Security Exceptions under the GATS – A Legal Commentary on Article XIVbis GATS

Abstract

Agreed commitments under GATS — both general and specific — amount to substantial qualifications to the exercise of sovereignty and powers in shaping domestic regulation of services. Members therefore agreed to introduce security exceptions aimed to preserve Members’ freedom of action in areas relating to national defence and security. Art. XIVbis entails a broad carve-out, as it states that “nothing in this Agreement” shall be construed to prevent Members from taking measures as defined under this provision. This paper argues that while granting broad discretion, national security exemptions under WTO law are not devoid of normative guidance and impose limitations on recourse to national security. In particular, Art. XIVbis seeks to strike a proper balance between Members’ prerogative to pursue or protect a legitimate security interest even through WTO-inconsistent means, and the interest of other Members in avoiding any frustration of their rights accorded by the GATS substantive rules. The paper suggests that the need to strike a proper balance points to the usefulness of an agreement among Members on what “national security” and “essential security interests” would entail. In addition, the adoption of procedural guidelines when a Member seeks to enforce a measure to respond to a threat to its security interests would enhance transparency and predictability in the international trade order.

Keywords: security exceptions, essential security interests, self-judging clause, principle of good faith, subjective standard of interpretation, emergency in international relations.

JEL Classification: K20, K33