1 Introduction and Background
Currently, international trade is witnessing export controls that are being instituted in the name of national security. The European Union (EU), United States (US), United Kingdom (UK) and others in light of Russia-Ukraine war have banned the export of certain items to Russia that include dual-use goods such as semiconductors, microcircuits, specific computers and software, lasers, sensors, marine and aerospace systems.1 Russia has also retorted by imposing countersanctions in the form of export ban of around 200 products such as telecom, medical, vehicle, agricultural, and electrical equipment, as well as some forestry products on about 48 countries including US and EU.2 The existence of an armed conflict may provide the context to justify above-mentioned export bans through seeking recourse to Article xxi General Agreement on Tariffs and Trade (gatt). It could be argued that on this occasion these export restrictions are firmly embedded in international peace and security. However, it may be noted that in the recent past export restrictions have also been imposed in circumstances that bear no connection with an armed conflict, situation of war, public order, territorial sovereignty but are nevertheless couched in national interest and security terms. For instance, US comprehensively tightened its export control regime through the Export Control Reform Act of 2018. This legislation has been successfully utilised to limit Chinese technology giant Huawei’s access to semiconductor chips made with US technology on national security grounds.3 Japan has also restricted exports of fluorinated polyimide, resist polymers and hydrogen fluoride, and
With the above background, the question that arises is whether gatt Article xxi accommodates concerns that go beyond military threats. Such threats may include a wide variety within the ambit of “new national security”8 such as
In the past, the gatt Article xxi was seldom utilised by Members and such an approach reflected goodwill and their unwavering support to the wto/gatt framework. However, the genie was let out of the bottle with Donald Trump’s presidency as he aimed to counter the rise of China’s economic might by utilising the national security argument to justify trade restrictions.10 It is projected that trade restrictions, especially export restrictions, may be increasingly couched in national security terms where Members would seek to protect their own economic interests by exerting their own understanding of security in the wto. In addition, geopolitics has an important impact on security considerations. The current geopolitical dynamic central to the security debate is characterised by the rise of China on the world stage. The liberal Western democracies have expressed concerns about China’s meteoric rise as they note that China rejects liberal norms embraced by democracy in Europe and US.11 It is submitted, that this geopolitical dynamic will most certainly play out in the wto and the adjudicatory mechanism of the wto12 will then
Following the introduction, section 2 presents the legal framework offered by ecl and are in a comprehensive manner as it is pertinent for the rare earths sector. More specifically, this section considers the question of how the tandem operation of ecl and are offers the legal basis to China to restrict the exportation of rare earth on grounds of resource security. In seeking out this question, this section also engages with the idea that resource security is considered as a matter of national security in China pursuant to the Overall National Security Outlook, which includes within its scope both traditional and non-traditional security issues.15 Section 3 presents a thorough analysis of gatt Article xxi and critically considers Russia – Measures Concerning Traffic in Transit (Russia – Traffic in Transit) and Saudi Arabia – Measures Concerning the Protection of Intellectual Property Rights dispute (Saudi Arabia– Intellectual Property Rights).16 This detailed discussion allows the chapter to answer the
2 China’s Export Control of Rare Earths
China is a major supplier of rare earths, that are widely deployed in defence, automotive, electronics, renewable energy industries. Japan, US and Netherlands are the three major importers of rare earths from China.17 Almost 90% of rare earths production is controlled by China and it has emerged as the technological leader in the processing of the element.18 China was successful in taking over the leadership position in production from the US in the rare earths market simply because it could access cheap labour and had the advantage of lower environmental protection standards.19 Two new developments in China are of interest in context of rare earths which include: i) ecl passed by the Standing Committee of the National’s People Congress that came in force in December 2020, and ii) are which was circulated for public comment on 15 January 2021 by Ministry of Industrial Policies and Regulations and Ministry of Information Technology.
2.1
As mentioned above, ecl has been put in place to enhance and regulate export control to safeguard national security and interests, and performance of anti-proliferation and other international obligations. It applies to controlled items that include dual-use items, military items, nuclear items and other goods, technologies, services, and items relating to the national security and national interests.20 Through this comprehensive law, China has implemented a unified export control system that is overseen by the State Export Control Administrative Departments (Departments of the State Council and the Central Military Commission) by making control lists, directories, and catalogues (collectively referred to as “Control Lists”), and implementing export licensing.21 are is specifically formulated to ensure rational development and utilization of rare earths resources, promoting the sustainable and sound development of the rare earths industry. This proposed regulation utilises management approach to the rare earths sector with the intention of protecting environment and ensuring resource security for Chinese domestic industries.22
2.2 Export Control Law and National Security
Article 1 of ecl spells out clearly that the objective of the Law is to safeguard national security and interest. This provision also clarifies that the controlled items include within its ambit technical information and data related to the items. Currently, no control list has yet been published and thus the question that remains open is whether rare earths will feature on such a list. This delay in the publication of such a list is not unusual as most lists that accompany Laws in China are published after some time has elapsed.23 Article 9 is particularly important provision as it provides that the State Export Control Administrative Departments may exercise temporary control over any goods, technologies and services outside the export control lists if required for the maintenance of national security and interest. This provision provides usually wide discretion to go beyond the controlled list which has a broad coverage to
Both terms, national security and interests that feature in the above-mentioned key provisions remain undefined. It is not surprising that both the terms national security and interests, which are at the core of this law remain undefined, because that leaves room for diverse and broad interpretations. The interpretation of national security may range from purely traditional threats of security that affect the integrity of the State such as armed or military conflict and appeals to the State’s right of self-defence situation brought about by grave danger that threatens its existence.25 It may also include a broader array of threats or risks which extend beyond preservation of territorial sovereignty and includes concern for public welfare and order and health, property, environment, and includes matters of economic interest.26
The question that arises is what are the various interests that may be relevant under national security within the meaning of ecl? In the past, defending the Chinese Communist Party rule and enhancing social stability, promoting economic development and opening to the world has been identified as a part of core national security strategy.27 In the present context, China’s national security interests encompasses broad issues such as, strengthening the Party’s centralized and unified leadership over national security work, protection of Chinese overseas investment, securing maritime integrity, deepening energy and resource security, extending control of space and cyberspace resources, protection for maintaining industries, and shaping a world order conducive to its development.28 To gain a bit more insight into the China’s national security strategy it is imperative to trace back to President Xi Jinping’s speech, on 15 April 2014, which he gave while presiding over the first meeting of the Central
The onsc was also reiterated by Xi in 2017 when he called for its implementation and highlighted that national security and development are deeply intertwined with each other.32 An earlier speech made in 2015 by Xi also captures the position well where he had remarked that “security and development are two sides of the same issue, two wheels in the same driving mechanism. Security guarantees development, and development is the goal of security”.33 His statements reflect a more assertive posture of reinforcing security to promote development. At the National Cybersecurity and Informatization Work Conference, Xi highlighted that cybersecurity and informatization are focus areas for security.34 Promoting breakthrough in core technologies and active
2.3 Intersection of ecl and are
The most striking element of are is the articulation of the legislative purpose with particular focus on sustainability, ecological environment, and resource security. Article 1 of are refers to resource security, which as indicated above has been considered within the broader ambit of China’s national security strategy. It is important to note that are expressly invokes the application of ecl. Article 15 provides for the applicability of ecl to export enterprises. Article 15 stipulates that the rare earth import, and export enterprises shall comply with laws and regulations on foreign trade, export control.43 This short provision is quite potent as it subjects the rare earths to the export control policies and control measures detailed under ecl. In this respect, the State Council and the Central Military Commission (collectively referred to as the State Export Control Administrative Departments or secads) may prohibit the export of rare earths if required for the maintenance of national security and national interests.44 ecl also prescribes specific licensing procedures and processes to implement export control of items that are on the controlled list or subject to temporary control. Export operators shall apply for the license to the secads.45 Overall, the State is responsible for implementing the licensing system for exports.46 When an export application is made, secads will review the export operator’s application and consider
