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The WTO Panel Ruling on the National Security Exception: Has the Panel ‘Cut’ the Baby in Half?

Published on April 12, 2019        Author: 
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Recently, media attention has been captured by the unravelling trade war between the declining western hegemon and the rising eastern mega-power with other discussions, such as the reform of the WTO dispute settlement system, reflecting the points of the growing divergence between the two.

Against this backdrop, the  Russia – Traffic in Transit (DS 512) dispute between Ukraine and the Russian Federation would not have attracted attention if not for one tiny detail: the Russian Federation invoked the national security exception contained in Art. XXI of the GATT. Pandora’s Box has been opened. The WTO panel found itself in a tricky situation. Amidst the severe crisis, which threatens the very existence of the WTO dispute settlement system, the panel entered murky legal terrain – adjudication of the trade measures related to national security. The national security clause had never been interpreted before – for good reason.

This post is an attempt to briefly reflect upon the panel’s ruling on the contentious issue of the national security exception. I begin by outlining the historical context of the recent transit dispute. The post then summarizes the legal claims brought by Ukraine and the justifications raised by the Russian Federation. Subsequently, the findings of the panel are discussed. The conclusion delves into the potential implications of the present decision.

In a number of the ongoing trade disputes, the parties have expressed their desire to rely upon the national security exception. The present ruling will be likely celebrated by the WTO Members that have brought legal claims against the additional steel and aluminium tariffs imposed by the United States (Section 232 tariffs). In a nutshell, if the panel’s ruling is not appealed, especially in the part pertinent to the objective review of the subparagraphs (i)-(iii) of Article XXI, then the United States national security justification in those disputes would not stand the scrutiny.

It appears, though, that the panel’s findings do not shed much light on how to resolve the unfolding trade conflict between Qatar, the United Arab Emirates and Saudi Arabia. (DS526, DS567 and DS576) The tension between these countries has a more political flavour and is not easily regarded a mere protectionism under the guise of national security. Read the rest of this entry…