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(2022-23)
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Module Title & Code:
Student Number:
Assignment’s Full Title:
ASSIGNMENT DETAILS
7826 World Trade Law (2221_AUT)
40350911
The Language Of Article XXI GATT Allows WTO Members To
Cynically Impose Protectionist Measures In The Name Of National
Security.

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(excluding bibliography, but including footnotes)

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 The Language Of Article XXI GATT Allows WTO Members To Cynically
Impose Protectionist Measures In The Name Of National Security.

Introduction:

Unilateralism against globalisation and economic nationalism has been more prevalent recently. The
United States' trade policy actions that undercut the multilateral trading system's rules are the most
blatant and significant examples of this tendency. One category of these measures, trade restrictive
measures allegedly taken to safeguard national security, stands out as being particularly problematic.
Other WTO Members have recently enacted trade-restrictive policies that they have defended or
attempt to defend on the basis of national security concerns. While GATT Contracting Parties and WTO
Members exercised great caution in the preceding 70 years when justifying trade-restrictive measures
with the claim of national security, that restraint now appears to be a thing of the past. There has
been an increase in the use of the national security exemption, particularly the exception under Article
XXI of the General Agreement on Tariffs and Trade of 1994.

There has been an increase in the use of the national security exemption, particularly the exception
under Article XXI of the General Agreement on Tariffs and Trade of 1994.

The current national security exception was first included in the General Agreement on Tariffs and
Trade (GATT) of 1947 and has since been incorporated into WTO rules and the majority of other
significant Free Trade Agreements. However, the most common and frequently discussed national
security exception in international trade law is Article XXI of the GATT 1994. This provision states:

Nothing in this Agreement shall be construed:

 to require any contracting party to furnish any information the disclosure of which it
considers contrary to its essential security interests; or
 to prevent any contracting party from taking any action which it considers necessary
for the protection of its essential security interests
 relating to fissionable materials or the materials from which they are derived;
 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;
 taken in time of war or other emergency in international relations; or
 to prevent any contracting party from taking any action in pursuance of its obligations
under the United Nations Charter for the maintenance of international peace and
security.

Numerous WTO agreements, including the GATT of 1994, contain general and particular exceptions, as
well as carve-outs and exemptions from their required responsibilities. When compared to other trade
law exceptions, GATT Article XXI distinguishes out because it is "self-declaratory," according to a closer
analysis. Unlike other exceptions typically found in trade agreements, each WTO member is free to
determine what it considers to be its own "essential security interests" under Article XXI without
having to adhere to any kind of objective standard and to take whatever steps it deems necessary to
protect those interests. The main justification for Article XXI's inherent lack of impartiality is the
unwillingness of sovereign governments to submit their judgment of what they perceive to be in their
country's security interests to scrutiny by another authority (i.e. WTO Council or an arbitral panel). It is
obvious that there is a potential risk of abuse, which should not be disregarded. Until now, the
international trading system has avoided the controversy implied in reliance on this measure thanks to
a combination of prudence, restraint, and good sense.

It is abundantly obvious from a review of GATT/WTO instances where Article XXI has been cited that
this specific Article might serve as a "slippery slope" for abusive and/or protectionist trade restrictions.
For instance, Sweden used Article XXI to justify its implementation of a global import ban on certain
footwear in 1975. Sweden specifically indicated that a drop in domestic footwear manufacturing had
reached the stage of posing a "critical threat to the emergency planning of its economic defence,"
necessitating and fully justifying the imposition of an import ban. This broad application of Article XXI
seems somewhat problematic, and even more so when considering restrictions on the use of
exceptions found in Article XX (General Exceptions), which require that measures taken by a State not
be “applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination
between countries where the same conditions prevail, or a disguised restriction on international
trade.” Interestingly, the restrictions under Article XX don’t apply to Article XXI.

The GATT national security exception was available to GATT Contracting Parties of 1948 but was
explicitly invoked on few occasions and was seldom the subject of a legal dispute. Throughout the first
two decades of the WTO, its Members were equally cautious in invoking the national security
exception of Article XXI of the GATT 1994 and eager to avoid any related dispute or to settle such
dispute ‘out of court’1

In a different instance, the United States invoked Article XXI in 1985 to support measures that forbade
all imports of goods and services with Nicaraguan provenance as well as all exports from the United
States to Nicaragua. In this instance, the United States maintained that Article XXI left it up to each
contracting party to choose what steps were required to preserve its own fundamental security
interests. Nicaragua in response filed a complaint and requested a GATT Panel decision. The Panel was
unable to review the legality of the United States' use of Article XXI due to the terms of reference that
the United States successfully argued for. The process itself supported the common and still prevalent
belief that a GATT Panel cannot or simply does not have jurisdiction to review a State's decision to
invoke Article XXI, even though the Panel was critical of the U.S.'s actions and stated that a party
relying on the exception must weigh its need to do so against the more fundamental need for stable
trade regulation.

