Russia and the WTO: Is it Time to Pierce the Article XXI(b)(iii) Security Exception?

Abstract

In this research paper, the author seeks to (1) take stock of Russia’s first three years as a member of the World Trade Organization (WTO) and (2) analyze whether Russia’s recent trade-damaging sanctions against the US, the EU and several other states are reviewable by the WTO. Article XXI(b)(iii), the so-called security exception, allows a WTO member to adopt measures to protect its “essential security interests . . . in time of war or other emergency in international relations,” notwithstanding its other WTO obligations. Because the provision empowers states to adopt measures “which it considers necessary” to protect those interests, legal scholars agree that the exception is at least partially “self-judging.” However, there has been no authoritative determination of the boundaries of when states may invoke Article XXI(b)(iii). Thus, it remains unclear whether a state may invoke the protections of the exception at its sole discretion, or whether there are some external limits. If it is completely self-judging, the exception has the power to undermine the whole WTO system. In the specific case of Russia’s Ukraine-related sanctions, an unreviewable exception is especially galling because Russia played an important role in creating the emergency in international relations that it now uses as an excuse to impose trade-destroying measures. Ultimately, this paper concludes that Article XXI(b)(iii) is at least limited by a requirement of good faith. At the same time, however, it is unlikely that a state’s ability to invoke the security exception is similarly restrained by the “clean hands” doctrine, which, in this author’s mind, is what is needed to deter states like Russia from undermining the WTO from within.

Keywords: WTO, National security exception, Article XXI, Article XXI(b)(iii), Sanctions, Russia