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The US doubles down on national security at the World Trade Organization

FILE – Containers are seen at a port in Nanjing in eastern China’s Jiangsu province on Oct. 27, 2022. China’s imports and exports shrank in November as global demand weakened and anti-virus controls weighed on the second-largest economy. (Chinatopix via AP, File)

Last week, the U.S. announced that it will appeal all five of the “national security” disputes it lost at the World Trade Organization (WTO). The irony is thick.

The WTO’s Appellate Body (AB) is defunct, thanks to the U.S. blocking the appointment of new jurists. Moreover, the Biden administration has already declared that it has no intention of complying with these rulings. Why would the U.S. appeal verdicts that it vows it won’t comply with?

The appeals will clearly delay compliance by, and frustrate retaliation against, the U.S. China, Norway, Switzerland and Turkey will be unable to get the WTO to authorize punitive tariffs aimed at the U.S. if the non-functioning AB doesn’t first hear these appeals.

The U.S. is clearly betting on this. At a WTO meeting in Geneva last week, Maria Pagan, the deputy U.S. trade representative, explained that the plaintiffs should instead “seek a non-violation/nullification or impairment claim.” A “non-violation” claim would effectively require plaintiffs to concede that the U.S. is in the right, as a legal matter, but that in allegedly pursuing its national security interests, the plaintiffs have been deprived of some of the trade benefits that they were expecting from their WTO membership.

Non-violation claims are rare because they’re exceedingly complex. In these five cases, the plaintiffs would essentially have to show they had not expected the U.S. to protect its national security. That’s a stretch, and Pagan knows it.

Pagan had a lot to say last week. She insisted that the U.S. “will not cede decision-making over its essential security to WTO panels” (emphasis in the original) and that “issues of national security cannot be reviewed in WTO dispute settlement….” The U.S. has been making these same arguments in its third-party submissions in “Russia—Traffic in Transit” and “Saudi Arabia—Intellectual Property Rights.” But Pagan also made some new arguments.

First, Pagan wants an expanded definition of an “emergency in international relations.” The WTO has ruled that the “less obvious … the defense or military interests,” the more the country has to “articulate its essential security interests….” Pagan says that this ignores the need for “deterrence or preparedness.” This would obviate the temporal requirement of the exception – the language is “in time of” – and therefore put anything and everything in play at any moment.

Second, Pagan says that these pending appeals will one day give the WTO a few more chances to get things right. She made it clear, however, that this does not mean the U.S. will ever let the WTO “reevaluate our national security decisions.” Pagan wants an “authoritative interpretation” that this exception is “self-judging,” but only Russia, Saudi Arabia and the United Arab Emirates agree with this. So, this is a red herring.

The most interesting thing about Pagan’s remarks is what she didn’t say. There’s not a single mention of “good faith.” Like other treaties, the WTO is supposed to be interpreted in good faith. This is where things get interesting.

In “Russia—Traffic in Transit,” the WTO ruled that good faith requires “the measures at issue meet a minimum requirement of plausibility in relation to the proffered essential security interests.” This “nexus” is what tripped up Saudi Arabia in its dispute with Qatar. Saudi Arabia told the WTO to simply record that it had invoked national security as a self-judging exception and call it a day. But Saudi Arabia completely agreed that it should be held to a good-faith test. Pressed to explain what this meant, Saudi Arabia talked itself into a box, conceding that there had to be a rational means-ends connection, otherwise it would be invoking national security in “bad faith.”

The point is that even if the U.S. could somehow get everything Pagan wants, it wouldn’t clear this good faith test. The national security exception simply can’t be stretched to fit the U.S.’s narrative.

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service, Georgetown University. Follow him on Twitter @marclbusch.

Tags Appellate Body Free trade Katherine Tai Maria Pagan trade disputes World Trade Organization

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