This period of self-restraint by GATT Contracting Parties and WTO Members for seven decades came
to an end in September 2016 with the filing of the first of seven national security cases. On September
14, 2016, Ukraine requested consultations with Russia regarding purported restrictions on transit
traffic from Ukraine through Russia to Kazakhstan and other countries. On March 21, 2017, the Traffic
in Transit (DS512) panel in Russia was formed. The fact that no fewer than seventeen WTO Members
participated in the panel proceedings as third parties plainly demonstrated the significance of this
dispute. The panel report was the first to examine the nature and scope of Article XXI's national
security exception. It became official and enforceable on April 26, 2019, when the WTO Dispute
Settlement Body accepted it.
______________________________________________________________

1
United States – The Cuban Liberty and Democratic Solidarity Act (DS38). In this dispute the European Communities, the
complainant, requested the panel to suspend the proceedings and subsequently reached an out-of-court understanding with
the United States on the implementation of the Helms-Burton Act. This understanding defused the dispute. For GATT
disputes in which the national security exception was raised but a panel ruling on the nature and scope of this exception was
deliberately avoided

Since the panel report in Russia - Traffic in Transit (2019) was adopted, a panel in Saudi Arabia -
Protection of IPRs (DS567), a national security case, circulated its report on June 16, 2020 2. In this
dispute, Saudi Arabia utilised the national security exemption under the TRIPS Agreement, or Article
73 thereof, in response to claims by Qatar that Saudi Arabia had broken its TRIPS Agreement
commitments by failing to protect the intellectual property rights of Qatari enterprises. The panel in
this instance closely adhered to the conclusions reached by the panel in Russia - Traffic in Transit
(2019), however, Saudi Arabia contested the panel's findings. This appeal is still unresolved, and the
DSB will not be able to adopt this report to make it final and legally binding because the Appellate
Body is currently paralysed as a result of the United States' block of the nomination of appellate
judges.

The panel proceedings are still going on in three other cases where the respondent has invoked, or is
anticipated to invoke, a national security exception, including United Arab Emirates - Goods, Services
and IP Rights (DS526) (complaint by Qatar), Japan - Products and Technology (Korea) (DS590)
(complaint by Korea), and US - Steel and Aluminium (DS544, 547, 548, 552, 554, 556 and 564)
(complaints by China, India 3. Although the panel reports that result from these ongoing proceedings
may also be appealed to the paralysed Appellate Body and never become final and legally binding4, US
- Steel and Aluminum is of particular importance 4. The significance of this case is demonstrated by the
presence of not one but seven complainants as well as the involvement of 22 more WTO Members as
third parties in the panel procedures. According to Section 232 of the Trade Expansion Act of 1962, the
United States levied higher customs taxes on steel and aluminium products due to national security
concerns. This cold war provision allows the US President to restrict the imports of products when an
investigation by the US Department of Commerce finds that these imports threaten US national
security5. Based on this finding, President Trump imposed in March 2018 the additional customs duties
on the imports of steel (25 percent) and aluminium (10 percent), which are the measures at issue in
US – Steel and Aluminium6.

_____________________________________________
2
Saudi Arabia – Measures Concerning The Protection Of Intellectual Property Rights Report Of The Panel
https://worldtradelaw.net/document.php?id=reports/wtopanels/saudiarabiaiprights(panel).pdf World Trade
Law 16 June 2020

3
The panel for Japan - Products and Technology (Korea) (DS590) was formed on July 29, 2020, but it is still
unoccupied. A panel was established in Qatar — Certain Measures Concerning Goods (DS576) (complaint by the
UAE), the fifth national security case filed since 2016, on May 28. However, the UAE informed the DSB on August
8 that it would continue to pursue its case because Qatar had withdrawn the relevant measures. WT/DS576/3

4
There were reportedly nine complainants, but Canada (DS550) and Mexico (DS551) withdrew their charges
after reaching an amicable resolution with the US. On November 21 and December 4, 2018, panels were created
for the remaining seven complainants. On January 25, 2019, the WTO Director-General assembled seven panels,
all of which have the same members. WT/DSB/M/421
5
Jaemin Lee, ‘Commercializing National Security: National Security Exceptions’ Outer Parameter under Gatt
Article XXI Special Issue on Revisiting Exceptions under International Economic Law’, (2018) Asian Journal of WTO
and International Health Law and Policy.

6
The American Journal of International Law Vol. 112, No. 3 (July 2018), pp. 499-504 (6 pages)

Conclusions:

How can a state keep its sovereignty to defend itself in genuine national security emergencies while
also preventing exploitation and the establishment of trade barriers for solely commercial or political
reasons? What is the best way for the global trade system to deal with this persistent problem? Is the
exception a necessary component of global trade law? Undoubtedly, there must be some exceptions.
The exception cannot be very restrictive since we cannot forbid actions that are required solely for
security concerns. On the other hand, we cannot make it so wide that nations would implement
measures that actually serve commercial or other goals while hiding behind the pretence of security.

There is no question that national security exceptions, such as those found in the GATT's Article XXI(b)
(iii), are essential to WTO law and that Members should have a lot of latitude in how these exceptions
are interpreted and applied. As Adam Smith stated earlier, national security touches on the
fundamental components of a state and is "of much more importance than opulence." However, the
risk of misusing the exclusions for national security is clear, particularly in the present moment of
aggressive economic nationalism, anti-globalism, and populist unilateralism. There are now many WTO
Members using national security exceptions, and the reason for this usage, raising major concerns
about misuse.

BIBLIOGRAPHY

1. The Use and Abuse of the National Security Exception under Article XXI(b)(iii) of the GATT 1994
WTI Working Paper No. 03/2020 by Peter Van den Bossche and Sarah Akpofure
2. P. Van den Bossche and W. Zdouc, The Law and Policy of the World Trade Organization: Text,
Cases and Materials (Cambridge University Press 2017)