At the Intersection of National Security and Free Trade – Discussion on the Fit-Analysis of the Security Exception in the WTO Agreements

Abstract: The World Trade Organization’s agreements contain a national security exception, that allows WTO members to circumvent their international trade obligations under the organization if they find it necessary to protect their essential security interests. The exception embodies the complex and difficultly navigated line between national security and free trade. National sovereignty is a matter that is widely considered to go beyond the interests of trade, a notion from which the need of a security exception spawns, while circumvention of the WTO obligations for any other reason than honest and real intent to uphold security clearly undermines the system.  To date, two WTO panels have interpreted a subparagraph of the national security exception, namely the case where a member may adopt measures they find necessary for the protection of their essential security interests in times of war or other emergency in international relations. To satisfy the requirements under this provision, a member must adhere to the principle of good faith by articulating its essential security interest, and elucidate the link between these interests and the trade restrictive measures adopted. However, the panels failed to properly scrutinize the existence of good faith. Instead, fulfillment of these requirements was determined by how close the emergency in international relation lied to the hard core of armed conflict. In this essay, it is argued that the failure to properly review good faith leaves a legal loophole that enables abuse of the exception for purely economic reasons. Previously, the atmosphere of the trading system allowed security and economic matters to more easily be kept apart. However, recent developments of national trade policies and the rise of new economic powers have changed the balance of the geoeconomic order.  Because uncodified powers no longer efficiently suppress security disputes from entering the WTO, this essay concludes that the security exception might have to be clarified to prevent abuse. Considering the changes to the trading regime’s state of play, the main discussion held is on whether an evolutionary interpretation of the term “emergency in international relations” could help remedy the loophole in the national security exception. As the multilateral trading system is facing challenges much different from the post-war environment in which the exception was drafted, the security exception must be interpreted in a dynamic manner to ensure compliance with the intention of its drafting parties.