WTO Issues Groundbreaking Decision On GATT National Security Exception

Author:Ms Ambassador Charlene Barshefsky, David J. Ross, Naboth van den Broek and Stephanie Hartmann
Profession:WilmerHale
 
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On April 5, 2019, a World Trade Organization (WTO) dispute settlement panel issued the first substantive WTO panel decision interpreting the "essential security" provision of the General Agreement on Tariffs and Trade (GATT 1994). The decision, which is still subject to appeal, has significant implications for other important disputes currently pending at the WTO—including the ongoing challenges to the steel and aluminum tariffs that the Trump Administration imposed under Section 232 of the Trade Expansion Act of 1962 and the challenge that Qatar is pursuing against the United Arab Emirates (UAE) in connection with the blockade imposed in 2017.

The dispute—Russia - Measures Concerning Traffic in Transit—arose following the serious deterioration of relations between Ukraine and Russia in February 2014. Between 2014 and 2018, Russia imposed a number of measures that restricted Ukraine from using transit routes across Russia for traffic destined for markets in Central Asia. Ukraine challenged the restrictions at the WTO on the grounds that they were contrary to Article V of the GATT 1994—which provides for freedom of transit—as well as various specific commitments of the Protocol of Accession of the Russian Federation to the WTO.

Russia responded by invoking the essential security provision of the GATT 1994, Article XXI, and in particular Article XXI(b)(iii), which provides that a WTO Member may take any action "which it considers necessary for the protection of its essential security interests taken in time of war or other emergency in international relations." This was the first time since the WTO's founding that a WTO Member had invoked the provision in a dispute. Thus, this was also the first time that a WTO panel had been asked to interpret the meaning of Article XXI, including the key questions of whether the phrase "which it considers necessary" means the provision is "self-judging" by the WTO Member invoking the exception, or whether other elements of the text of Article XXI qualify (and thus limit) the self-judging nature of the provision.

Russia asserted that Article XXI is self-judging and that the dispute involved obvious and serious national security matters that the WTO was not designed or equipped to handle. Thus, in Russia's view, its invocation of Article XXI meant the panel lacked jurisdiction to evaluate Ukraine's claims. The United States took a similar position as a third party participant, arguing that Article XXI is...

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