A Former Appellate Body Chair Argues WTO Members Have The Ability To Remove The Russian Federation From WTO Membership; Other Proposals To Strip MFN Benefits From Russia And Services Restrictions



Terrence P. Stewart | Current Thoughts on Trade

In my post on February 28, 2022, I reviewed actions in the U.S. and various other trading partners to impose additional export controls on goods going to Russia because of its invasion of Ukraine as well as a House bill to both strip normal trade relations from Russia and have the US seek to have Russia removed from the WTO. 

That same day, James Bacchus, a former WTO Appellate Body Chair, published an opinion in the Wall Street Journal indicating that WTO Members have the ability under Art. X of the Marrakesh Agreement Establishing the WTO to expel Russia from the organization if they have the will. Mr. Bacchus urges the United States to lead the effort to have Russia expelled from the WTO because of the unprovoked war started by Russia with Ukraine. Article X of the Marrakesh Agreement Establishing the WTO deals with amendments to the WTO and not specifically with removal of a Member. Mr. Bacchus’ piece is relying on language from Art. X:5 which states in part that “The Ministerial Conference may decide by a three-fourths majority of the Members that any amendment made effective under the preceding provision is of such a nature that any Member which has not accepted it within a period specified by the Ministerial Conference in each case shall be free to withdraw from the WTO or to remain a Member with the consent of the Ministerial Conference.” As recognized by Mr. Bacchus, the organization typically operates by consensus. Nonetheless, his opinion piece raises at least an approach that might be tried (propose an amendment to the WTO (e.g.. WTO membership is suspended at such time as the Member invades another WTO Member without UN authorization) and get Members to agree to vote on it and achieve 3/4 support).

In the U.S. Congress, the Chairman of the Senate Finance Committee, Senator Wyden of Oregon, issued a press release on March 1, 2022 which included some additional trade and finance steps that could be taken to increase the sanctions on Russia. Chairman Wyden’s list provides six additional steps that the U.S. should be taking to sanction Russia. The second deals with trade and is copied below.

” Second, we need to make sure tariff treatment of Russia reflects its pariah status. Permanent normal trade relations are extended to countries as they join the World Trade Organization (WTO) and agree to abide by rules that ensure a level playing field in international trade. Removing normal trade relations will raise tariffs on Russian goods and send a message that unprovoked invasions of a foreign nation will not be tolerated in any arena. In addition, Russia’s actions to throttle internet access and censor online content as a means to crush dissent and limit access to reliable information not only raise human and civil rights concerns, but also act as a barrier to trade. We must consider how trade tools can be used to address such digital authoritarianism by any actor.”

President Biden, in his state of the union address on March 1, 2022, indicated that the United States was joining the European Union and Canada in closing U.S. airspace to Russian aircraft. Such closure obviously restricts trade in some service sectors.

Some states and businesses are boycotting purchase of Russian goods.

It is clear that countries around the world will be ratcheting up sanctions on Russia and Belarus as Russia’s war in Ukraine continues to intensify. Much of the sanctions are finance-related but trade sanctions are a part and likely to become more important over time.

Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, Current Thoughts on Trade.

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