WTO Dispute on the US Human Rights Sanctions is Looming on the Horizon

At the turn of the year, Venezuela initiated a WTO dispute with the United States. In a nutshell, Venezuela questions WTO-consistency of a number of coercive trade-restrictive measures (economic sanctions) imposed by the United States. Some of those restrictions were allegedly imposed on the human rights grounds.

US sanctions against Venezuela

The United States has been consistently imposing trade-restrictive measures against Venezuela, yet none of them has ever been challenged at the WTO. Most likely, the last wave of such restrictions is a spark that lit the fuse. In recent years, the Trump Administration introduced additional restrictions on Venezuela’s financial sector, leaving the country’s finances in shambles, as well as sanctions directed against the country’s gold sector. According to the media reports published in January 2019, the United States considers even tougher sanctions, particularly the ones that can impede Venezuela’s oil industry.

Human rights sanctions against Venezuela

The United States is notorious for its practice of economic coercion, which has been debated at length within the international community. Economic measures imposed to promote human rights entered the US foreign policy agenda under President Carter. In the following decades, the US has made ample use of them. 

In December 2014, the US Congress enacted the Venezuela Defense of Human Rights and Civil Society Act of 2014. The enactment of the act was triggered by a number of events, particularly by the deteriorated living standards and the violent crackdown on the anti-government protesters. The act authorizes the President to impose various targeted sanctions, – sanctions against current or former government officials responsible for acts of violence or serious human rights abuses against protesters. The ambit of such sanctions includes blocking of assets of the designated individuals as well as travel restrictions. In pursuit of its authority, President Obama declared the national emergency in respect of the situation in Venezuela and issued an Executive Order 13692 of March 8, 2015, which implements the aforesaid human rights sanctions.

The alleged WTO-inconsistency of the human rights sanctions

In its request for consultations Venezuela contends that the Venezuela Defense of Human Rights and Civil Society Act of 2014 along with its implementing regulation, – Executive Order 13692, violate the following provision of the WTO covered agreements:

• Article I:1 of the GATT 1994 (Most-Favoured-Nation Treatment);
• Article III:4 of the GATT 1994 (National Treatment);
• Article V:2 of the GATT 1994 (Freedom of Transit);
• Article XI:1 of the GATT 1994 (General Elimination of Quantitative Restrictions), or alternatively Article XIII:1 of the GATT 1994 (Non-discriminatory Administration of Quantitative Restrictions); and
• Article II:1 of the GATS (Most-Favoured-Nation Treatment).

The possible justifications: public morals vs. national security

With this factual context sketched, it might be worthwhile to briefly discuss the most plausible justifications the United States can invoke under the GATT 1994 and the GATS. It appears that these justifications are the public morals exception and national security clause. In the author’s view, each of these exceptions might fall short of justifying unilateral human rights sanctions for the reasons discussed below.

Public morals exception

The WTO jurisprudence, in which the public moral exception was discussed, exemplifies the tribunal’s attempt to leave an open-ended definition of what falls into the definition of “public morals”. Despite such unfettered discretion in defining the ambit of “public morals”, it is qualified by the necessity requirement (“necessary to protect”) and the test under the chapeau of Article XX.  

The previous jurisprudence introduced the following standard to evaluate measure’s necessity: “a necessity analysis involves a process of “weighing and balancing” a series of factors, including the importance of the objective, the contribution of the measure to that objective, and the trade-restrictiveness of the measure.” Moreover, a challenged measure and possible alternatives ought to be compared (Appellate Body Reports, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, p 7 para. 5.169). 

If human rights sanctions pursue the objective to promote human rights abroad, the question that springs to mind is whether the public morals exception can justify outwardly-directed measures. In other words, if a WTO member can impose its public moral standards outside of its jurisdiction. This vexed question has been amply discussed by the legal scholars, yet has not been clarified by the WTO adjudicators.

Another intricate issue is how to examine the contribution of human rights sanctions to achieving a pursued goal. To put it differently, what is the appropriate benchmark for such evaluation: evidence that a targeted state experience economic hardship or an enhanced human rights record. The requirement to demonstrate that economic sanctions improve human rights record abroad goes against the grain of the evidence gathered by social scientists. It suffices to say that the effects of human rights sanctions might be difficult to predict, especially in a short term.  

One cannot help noticing that even a brief analysis indicates a number of intricacies related to public morals justification.

National security exception

Let’s turn to the national security exception. Few scholars have already debated whether the national security clause can be relied upon to justify human rights sanctions. One example being, Sarah Cleveland in her article on the subject published in 2002.

Recently the security exception has been invoked by the Russian Federation in an ongoing dispute with Ukraine (DS512) and by the United Arab Emirates in a dispute with Qatar (DS526), yet neither a panel nor the Appellate Body has ever adjudicated it. In the midst of the heated debate on the ambit of the national security clause, more specifically Article XXI(b)(iii) of the GATT 1994, the dispute between Venezuela and the United States can be of significant interest.

The United States is of the view that the invocation of the national security clause is a non-justiciable matter. Thus, following this logic, the clause is completely self-judging and both panels and the Appellate Body are incompetent to review its invocation. This view does not reflect the prevailing international sentiment in this regard. While there is much to quibble about when it comes to the national security and the competence of the WTO adjudicators, we should leave this debate for the time being.

To justify WTO-inconsistent human rights sanctions under the security clause, – specifically Article XXI(b)(iii), a member ought to demonstrate that these measures are necessary for the protection of its “essential security interest” and that they were “taken in time of war or other emergency in international relations”.

The intricacy of defining what constitutes “essential security interests” has been well captured by Thomas Cottier and Panagiotis Delimatsis: “The agreement requires a qualified interest in the absence of which restrictions cannot be imposed. While military security, for instance, can generally be deemed essential, non-military security can equally be regarded as essential due to new threats and technologies. Of course, not any non-economic military or political motive can be considered essential.” To argue that protection of human rights abroad meet the threshold of “essential security interest” might be an ambitious goal to achieve.

The concept of “emergency” is not firmly entrenched in international law and its content remains undefined. The textual interpretation does not provide an unambiguous interpretation. The context reveals that “other emergency in international relations” covers not only military conflicts, but also other tensions between states. The subparagraph (iii) explicitly mentions “war” and if the term “emergency” is interpreted to cover only military conflicts, then the prerequisite “other emergency in international relations” becomes redundant. This interpretation stands in sharp contrast to the view of the Appellate Body that “an interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility” (Appellate Body Report, United States – Standards for Reformulated and Conventional Gasoline, p. 3 (n 128) p. 23).

Notwithstanding the fact that “other emergency in international relations” can be interpreted as to include emergencies of a non-military character, it does not entail that violations of human rights abroad can easily fall under this exception. Seen this way, justification under the national security exception appears rather inconceivable.

The author would not like to sound like a prophet of doom and blithely dismiss any possibility to justify WTO-inconsistent human rights sanctions under the discussed exceptions, yet such possibility should be taken with a grain of salt.