While ecl may be seen as China’s response to export controls adopted by the US against Chinese companies, through are China wants to regulate the rare earths sector more comprehensively to address environmental concerns and plan adequately for rare earths production and domestic utilization. are reflects a change in position where China is not satisfied with simply being an exporter of rare earths that has pollution consequences for the country without any real benefit for its value-added sector. As Xi has remarked, “innovation-driven growth has become the pressing demand for China’s development”.49 Once the extraction and processing of rare earths is limited considering sustainability and environmental concerns outlined in are, the resource will inevitably be reserved for domestic industries. Rare earths are an important resource for China as it is an important input for many crucial industries (electronics, steel, vehicles etc). Equipment’s such as wind turbines and hybrid electric vehicles that use nickel-metal hydride batteries requires the crucial input of rare earths, and China has set its ambition to lead the green technology sector. In this context, there is an economic and social, ecological dimension that is at play. Based on the enforcement of ecl and are, and China’s current national security strategy, the case for export control in the favour of rare earths for ensuring resource security for its domestic industries can be made. The justification is that it is crucial for the country’s economic and
It is not the first time that economic development has been argued as a matter of national security. US equates security with self-sufficiency and competitiveness.52 Perusal of US’s legislative development reveals that economic welfare of the domestic industries has been linked with national security.53 The Trump administration advocated vehemently for the protection of industries as a matter of national security. The US Department of Commerce conducted multiple investigations under Section 232 (c) of the Trade Expansion Act of 1962 to determine if certain imports threaten to impair national security.54 During the investigation for steel and aluminium, both current and
While the rationale of resource security remains central to are, it is argued that ecl along with are is setting the legal ground for Chinese authorities to counter export control regimes such as that of the US which have targeted leading Chinese companies. US has also revoked China Telecom’s licence citing national security concerns.57 China has had a turbulent relationship with the US in the past three years over restrictions over Huawei Technologies Co., the Semiconductor Manufacturing International Corp., etc. China has not ruled out the possibility of using rare earths as leverage tool in the US trade war initiated under Trump administration on the basis of national security.58 The current Biden administration does not take a dramatically different sentiment towards China than its predecessor and it is not likely that trade disputes will abate.59 The proposal that China may use ecl and are to impose
3 Consideration under wto Law
3.1 Introducing gatt Article xxi
China may restrict exports of the rare earths through several measures such as export duties, a ban, instituting an export quota, minimum export price requirement, discretionary and non-automatic licensing system. China is most likely to invoke the national security exception under gatt Article xxi if a complaint is made by Member(s) of the wto to defend ecl and are. gatt Article xxi allows Members to adopt measures inconsistent with the any of the provisions of the agreement against other Members for the purpose of security. gatt Article xxi provides regulatory autonomy to the wto Members to address a matter of (i) national security information; (ii) nuclear material; (iii) military goods and services; (iv) war or other emergency in international relations; and (v) UN Charter Obligations. The Article allows opportunity for a wto member to maintain any gatt inconsistent measure to address national security provided the measure in question meets the above stipulated requirements. Security exception also appears in Article xiv bis of the General Agreement on Trade in Services (‘gats’) only with modulation to
I think there must be some latitude here for security measures. It is really a question of balance. We have got to have some exceptions. We cannot make it too tight, because we cannot prohibit measures which are needed purely for security reasons. On the other hand, we cannot make it so broad that, under the guise of security, countries will put measures which really have a commercial purpose. We have given considerable thought to it and that this is the best we could preserve that proper balance.65
It has also been argued that national security exception under gatt is self-judging which means the exception allows a Member State to evaluate what “it considers necessary for the protection of its essential security interests”. What the phrase self-judging means is that the exception is not reviewable by the panel and the ab66 or that it is not ‘justiciable’. The “self-judging” approach in context of Article xxi (b) is supported by the US, uae, Bahrain, Saudi Arabia, and Egypt.67 The problem with the self-judging approach is that it leaves the
3.2 Scope of Application of gatt Article xxi and Export Duties and Charges on Rare Earths
A brief discussion on the scope of gatt Article xxi is instructive considering the possibility that China may impose export duties on the rare earths. There is limited interpretative extrapolation on the scope of gatt Article xxi as opposed to Article xx entitled “General Exceptions”, but the interpretive approach adopted under the latter provision is relevant and instructive. Article xx allows under specific conditions from the gatt obligations and other wto Agreements provided it has been explicitly incorporated by reference. In addition, whether gatt Article xx can be utilised to justify inconsistency, for instance with obligations under the Accession Protocol, has been clarified through various cases such as China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (China – Publications and Audiovisual Products),70 China – Export Duties on Certain Raw Materials (China-Raw Materials)71 and China – Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum (China-Rare Earths).72
Taxes and Charges Levied on Imports and Exports
3.China shall eliminate all taxes and charges applied to exports unless specifically provided for in Annex 6 of this Protocol or applied in conformity with the provisions of Article viii of the gatt 1994.
This implication of this paragraph is quite clear in light of China – Rare Earths and China – Raw Materials which is that China cannot subject a rare earth to export duty or charge unless a particular form of rare earth appears on Annex 6 and if it does it may not be subject to more than what has been stipulated in the Annex. There is nothing in the language of paragraph 11. 3 of Protocol of Accession that suggests that gatt Article xxi is available to China by way of an exception. Therefore, if China was to impose export duties on rare earths inconsistent with its obligations under the Protocol of Accession, then gatt Article xxi would not be available as an exception. The important message is that China’s Protocol of Accession has created more onerous obligations for China compared to other wto members, and this restricts their ability in terms of maintaining export restriction in the form of duties aimed at rare earths management.78
3.3
As mentioned above, gatt Article xxi provides the possibility for the wto members to maintain trade restrictive measures that they may consider necessary to protect their “essential security interests”. Interestingly, “security” has not been defined under the gatt and thus what constitutes a matter of security remains a matter of interpretation. It may be noted that “national security emergency” or “security emergency” clauses appear as open-textured phrases in other treaties too. The China–Australia Free Trade Agreement incorporates gatt Article xxi and Article xiv bis, mutatis mutandis, in Chapter 16.79 For example, a similar construction of gatT’s essential security exception is to be found in Article 32.2 of the Agreement between the United States of America, the United Mexican States, and Canada.80 In this agreement “essential security” remains undefined but also includes “maintenance or restoration of international peace or security”. A similar undefined “essential security” phrase is also found in Argentina–US bit.81
In context of the wto, during discussions in the Geneva session of the Preparatory Committee, drafters of the original Draft Charter had contemplated the challenges associated with the lack of definition of security. The drafters highlighted that a broad interpretation allows that the possibility of restrictive measures to be justified through reasoning that can be connected to security interest. This would mean that anything under the sun could be cited as a matter of security interest. Such a broad approach has the potential of justifying measures that were for the purpose of “protection for maintaining industries under every conceivable circumstance” which has been considered as problematic.82 At the same time, the drafters also contemplated against
It may be recapitulated that Article 21 of the nsl refers to utilization and protection, management and control of resources. It also seeks to ensure the sustainable, reliable, and effective supply of resources and energies required for economic and social development.84 The straightforward articulation by China would be based on the fact that rare earths are an important input for critical industries and thus important for economic reasons. Rare earths are an important commodity for value added downstream sectors which is important for reinforcing their industrial base and thus resource security may simply be articulated as a matter of security interest.
