From Norms to Expectations: Balancing Trade and Security Interests in the Post-COVID-19 World

Abstract

Often depicted as a ‘nuclear button’, the significance of the security exceptions to the world trade legal regime goes well beyond an exception that exempts states from legal commitments to trade liberalisation. As a general exception enshrined into the GATT/WTO regime, the national security exceptions are a reflection of historical negotiations which eventually led to a compromise and consensual expectation among WTO members. This consensus entails a two-pronged attribute of this provision. On the one hand, the possibility and the scope of review of the security exceptions was intentionally made ambiguous. On the other hand, there lies an implied expectation among the state actors as to its applicability. The existing literature in the field of international trade law focuses predominantly on the former attribute of the issue. This paper turns to the latter.

Our analysis explores three imperative questions. First, this paper attempts to understand the ‘circumstances’ in which the national security exceptions are likely to be invoked. Second, this paper looks into whether the aforementioned expectations have changed over time. Lastly, the paper analyses how the rules of the international trade regime should interact with the common expectations. In view of the above questions, this paper argues that the security exceptions rule was invoked in the most severe cases of interstate confrontation, closely related to wars, armed conflicts and similar situations endangering the territory, population and political system of a state. This reflects a common expectation among states that the national security exceptions rule is to be employed for the protection of essential security interests.

After an examination of recent trade disputes between China and the United States and between Russia and the United States/European Union over Ukraine, we conclude that so far this common expectation persists. On this ground, we argue that the WTO panels should be mindful of any arbitrary extension of the use of the national security exception and the delimitation between security and other national interests.

Keywords: WTO, security exception, constructivism, international trade law, armed conflict, security interests, China, European Union, Russia, Ukraine, United States, dispute settlement

JEL Classification: F00, F02, F13, F15, F19, F5, F50, F52, F53, F55