At a DSB meeting in January 2023, the U.S. made clear its position that "it was a mistake to begin adjudicating national security at the WTO," and said: "we believe Members need to clarify and adopt a shared understanding of the essential security exception, and we therefore intend to seek an authoritative interpretation of Article XXI of the GATT 1994, pursuant to Article XI of the WTO Agreement." We now have a formal U.S. proposal to this effect (H/T to Peter Ungphakorn for pointing me to it), in the form of a communication entitled “Reflections from the United States on the Handling of Disputes Involving Essential Security Measures."
Here is the crux of the U.S. proposal:
WTO Members designed a system for the settlement of disputes where rebalancing can take place without interfering with a Member's assessment and sovereign responsibilities for its essential security. If a Member is impacted by an essential security measure, and the Member wishes the assistance of WTO Members in defining an appropriate rebalancing, the appropriate response is to bring a non-violation nullification or impairment claim pursuant to the General Agreement on Tariffs and Trade 1994 (GATT 1994), the General Agreement on Trade in Services (GATS), or the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), or the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).
A non-violation nullification or impairment claim may be used to challenge any measure applied by another Member, whether or not the measure breaches the WTO Agreement, provided that the measure nullifies or impairs a benefit, or impedes the attainment of an objective, of the Agreement. Thus, the consistency of the measure with the WTO Agreement is not in dispute and is not assessed by an adjudicator; instead, the claim rests on the assertion that a Member's benefits have been nullified or impaired by the measure, with the objective of ensuring that the negotiated balance of concessions is maintained.
In the context of an essential security measure, such disputes should proceed in accordance with the following guidelines:
• Members agree to pursue arbitration under DSU Article 25 to determine the level of suspension equivalent to the level of nullification or impairment based on a claim of non-violation nullification or impairment with respect to an essential security measure;
• A complaining party Member agrees not to challenge the invocation of the essential security exception;
• A responding party Member agrees not to contest the claim of non-violation nullification or impairment provided the complaining party Member has not resorted to countermeasures; and
• The parties agree the complaining party Member may suspend the application of tariff concessions at the level equivalent to the level of nullification or impairment determined by the Arbitrator.
WTO Members should also agree, pursuant to Article IX of the WTO Agreement, to an authoritative interpretation of Article XXI of the GATT 1994, Article XIV bis of the GATS, and Article 73 of the TRIPS Agreement, to clarify the understanding of the essential security exception. To illustrate:
Under GATT 1994 Article XXI(b), GATS Article XIV bis:1(b), and TRIPS Agreement Article 73(b), each Member determines for itself whether an action it takes is necessary for the protection of its own essential security interests and whether one or more of the circumstances set out in the subparagraph endings are present. Therefore, in any dispute in which a responding party Member invokes GATT 1994 Article XXI(b), GATS Article XIV bis:1(b), or TRIPS Agreement Article 73(b) of the TRIPS Agreement, a WTO adjudicator shall not review a Member's invocation of GATT 1994 Article XXI(b), GATS Article XIV bis:1(b), or TRIPS Agreement Article 73(b), and shall instead limit its report to the DSB to note that invocation.
(footnotes omitted)
When I wrote about about the U.S. suggestion that it was going seek an authoritative interpretation on this issue, I noted two concerns: (1) that NVNI claims are hard to win; and (2) the existing DSU text provides a remedy for NVNI complaints that may not be as strong as the remedy for violation complaints. It looks to me as though the U.S. proposal addresses both of these points, as it is along the lines of what I had been pushing for in this context, which is immediate rebalancing in these cases.
This all leaves me with a few questions:
- The U.S. is invoking national security as part of domestic policymaking a lot these days. Is it ready for all the rebalancing arbitrations that might take place?
- How will the "guidelines" noted by the U.S. work? I feel like they would need to be formalized in some way, and I'm curious what the U.S. has in mind here.
- How will other Members react to this proposal in terms of its substance?
- The timing of the proposal is problematic because the Biden administration is on its way out. Will the Trump administration support this proposal? Will it put time and resources into pushing it?