In addition to the above, China can reinforce the security argument by seeking recourse to climate change agenda which has been in the recent past argued as a matter of security.85 China may pursue the argument that rare earths constitute an important input for the manufacturing renewable energy sector products which ultimately will contribute to address environment and broader climate change issues. China has recently announced its ambitious carbon reduction targets and export restrictions on rare earths may be argued as a tool to achieve these goals.86 are has a clear management focus for the purpose of rational development and utilization of rare-earth resources and protecting ecological environment.
It is to be recognised that are reflects the intention of China of trying to tackle the environmental impact of rare earths mining. Therefore, drawing
The above line of argumentation also finds basis in the sovereignty argument by virtue of which every nation has an inherent right to exploit its
3.3.1 The Subparagraphs Are Limitative
- (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 relation; or
But if one considers the logical structure of the provision, it is apparent that the three sets of circumstances under subparagraphs (i) to (iii) of Article xxi(b) operate as limitative qualifying clauses; in other words, they qualify and limit the exercise of the discretion accorded to Members under the chapeau to these circumstances.100
The Panel further clarifies that the subparagraphs establish alternative (rather than cumulative) requirements that the action in question must meet for it to fall within the ambit of Article xxi(b).101 The structural construction of the Article xxi with the chapeau and the subparagraphs is a classic example of purposive enumeration that qualifies measures that can be taken by wto Members. The construction of the provision reflects conscious design. One may argue that the subparagraphs set out a list of exceptions and hence the grounds are limited and exhaustive.102 Further, the close relation between the chapeau and the paragraphs of Article xxi (b) is manifested by opening phrases of the subparagraphs. Subparagraphs (i) and (ii) opens with the phrase “relating to” and subparagraph (iii) “taken in time of”. Specific to subparagraph (i) and (ii) dictionary meaning of relate means to “show or make a connection between two or more things”. The ab in US- Shrimp interpreted “relating to” in Article xx(g) as “close and genuine relationship of ends and means” between the measure and the end pursued.103 Also, in China-Raw Materials, the ab defined the term as “hav(ing) some connection with, be(ing) connected to”.104 Applying the understanding from the dictionary meaning and the ab jurisprudence on “relating to” it emerges that any Member may take measure which it considers necessary for the protection of its essential “security interest” provided it
3.3.2 The Qualification of “Essential”
While the Members are free to define what it considers to be “essential security interests”, not every interest is one that relates to the security of a nation, nor will every security interest qualify as being “essential”.105 The panel in Russia – Traffic in Transit has clarified that “essential security interests” is a narrower concept than “security interests” and concerns “those interests relating to the quintessential functions of the state, namely, the protection of its territory and its population from external threats, and the maintenance of law and public order internally”.106 While the Panel clarified that this narrow clarification is not a rigid one and that the specific interests may depend on situations perception and changing circumstances,107 but only dangers of terrorism and extremism were accepted consistent with the formulation described above.108 The Panel stipulates that the Members are not free to elevate any concern to that of an “essential security interest”.109 For instance, a trade interest cannot simply be re-labelled as an “essential security interest” by a Member to release itself from the obligations under the “reciprocal and mutually advantageous arrangements” of the wto.110 It is a settled position that military security is considered essential but it remains unclear whether the ever changing nature of threats that are non-militaristic in nature can also be considered essential. To some extent the Panel has clearly drawn limits on the scope of what can be considered essential. Ultimately, whether a certain interest qualifies as essential will be assessed by Panel and the Appellate Body taking into account all the circumstances of the case at hand and may ultimately be linked to the enumerated sub-paragraphs of Article xxi (b).
3.3.3
- i.the importance of the societal value pursued by the measure;
- ii.the extent to which a measure contributes to the realization of the end pursued; and
- iii.
the extent to which the measure in question produces trade restrictive effects115
The above prescription has been referred to as the least restrictive measure test which means that if an alternative measure that is less trade restrictive and is reasonably available with an equivalent contribution116 to the measures that the measure in question will fall short of the “necessary” requirement. The ab has also clarified that an alternative means is not “reasonably available” if it is “merely theoretical in nature and does not achieve the desired level of protection”.117 The jurisprudence regarding necessity available under gatt Article xx disputes may be instructive, albeit in a limited manner, in informing interpretive matters that arise in gatt Article xxi. This is for the reason that the word “necessary” in gatt Article xxi is different from the context of the same word in gatt Article xx.118 It has been argued that the presence of “which it considers” in the provisions extend the Members discretion not only to the determination invoking Member’s essential security interests, but also to the necessity of the measures for the protection of those interests.119
The Panel in Russia – Traffic in Transit case has clarified the rubric of necessity by way of two important points. First, the Members must sufficiently articulate the “essential security interests” that it considers the measures at issue are necessary to protect. Second, for a measure to be necessary under gatt Article xxi, it must “meet a minimum requirement of plausibility in relation to the proffered essential security interest, i.e., they are not implausible as measures protective of these interests”.120 Arguably, the approach of “minimum requirement of plausibility”121 could be effective in tackling interests of
It is interesting to note that the above two-point evaluation was utilised to the full extent by the Panel in the more recent Saudi Arabia – Measures Concerning the Protection of Intellectual Property Rights dispute,123 where inadequate protection of intellectual property rights held by or applied for entities based in Qatar was challenged.124 With respect to the first point regarding the formulation of the “essential security interests”, the Panel stipulated that the purpose of this part is simply to assess whether the challenged measures are related to the interest indicated. Only a “minimal satisfactory” standard is applied to this effect.125 The Panel accepted Saudi Arabia’s articulation of the “essential security interests” as they relate to quintessential functions of the State.126 The standard of plausibility which explores the connection between the measures and essential interests set forth by Russia – Traffic in Transit was applied by the Panel in Saudi Arabia true to its spirit. In conclusion, the Panel found that the measures, that directly or indirectly, prevented beIN Media Group llc from obtaining Saudi legal counsel to enforce its ip rights through civil enforcement procedures before Saudi courts and tribunals meets the requirements of trips Article 73(b)(iii).127 The Panel recognised that Saudi’s umbrella policy of ending or preventing any form of interaction with Qatari nationals and access to civil remedies through Saudi courts (anti-sympathy measures) was plausibly directed to protect Saudi population and citizens government institutions, and its territory from the threats of terrorism and extremism.128 The Panel clearly remarked that the “anti-sympathy” measures “met a minimum requirement
3.3.4 The Scope of “Emergency in International Relations”
An ‘emergency’ occurs when there is a general agreement that a nation or some part of it faces a sudden and unexpected rise in social costs, accompanied by a great deal of uncertainty about the length of time the high level of cost will persist …. ‘Emergency powers’ describe the expansion of governmental authority generally and the concomitant alteration in the scope of individual liberty, and the transfer of important ‘first instance’ law-making authority from legislatures to executive officials in emergencies.132
- (a)an event or situation which threatens serious damage to human welfare in a place in the United Kingdom,
- (b)an event or situation which threatens serious damage to the environment of a place in the United Kingdom, or
- (c)war, or terrorism, which threatens serious damage to the security of the United Kingdom.133
Further, human welfare under Section 1 (a) has been defined generously to include loss of human life, human illness or injury, homelessness, damage to property, disruption of a supply of money, food, water, energy or fuel, disruption of a system of communication, disruption of facilities for transport, or disruption of services relating to health. Environment in Section 1 (b) includes disruption or destruction of plant life or animal life.
