Invoking the Security Exceptions under GATT : Are Economic Sanctions Eroding the Foundation of the WTO?

The national security exception under Article XXI of GATT is a major exception to Members’ obligations under the WTO. However, it has been claimed to be a loophole to the WTO system, and it goes beyond the principles of general international law on lawful suspension of treaty obligations. Throughout the GATT 1947 and WTO practice, from early cases to the case US – Helms-Burton regarding the U.S. embargo against Cuba, it has not yet been resolved whether Article XXI could be subject to the WTO dispute settlement system. The subject matter of this thesis has significant importance today. Russia imposed counter sanctions on the EU, Norway, the United States, Australia and Canada, and banned the importation of listed agricultural products, raw materials and food from the targeted countries. By doing so, Russia violated its obligations under the WTO. However, Russia justified its measures stating that it is a matter of its ‘national security interests’. Economic sanctions have played a role in the trade arena as a tool for states’ foreign policy. The relationship between the WTO and national security remains still unresolved after nearly 70 years. The Russian unilateral justification for its counter sanctions, could make a potential case to the WTO panels or the Appellate Body on Article XXI of GATT. This thesis will discuss, whether the WTO panels and the Appellate Body should have a competence to investigate the national security exception Article XXI of GATT in a dispute, and second, whether they can assess the justification of economic sanctions taken under Article XXI(b)(iii) of GATT, and third, if so, how such assessment and interpretation of justification could be conducted. Forth, it will be reviewed whether the WTO should tolerate the unlimited invocation of Article XXI by Members. This thesis is faithful to legal dogmatic method. To understand the subject matter, the first part will shortly explain the main provisions of GATT and economic sanctions in the context relevant to this study, and then provide an overview of the WTO jurisdiction and its dispute settlement system in the light of state sovereignty, which is vital to bear in mind in the discussion of national security. In the second part, this thesis will study thoroughly Article XXI of the GATT, focusing on its most controversial subsection (b)(iii). To understand well the key issues, it is necessary to discuss in this part the historical background and the preliminary works of the security exception clause. This will be examined and assessed through the relevant cases on the invocation of the Article XXI, in the light of the presented varying interpretations and factual grounds. The third part will look at the WTO panels’ and the Appellate Body’s possible methods for interpreting ‘justification’ of economic sanctions taken under Article XXI(b)(iii) of GATT, both in the light of case history and principles of general international law, and will propose an alternative approach which could be applied arising national security related disputes. Last, the conclusion will summarize the findings and make suggestions for possible solutions for the current controversy