The Geneva-based World Trade Organization (WTO) just dealt a fatal blow to the Trump administration’s efforts to claim a national security rationale for tariffs on steel. “If you don’t have steel, you don’t have a country,” President Trump has said, and his Commerce Department has pointed to factory closures as a cause for concern.
To be clear, the United States wasn’t the defendant at the WTO, and Trump’s 25 percent steel tariffs weren’t at issue.
Rather, a WTO panel ruled against Russia’s claim that it alone would be the judge of whether trade restrictions it had imposed on Ukraine were for national security reasons. While Russia ultimately won the dispute, it won it on terms that cast serious doubts on the international legality of Trump’s tariffs.
What’s trade got to do with national security?
This was the first panel to rule on Article XXI of the WTO’s General Agreement on Tariffs and Trade (1947). Drafted after World War II, this provision allows a country to duck its free-trade commitments when it considers it necessary "for the protection of its essential security interests . . . in time of war or other emergency in international relations.” The article was rarely invoked until the rise of Trump, but the WTO is now dealing with three invocations of national security: the Russia-Ukraine dispute, a dispute over the Qatar blockade and a case brought by Turkey against Trump’s steel tariffs.
The U.S. and Russian delegations have stood side by side arguing for the unusual proposition that Article XXI is “non-justiciable,” meaning once it is invoked by a defendant, a panel cannot rule on the claim and must accept it at face value. While countries from Canada to Singapore urged the panel to exercise caution in coming to a decision, none went so far as Russian President Vladimir Putin and Trump’s delegations.
The ad hoc panel had none of this argument. Chaired by Georges Abi-Saab, the former head of the WTO’s Appellate Body, the panel argued that any words that negotiators care enough to put into a treaty are subject to legal interpretation. At a minimum, the panel said that both the existence of an international emergency and the timing of the ostensibly security-protecting measures could be objectively ascertained by adjudicators. And while there was nothing in the GATT text requiring these interpretations, the panel decided that emergencies exist only when there are unexpected dangers requiring urgent action, that international emergencies under Article XXI are mostly limited to defense and military issues, and that “international relations” are limited to interactions primarily between sovereign states.
In Russia’s favor, the panel found that there was an emergency and that the actions had been taken during it. As support, they looked to U.N. General Assembly resolutions expressing concern about the situation from 2014 to 2016, and the fact that other countries had placed sanctions on Russia for its invasion of Crimea. In this, the panelists tracked a trend we see in other areas of international law. For instance, in my research, I have shown that investment arbitrators are more likely to defer to countries invoking exceptions to defend environmental policies that interfere with liberal trade when the policies are widely endorsed by the international community. (Anomalous measures targeting unusual problems have a tougher time surviving scrutiny.)
There is going to be a collision with Trump
In a warning sign for Trump, none of these interpretations work in his favor. The long-running decline of Midwestern factory jobs is unlikely to constitute an “emergency” under the panel’s reading, let alone one that cuts to the core of inter-sovereign relations. He might have more luck claiming that the entry of China’s nonmarket economy into global open-trading rules is a shock to the international order — but that would be an economic rather than a military conflict. The fact that Trump’s steel tariffs are anomalous and not imposed in coordination with trading partners is also unlikely to be viewed favorably in Geneva.
Indeed, numerous parts of the decision seemed to constitute warning shots across Trump’s bow. The panel dismissed “protectionism under the guise of security,” and distinguished between conflicts that are “considered urgent or serious in a political sense” and those that are war-related. It also spent pages diving deep into the archives of the U.S. delegation that helped draft the GATT in the 1940s, showing that officials contemplated and ultimately dismissed a more self-judging formulation of the security defense. Indeed, the U.S. delegation decided to compromise its own sovereign discretion. It feared that U.S. exporters might suffer abroad if other countries abused the exception. (As recent work by legal scholar Mona Pinchis-Paulsen shows, the U.S. military was the real loser in this interagency battle. Then, as now, the armed services are friendlier to industrial policy that interferes with markets.) The WTO would probably not have spent so much time on Russia’s dispute with Ukraine unless it wanted to send a signal to the United States.
This decision is just the latest in conflicts between Trump and the WTO, which the president has said was “designed by the rest of the world to screw the United States.” Trump has refused to greenlight appointments to fill vacancies on the Appellate Body, which will soon mean that it has no quorum and is unable to complete its work. Making a call on Article XXI was always going to be a lose-lose proposition for the WTO, and unsurprisingly, Friday’s Solomonic decision was a loser.
Todd N. Tucker is a political scientist and fellow at the Roosevelt Institute, and the author of “Judge Knot: Politics and Development in International Investment Law” (Anthem Press). Follow him on Twitter @toddntucker.