61. The Conundrum of the Essential Security Exception: Can the WTO resolve the GATT Article XXI crisis and save the dispute settlement mechanism?
- Author:
- Stephen Kho, Yujin McNamara, Sarah Kirwin, and Brooke Davies
- Publication Date:
- 11-2023
- Content Type:
- Working Paper
- Institution:
- Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
- Abstract:
- The World Trade Organization (WTO) is in an existential crisis. Ever since the United States began blocking the appointment of new Appellate Body members, the WTO’s dispute settlement mechanism began slowly breaking down. As the Appellate Body lost its ability to function, WTO Members realized that they were empowered to appeal disputes they had lost at the panel level “into the void,” thereby preventing resolution. This, in turn, resulted in the filing of fewer disputes as Members instead started taking trade matters into their own hands. At the same time, Members began to more freely ignore their WTO obligations, knowing that if challenged, they could simply appeal adverse decisions “into the void” while still boasting their compliance with WTO rules because the dispute settlement mechanism would not have rendered a final decision based on a procedural technicality. Some WTO Members are now actively attempting to resuscitate the faltering dispute settlement system. Over the past year, efforts to negotiate a solution to the Appellate Body impasse have intensified between the United States and other Members, so much so that WTO Director- General Ngozi Okonjo-Iweala recently suggested that dispute settlement reform could be one of the main “outcomes” of the upcoming 13th WTO Ministerial Conference.2 However, this is easier said than done. Despite recent progress in the reform discussions, the United States has seen to it that a key sticking point in the negotiations has become the justiciability of Article XXI(b) of the General Agreement on Tariffs and Trade of 1994 (GATT).3 Article XXI(b) is an exception that allows WTO Members to legally deviate from their trade obligations when necessary for the protection of their “essential security interests”.4 As with the Appellate Body impasse, the United States stands largely alone in taking a hard- line position that Article XXI(b) must be wholly self-judging and thus non-justiciable under the WTO. In the view of the United States, Members may unilaterally determine for themselves whether their actions are taken for purposes of their essential security interests, or, in other words, whether they self-qualify to use the Article XXI(b) exception to justify what would otherwise be a WTO violation.5
- Topic:
- International Trade and Finance, National Security, WTO, and Disputes
- Political Geography:
- Global Focus and United States of America