- (a)seriously endangers the lives, health or safety of Canadians and is of such proportions or nature as to exceed the capacity or authority of a province to deal with it, or
- (b)seriously threatens the ability of the Government of Canada to preserve the sovereignty, security and territorial integrity of Canada and that cannot be effectively dealt with under any other law of Canada.134
Both the above definitions above capture damage to health and safety of human life, environment within the scope of emergency.
The question is – whether “emergency” covers matters of both military, serious security-related conflicts and non-military interests’ such as natural disasters, pandemics, or financial crises as a permissible basis for Members to excuse themselves from their responsibility under gatt. One may argue for “adverse economic situation” as a basis for deviation from gatt obligations
Russia – Traffic in Transit has clarified that only specific type of interests that are similar to the situation of war are justified pursuant to “emergency in international relations”. This is because phrase “emergency in international relations” is prefixed by the phrase “taken in time of war” joined with the “or” which indicates that war is one example of the larger category of “emergency in international relations”.136 The Panel has clarified that conflicts that give rise to defence and military interests, are included under this subparagraph.137 It seems that the Panel has considered the phrase in the context of the entire provision where the subparagraphs set forth only specific type of matters such as fissionable materials, and traffic in arms, ammunition and implements of war, as well as traffic in goods and materials for the purpose of supplying a military establishment. Without contest, matters included in the subparagraphs fall within the scope of traditional threats that compromise the physical integrity of the State that require immediate action. Although, the Panel has considered a sufficiently wide scope of conflict which includes situations of armed conflict but also latent conflict.138 In coming to this conclusion, the Panel relied on the historical diplomatic practice and referred to Article 11 of the Covenant of the League of Nations: “Any war or threat of war, whether immediately affecting any of the members of the League or not, is hereby declared a matter of concern to the whole League … [i]n case any such emergency should arise …”.139
Following the above order, it is interesting to note during clarification of the “emergency in international relations” the Panel in Russia – Measures Concerning Traffic in Transit has also included maintenance of law and public order interests within the scope of this phrase. The Panel clarified that “heightened tension or crisis, or of general instability engulfing or surrounding a state”142 are also included within the ambit of the phrase. By including “maintenance of law” and “public order”, the Panel may have inadvertently suggested the inclusion of law enforcement activities pursuant to police powers to ensure public safety. There is a fine difference between public order and national security which arguably is in the nature of action required for risk management and severity. Public order tends to cover law-enforcement activities during peace time while “security interests” are implicated when the public order itself may be under severe stress due to armed hostilities or acute crises.143 Public order may include threats such as riots and other civil disturbances. In most cases the threats that are covered within the ambit of security are related to terrorism, weapons of mass destruction, attack by foreign country, regional conflicts, technology enabled crime, organized crime, critical infrastructure, global pandemics. Following this reasoning, one cannot help but question if it is wise to juxtapose public order into the security exception as the Panel has regarded. In fact, in many instruments such as oecd Declaration on International Investment and Multinational Enterprises C (76)99,144 the General Agreement
Overall, Russia – Traffic in Transit has nudged the position that that political or economic differences between Members are not sufficient, of themselves, to constitute an emergency in international relations.147 The Panel also drew attention to the conduct of Members in the past. The Panel stated that in the past Members have generally exercised restraint in their invocations of gatt Article xxi(b)(iii), and only invoked the exception in situation of armed conflict and acute international crisis of the nature where tensions could lead to armed conflict.148 In the past, the Members have separated military and serious security-related conflicts from economic and trade disputes.149
3.3.5
China’s approach to security through onsc is a comprehensive one and in some manner reflective some of the contemporary understanding of security described in the above sections and is to a large extent is aimed to safeguard China’s interests nationally and internationally. It is inevitable that China will seek to argue for its own view on national security in the wto in line with the visions and strategy of the onsc. As a matter of fact, the US also demonstrates a much broader understanding of security which goes beyond the scope of the gatt Article xxi in its current form and has in the past also pushed its own understanding of national security in the wto. The discussion in the above section has highlighted that a formalistic reading of gatt Article xxi shows that it has a narrow scope and potentially covers the security interest that are considered traditional in nature. This does not come as a matter of surprise since the instrument was drafted several decades ago and does not in any way accommodate the reality that the concept of security has been enlarged in light of political, social, cultural and economic developments. There is nothing in the sub-paragraphs of gatt Article xxi (b) that may accommodate the concern for resource security and associated economic concerns. In fact, it could be argued that gatt Article xx (g) that concerns exhaustible natural resource may be somewhat more relevant and may serve as a valid ground for seeking the exception. While Article xx (g) offers a basis for protection of exhaustible natural resource, it does not fully allow the pursuit of the argument of resource security which is intrinsically linked to economic development and stability.
Further, there has been much excitement and optimism built around phrases such as “which it considers necessary for the protection of its essential security interests” and “emergency in international law” on the basis that these phrases leave open the room for manoeuvre by the Members to argue for their position on national security in the wto. Could this mean that the phrase “essential security interest” or “emergency in international law” may provide the opportunity to China to accommodate resource security argument within the ambit of gatt Article xxi? Russia – Traffic in Transit displays a cautious approach in fleshing the meaning of the phrases which has remained confined to war, conflict and violence. The Panels in both the disputes were confronted with situations that pertained to conflict (territorial and diplomatic) and not to situations that reflected the broadened and deepened security concerns that go beyond issues of war and peace. For China’s argument of resource security to be recognised, the Panels would have to engage with the broader meaning of security through the elaboration of somewhat open textured phrases. However, the Panel’s interpretative exercise may not yield the outcome that
4 Conclusion
The chapter explored the possibility of accommodating resource security and economic development arguments under gatt Article xxi. The conclusion is that while security is available as an exception for the wto Members the scope of the provision is very narrow. In fact, the scope is by and large only confined to militaristic matters. If China aims to defend export restrictions under gatt Article xxi, it is most likely to fail. China’s argument is representative of a broader understanding of security and gatt Article xxi is not representative of the contemporary field of security and where it is headed. Several issues (climate, health, resources, development, economic) that reflect shifting economic, social and political priorities in terms of security remains excluded. The current security demands of the wto Members cannot be simply ignored and to hope that Members practice self-restrain that was prevalent before Trump era is not pragmatic. The understanding of the complex interplay between both trade and security has evolved and the US-Ukraine conflict highlights tension surrounding the issue of security. The realignment of wto in mainly two large blocks with US and Allies on one side and China on the other also
The so called undefined catch all phrases such as “essential security interest” or “emergency in international law” touted as possibilities for encompassing the contemporary issues is a falsehood. The Panels are limited in their function and interpretive role by the organizational structure and dsu provisions. While this exposes the limits of wto’s design, the more important argument is that the Panels cannot make up for what does not exist in the text of gatt Article xxi. A gallant approach to expansive interpretations by a certain Panel that add to the meaning of the provision would expose them to political risk.162 Moreover, an undesirable outcome for any of the Members may prompt them to discredit the Panel and the implementation of the recommendations may also be protracted amidst geopolitical tensions. While adjudication may assist in helping the Members to understand their priorities163 it does not seem to offer a full resolution that the matter requires.
