The unknown territories of the national security exception: the importance and interpretation of art. XXI of the GATT.

• Author: Kitharidis, Sophocles

Abstract

There has been a lack of proper examination of Article XXI, the national security exception of the GATT 1994, in current World Trade Organisation law discourse. It is only recently that this fundamental area has been subjected to full review. In the negotiations leading up to the formation of the WTO, it was decided by the states parties that the provision should not be separate, but rather placed together with the general exceptions of Article XX. This article will provide a comprehensive analysis of the ambiguous national security exception through an examination of the current discourse and case law. It will first describe the scope and justiciability of Article XX as well as Article XXI in order to demonstrate the foundations of the Articles and their limitations. In doing so, it will assess the use of both exceptions to analyse the invocation of the articles through the example of climate change. It will then discuss the non-controversial aspects of the national security provision in order demonstrate its justiciability and applicability. This article will further analyse the challenge of invoking the national security exception, and in doing so, incorporate a theoretical discussion on the WTO Panel's role in interpreting the national security exception. Finally, this article will provide an analysis on the future of the national security provision, elaborating on the issue of whether states are reluctant to submit Article XXI disputes to the WTO Panel.

I Introduction

Since the establishment of the World Trade Organization (1) (WTO) and the incorporation of the General Agreement on Tariffs and Trade (GATT) into the WTO system, national security has been under complex review. (2) In the negotiations leading up to the formation of the WTO, it was decided by the states parties that the national security exception of Article XXI of the GATT 1994 should not to be a separate provision, and was instead placed with the general exceptions of Article XX. (3) The itemised exceptions in Article XX are not absolute, and subject to the general restrictions that a measure cannot qualify for any exception if it either an arbitrary or unjustifiable discrimination between countries with the same conditions, or a 'disguised restriction on trade'. (4) These restrictions were designed to protect WTO Member States against abuses of the itemised exceptions by other states. (5) Consequently, the proper assessment of the risk of the invocation of Article XXI being undisciplined has been the subject of much academic debate. Scholars such as Raj Bhala argue that as well as Article XXI being an all-embracing exception, a number of other features of the exception are noteworthy. First, Bhala identifies that Article XXI(b) may be classified and interpreted to be the most important and controversial portion of this exceptions. (6) Second, the other provisions of Article XXI, such as sections (a) and (c), and possibly (b)(1), ought not to be particularly controversial; (7) and third while a non-sanctioning member can challenge the invocation of Article XXI by a sanctioning member, this right has no practical impact. (8) The exception also embraces five distinct subject areas: (9) (1) national security information; (2) nuclear material; (3) military goods and services; (4) war and international emergencies; and (5) UN Charter obligations. (10) These features have meant that the extent of the exception has proven to be ambiguous, as the current case law on the exception is limited and not very helpful.

Further, Article XIV bis of the General Agreement on Trade in Service (GATS), which is also referred to as part of the security exceptions, provides for Member States to adopt and enforce measures that are in the best interest of their national security that would otherwise be inconsistent with GATS obligations. (11) The provisions of both Article XIV bis and XXI are in identical language and are very similar in importance. (12) These provisions come into play when a WTO Member State takes unilateral and multilateral measures which affect trade between other States, as means to achieve national (or international) security. By taking such measures, WTO Member States can theoretically seek justification for these measures under Article XIV bis; (13) however to date, no Member State has involved Article XIV bis. A full examination of this article and any potential differences between it and Article XXI is beyond the scope of this article.

This article will provide a comprehensive analysis on the ambiguous national security exception through an examination of the current discourse and developing case law. It will first describe the scope and justiciability of Article XX as well as Article XXI in order to demonstrate the foundation principles of the articles and their limitations. It will then address the non-controversial aspects of the national security provision in order to further explore its justiciability and applicability. This article will investigate the challenge of invoking the national security exception, and in doing so, undertake a theoretical analysis on the WTO Panel's role in interpreting the national security exception. It will discuss the future of the national security provision, focussing in particular on the issue of whether states are reluctant to submit Article XXI disputes to the WTO Panel. Finally, the article will use climate change as a case study to analyse how the invocation of the articles would work in practice

II The Scope and Justiciability Of Article XX and Xxi as National Security Provisions

Arguably, Article XX has a broad scope and is applicable to a wide range of situations. This is due to the article allowing under certain circumstances deviation from all GATT obligations. (14) The issue is whether Article XX can also justify inconsistency with obligations found in WTO agreements other than the GATT. A number of the measures covered by the exceptions in Article XX may be thought of as falling within the general 'police powers' or 'health and welfare powers' of a state. (15) The function of the exception was explained by the Appellate Body in the United States--Shirts and Blouses from India (16) case, where it noted that Article XX contains 'limited exceptions from obligations under certain other provisions of the GATT, not positive rules establishing obligations in themselves'. (17) With respect to the function of this Article, in US--Section 337 Tariff Act (1989) the Body held that:

Article XX is entitled 'General Exceptions' and that the central phrase in the introductory clause reads: 'nothing in this Agreement shall be construed to prevent the adoption or enforcement ... of measures ...'. Article XX(d) thus provides for a limited and conditional exception from obligations under other provisions. The Panel therefore concluded that Article XX(d) applies only to measures inconsistent with another provision of the General Agreement, and that, consequently, the application of Section 337 has to be examined first in the light of Article 111:4. If any inconsistencies with Article III:4 were found, the Panel would then examine whether they could be justified under Article XX(d). (18) Members will only invoke Article XX when a measure of that Member is found to be inconsistent with other GATT provisions, and as such, its invocation prevents the measure from being contrary to the Member's obligations. (19) Article XX also provides for limited and conditional exceptions from obligations under GATT provisions. Scholars within the field such as Peter Van den Bossche and Werner Zdouc contend that the list of exceptions is 'exhaustive' and should not be read more broadly. (20) They further argue that the exceptions are conditional as Article XX 'only provides for justification of an otherwise GATT-inconsistent measure when the conditions set out [in the provision]' are satisfied. (21)

It may also be argued that due to the nature of the exceptions, Article XX should be interpreted narrowly and the maxim singularia non sunt extendenda applied. (22) However, the Appellate Body adopted the approach taken in US--Gasoline (23) and US--Shrimp (24), and sought to 'balance the affirmative commitments and the exceptions'. (25) The decisions of the Appellate Body also strike a balance between trade liberalisation, market access and non-discrimination on one hand, and societal values and the political autonomy of Member states on the other. (26) One may therefore argue that Article XX is, to a degree, a balancing provision. (27)

The Appellate Body further analysed the nature and function of this provision and noted in Thailand--Cigarettes (Philippines): (28)

[i]t is true that, in examining a specific measure, a panel may be called upon to analyse a substantive obligation and an affirmative defence, and to apply both to that measure. It ... will require a panel to find and apply a 'line of equilibrium' between a substantive obligation and an exception ... [but] does not render that panels analyses of the obligation and the exception a single and integrated one. On the contrary, an analysis of whether a measure infringes obligation necessarily precedes, and is distinct form, the 'further and separate' assessment of whether such measure is otherwise justified. (29) A. The Applicability of Article XX

When assessing the scope of application of Article XX, one must review the exceptions that allow for deviation from GATT obligations. Under certain defined conditions, Article XX allows deviation from specific GATT obligations. (30) Therefore, as Van den Bossche and Zdouc note, the application of Article XX is broad.

Can Article XX justify inconsistencies with obligations under other WTO agreements than the GATT 1994? This issue was considered in China - Publications and Audiovisual Products (31), a case where China invoked the provision in the hope of justifying measures that were found inconsistent with its...