Security Exceptions and WTO Reform

Author Name NAKATOMI Michitaka (Consulting Fellow, RIETI)
Creation Date/NO. February 2024 24-P-002
Research Project Structural Changes in the World Economy and Responses from Japanese Firms and the Government
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This paper discusses the status of security exceptions in the WTO, their actual implementation and interpretation, and desired responses for the international trade system.

In order to maintain the balance between security exceptions and free trade, it is essential to restore the WTO's legislative function, strengthen its monitoring and surveillance function, and quickly restore its dispute settlement function.

The expansion of security exception measures is largely due to the sluggish legislative function of the WTO, and it is important to realize the results in such areas as the JSI (JOINT STATEMENT INITIATIVE), as well as to specify negotiation issues such as trade remedy measures.

Moreover, the dialogue on matters of specific trade concern (STC) at WTO committees based on the TBT Agreement and other agreements has been effective and has also been helpful in resolving disputes, and is expected to be utilized for security exceptions. The establishment of new National Security Committee is also an issue for consideration.

With regard to the restoration of the dispute resolution function, in order to prevent the abuse of the security exception and the acceleration of its black-boxing, it is essential to take into account its political nature and the U.S. position on the issue of justiciability, and it may be necessary to consider introducing a compensation mechanism on the grounds of non-violation. In disputes related to security exceptions, there is currently a strong possibility that the losing party will file an appeal into the void, which will further hollow out the dispute settlement function of the WTO. It is necessary to consider the option of introducing a binding, one stage dispute settlement system into the WTO dispute settlement to avoid this.

The English version of this paper is 24-P-003.