Last Friday, the United States appealed the US-Origin Marking Requirement (DS597) and the US-Steel and Aluminium Products (DS544,552, 556, 564) reports. With the appeal came news that the US would lead an effort to draft an authoritative interpretation of GATT Article XXI. This U.S. administration will want to solidify its position that Article XXI is self-judging (briefly, that it is for the invoking member to decide what action it considers “necessary” for the protection of its essential security interests and which circumstances are present) and that the only redress for Members affected by security measures would be a non-violation nullification or impairment claim.
Further consideration of how the United States lost its security defence in these cases may be overshadowed by this announcement. Towards the conclusion of the dispute settlement proceedings in US-Steel and Aluminium Products, a curious thing happened. The United States maintained the self-judging nature of GATT Article XXI(b). Still, the United States used its closing statements to argue that its security actions occurred ‘in time of war or other emergency in international relations.’ The complainants’ objections to the ‘manner and timeliness’ of the U.S. defence were noted (DS544, para 7.130). Did the panel second-guess what the U.S. government finds to be a national security issue, or did the United States argue its defence poorly? This post examines how the United States presented its arguments in the US-Steel and Aluminium Products dispute. Knowing the next steps may be to compose a new process for disputes arising from security actions, we need to interrogate this proceeding to ask better questions in the future.
Burden of Proof
Following the standard approach for exceptions, when invoking GATT Article XXI(b), the invoking member bears the burden of proof. No panel has yet clarified if the allocation of the burden of proof should shift based on the respondent’s invocation of specific security exceptions under Article XXI(b). Moreover, the DSU does not regulate circumstances where a respondent invokes Article XXI, especially subparagraph (a) which confirms that all Members may withhold any information it considers contrary to its essential security interests. To date, there is no common understanding of how Article XXI(a) impacts a Member’s burden of proof.
The burden of proof was a crucial issue in the Russia-Traffic in Transit dispute. Ukraine maintained throughout the proceedings that Russia could not invoke Article XXI(a) to refuse to disclose any factual evidence and evade its burden of proof (DS512, para. 7.32, 7.129). Russia did not disclose information about the ‘emergency in international relations.’ Instead, as is well known now, Russia formulated ‘hypothetical circumstances’ and cited Ukraine’s Trade Policy Review Report to identify the ‘emergency in international relations’ (DS512, 7.114, 7.118). The panel did not set an onerous evidentiary burden on Russia and accepted that the ‘situation’ giving rise to the measures was ‘publicly known.’ The panel did not squarely discuss Russia’s invocation of Article XXI(a) as independent of or related to its invocation of Article XXI(b). Without parameters set in this report, it remains unclear what a member could do in these proceedings to ‘lose its protection provided by article XXI’ (Hahn 1991, 616).
In the Saudi Arabia – IP Rights (DS567) dispute, Saudi Arabia refused to engage with ‘the facts or arguments presented by Qatar’ (DS567, para 7.40). As a result, the panel clarified that it must ‘satisfy itself’ that the complainant made a prima facie case in relation to each claim. The panel explained that it would first conclude whether the claims were ‘well-founded in fact and in law through various means, including written and oral questions and undertaking a careful review of the evidentiary basis underlying Qatar's various factual assertions.’ (DS567, para 7.39). When evaluating the existence of an ‘emergency in international relations,’ the panel agreed with Saudi Arabia that severance of all diplomatic and consular relations is the ‘ultimate state expression of the existence of an emergency in international relations.’ (7.259). The panel refused to opine on the burden of persuasion or proof required to determine the existence of an ‘emergency in international relations.’ (7.268).
When the United States switched strategies
The US-Steel and Aluminium Products dispute proceeded through two substantive meetings. First, with the parties at the end of October 2019 and a second substantive meeting with the parties on 11, and 25 January 2021 (para 1.10). Parties received the interim report on 29 June 2022. A session with the third parties occurred on 18 November 2019.