What complicates matters is that the ab has collapsed because US has persistently blocked the appointment of new Members over ab’s interpretive approach. This has implications for the Panel reports as they are not binding subject to appeal. While this entails significant weakening of the wto Dispute Settlement System with considerable risk for the wto’s credibility. As Heath rightly remarks that the collapse of the ab has shifted authority dynamics in the trading system.164 While the EU led Multi Party Interim Appeal Arbitration Arrangement seeks to offer a stop gap measure by providing an appellate function, it does not cover all Members. Most importantly, US has not signed up for it and thus leaves its veracity on national security legalism open for discussion.
The chapter fully explores that for China in context of rare earths, resource security is a matter of importance given its economic (innovation, green-tech sector) and environmental concerns and the failure of the gatt framework to accommodate its interest may be detrimental to their willingness towards their larger commitment to the wto. China’s resource security argument
The contentious nature of security disputes perhaps requires a different strategy for its resolution. In addition, in absence of a clear strategy to resolve the ab crisis and by the wto Members does make one wonder if judicialization of trade disputes is something in the past. Therefore, it becomes somewhat pressing to find other strategies that can address the issue of security in the wto. Perhaps, a functional approach to the issue may be adopted where Members may consider arbitration under Article 25 of the dsu or the option of conciliation, mediation and good offices under Article 5 of the dsu to resolve such disputes. Another proposal could be to develop best practices through a specialized committee modelled along the lines of Technical Barrier to Trade committee which will keep track of measures taken for national security under review measures, provide opportunity for periodic review of such measures, and provide a formal forum for Members to raise their concerns. The work in the committee may potentially feed into adopting authoritative interpretation by the Members to clarify the provisions or also transforming the provisions entirely.
To conclude, the overall finding, of this work is that revisiting the security exception provision is the need of the hour. Perhaps, in the larger scheme of things, it also highlights the needs for revisiting gatt and other Agreements to keep up with the rapid pace of economic change and political priorities.
‘Russia sanctions list: What the west imposed over the Ukraine invasion’ (ft 4 March 2022) available at <
‘Russia hits back at Western sanctions with export bans’ (bbc 10 March 2022) available at <
S Sacks and G Webster, The Trump Administration’s Approach to Huawei Risks Repeating China’s Mistakes, May 23, 2019 <
“Regarding the Notification (tsuutatsu) to amend parts of notifications including the ‘Notification(tsuutatsu) on the implementation of the Export Trade Control Order” (1 July 2019, Security Export Licensing Division, Ministry of Economy, Trade and Industry) <
“Update of METI’s licensing policies and procedures on exports of controlled items to the Republic of Korea” (1 July 2019, Ministry of Economy, Trade and Industry) <
Japan – Measures Related to the Exportation of Products and Technology to Korea, Request for Consultations by The Republic of Korea, wt/ds590/1, para 7. Korea argues that the amended export licensing policies and procedures have increased the level of scrutiny which results in delays. This increased level of scrutiny has no legitimate basis and is politically motivated. For a detailed discussion on Japanese export controls, refer to K Shiojiri, “Japan’s Measures on Export Control to the Republic of Korea: From the Perspective of International Law” (2019) 12 (2) Journal of East Asia and International Law 337.
Art 2, People’s Republic of China (prc) Export Control Law, As passed by Standing Committee of the National People’s Congress on October 17, 2020, <
JB Heath, The New National Security Challenge to the Economic Order, (2020) 129 Yale Law Journal 1020.
In China a ‘Law’ is the equivalent of the Act in common law jurisdictions. Hierarchically an Administrative Regulation falls under the Constitution and Basic Laws. For comprehensive discussion on the hierarchy of legal rules in China, refer to I Castellucci, “Rule of Law with Chinese Characteristics” (2007) 13 (1) Annual Survey of International & Comparative Law 35–58.
CP Bown, “Export Controls: America’s Other National Security Threat” (2020) 283 (30) Duke Journal of Comparative & International Law 283.
GJ Ikenberry, “The Rise of China and the Future of the West: Can the Liberal System Survive?” (2008) 87(1) Foreign Affairs 23–37; M Stephen, “States, Norms and Power: Emerging Powers and Global Order” (2014) 42(3) Millennium 888–96; I Clark, “International Society and China: The Power of Norms and the Norms of Power” (2014) 7 (3) Chinese Journal of International Politics 31–340.
The wto dss comprises of a political institution called the Dispute Settlement Body and the quasi-judicial and judicial-type bodies such as the ad-hoc Panels and the permanent Appellate Body respectively. The dss may be argued as one of the most prolific and active of all international State-to-State dispute settlement system and it has also navigated through disputes that were subject to controversy and public debate. For comprehensive discussion on the wto dispute settlement system refer to P Van den Bossche and W Zdouc, The Law and Policy of the WTO: Text, Cases and Materials (Cambridge, 2019) 80–159.
ibid.
RE Hudec, “GATT or GABB? The Future Design of the General Agreement on Tariff and Trade” (1971) 80(7) The Yale Law Journal 1299–1386.
The Overall National Security Outlook discussed in detail in section 2 includes both traditional and non-traditional view of security and includes resource security amongst other issues such as economic security, cultural security, societal security, science and technology security, cybersecurity, environmental security, nuclear security, and the security of overseas interests. J Blanchette, Ideological Security as National Security, December 2020 available at <
The case of Saudi Arabia – Measures Concerning the Protection of Intellectual Property is also considered because the language of the security provisions in the gatt and trips is similar neither the parties nor the Panel in contested or deviated from the interpretative approach in Russia – Traffic in Transit and it builds on the clarification made in the Russia case. It is submitted that the paper does suggest transferability of Art. xxi gatt’s interpretation to Art. 73 trips or vice versa because of identical language of both the provisions. However, since there has been limited disputes which have involved national security in the wto interpretation on national security under the trips may be instructive for dispute under the gatt or vice versa.
Chinese data indicate that its rare earths exports totalled 53,518 metric tons, with a value of $517 million. China’s top three rare earths exports markets by value were Japan (54% of total), the United States (14%), and the Netherlands (8%). China also exported $1.7 billion worth of magnets containing rare earths (including $201 million to the United States), an indicator of the significance of Chinese downstream industries that utilize rare earths. Trade Dispute with China and Rare Earth Elements, June 28, 2019 <
M Schmid, “Rare Earths in the Trade Dispute Between the US and China: A Déjà vu” (2019) 54 Intereconomics 378–384.
ibid.
Article 2 prc Export Control Law (n 7).
Article 4, ibid.
On January 15, 2021, the Ministry of Industry and Information Technology issued the draft version of the Regulations on Rare Earth Management to gather public opinions until February 15, 2021. Translated version sourced from LexisNexis.
This aspect was gleaned from conversation with Prof Yongmei Chen. The example she cited to support the assertion was that no national negative list for services has been published yet.
(n 31).
For narrow view refer to JB Heath, “National Security and Economic Globalization: Towards Collision or Reconciliation” (2019) 42 Fordham International Law Journal 1431.
