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Opinion
April 12, 2019 www.intellinews.com I Page 23
The ruling is making nobody happy
The Ukrainian side believes that the panel
didn’t act even-handedly, letting Russia getting away with insufficient evidence that its security interests were at stake – as well as with a WTO- illegal measure. Ukraine had argued that Russia was basically reacting to Ukraine’s signing on to a Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU, but there was no objective security reason to impose those transit bans.
Russia – supported by the US which had intervened as third party in the case – had argued that the WTO panel had no jurisdiction whatsoever in the case. Moscow argued that Article XXI of the GATT leaves total discretion to WTO members to decide on their course of action. Paragraph b) of this article says that the GATT’s rules are not in any way construed “to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests”. Moscow sees the “which it considers necessary” language as meaning that no WTO panel may look at the issue altogether.
In support of Moscow, the US wrote to the panellists arguing that invoking national security was “self-judging” and “non-justiciable”.
The three panellists flatly rejected the claim. “There is no basis for treating the invocation of Article XXI [...] as an incantation that shields a challenged measure from all scrutiny,” the report reads.
“It is a balanced decision,” reckons Stéphanie Noël, a trade lawyer in Geneva. “WTO members are accorded a rather high level of deference in deciding what their essential security interests are, and how to defend them. At the same time, the obligation of good faith applies to both
the definition of those interests, and to their connection with the measure at issue. Both must be found “plausible”.”
André Sapir, a senior fellow at the economics think tank Bruegel, concurs. “The panel has made a very important and welcome contribution by
rejecting Russia’s argument that the [it] has no jurisdiction to review Russia’s invocation of Art XXI.” But the panellists were also “wise” to decide they had no jurisdiction to review Russia’s specific measures.
WTO system at stake
The case could send shockwaves through the WTO system over time.
Washington’s steel tariffs introduced last
year are based on Section 232 of the 1962
Trade Expansion Act, which empowers the US president to impose unilateral trade restrictions for national security reasons. The measures affected close US allies, including NATO and EU members as well as Japan. The US exempted some countries from the tariffs, imposing only duty-free quotas in return for trade concessions. US friends such as Korea, Argentina and Brazil played along. The others refused and saw tariffs slapped on their metals exports.
The US administration is currently considering applying tariffs on imports of autos on similar national security grounds.
The EU, Canada, Turkey, Mexico and others are suing the US in the WTO over the steel duties, arguing that the US is using the national security argument as a disguised protectionist measure and trying to exempt itself from WTO rules altogether.
To several analysts, the ruling is bad news for Washington. US President Donald Trump has on occasion expressed the desire to leave the WTO. The US Trade Representative, Robert Lighthizer,
a long-standing WTO critic, sees the Geneva trade dispute settlement mechanism as impinging too much on national sovereignty.
The US is currently blocking the appointment of members of the WTO’s Appellate Body whose terms have expired. By end 2019, the appellate function in Geneva could simply wane. This would weaken a system of impartial and peaceful