For seventy years, the security exception in the multilateral trade regime has mostly lain dormant. The exception first appeared in the General Agreement on Tariffs and Trade 1947 (GATT 1947), before being incorporated in the General Agreement on Tariffs and Trade 1994 (GATT 1994) upon the creation of the World Trade Organization (WTO).
However, security exceptions also exist in several other WTO provisions, including the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the General Agreement on Trade in Services (GATS).
Until recently, perhaps through a combination of WTO member restraint and fortu- itous circumstances, WTO panels have not had to make a definitive ruling on the meaning and scope of these exceptions. Yet, suddenly, the security exception lies at the center of multiple explosive disputes, posing a potential threat to the WTO’s very existence.
The text and history of the security exception reveal a longstanding recognition among GATT contracting par- ties, and now WTO members, of the highly sensitive nature of this exception. Members have traditionally refrained from bringing legal challenges against security-based measures and from invoking the security exception as a defense.
Current disputes involving not only recent tariffs imposed by the United States but also other trade restrictions imposed by the United Arab Emirates (UAE) and Russia break with this culture of restraint, raising the question of the extent to which the security exception is “self-judging.” Rather than forcing a WTO panel to rule on this contentious question, WTO members should collaborate more generally to resolve escalating chal- lenges to the international trading system.
Text and History of the Security Exception
Article XXI of the GATT 1994 states, inter alia:
Nothing in this Agreement shall be construed …
(b) to prevent any Member from taking any action which it considers necessary for the protection of its essential security interests …
(ii) relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military
establishment; [or]
(iii) taken in time of war or other emergency in international relations … .
Significant uncertainty surrounds this provision. A 1987 Secretariat note on Article XXI of the GATT 1947 recorded one case in which the GATT contracting parties had discussed measures taken under Article XXI(b)(ii) and eight in which they had discussed measures taken under Article XXI(b)(iii).
In addition, the Secretariat stated that in 1975 Sweden notified import restrictions on leather shoes, plastic shoes, and rubber boots “taken in conformity with the spirit of Article XXI.” At that time, Sweden explained that these import quotas rested on security grounds:
[Sweden’s] security policy … necessitates the maintenance of a minimum domestic production capacity in vital industries … to secure the provision of essential products necessary to meet basic needs in case of war or other emergency in international relations.
This passage, arising in the context of footwear, highlights how extensive the WTO security exception might be if read to encompass any industry that a WTO member might regard as necessary to “meet basic needs.” Other contracting parties “expressed doubts as to the justification” of Sweden’s measures under Article XXI, noting the lack of a “detailed economic justification” and the fact that they were introduced “at a time of high unemployment in their own countries.”
Nevertheless, the Swedish problem dissipated when Sweden later decided to terminate the quotas, at least with respect to leather shoes and plastic shoes.
Current WTO Disputes Involving the Security Exception
A series of WTO disputes involving the security exception has emerged in the last two years. The most advanced of these disputes is brought by Ukraine against Russian restrictions on traffic in transit from Ukraine to third countries via Russia. Ukraine alleges breaches of the “Freedom of Transit” provisions of GATT Article V. In response, Russia has invoked the security exception in Article XXI.
In 2017, Qatar requested the establishment of a panel with respect to “measures taken in the context of coercive attempts at economic isolation” allegedly imposed by the UAE against Qatar. Qatar brings claims under GATT 1994, GATS, and TRIPS, including under provisions regarding transit and nondiscrimination. The UAE contends that, pursuant to the security exceptions in these three agreements, it was “forced to take measures in response to Qatar’s funding of terrorist organizations.”
Additional disputes have arisen more recently in relation to the U.S. imposition of tariffs on steel and aluminum imports, under Section 232 (“Safeguarding national security”) of the Trade Expansion Act of 1962. Of the countries that export these products to the United States, only Argentina, Australia, Brazil, and the Republic of Korea are exempt from these tariffs, with Australia subject to monitoring in an undisclosed arrangement and the other three countries agreeing to import quotas of questionable WTO legality.
Nine countries have commenced WTO disputes against the United States in relation to these tariffs: China, India, Canada, the European Union, Mexico, Norway, Russia, Switzerland, and Turkey. In addition, the United States has commenced six disputes against retal- iatory tariffs imposed by Canada, China, the European Union, Mexico, Russia, and Turkey. WTO panels have already been requested in most of these fifteen disputes.
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