Based on its first submission in US – Steel and Aluminium Products, the U.S. maintained that the GATT security exceptions were self-judging, and its invocation of security was non-justiciable in WTO dispute settlement proceedings. In particular, the U.S. asserted that the phrase ‘which it considers’ applied to the entire provision, such that Article XXI(b)(iii) ‘might have been written’ as ‘Nothing in this Agreement shall be construed to prevent any contracting party from taking, in time of war or other emergency in international relations, any action which it considers necessary for the protection of its essential security interests.’ (para 33). Thus, the U.S. had sole authority to define ‘emergency in international relations’ of subparagraph (b) of GATT Article XXI. As the Trump administration made clear at the time, U.S. concerns were with ‘economic security.’ Responding to the first set of panel questions, in February 2020, the United States explained that ‘essential security’ encompassed ‘commercial or trade relations’. Responding to the second set of panel questions, in September 2020, the United States defined ‘emergency in international relations’ as ‘a situation of danger or conflict, concerning political or economic contact occurring between nations, which arises unexpectedly and requires urgent attention’ (para 48). Moreover, an ‘emergency’ in the sense of GATT Article XXI is ‘likewise broad’ and includes commercial or trade relations that arise ‘unexpectedly and requires urgent attention.’ (para 232).
The US-Steel and Aluminium Products panel report explains that the U.S. maintained its self-judging argument and ‘submitted an extensive record of material relating to the measures at issue.’ (7.131). However, the panel report highlights only one piece of evidence: the Steel and Aluminium Reports of the USDOC and Presidential Proclamations setting out the legal basis under Section 232, both in the public record. For the first substantive meeting in October 2019, the United States’ opening and closing statements do not mention the circumstances giving rise to U.S. actions.
When did the United States begin to articulate the situation as meeting the requirements of GATT Article XXI(b)(iii)? Based on the panel report, the answer is the U.S. second written submission. While asserting that the United States did not have to provide any information explaining its invocation of the security exceptions, it argued that ‘publicly available information’ concerning its measures ‘could be understood to relate most naturally to the circumstances described in Article XXI(b)(iii).’ (para 7.132, citing the submission, paras. 23, 24). The only evidence of this is found in the panel report itself. The U.S. posted its pleadings for the US-Steel and Aluminium Products but not this second written submission.
The dates of this submission are fuzzy. Based on the panel’s explanation, the submission came before the responses the US made on September 22, 2020 to the panel’s additional questions. There, the U.S. confirms that while the panel may not ‘make its own assessment’ of the U.S. invocation of GATT Article XXI, ‘the extensive findings in the steel and aluminium reports are consistent with the United States considering the measures at issue to be taken “in time of war or other emergency in international relations”’ (p. 35, para. 42).
In the closing statement at the second substantive meeting, the United States reiterated its assessment that GATT Article XXI is self-judging. Still, in the alternative, ‘[t]he record before the panel demonstrates that the United States considers the measures at issue to be necessary for the protection of its essential security interests and taken “in time of war or other emergency in international relations”. (DS544, para 7.134). In the second set of responses to panel questions (September 22, 2020), the United States relied on the publicly available USDOC reports to justify its invocation of GATT Article XXI(b)(iii) (paras 43-49). This short explanation concerns the ‘weakening of the domestic economy’ and risks to U.S. ‘national security’ due to the ‘displacement of domestic steel by imports’ (para 43). Asserting the ‘global nature of steel excess capacity’, the USDOC reports state that inter-governmental efforts (such as at the OECD) failed to resolve the United States’ concerns with Chinese steel producers receiving subsidies and other forms of government support (para 45).
The U.S. closing statement introduced another argument too – that the ‘United States was at a crucial point [and] that without immediate action, the steel industry could suffer damages that may be difficult to reverse and reach a point where it cannot maintain or increase production to address national emergencies’ (para 7.134). The United States also used its closing to present the new argument that ‘fundamental changes’ to the steel and aluminium industries brought on by the ‘production revolution’ can lead to ‘unexpected developments,’ particularly ‘when that industry is facing an “acute” situation of global excess capacity that is the highest in the industry’s history’ (para 7.134). To make this argument, the panel report highlights that the United States referred to other inter-governmental documents, including the G20 Global Steel Forum Report of 2017, G7 Summit Communiqué, and OECD Ministerial Council meeting statements in 2018 (para 7.135).
