In a post from February on the U.S. - Origin Marking Requirements (DS597) case, I asked: "Is the U.S. really saying that Article XXI applies beyond the GATT?" Based on the U.S. first written submission in the case, the answer is a resounding yes. Here's an excerpt of their argument:
C. THE EXCEPTION UNDER ARTICLE XXI OF THE GATT 1994 APPLIES TO THE CLAIMS UNDER THE AGREEMENT ON RULES OF ORIGIN.
266. The structure of the WTO Agreement as a whole demonstrates that the essential security exception of Article XXI of the GATT 1994 applies to the multilateral agreements on trade in goods, including the Agreement on Rules of Origin, as explained below. To conclude otherwise would suggest that negotiators believed that the essential security exception applied to the fundamental disciplines in the GATT 1994—including with respect to marks of origin in Article IX—but not to the elaborations upon those disciplines as set out in the other trade-in-goods agreements, including with respect to the rules of origin used to administer a marking requirement.
267. In addition, as discussed in detail below, the Agreement on Rules of Origin includes multiple textual references to the GATT 1994, which make clear that the Agreement on Rules of Origin applies to rules of origin used in commercial policy instruments disciplined by the GATT 1994, and that Members retain discretion under the Agreement on Rules of Origin to take action to protect their essential security interests under Article XXI. The object and purpose and negotiating history confirm the close link between the Agreement on Rules of Origin and the measures it disciplines, and the GATT 1994 and the GATT-disciplined measures that rules of origin administer. Indeed, Hong Kong, China, acknowledges the link between the Agreement on Rules of Origin and the GATT 1994, as it acknowledges that its claims of breach of Article 2(d) of the Agreement on Rules of Origin are “essentially the same” as its claims of breach of Articles I:1 and IX:1 of the GATT 1994 (as well as Article 2.1 of the TBT Agreement).294
1. The structure of the WTO Agreement shows that the essential security exception applies to the Multilateral Agreements on Trade in Goods, including the Agreement on Rules of Origin.
268. The starting point for establishing that the essential security exception applies to the Agreement on Rules of Origin is to examine the structure of the WTO Agreement as a whole. The Marrakesh Agreement is an umbrella, establishing among other things that all of the agreements in its annexes are a single undertaking.295 The core multilateral substantive obligations are contained in Annex 1. In particular, Annex 1A consists of the Multilateral Agreements on Trade in Goods (including the Agreement on Rules of Origin and the Agreement on Technical Barriers to Trade), Annex 1B consists of the General Agreement on Trade in Services (GATS), and Annex 1C consists of the Agreement on Trade Related Aspects of International Property Rights (TRIPS). The essential security exception applies to each of Annexes 1A, 1B, and 1C....
272. Within Annex 1A, the Multilateral Agreements on Trade in Goods, the first agreement listed is the GATT 1994. Of course, the GATT 1994 is a successor the to the GATT 1947. The GATT 1947, and the slightly modified GATT 1994, contain the essential security exception in their respective Article XXIs. The remaining agreements in the Annex 1A (including the Agreement on Rules of Origin and the TBT Agreement) are the product of negotiations in the Uruguay Round, undertaken with the purpose of elaborating upon the disciplines in the GATT 1994 and related matters involving trade in goods. None of the remaining agreements has an article repeating the GATT 1947/1994 essential security exception, and these agreements only contain a few scattered references to the essential security exception.299
273. Two possibilities arise from this structure. The first, which the United States submits is plainly correct, is that the negotiators understood that the GATT 1947/1994 essential security exception applies to the new agreements on trade in goods contained in Article 1A. The other possibility is that for some reason, the negotiators believed that the essential security exception applied to the fundamental disciplines in the GATT 1994, but not to the elaborations upon those disciplines as set out in the other trade-in-goods agreements. This second interpretation is untenable as a matter of logic or common sense.