For broad view refer to JB Heath, “Trade and Security among the Ruins” (2020) 30 Duke Journal of Comparative and International Law 223; JB Heath, “The New Security Challenge to the Economic Order Law” (2020) 129 Yale Law Journal 924.
MS Tanner and PW Mackenzie, China’s Emerging National Security Interests and Their Impact on the People’s Liberation Army (Marine Corps University Press, 2015) 1–26.
X Junyong and Z Zhipeng, “Forty Years of Research on the Rule of Law in China’s National Security: Retrospect and Prospect” (2019) (Google Translation software was utilized to read this article.)
This discussion is important as in the case of China the President’s speech is significant and showcases national strategy.
“Xi Jinping Chairs First nsc Meeting, Stresses National Security with Chinese Characteristics”, Xinhua News Agency, 15 April 2014, available at <
National Security Law of the People’s Republic of China, (Adopted at the 15th session of the Standing Committee of the Twelfth National People’s Congress on July 1, 2015) available at <
“Xi Jinping presided over the first meeting of the 19th Central National Security Committee and delivered an important speech”, Xinhua News Agency, 17 April 2018, available at <
“Xi Jinping’s Speech at Opening of Second World Internet Conference”, Xinhua News Agency, 16 December 2015. available at <
“Xi Jinping: Independent Innovation Promotes the Building of a Network Power”, Xinhua News Agency, 21 April 2018, available at <
“The CCP 19th Central Committee Fifth Plenum Communique” Xinhua News Agency, 29 October 2020 available at <
Xi Jinping, “在庆祝中国共产党成立100周年大会上的讲话” [Speech at the celebration of 100th anniversary of the founding of the Communist Party of China] (speech, Beijing, July 1, 2021) available at <
For a detailed discussion on the various legal developments refer to KA Mankikar, Preserving National Security, the Xi Jinping Way available at
Standing Committee of the 13th National People’s Congress of the People’s Republic of China promulgated the Anti-Foreign Sanctions Law on 10 June 2021.
K Karause and MC Williams, ‘Security and “Security Studies”: Conceptual Evolution and Historical Transformation’ in A Gheciu and XC Wohlforth (eds), The Oxford Handbook of International Security (oup 2018) p 22.
B Buzan, People, States and Fear: An Agenda for International Security Studies in the Post-Cold War Era (Macmillan 1991) p 26.
B Buzan and O Waever and J de Wilde, Security: A New Framework for Analysis (Lynne Reinner) 1998; RJ Hanlon and K Christie, Freedom from Fear, Freedom from Want: An Introduction to Human Security (University of Toronto Press 2016).
First featured in the 13th Five-year plan for economic and social development and includes concepts such as innovative, coordinated, green, open and inclusive development. For a comprehensive insight into understanding the new development concept and its implementation refer to X Jinping, The Governance of China – ii (Foreign Languages Press 2017) 217–250.
Article 5 of ecl.
Article 10 of ecl.
Article 12 of ecl.
Article 12 of ecl.
Article 13 of ecl.
‘Huawei: US tightens restrictions on Chinese giant’ (bbc, 17 August 2020) available at <
X Jinping, The Governance of China – ii (Foreign Languages Press 2017) 223.
K Karause and M C Williams, ‘Security and “Security Studies”: Conceptual Evolution and Historical Transformation’ in A Gheciu and XC Wohlforth (eds), The Oxford Handbook of International Security (oup 2018) p 22; JB Heath (n8).
N Tschirgi, ‘International Security and Development’ in A Gheciu and XC Wohlforth (eds), The Oxford Handbook of International Security (oup 2018) p 563.
MP Paulsen, “Trade Multilateralism and US National Security: The making of the GATT Security Exceptions” (2020) 41(1) Michigan Journal of International Law 109; E Krieger, “Rethinking Presidential Authority in Trade: A Modus Vivendi for Congressional Non-Interference and National Security” (2020) 88 (4) University of Missouri-Kansas City Law Review 1039.
The following statement of Alexander Hamilton from 1791 captures the direct connection of commercial interests with security as perceived by the US: Not only wealth; but the independence and security of the country, appear to be materially connected with the prosperity of the manufacturers. Every nation, with a view to those great objects, ought to endeavour to possess within all the essential of national supply. This comprises the means of subsistence, habitation, clothing and defence.
Alexander Hamilton’s Final Version of the Report on the Subject of Manufactures, Philadelphia, December 5, 1791 available at <
Section 232 (c) of the Trade Expansion Act of 1962 highlights the US’s approach in considering weakening of internal economy as a matter of national security. Section 232 (c) of the Trade Expansion Act of 1962 provides that: In the administration of this section, the Secretary and the President shall further recognise the close relation of the economic welfare of the Nation to our national security and shall take into consideration the impact of foreign competition on the economic welfare of individual domestic industries: and any substantial unemployment, decrease in revenues of government, loss of skills or investment, or other serious effects resulting from the displacement of any domestic products by excessive imports shall be considered without excluding other factors, in determining whether such weakening of our internal economy may impair the national security. For a comprehensive discussion on the investigations see Section 232 Investigations: Overview and Issues for Congress Updated 18 May 2021, available at <
Presidential Proclamation 9704 of March 8, 2018, “Adjusting Imports of Aluminum into the United States”, 83 Federal Register 11619, March 15, 2018, and Proclamation 9705 of March 8, 2018, “Adjusting Imports of Steel into the United States”, 83 Federal Register 11625, March 15, 2018.
CP Brown, “Export Controls: America’s Other National Security Threat” (2020) 30 (2) Duke Journal of Comparative and International Law 283.
‘US revokes licence of top Chinese telecoms company’ (bbc, 27 October 2021) available at <
S Zheng, ‘China will not rule out using rare earth exports as leverage in trade war with US’ South China Morning Post (29 May 2019) available at <
J Disis, ‘The China trade war is one thing Joe Biden won’t be rushing to fix’ cnn Business (bbc, January 26 2021) available at <
K Bradsher, ‘Amid Tension, China Blocks Vital Exports to Japan’ The New York Times (Sept. 22, 2010) available at <
Appellate Body Report, China – Export Duties on Certain Raw Materials, wt/ds394/20.
Appellate Body Report, China – Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum, wt/ds431/17.
ibid.
Appellate Body Report, China – Export Duties on Certain Raw Materials, wt/ds394/20; Appellate Body Report, China – Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum, wt/ds431/17.
United Nations, Econ. & Soc. Council, Preparatory Comm. of the U.N. Conference on Trade & Emp’t, Thirty-Third Meeting of Commission A, at 19, U.N. Doc. e/pc/t/a/pv/33 (1947) (Dr. Speekenbrink on behalf of the Netherlands), available at <
R Bhala, “National Security and International Trade Law: What the GATT Says, and What the United States Does” (1998) 19 University of Pennsylvania Journal of International Law 263; A Emmerson, “Conceptualizing Security Exceptions: Legal Doctrine or Political Excuse” (2010) 11 Journal of International Economic Law 135; RP Alford, “The Self-Judging Security Exception” (2011) Utah Law Review 697. RS Whitt, “The Politics of Procedure: An Examination of the GATT Dispute Settlement Panel and Article xx1 Defence in the Context of the US Embargo of Nicaragua” 19 (1987) Law and Policy in International Business 603.
For more discussion on the different positions taken by the wto Members on the “self-judging” nature of the security exception refer to T Voon (n54).
