At a House Ways and Means Committee trade hearing yesterday, Congressman Don Beyer asked a good question of former USTR official Bruce Hirsh about possible abuse of the national security exception in trade agreements:
Mr. Hirsh, you mentioned that, you talked about the dispute over whether WTO panels can second guess a Member's decision to take a measure for national security purposes. Clearly this happened in President Trump's administration. This administration has held fast to the position that national security concerns remain sacrosanct and out of bounds for multilateral bodies to consider. You suggest maybe there's a way to formalize this. But have we created this huge hole in the WTO rules? What's to prevent self attestation from any given country to choose any given thing? For example, ... why couldn't India say that they have a national security exemption for rice?
We haven't seen the spread of this sort of abuse of the national security exception yet, but I've wondered whether it's coming.
Hirsh responded as follows:
Yeah, that's an excellent question. And, you know, there's clearly a tension between treating national security issues as self judging and the potential for a big loophole. But this has been the case since 1947. This has been on the books since 1947. The US has taken this position since 1947. And what held it back really from becoming this kind of loophole was this mutual recognition, this norm that it should not be overused. Now, you know, we're in a situation where it is increasingly being used.
So what can we do? For one thing, the US has never denied that when a Member invokes national security, that another Member is entitled to retaliate. This is frankly the end point of any dispute. So what the US really has done in the past is just skip over the middle, skip over the notion that trade experts can sit in judgment on a Member's national security decisions, and just cut right to the chase and say, OK, you want to retaliate? This was the impact of our measure, you may retaliate up to that point. And so when I talk about formalizing that process, that's what I'm referring to. That ability to retaliate should serve as some disincentive.
I could be wrong here, but I had a different impression of the current U.S. position. I thought the U.S. position was that after one government invokes national security, other governments can file non-violation nullification or impairment complaints (Key quote at the link: "From the beginning of the trading system, it has been the U.S. view that the appropriate remedy where a Member is impacted by another Member's essential security measures is to seek a non-violation / nullification or impairment claim"). If those complaints are successful, then retaliation would be permitted. The problem with this approach is, given the difficulty of winning non-violation complaints, practically speaking it will be a challenge for anyone to be able to retaliate against national security measures. But I'd be happy to be wrong about the current U.S. position, and it would be great to hear someone from USTR confirm what Bruce seemed to be saying.