274. The General Interpretative Note to Annex 1A supports the interpretation that the GATT 1994 essential security exception applies to the new trade-in-goods agreements. The note provides:In the event of conflict between a provision of the General Agreement on Tariffs and Trade 1994 and a provision of another agreement in Annex 1A to the Agreement Establishing the World Trade Organization (referred to in the agreements in Annex 1A as the “WTO Agreement”), the provision of the other agreement shall prevail to the extent of the conflict.
The note addresses possible conflicts between the GATT 1994 and the new agreements in Annex 1A; in doing so, the note confirms that the negotiators viewed the new agreements as addressing the same topics as the GATT 1994. Further, in providing that the new agreements prevail in the event of conflict, the drafters were reflecting the general rule that more specific provisions prevail over general provisions. Thus, the interpretive note confirms that the new trade-in-goods agreements were viewed as an elaboration upon the disciplines in the GATT 1994.
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D. THE EXCEPTION UNDER ARTICLE XXI OF THE GATT 1994 APPLIES TO THE CLAIMS UNDER THE TBT AGREEMENT
1. The structure of the WTO Agreement and textual references within the TBT Agreement confirm that essential security measures are not reviewable under the TBT Agreement, and this understanding is further confirmed by negotiating history.
297. As the United States explained in Section III.C.1, the structure of the WTO Agreement as a whole shows that the GATT 1994 essential security exception applies to the Annex 1A Multilateral Agreement on Trade in Goods, including the Agreement on Rules of Origin. That explanation applies with equal force to the TBT Agreement. Below, Section III.D.1 discusses the specific provisions within the TBT Agreement that set forth strong and explicit links to the GATT 1994 and the essential security exception in GATT 1994 Article XXI. Section III.D.2 demonstrates that the negotiating history of the TBT Agreement confirms that essential security measures are unreviewable by the TBT Agreement. Section III.D.3 explains that the link between the TBT Agreement and the GATT 1994 is particularly strong in this dispute, given the overlap between the discrimination claims under Article 2.1 of the TBT Agreement and Articles I:1 and IX:1 of the GATT 1994 – an overlap that Hong Kong, China itself acknowledges....
302. In this respect, the contrast between the sixth and seventh recitals reflects an important difference between Articles XX and XXI of the GATT 1994.319 That is, while the former subjects a measure qualifying as “necessary” to a further requirement of, essentially, nondiscrimination, and in turn to review in a possible dispute settlement proceeding, the latter provision is self-judging as to what actions are necessary for a Member to protect its essential security measures.
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313. Therefore, Tokyo Round Standards Code negotiators contemplated that the preamble should “refer” to the exception articles of the GATT, specifically Articles XX and XXI. This supports the interpretation that the seventh recital of the preamble reflects Article XXI of the GATT.
In my earlier post, I concluded with this:
... I have been making a lonely case that GATT Article XX should apply to non-GATT goods agreements, based on the logic that the non-GATT goods agreements are all derived from some part of the GATT, so it makes sense that the GATT exceptions should apply. But no one seems convinced.
Is it possible that USTR sees it the same way I do? Or would they distinguish Article XXI from Article XX? Or perhaps they didn't really mean what they seemed to be saying today to be taken to its logical conclusion? ...
Having read USTR's arguments in its written submission, I still have a lot of questions about how they see all this, in particular the distinction between GATT Articles XX and XXI as exceptions to non-GATT agreements. Would they extend their position beyond just GATT Article XXI? Could GATT Article XX apply to non-GATT agreements? If yes, which ones? Based on the arguments in the U.S. submission, I'm not entirely sure what the U.S. view is here. Reading the U.S. argument in paras. 314-315 (not quoted above), I can see a possibility that the U.S. does not take the view that GATT Article XX applies to the TBT Agreement. But without a similar argument in the Rules of Origin Agreement section, does that mean they think GATT Article XX does apply there? And what about other WTO agreements? If anyone wants to read the full text of the U.S. arguments on this issue and offer their assessment, I'd love to hear it! And I hope the panel asks some pointed questions that helps flesh this out.
