s benefit to say so.

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Trauma2000AM HantsVeeNarian (Yerevan)freddJohn Mason Recent comment authors
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Trauma2000
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Trauma2000

So… the U.$. ‘siding’ with Russia out of ‘self interest’ and ‘money.’ Not surprising. Everything the U.$. does is done out of Self Interest and Money.

AM Hants
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AM Hants

Interesting to see how this pans out. Ukraine has shown she is at war with Russia, so Russia can prove national security is at risk, based on Ukraine’s actions.

VeeNarian (Yerevan)
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VeeNarian (Yerevan)

US/EU/NATO stuffed organisations are fundamentally flawed. I really don’t know why Russia has bothered with them. I suppose there is no choice until BRICS/SCO alternatives are up and running.
So, let me get this straight: Ukraine claims that Russia has invaded the Donbass, annexed Crimea and this position has been backed by the US/EU/NATO gang? And yet Russia cannot take act on its security?
Remember how the US/EU/NATO gang could sanction Russia in an attempt to destroy its economy in 2014, but Russia had no right to respond with its food sanctions?
This is the mentality of the Western supremacists.

fredd
Guest
fredd

In Russia’s case, the country has been reluctant to admit any military
role in Ukraine, so identifying the reason for its national security
exception could be awkward for Moscow, she said.

no it is not Ukraine is the hostile nation accusing russia of an invasion and not producing any proof so it is in russia’s interest to stop traffic from this hostile nation on its territory

John Mason
Guest
John Mason

Having read the article one can come to a logical conclusion to save the WTO is to throw the US out.

rufous
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rufous

Who’s elected to the WTO? No one. Why the hell wouldn’t the US or Russia prefer to limit the WTO’s power? I think it’s a good idea.

usc440
Guest
usc440

ukraine was tricked into this war be george soros and the corrupt EU….. once again poor ukraine left at the altar to fight russia on its own…… poor ukraine gets screwed again…………

Bill Spence
Guest
Bill Spence

The US does not have to accept consistency and can violate WTO rules at will. So one should question why they would ever side with Russia.

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FBI recommended Michael Flynn not have lawyer present during interview, did not warn of false statement consequences

Flynn is scheduled to be sentenced on Dec. 18.

Washington Examiner

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Via The Washington Examiner…


Former FBI Deputy Director Andrew McCabe, who arranged the bureau’s interview with then-national security adviser Michael Flynn at the White House on Jan. 24, 2017 — the interview that ultimately led to Flynn’s guilty plea on one count of making false statements — suggested Flynn not have a lawyer present at the session, according to newly-filed court documents. In addition, FBI officials, along with the two agents who interviewed Flynn, decided specifically not to warn him that there would be penalties for making false statements because the agents wanted to ensure that Flynn was “relaxed” during the session.

The new information, drawn from McCabe’s account of events plus the FBI agents’ writeup of the interview — the so-called 302 report — is contained in a sentencing memo filed Tuesday by Flynn’s defense team.

Citing McCabe’s account, the sentencing memo says that shortly after noon on Jan. 24 — the fourth day of the new Trump administration — McCabe called Flynn on a secure phone in Flynn’s West Wing office. The two men discussed business briefly and then McCabe said that he “felt that we needed to have two of our agents sit down” with Flynn to discuss Flynn’s talks with Russian officials during the presidential transition.

McCabe, by his own account, urged Flynn to talk to the agents alone, without a lawyer present. “I explained that I thought the quickest way to get this done was to have a conversation between [Flynn] and the agents only,” McCabe wrote. “I further stated that if LTG Flynn wished to include anyone else in the meeting, like the White House counsel for instance, that I would need to involve the Department of Justice. [Flynn] stated that this would not be necessary and agreed to meet with the agents without any additional participants.”

Within two hours, the agents were in Flynn’s office. According to the 302 report quoted in the Flynn sentencing document, the agents said Flynn was “relaxed and jocular” and offered the agents “a little tour” of his part of the White House.

