Economic Security in the WTO Agreement: Balancing trade liberalization with protection of security interests

Author Name KOMETANI Kazumochi (Consulting Fellow, RIETI)
Creation Date/NO. July 2023 23-P-010
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This paper proposes that the WTO Agreement should be interpreted as permitting any restriction on military trade based on security considerations and prohibiting any restriction on non-military trade on such grounds, except for restrictions between parties to a war, or when a Member uses such measures to assist a party to a war where the consequences of the measures could seriously impact the security interest of the assisting Member. It disagrees with the existing WTO panel reports that have allowed for a broad interpretation of the phrase “other emergency in international relations”. Such an interpretation increases the risk that economic dependence will be exploited to disincentivize trade liberalization, which would suppose further economic dependence. Furthermore, no restriction on non-military trade should be permissible, even if it is taken for the purpose of protecting a strategically key industry. For that purpose, a Member should explore the possibility of withdrawing relevant tariff concessions on an MFN basis pursuant to GATT Article XXVIII, rather than resorting to the national security exception that could permit non-MFN trade restrictions. It is difficult for the U.S. Section 232 measures concerning certain steel and aluminum products or China’s “Military-Civil Fusion” policy to co-exist with the WTO Agreement. Both of them disregard the previously cited distinction in treatment between military trade and non-military trade.