Assessment of the U.S. invocation of GATT Article XXI
The panel relied on dictionaries to clarify that the phrase ‘emergency in international relations’ refers to ‘at least comparable in its gravity or severity to a “war”’ (para 7.138-139). Moreover, it does not cover ‘purely domestic or national affairs.’ The panel concluded that the USDOC Steel and Aluminium reports identify three factors explaining how the United States considered a ‘weakening of [the United States] internal economy may impair the national security.’
- Displacement of domestic steel/aluminium by excessive imports;
- Consequent adverse impact on the economic welfare of the domestic steel/aluminium industry; and
- Global excess capacity in steel and aluminium.
The panel found that the first two factors speak to the domestic concerns of the United States. As the Section 232 investigations concerned determinations regarding U.S. national security, the panel found the record fails to meet the evidence required when invoking GATT Article XXI(b)(iii). One way to look at this is that the panel did not ‘second-guess’ U.S. security. Rather, the panel concluded that GATT Article XXI(b)(iii) only justifies security actions taken during a (narrow interpretation of) ‘emergency in international relations.’ The USDOC reports show what the United States deemed security interests ‘necessary’ for protection. However, this evidence was insufficient for a ruling that the security actions were taken during an ‘emergency in international relations’ (para 7.143). Had the United States made a clearer argument about the emergency in international relations earlier, it’s possible the panel could have found the United States justified its security actions.
Regarding ‘global excess capacity in steel and aluminium’, the panel acknowledged ‘evidence of international engagement’ but did not find ‘situations of a certain gravity or severity and international tensions that are of a critical or serious nature in terms of their impact on the conduct of international relations’ (para 7.147-148). The panel treated evidence of diplomatic ‘solutions’ and international cooperation as evidence that the U.S. did not act in time of an ‘emergency in international relations.’ (para 7.148).
Echoing my concerns in Part 1, the panel report narrows the use of security by interpreting GATT Article XXI(b)(iii) as a ‘we had no other choice’ type of circumstance. Effectively, the United States would have to show a breakdown of international (economic) relations between the United States and China. It fails to account for the possibility of security actions alongside international coordination. For those unsure about the future of non-violation complaints, a legitimate question is whether a dispute settlement panel will ever review any U.S. action involving China again. Still, a benefit of the effort to create a new rebalancing process is that WTO members can figure out how to address the broad spectrum of circumstances that raise security practices, including those not in times of severe breakdown of international relations.
Nevertheless, why didn’t the United States provide more evidence to argue that the challenges of excess capacity remain unresolved, despite international initiatives? Why did the panel effectively ignore the complainant’s concerns that the United States failed to discharge its burden of proof for the duration of these proceedings? I wonder what the report would have looked like if the panel had pushed harder on due process and not simply let the United States present new evidence in the closing statement of the second meeting. The panel observed (in a footnote) that after the meeting, the complainants would have the opportunity to submit written comments on arguments made by the United States during its closing statements (footnote 481). The only reference to the added submissions is where the panel highlights the United States’ arguments that OECD Members have ‘serious concerns’ with ‘severe excess capacity in key sectors such as steel and aluminium.’ (para 7.135).
Wrapping up
As part of the authoritative interpretation process, Members may choose to confirm that the circumstances by which a Member brings a security action are subjective questions. Any new process involving security actions must develop a clear plan for due process, clarifying how arguments and evidence can shift from party to party. If proceeding to focus on rebalancing, then questions regarding the burden of proof and the role of arbitrators will continue. As the arbitrator in EC-Hormones (US) (Article 22.6) explained, ‘WTO Members, as sovereign entities, can be presumed to act in conformity with their WTO obligations […] The duty rests on all parties to produce evidence and to collaborate in presenting evidence to the arbitrators – an issue to be distinguished from the question of who bears the burden of proof.’ (paras 9, 11).