“The agents did not provide Gen. Flynn with a warning of the penalties for making a false statement under 18 U.S.C. 1001 before, during, or after the interview,” the Flynn memo says. According to the 302, before the interview, McCabe and other FBI officials “decided the agents would not warn Flynn that it was a crime to lie during an FBI interview because they wanted Flynn to be relaxed, and they were concerned that giving the warnings might adversely affect the rapport.”

The agents had, of course, seen transcripts of Flynn’s wiretapped conversations with Russian then-ambassador Sergey Kislyak. “Before the interview, FBI officials had also decided that if ‘Flynn said he did not remember something they knew he said, they would use the exact words Flynn used … to try to refresh his recollection. If Flynn still would not confirm what he said … they would not confront him or talk him through it,'” the Flynn memo says, citing the FBI 302.

“One of the agents reported that Gen. Flynn was ‘unguarded’ during the interview and ‘clearly saw the FBI agents as allies,'” the Flynn memo says, again citing the 302.

Later in the memo, Flynn’s lawyers argue that the FBI treated Flynn differently from two other Trump-Russia figures who have pleaded guilty to and been sentenced for making false statements. One of them, Alexander Van der Zwaan, “was represented by counsel during the interview; he was interviewed at a time when there was a publicly disclosed, full-bore investigation regarding Russian interference in the 2016 election; and he was given a warning that it is a federal crime to lie during the interview,” according to the memo. The other, George Papadopoulos, “was specifically notified of the seriousness of the investigation…was warned that lying to investigators was a ‘federal offense’…had time to reflect on his answers…and met with the FBI the following month for a further set of interviews, accompanied by his counsel, and did not correct his false statements.”

The message of the sentencing memo is clear: Flynn, his lawyers suggest, was surprised, rushed, not warned of the context or seriousness of the questioning, and discouraged from having a lawyer present.

That is all the sentencing document contains about the interview itself. In a footnote, Flynn’s lawyers noted that the government did not object to the quotations from the FBI 302 report.

In one striking detail, footnotes in the Flynn memo say the 302 report cited was dated Aug. 22, 2017 — nearly seven months after the Flynn interview. It is not clear why the report would be written so long after the interview itself.

The brief excerpts from the 302 used in the Flynn defense memo will likely spur more requests from Congress to see the original FBI documents. Both House and Senate investigating committees have demanded that the Justice Department allow them to see the Flynn 302, but have so far been refused.

In the memo, Flynn’s lawyers say that he made a “serious error in judgment” in the interview. Citing Flynn’s distinguished 30-plus year record of service in the U.S. Army, they ask the judge to go along with special counsel Robert Mueller’s recommendation that Flynn be spared any time in prison.

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Macron offers crumbs to protestors in bid to save his globalist agenda (Video)

The Duran Quick Take: Episode 36.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris take a quick look at French President Macron’s pathetic display of leadership as he offers protestors little in the way of concessions while at the same time promising to crack down hard on any and all citizens who resort to violence.

Meanwhile France’s economy is set for a deep recession as French output and production grinds to a halt.

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Via Zerohedge


As if Brussels didn’t have its hands full already with Italy and the UK, the European Union will soon be forced to rationalize why one of its favorite core members is allowed to pursue populist measures to blow out its budget deficit to ease domestic unrest while another is threatened with fines potentially amounting to billions of euros.

When blaming Russia failed to quell the widespread anger elicited by his policies, French President Emmanuel Macron tried to appease the increasingly violent “yellow vests” protesters who have sacked his capital city by offering massive tax cuts that could blow the French budget out beyond the 3% budget threshold outlined in the bloc’s fiscal rules.

