Academic journal article The George Washington Journal of International Law and Economics

Be Careful What You Wish For: U.S. Politics and the Future of the National Security Exception to the GATT

Academic journal article The George Washington Journal of International Law and Economics

Be Careful What You Wish For: U.S. Politics and the Future of the National Security Exception to the GATT

Article excerpt


In 1994 the United States led more than 100 nations into the greatest free-trade experiment in history. The World Trade Organization (WTO), the product of seven years of negotiations' known as the Uruguay Round,2 represents an attempt to strengthen the General Agreement on Tariffs and Trade (GATT)3 and ensure a more free and less discriminatory trading system.4

Under the WTO, countries may no longer thwart examination of their policies affecting trade.5 This change promises significant benefit to the United States.6 It may also, however, conflict with another fundamental principle of the GATT-that any country has the right to justify economic sanctions against a foreign nation in the name of national security.7 The national security exception to the GATT, contained in Article XXI, has functioned as a virtually unlimited escape clause from the GATT's requirements.8 It allows a member country to violate a basic precept of the GATT: If a nation chooses to extend preferential trade treatment to one foreign country, it must offer the same preferences to all foreign countries.9 As one commentator has noted, "Article XXI . . . allows Contracting Parties-in certain instances-to use economic measures for political means in a way which would be considered illegal under the regular regime of [the] GATT."Io

Before the establishment of the WTO, the United States could prevent another nation from challenging its decision to invoke the national security exception as justification for trade sanctions.ll After the Uruguay Round, the United States may have lost this power.l2 The European Union (EU) has already challenged the Cuban Liberty and Democratic Solidarity Act (Helms-Burton Act),lo which punishes foreign companies and nationals that do business with Cuba.l4 The EU objected to two provisions in particular.l5 The first allows U.S. citizens from whom the Cuban government has expropriated property to file claims against any person who invests in that property.l6 The second bans officials of foreign companies that invest in expropriated property from entering the United States.l7 Claiming that the WTO has neither the right nor the ability to judge U.S. foreign policy concerns, the United States said it would boycott any WTO panel convened in response to these two If the United States changes its mind and decides to participate in the WTO hearing, observers expect it to defend its policy on Article XXI grounds.19

In either case the newly-hatched WTO will face a Hobson's choice: uphold the unilateral invocation of national security to justify violations of the GATT and risk opening the door to a virtually unlimited number of such justifications in the future, or side against Washington and risk the withdrawal of U.S. support for the WTO, which could reverse much of the trading progress of the last decade.20 This Note explains the background of the GATT's national security exception and explores the coming conflict in the WTO over its possible invocation. This Note argues that it is in the best interests of the United States to limit the applicability of the national security exception under the WTO. Finally, this Note explores alternatives to trade sanctions that Congress and the White House use to achieve U.S. foreign policy goals.

II. DISCUSSION A. Background of the GATT and Its National Security Exception (Article XXI) The principle of non-discriminatory trade underlies the GATTall signatories must offer the same trade rights and privileges to all other signatories.21 A number of exceptions, however, permit import restrictions in certain circumstances: (1) when a nation "dumps"22 (i.e., sells goods for a lower price in the importing country than at home) goods or subsidizes their production;23 (2) when trade hurts a nation's balance of payments;24 (3) when trade damages a domestic industry;25 or (4) when trade threatens important national priorities, including public morals, "national treasures," or natural resources. …

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