Panel Report, wt/ds512/r, paras 7.102 – 7.104.
ibid paras 7.53–7.58.
ab Report, wt/ds363/ab/r, (21 December 2009).
ab Report, wt/ds394/20.
ab Report, wt/ds431/17.
ab Report, China – Raw Materials (2012), para 307.
ab Report, China – Rare Earths (2014) para 5.74.
ibid.
ibid.
ibid.
U Ghori, “Three Lessons on the Construction of Export Controls under WTO Law” 39 (2020) University of Queensland Law Journal 85.
Article 16.3: Security Exceptions.
1. Nothing in this Agreement shall be construed to: (a) require a Party to furnish or allow access to information the disclosure of which it determines to be contrary to its essential security interests; or (b) preclude a Party from applying measures that it considers necessary for the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interest.
Treaty between United States of America and the Argentine Republic Concerning the Reciprocal Encouragement and Protection of Investment signed 14 November 1991 (entered into force 20 October 1994). This Treaty shall not preclude the application by either Party of measures necessary for the maintenance of public order, the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the Protection of its own essential security interests.
Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment, Verbatim Report, Thirty-Third Meeting of Commission held on Thursday, 24 July 1947 in the Palais Des Nations, Geneva, e/pc/t/a/pv/33, pp. 20–21.
ibid.
(n 31).
For a comprehensive overview on literature on climate change and security refer to J Bubsy, “Environmental Security” in A Gheciu and XC Wohlforth (eds), The Oxford Handbook of International Security (oup 2018) 471- 479 which refers to literature such as J Barnett, RA Mathew and KL O’Brien, “Global Environment Change and Human Security: An Introduction” in RA Mathew, J Barnett, B Mc Donald and KL O’Brein (eds), Global Environmental Change and Human Security (mit Press 2010) 3–32; I Salehyan, “Climate Change and Conflict: Making Sense of Disparate Findings” (2014) 43 Political Geography, Special Issue: Climate Change and Conflict 1–5. EJ Parry, “The Greatest Threat to Global Security: Climate Change Is Not Merely an Environmental Problem <
‘China and US pledge climate change commitment’ (bbc 18 April 2021) available at <
(n 85).
R Dannrether, International Security: The Contemporary Agenda: Cambridge: Polity Press.
For a quick view of various studies undertaken refer to J Bubsy, “Environmental Security” in A Gheciu and XC Wohlforth (eds), The Oxford Handbook of International Security (oup 2018) 471–479.
T Homer Dixon, Environment Scarcity and Violence (Princeton University Press 1999); A Mathew, ‘Environment, Conflict and Sustainable Development’ in N Tschirgi, M Lund and F Mancini (eds), Security and Development: Searching for Critical Connections (Lynne Reinner 2010).
Climate Change: Global poll finds most believe it’s a ‘global emergency’ (bbc 27 January 2021) available at <
M McDonald “Climate Change and Security: Towards Ecological Security?” (2018) 10 International Theory 153.
B Ki-moon, A Climate Culprit in Darfur, 16 June 2007 available at <
CS Hendrix and SM Glaser, “Trends and Triggers: Climate Change and Civil Conflict in Sub-Saharan Africa” (2007) 26 Political Geography 695–715.
Jamshidi (n 85).
See (n 85).
General Assembly resolution 1803 (xvii) of 14 December 1962, “Permanent sovereignty over natural resources”.
Panel Report para 7.662.
Panel Report, wt/ds512/r, paras 7.127, 7.64-68, 7.82.
ibid para 7.65.
ibid para 7.68.
This is similar to Art xx of the gatt also contains a limited and exhaustive enumeration listed in paragraphs (a) to (j) along with the introductory clause which is called the chapeau sets requirements for further appraisal of the measures that are sought to be justified under one of the paragraphs. Art xx sets out in paragraphs (a) to (j) grounds of justification for measures taken to protect societal values such public morality; human, animal or plant life; compliance with gatt consistent laws and regulations; exhaustible natural resource, national treasures of artistic, historic or archaeological value.
Para 141.
ab Report, China – Raw Material (2012) Para 355.
P Delimatsis and T Cottier and ‘Art xiv bis: Security Exceptions’ in Wolfrum R, Stoll PT, Feinäugle Cl, (eds.) in WTO – Trade in Service (Martinus Nijhoff Publishers 2008) 329–348.
Panel Report, Russia – Traffic in Transit (2019), para. 7.130.
ibid.
ibid.
ibid para 7.132.
ibid para 7.133.
W Weiss, “Adjudicating Security Exception in WTO Law: Methodical and Procedural Preliminaries” (2020) 54(6) Journal of World Tarde 829–852.
Panel Report (n 106) See the section on main arguments of the third parties pg 33–39. Australia’s third-party statement, paras. 9–21; Brazil’s third-party submission, paras. 4–5 and 8–9; third-party statement, paras. 21–30; and response to Panel question No. 6; Canada’s third-party statement, paras. 6–8; and response to Panel question No. 6, para. 8; China’s third-party statement, paras. 18–19; and response to Panel question No. 6, para. 6; Japan’s third-party submission, paras. 32–38; Singapore’s third-party statement, paras. 14–19; United States’ third-party statement, paras. 1, 11–12, 34–35; and response to Panel question No. 6, para. 31.
The formulations of necessity in international law have been considered extensively. Grotius credited for bringing the doctrine from realms of municipal law to international law has explained the doctrine of necessity through examples has regarded necessity is “nothing short of extreme exigency”. He proposed that “under the plea of necessity nothing short of extreme exigency can give one power a right over what belongs to another no way involved in the war”. Ago states, that the essential interest must be “absolutely of an exceptional nature”. One may also seek recourse to the 2001 ilc Art 25 on Responsibility of States for Internationally Wrongful Acts to understand what constitutes necessity. One element of necessity under Art 25 is “to safeguard an essential interest against grave and imminent peril”. In addition, the measures in question must be the “only way” available to safeguard its essential interests. This means that no other alternatives are available to protect its essential interests except the measure adopted by the State. It further stated that this rule would also apply even if such lawful alternatives were more costly or less convenient.
Art xx: General Exceptions of the gatt.
It is important to consider the ab’s finding in European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, wt/ ds135/ab/r (adopted 5 April 2001) (ec-Asbestos) (2001) regarding the requirements of necessity.
The ab in the ec-Asbestos, para 172 has clarified the meaning of “reasonableness” by stating that a measure with less restriction on trade could not be considered as “a reasonable alternative” if it does not have the potential to achieve the same level of protection sought. ec-Asbestos (2001) paras 169–174.
China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, wt/ds363/ab/r, (21 December 2009) para 318–319.
P Ranjan, “National Security Exceptions in the General Agreement on Tariffs and Trade (GATT) and India-Pakistan Trade” (2020) 54 (3) Journal of World Trade 643.
Wolfgang Weiss, Adjudicating Security exceptions in WTO Law: Methodical and Procedural Preliminaries (2020) Journal of World Trade 54(6) 829.
(n 99) para 7 138–7 139.
(n 99) para 7 138.
(n 118).
The case of Saudi Arabia – Measures Concerning the Protection of Intellectual Property is also considered because the language of the security provisions in the gatt and trips is similar and neither the parties nor the Panel in this case contested or deviated from the interpretative approach in Russia – Traffic in Transit. Saudi Arabia – Measures Concerning the Protection of Intellectual Property builds on the clarification made in the Russia – Traffic in Transit case. It is submitted that the paper does suggest transferability of Art. xxi gatt’s interpretation to Art. 73 trips or vice versa because of identical language of both the provisions. However, since there has been limited disputes which have involved national security in the wto interpretation on national security under the trips may be instructive for dispute under the gatt or vice versa.