Given the concessions recently offered by Italy’s populists, Macron’s couldn’t have picked a worse time to challenge the bloc’s fiscal conventions. As Bloomberg pointed out, these rules will almost certainly set the Continent’s second largest economy on a collision course with Brussels. To be clear, Macron’s offered cuts come with a price tag of about €11 billion according to Les Echos, and will leave the country with a budget gap of 3.5% of GDP in 2019, with one government official said the deficit may be higher than 3.6%.

By comparison, Italy’s initial projections put its deficit target at 2.4%, a number which Europe has repeatedly refused to consider.

Macron’s promises of fiscal stimulus – which come on top of his government’s decision to delay the planned gas-tax hikes that helped inspire the protests – were part of a broader ‘mea culpa’ offered by Macron in a speech Monday night, where he also planned to hike France’s minimum wage.

Of course, when Brussels inevitably objects, perhaps Macron could just show them this video of French police tossing a wheelchair-bound protester to the ground.

Already, the Italians are complaining.  Speaking on Tuesday, Italian cabinet undersecretary Giancarlo Giorgetti said Italy hasn’t breached the EU deficit limit. “I repeat that from the Italian government there is a reasonable approach, if there is one also from the EU a solution will be found.”

“France has several times breached the 3% deficit. Italy hasn’t done it. They are different situations. There are many indicators to assess.”

Still, as one Guardian columnist pointed out in an op-ed published Tuesday morning, the fact that the gilets jaunes (yellow vest) organizers managed to pressure Macron to cave and grant concessions after just 4 weeks of protests will only embolden them to push for even more radical demands: The collapse of the government of the supremely unpopular Macron.

Then again, with Brussels now facing certain accusations of hypocrisy, the fact that Macron was pressured into the exact same populist measures for which Italy has been slammed, the French fiasco raises the odds that Rome can pass any deficit measure it wants with the EU now forced to quietly look away even as it jawbones all the way from the bank (i.e., the German taxpayers).

“Macron’s spending will encourage Salvini and Di Maio,” said Giovanni Orsina, head of the School of Government at Rome’s Luiss-Guido Carli University. “Macron was supposed to be the spearhead of pro-European forces, if he himself is forced to challenge EU rules, Salvini and Di Maio will jump on that to push their contention that those rules are wrong.”

While we look forward to how Brussels will square this circle, markets are less excited.

Exhausted from lurching from one extreme to another following conflicting headlines, traders are already asking if “France is the new Italy.” The reason: the French OAT curve has bear steepened this morning with 10Y yields rising as much as ~6bp, with the Bund/OAT spread reaching the widest since May 2017 and the French presidential election. Though well below the peaks of last year, further widening would push the gap into levels reserved for heightened political risk.

As Bloomberg macro analyst Michael Read notes this morning, it’s hard to see a specific near-term trigger blowing out the Bund/OAT spread but the trend looks likely to slowly drift higher.

While Macron has to fight on both domestic and European fronts, he’ll need to keep peace at home to stay on top. Remember that we saw the 10Y spread widen to ~80bps around the May ’17 elections as concerns of a move toward the political fringe played out in the markets, and the French President’s popularity ratings already look far from rosy.

And just like that France may have solved the Italian crisis.

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Watch: Democrat Chuck Schumer shows his East Coast elitism on live TV

Amazing moment in which the President exhibits “transparency in government” and shows the world who the Democrat leaders really are.

Seraphim Hanisch

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One of the reasons Donald Trump was elected to the Presidency was because of his pugnacious, “in your face” character he presented – and promised TO present – against Democrat policy decisions and “stupid government” in general.

One of the reasons President Donald Trump is reviled is because of his pugnacious, “in your face” character he presented – and promised TO present – in the American political scene.

In other words, there are two reactions to the same characteristic. On Tuesday, the President did something that probably cheered and delighted a great many Americans who witnessed this.

