The Availability of National Security Measures under WTO Law and Options for Response

Executive Summary

(Summary of a project undertaken for Trade Law Bureau, Government of Canada)*

(Full report can be read here)**

The seventy years following the establishment of the multilateral trading regime with the GATT 1947 have seen very few invocations of national security exceptions to treaty obligations. Recently, this trend has begun to change. The use of Article XXI of the GATT 1994 has seen a significant upswing during 2017 and 2018. The current flurry of trade-distorting measures justified under the provision has made understanding the justiciability of a state’s invocation of a national security exception and the potential responses available to affected WTO Members a priority.

The University of Ottawa and Queen’s Trade Law Practicum Team undertook to survey the use of the national security measures by WTO Members since its inception, with a focus on the past two years. This project, completed for a government beneficiary, comprises of a memorandum with two principle parts. First, it sets out a legal framework for the interpretation of Article XXI of the GATT 1994 to provide guidance for assessing the legality of trade-distorting measures justified under the provision. Second, it provides a thorough analysis of the response options available to WTO Members by evaluating the benefits and drawbacks of each option from a legal, political, and policy perspective.

The first section of this memorandum begins with a description of the trade-distorting measures taken by Russia, the United Arab Emirates, and the United States, respectively, in three disputes currently before the DSB of the WTO. In each case, the Member instituting the measures has invoked the security exception provision of either the GATT 1994, GATS, and/or TRIPS. This section then undertakes an interpretative analysis of Article XXI of the GATT 1994 using the framework codified in sections 31 and 32 of the Vienna Convention on the Law of Treaties. This analysis informs the development of a legal framework to assess the legality of Member’s invocations of these national security exceptions by drawing upon: (i) the negotiating history of the security exceptions; (ii) a comparative analysis of the language of the security exceptions in the GATT 1994 and security exceptions found in other free trade agreements; (iii) statements and submissions by WTO Members in meetings and dispute settlement proceedings; and (iv) academic literature. This framework will address two essential questions: (i) is Article XXI is justiciable; and (ii) if so, what standard of review should be employed by the adjudicator?

The second section of this memorandum begins with an overview of how WTO Members have historically responded to invocations of security exception provisions. Then, an overview of each common response tactic is provided, including a discussion of: (i) treating trade-distorting measures as Article XIX Safeguard Measures; (ii) opting for a non-violation complaint to extract concessions; (iii) designing and implementing countermeasures to offset the trade distortion; (iv) responding with general international law countermeasures; (v) not formally responding to the measures; and (iv) resorting to diplomacy or domestic lobbying. Within the discussion of each potential response measure, there is an independent exploration of the associated legal, political, and policy benefits and drawbacks of each course of action.

The debate over the interpretation of national security exceptions speaks to the foundational balance between international legal obligations and state sovereignty. A recent Panel Report in Russia - Traffic in Transit provides guidance on the contours of Article XXI, though there are several ongoing and related disputes before the Dispute Settlement Body yet to be heard and a likely Appellate Body decision in the future. The resolution of these coming disputes has the potential to destabilize or re-invent the post-war multilateral trading regime. Whatever the outcome, developing a framework for assessing the legality of invocations of national security exceptions and an understanding of response options is essential.

The full report can be read here.

*Image Credit: AFP/Getty Images

** The contents of this submission are solely the views of the authors and should not be interpreted as being the work product of the Department of Justice or as reflecting the views of the Trade Law Bureau or the Government of Canada

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