Saudi Arabia – Measures concerning the Protection of Intellectual Property Rights – Communication from Qatar wt/ds567/8, 5 October 2020.
ibid para 7.281.
ibid para 7.280.
ibid para 7.281.
ibid para 7.286–7.288.
ibid para 7.288.
ibid para 7.289.
J Pauwelyn, “Export Restrictions in Times of Pandemic: Options and Limits under International Trade Agreements” (April 30, 2020).
M Tushnet, “The Political Constitution of Emergency Powers: Parliamentary and Separation-of-Powers Regulation” (2008) 3 International Journal of Law in Context 275.
Part 1 – Meaning of Emergency <
Emergencies Act r.s.c., 1985, c. 22 (4th Supp.) <
Introduction of A Global Import Quota System for Leather Shoes. Plastic Shoes and Rubber Boots, Notification by the Swedish Delegation, <
(n 68) para 7.72.
(n 68) paras 7.75–7.76.
(n 68) para 7.76.
(Covenant of the League of Nations, done at Paris, 28 June 1919, League of Nations Treaty Series, Vol. 108, p. 188).
(Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment, Verbatim Report, Thirty-Third Meeting of Commission A Held-on Thursday, 24 July 1947, e/pc/t/a/pv/33, p. 19 (as corrected by Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment, Corrigendum to Verbatim Report of Thirty-Third Meeting of Commission A, e/pc/t/a/pv/33.Corr.2).
ibid.
(n 68) 7.76.
WW Burke-White & AV Staden, “Investment Protection in Extraordinary Times: The Interpretation and Application of Non-Precluded Measures Provisions in Bilateral Investment Treaties” (2008) 48(2) Virginia Journal of International Law 308 -409.
Adopted on: 21/06/1976 Amended on: 25/05/2011 available at <
Art xiv: General Exceptions Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures: (a) necessary to protect public morals or to maintain public order; (5) … Footnote: 5. The public order exception may be invoked only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society. Article xiv bis: Security Exceptions 1. Nothing in this Agreement shall be construed: (a) to require any Member to furnish any information, the disclosure of which it considers contrary to its essential security interests; or …
Art xxiii: Exceptions to the Agreement 1. Nothing in this Agreement shall be construed to prevent any Party from taking any action or not disclosing any information which it considers necessary for the protection of its essential security interests relating to the procurement of arms, ammunition or war materials, or to procurement indispensable for national security or for national defence purposes.
2. Subject to the requirement that such measures are not 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, nothing in this Agreement shall be construed to prevent any Party from imposing or enforcing measures: necessary to protect public morals, order or safety, human, animal or plant life or health or intellectual property; or relating to the products or services of handicapped persons, of philanthropic institutions or of prison labour.
(n68) para 7.75.
(n68) para 7.81.
ibid.
Saudi Arabia’s opening statement at the first meeting of the Panel, paras. 21–22 and 44–45; closing statement at the first meeting of the Panel, paras. 18–20; and second written submission, paras. 14–18 and 41.
Saudi Arabia’s opening statement at the first meeting of the Panel, para. 47.
Saudi Arabia’s opening statement at the first meeting of the Panel, paras. 26–37; closing statement at the first meeting of the Panel, paras. 17–20; and second written submission, paras 14–15.
Panel report, wt/ds567/8, Para 7.245.
Ibid 7.262.
ibid 7.259.
ibid 7.263.
C Fernandez de Casadevante V Romani, Sovereignty and Interpretations of International Norms (Springer, Berlin 2007) 4.
Art 3.2 provides that the dispute settlement system of the wto is a central element in providing security and predictability to the multilateral trading system. The Members recognize that it serves to preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law.
The aspect of preservation of legitimate expectation arising out of the covered agreements is manifestly important as it protects and promoted the trade interaction between the Member States which lies at the heart of the existence of the wto as an institution. An interesting treatment of legitimate expectation is also, found in Korea-Government Procurement Panel where the Panel recognized that legitimate expectations not only arise from the negotiated concessions but also concern measures which impair the concession under negotiations.
Panel Report, Korea-Measures Affecting Government Procurement Measures, wt/ds163/r, adopted June 2009, 7.95.
(n 68) 7.79.
RR Krebs, ‘The Politics of Security’ in A Gheciu and XC Wohlforth (eds), The Oxford Handbook of International Security (oup 2018) 299.
D Boklan and A Bahri, “The First WTO’s Ruling on National Security Exception: Balancing Interests or Opening Pandora’s Box” (2020) 19(1) World Trade Review 122–136.
CL Davis Why Adjudicate? Enforcing Trade Rules in the wto (Princeton University Press 2012).
JB Heath, “Trade and Security among the Ruins” (2020) 30 Duke Journal of Comparative and International Law 223.
Table of Authorities
International Treaties
oecd
oecd Declaration on International Investment and Multinational Enterprises (adopted 21 June 1976, amended on 25 May 2011).
Agreement Establishing the World Trade Organization (adopted 15 April 1994, entered into force 1 January 1995) 1867 unts 154.
General Agreement on Trade-Related Aspects of Intellectual Property (adopted 15 April 1994, entered into force 1 January 1995) 1869 unts 299.
The General Agreement on Tariffs and Trade (adopted 15 April 1994, entered into force 1 January 1995) 1867 unts 190.
Regional Treaties
Argentina- US bit, Treaty between United States of America and the Argentine Republic Concerning the Reciprocal Encouragement and Protection of Investment, (adopted 14 November 1991, entered into force 20 October 1994).
United Nations
General Assembly resolution 1803 (xvii) of 14 December 1962, “Permanent sovereignty over natural resources”.
League of Nations
Covenant of the League of Nations (adopted 28 June 1919, entered into force 10 January 1920), League of Nations Treaty Series, Vol. 108, p. 188.
National Legislation
United States of America
The Trade Expansion Act of 1962 (11 October 1962).
Canada
Emergencies Act (r.s.c., 1985, c. 22 (4th Supp.)).
United Kingdom
Civil Contingencies Act 2004.
Peoples Republic of China
prc Export Control Law (ecl), (adopted 17 October 2020, entered into force 1 December 2020).
National Security Law of the People’s Republic of China, (adopted July 1, 2015).
International Case Law
Panel Report, Russia – Measures Concerning Traffic in Transit – Panel report – Action by the Dispute Settlement Body, wt/ds512/7 | 29 April 2019.
Panel Report, Saudi Arabia – Measures concerning the Protection of Intellectual Property Rights – Communication from Qatar, wt/ds567/8 | 5 October 2020.
Appellate Body Report, China – Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum, wt/ds431/17, 7 August 2014.
Appellate Body Report, China – Measures Related to the Exportation of Various Raw Materials, wt/ds394/20, 30 January 2012.
Appellate Body Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products – Joint communication from China and the United States, wt/ds363/19, 21 December 2009.
Panel Report, Korea – Measures Affecting Government Procurement, wt/ds163/7, 1 May 2000.
Panel Report, China – Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum, wt/ds431/17, 26 March 2014.
Panel Report, China – Measures Related to the Exportation of Various Raw Materials, wt/ds394/20, 5 July 2011.
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