European Parliament Cites GATT Article XXI as Justification for Trade Deal with U.S.

Last year, I raised the issue of how the security concerns of certain governments were a crucial factor in their trade negotiations with the U.S., with the Ukraine war and the U.S.-EU trade negotiations as my focus. I subsequently asked, "to what extent did the Ukraine war influence the EU's approach (and the negotiating result as well)?"

Since then, the U.S.-EU trade deal has stumbled a bit, slipping on some icy patches and having to recover. I haven't followed all the twists and turns, but I see that the European Parliament took a vote last week on the legislation to implement it in EU law, giving strong approval albeit with some conditions attached. There are still hurdles that might emerge, but it seems as though there is a good chance the deal will be finalized and implemented.

What interests me for the purposes of this post is that as part of the implementing legislation, Parliament added some language in a recital that formalizes the concerns about security in relation to the Ukraine war:

(1f) In view of Russia’s war of aggression against Ukraine, as well as other conflicts in the Union’s neighbourhood that undermine the security of the Union and its citizens, it is imperative for the Union to maintain and further strengthen its partnership with a key ally at a time when such relations are of critical importance. In that exceptional context, the Union is required to adopt extraordinary and temporary measures, duly justified under Article XXI of the GATT (Security Exceptions). However, such unilateral measures should not set a precedent and should remain strictly exceptional, proportionate and time-limited, reflecting their specific nature as actions justified on security grounds.

The Ukraine security part is not too surprising, but I'm not sure what to make of the reference to GATT Article XXI. If it is just about confirming what European leaders have in mind as the political justification for this deal (along the lines of the quotes in my earlier posts), I can see the logic, although I'm not sure why it needs to be included in the recital. However, if it is intended as an effort to provide a legal justification for the EU measures under GATT Article XXI, this seems like a dangerous road to go down.

First of all, with regard to WTO law, it would be a challenge to convince a WTO panel to agree with Parliament that these measures are "duly justified under Article XXI." I don't want to get too bogged down in the case law in this short post, but here's a quick assessment of the relevant provisions. Under the legislation, the EU is treating other Members less favorably than the U.S., which would lead to a GATT Article I:1 MFN violation. If the EU were to invoke Article XXI as a defense, it would have to show that the legislation is an "action which it considers necessary for the protection of its essential security interests" under the Article XXI(b) introductory clause; and that it falls under the "taken in time of war or other emergency in international relations" requirement in Article XXI(b)(iii). One consideration here will be whether the EU legislation can be sufficiently connected to the security concern being cited. On this point, at para. 7.138, the Russia - Traffic in Transit panel said: "as concerns the application of Article XXI(b)(iii), this obligation is crystallized in demanding that the measures at issue meet a minimum requirement of plausibility in relation to the proffered essential security interests, i.e. that they are not implausible as measures protective of these interests." Is this EU legislation plausibly protective of the EU's security interests related to Ukraine? Does it actually "maintain and further strengthen its partnership with a key ally"? I watched a bit of the plenary debate in the Parliament, and many of the MEPs did not come across as very confident on these points.

Second, in terms of the systemic impact, it seems to me that taking this approach to Article XXI in these circumstances pushes the boundaries of how this provision is applied. I know the Parliament says "such unilateral measures should not set a precedent," but I'm not sure a disclaimer of this sort will be effective, as the political precedent for a broader approach to invoking Article XXI will have been set. What this means in practice is that future EU actions are more likely to rely on Article XXI, and that other governments may see this as a signal that they, too, have a greater scope to rely on Article XXI to justify violations.

With regard to the next steps, a Parliament press release on the vote says "MEPs are now ready to start negotiations with EU governments on the final shape of the legislation" (referring to the trilogue negotiations involving Parliament, the Member States represented in the Council, and the Commission). It would be a good idea for everyone involved, at both the EU and Member State level, to think about the implications of a formal assertion that the legislation is justified under Article XXI, in terms of both potential litigation against this legislation and the signal it sends to the rest of the WTO membership about how Article XXI can and should be used.