Non-trade Issues in WTO: National Security

Transcript:Non-trade Issues in WTO: National Security:
Non-trade Issues in WTO: National Security Exception Mitsuo Matsushita Professor Emeritus of Tokyo University Former Member of WTO Appellate Body 1 WTO/GATT and Non-Trade Issues WTO aims at liberalizing trade and investment. However, there are areas in the economy where free trade would not create a good performance. Examples are: (1) national security which requires control of export, import, investment and transfer of technology, (2) environmental protection where an excess of activities of enterprises in free market generate negative impacts on the environment and, in this way, the deterioration of the conditions in which human beings have to exist; (3) the protection of human rights in which human dignity must be protected even at the cost of economic efficiency and (4) pandemic where all efforts must be centered on the combat to overcome it. In this presentation, the issues relating to national security is discussed. 2 GATT: XXI: National Security Provision The supreme value of a state is its existence. A state therefore has the right to take measures to safeguard its existence. GATT: Art. XXI recognizes this need and exempts activities of a state to protect itself from outside threats from the disciplines of WTO/GATT. All FTAs have provision similar to GATT: Art. XXI. GATT: Art. XXI(a)(iii) exempts from the GATT obligations any state action “taken in time of war or other emergency in international relations…” 3 Wide Scope of Discretion Under GATT: Art. XXI, contracting parties are given wide discretion when invoking measures. Parties can invoke Art. XXI whenever they deem that there is a situation that threatens its national security. Parties are authorized to decide what constitutes national security and therefore the judgment is largely reserved to the discretion of the party invoking it. However, the principle of good faith prevent contracting parties from abusing the discretion. For example, taking protectionist measure under the name of national security and unduly restricting import is prohibited. 4 The Russian Cargo Case (2019, WT/DS512/R) In relation to the War between Russia and Ukraine, Russia prohibited passage of Ukrainian goods designed to a third country through the Russian territory. Ukraine claimed that this measure amounted to an infringement of GATT: Art. V which guarantees the free passage of products of a contracting party destined to a third country through the territory of another contracting party. Russia denied the power of GATT to decide what the belligerents are and claimed that this