Turkish Law Blog

Pandora’s Box: GATT Article XXI Security Exceptions

Tan Albayrak Tan Albayrak/ Morris, Manning & Martin, LLP
11 April, 2019
526

The WTO has recently released its long-awaited panel ruling on DS512, a dispute between Russia and Ukraine concerning certain restrictions on traffic in transit.  As the respondent side defending its measures, Russia had invoked GATT Article XXI – the national security exception.  The reason why the outcome of this dispute was “long-awaited” is that the United States is also expected to invoke the same provision to defend its Section 232 tariffs on steel and aluminum in the disputes brought against it.  The functioning of Art. XXI up until this decision was somewhat of an unknown due to a lack of established jurisprudence.  Interpretations were limited to a handful of GATT-era disputes not fully on point as well as piecemeal documents from negotiating history and elsewhere.  Now, the Pandora’s Box has been properly opened for the first time.

Since the release of the Panel Report, there has been some confusion, especially in non-trade news outlets as to the favorability of this decision to a future United States defense.  The confusion seems to come from the fact that Russia, the party invoking the defense, has won the dispute.  However, this end-result does not mean at all that the United States has equal chances of successfully invoking the defense in the disputes against Section 232 tariffs.  On the contrary, the way the panel in Russia – Traffic in Transit (DS512) has laid out the functioning of Art. XXI strongly suggests that the United States is not likely to prevail on that defense. 

GATT Art. XXI(b) has three subparagraphs where a Member can justify a measure taken under the guise of national security.  It can properly do so if it considers necessary for the protection of its essential security interests

(i) relating to fissionable materials or the materials from which they are derived;

(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;

(iii) taken in time of war or other emergency in international relations

The U.S. Section 232 tariffs clearly do not fall within the scope of subparagraphs (i) and (ii).  Up until this decision that was recently rendered, while still a far stretch, the only wiggle room from the perspective of the U.S. was in subparagraph (iii) – the “other emergency in international relations” portion in particular.  Due to the catchall wording, as well as a lack of proper jurisprudence on Art. XXI, in defending its Section 232 tariffs the U.S. could have created dicta on the necessity of steel and aluminum tariffs for the protection of its essential security interests relating to some emergency in international relations.  What the panel in Russia – Traffic in Transit has done is to end that open-endedness by drawing clear lines as to what does and does not constitute an “emergency in international relations” for the purposes of GATT Art. XXI[1]:

Moreover, the reference to "war" in conjunction with "or other emergency in international relations" in subparagraph (iii), and the interests that generally arise during war, and from the matters addressed in subparagraphs (i) and (ii), suggest that political or economic differences between Members are not sufficient, of themselves, to constitute an emergency in international relations for purposes of subparagraph (iii). Indeed, it is normal to expect that Members will, from time to time, encounter political or economic conflicts with other Members or states. While such conflicts could sometimes be considered urgent or serious in a political sense, they will not be "emergencies in international relations" within the meaning of subparagraph (iii) unless they give rise to defence and military interests, or maintenance of law and public order interests.

An emergency in international relations would, therefore, appear to refer generally to a situation of armed conflict, or of latent armed conflict, or of heightened tension or crisis, or of general instability engulfing or surrounding a state. Such situations give rise to particular types of interests for the Member in question, i.e. defence or military interests, or maintenance of law and public order interests. (emphasis added)

The status quo and the geopolitical circumstances surrounding the United States are very different from that of Russia and Ukraine.  The panel deemed the situation in DS512 an “emergency in international relations” because it was “very close to the ‘hardcore’ of war or armed conflict.”  In support of this, it noted the UN General Assembly Resolution recognizing the situation as such[2].  While recognition by the UN is not necessary to make a showing of an emergency in international relations, the analysis of the panel makes it clear that there has to be a cognizable physical tension as described[3].  Without such showing, a Member invoking this exception will be held to an even higher level of scrutiny[4]:   

What qualifies as a sufficient level of articulation will depend on the emergency in international relations at issue. In particular, the Panel considers that the less characteristic is the "emergency in international relations" invoked by the Member, i.e. the further it is removed from armed conflict, or a situation of breakdown of law and public order (whether in the invoking Member or in its immediate surroundings), the less obvious are the defence or military interests, or maintenance of law and public order interests, that can be generally expected to arise. In such cases, a Member would need to articulate its essential security interests with greater specificity than would be required when the emergency in international relations involved, for example, armed conflict.  (emphasis added)

It is clear that the United States would not be able to make this articulation, as the facts surrounding simply do not permit it.  In the context of Art. XXI, what constitutes national security is somewhat of an objective determination.  Even in the near-impossible finding of the existence of an emergency in international relations, it is still unlikely that the U.S. would prevail on this defense because of Art. XXI(b)(iii) has a second requirement – that the measure is taken “in time of” the purported emergency.  This is a strictly temporal analysis[5].  Accordingly, the U.S. would not be able to argue that it is taking the Section 232 actions in anticipation of conflict either.

In addition to the substantive considerations above, the panel also accentuated Members’ general obligation of engaging in “good faith.”  This means that a panel will also review whether the Member (i) designated its essential security interests in good faith and (ii) whether its measure is “not implausible” in its relation to the protection of alleged security interests[6].  In public international law, it is generally not an easy task to make a showing of a lack of good faith.  However, the apparent hostility in current U.S. trade policy combined with the explicitness of the Administration in implementing it will surely be a factor that a panel examining Section 232 tariffs will consider.  Russia passed this test because the panel was convinced of the veracity of Russia’s designation of its essential security interests[7].  It also determined that the challenged transit bans and restrictions were not remote or unrelated to the 2014 emergency – which would have rendered Russia’s measures implausible for the protection of its essential security interests, thereby violating WTO rules[8]

In short, the panel has established that GATT Art. XXI is not entirely a “self-judging” provision.  With regards to the disputes against the Section 232 tariffs, the U.S. view has been that a WTO panel does not even have jurisdiction in the first place due to the chapeau of Article XXI(b) which allows a Member to take actions “which it considers necessary” for the protection of its essential security interests.  In addition to confirming the WTO’s jurisdiction to review, the panel decision of Russia – Traffic in Transit has also clarified that any discretion afforded by this national security exception is limited to circumstances that objectively fall within the scope of the three subparagraphs of Article XXI(b)[9]

The United States has taken actions against a group of countries including its allies in a conflict-free environment.  None of the facts in the context of the U.S. vis-à-vis those countries is similar to the case of Russia and Ukraine.  Thus, if future panels examining Section 232 tariffs follow the objective criteria set forth by DS512, it is almost certain that a U.S. defense for these tariffs under GATT Art. XXI would crumble.


[1] Panel Report, Russia – Traffic in Transit, paras. 7.75-7.76.

[2] UN General Assembly Resolution No. 71/205, 19 December 2016.

[3] See Panel Report, Russia – Traffic in Transit, paras. 7.136-7.137.

[4] Id. at para. 7.135.

[5] See id. at paras. 7.70 and 7.124-7.125.

[6] See id. at paras. 7.132-7.135 and 7.138-7.139.

[7] See id. at paras. 7.136-7.137.

[8] See id. at paras. 7.140-7.145.

[9] See id. at paras. 7.101 and 7.53-7.100.

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