Russia National Security Case at WTO Could Have Implications for Section 232 Tariffs

Now that the World Trade Organization has ruled that Russia was justified in blocking transit of Ukrainian goods across its territory under the General Agreement on Tariffs and Trade's national security exception, lawyers are trying to project how a different panel will view the U.S. use of the same rationale for its steel and aluminum tariffs.

The U.S. has argued that WTO's dispute settlement system has no jurisdiction when a country says an act is for national security, that it is entirely self-judging. But the WTO did judge whether Russia followed the text of the GATT, which says that the trading system's rules do not prevent actions that a country considers "necessary for the protection of its essential security interests" relating to fissionable materials, traffic in arms, ammunition or goods "directly or indirectly for the purpose of supplying a military establishment" or "taken in time of war or other emergency in international relations."

It was that last clause that allowed Russia's move, given that Russia had annexed Crimea from Ukraine, and Ukraine accuses Moscow of supporting a civil war in its eastern provinces.

Georgetown Law Professor Jennifer Hillman believes the Section 232 tariffs do not qualify for any of these three clauses, and has been arguing that (see 1806290049) even before this ruling. She said last June that the Trump administration's read on Section 232 of the Trade Expansion Act means that "anything we deem to be in our economic security interest is national security and vice versa."

According to documents at the WTO, one of the original drafters of the GATT's national security exception said the clauses were needed to clarify what essential security interests could be. "We cannot make it too tight, because we cannot prohibit measures which are needed purely for security reasons. On the other hand, we cannot make it so broad that, under the guise of security, countries will put on measures which really have a commercial purpose," he said.

Thompson Hine lawyers blogged April 11 about the case, noting that the panel said that the WTO will allow trade actions under the national security exception only when it meets one of the three clauses. But, they wrote, "it remains to be seen how a new panel will view the Trump administration’s decision to consider steel and aluminum imports a national security threat."