The Democrats have been unanimous in taking any chance to roast the President, or to call for his impeachment, or to incite violence against him. But Tuesday was President Trump’s turn. He invited the two Democrat leaders, presumptive incoming House Speaker Nancy Pelosi, and Senate Minority Leader Chuck Schumer, and then, he turned the cameras on:

As Tucker Carlson notes, the body language from Schumer was fury. The old (something)-eating grin covered up humiliation, embarrassment and probably no small amount of fear, as this whole incident was filmed and broadcast openly and transparently to the American public. Nancy Pelosi was similarly agitated, and she expressed it later after this humiliation on camera, saying, “It’s like a manhood thing for him… As if manhood could ever be associated with him.”

She didn’t stop there. According to a report from the New York Daily News, the Queen Bee took the rhetoric a step below even her sense of dignity:

Pelosi stressed she made clear to Trump there isn’t enough support in Congress for a wall and speculated the President is refusing to back down because he’s scared to run away with his tail between his legs.

“I was trying to be the mom. I can’t explain it to you. It was so wild,” Pelosi said of the Oval Office meet, which was also attended by Vice President Pence and Senate Minority Leader Chuck Schumer (D-N.Y.). “It goes to show you: you get into a tinkle contest with a skunk, you get tinkle all over you.”

This represented the first salvo in a major spin-job for the ultra-liberal San Francisco Democrat. The rhetoric spun by Mrs. Pelosi and Chuck Schumer was desperate as they tried to deflect their humiliation and place it back on the President:

With reporters still present, Trump boasted during the Oval meeting he would be “proud” to shutdown the government if Congress doesn’t earmark cash for his wall before a Dec. 21 spending deadline.

Pelosi told Democrats that Trump’s boisterousness will be beneficial for them.

“The fact is we did get him to say, to fully own that the shutdown was his,” Pelosi said. “That was an accomplishment.”

The press tried to characterize this as a “Trump Tantrum”, saying things like this lede:

While “discussing” a budgetary agreement for the government, President Donald Trump crossed his arms and declared: “we will shut down the government if there is no wall.”

While the Democrats and the mainstream media in the US are sure to largely buy these interpretations of the event, the fact that this matter was televised live shows that the matter was entirely different, and this will be discomfiting to all but those Democrats and Trump-dislikers that will not look at reality.

There appears to be a twofold accomplishment for the President in this confrontation:

  1. The President revealed to his support base the real nature of the conversation with the Democrat leadership, because anyone watching this broadcast (and later, video clip) saw it unedited with their own eyes. They witnessed the pettiness of both Democrats and they witnessed a President completely comfortable and confident about the situation.
  2. President Trump probably made many of his supporters cheer with the commitment to shut down the government if he doesn’t get his border wall funding. This cheering is for both the strength shown about getting the wall finished and the promise to shut the government down, and further, Mr. Trump’s assertion that he would be “proud” to shut the government down, taking complete ownership willingly, reflects a sentiment that many of his supporters share.

The usual pattern is for the media, Democrats and even some Republicans to create a “scare” narrative about government shutdowns, about how doing this is a sure-fire path to chaos and suffering for the United States.

But the educated understanding of how shutdowns work reveals something completely different. Vital services never close. However, National Parks can close partly or completely, and some non-essential government agencies are shuttered. While this is an inconvenience for the employees furloughed during the shutdown, they eventually are re-compensated for the time lost, and are likely to receive help during the shutdown period if they need it. The impact on the nation is minimal, aside from the fact that the government stops spending money at the same frenetic pace as usual.

President Trump’s expression of willingness to do this action and his singling out of the Dem leadership gives the Democrats a real problem. Now the entire country sees their nature. As President Trump is a populist, this visceral display of Democrat opposition and pettiness will make at least some impact on the population, even that group of people who are not Trump fans.

The media reaction and that of the Democrats here show, amazingly, that after three years-plus of Donald Trump being a thorn in their side, they still do not understand how he works, and they also cannot match it against their expected “norms” of establishment behavior.

This may be a brilliant masterstroke, and it also may be followed up by more. The President relishes head-to-head conflict. The reactions of these congress members showed who they really are.

Let the games begin.

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