ARTICLE XXI AND ITS CONTROVERSY

Synopsis of Central Argument: -

Article XXI of the GATT encapsulates one of the most debated exceptions of the W.T.O.
rules, the National Security exception. On a reading of Article XX1 (b), we may infer that
member states have been given the autonomy to invoke the article as and when they
consider it "necessary for the protection of its essential security interests." It has also been
defined as a "self-judging" provision. Member states have been given the sole discretion to
decide whether the circumstances of a situation warrant the use of the Article XXI
exception. This paper further aims to discuss Article XXI's controversial nature and
determine whether such discretion is required to be subjected to judicial review by the
Panel. Various Panel reports will be analyzed through the course of the paper.

The first case which will be discussed is Sweden-Import Restrictions on Certain Footwear.
In this case, Sweden's import quota in 1975 on specific footwear was in consideration.
Sweden argued that its import ban on footwear was required to maintain a certain level of
domestic production in the event of a sudden war. The objective of the import ban was also
to prevent any threats to Sweden’s "economic defense. " Sweden's argument was based on
the following grounds: "decrease in domestic production has become a critical threat to the
emergency planning of Sweden's economic defense. The policy necessitates the
maintenance of a minimum domestic production capacity in vital industries." We may
observe that Sweden's argument is in furtherance of ensuring economic security. Although
Sweden eventually revoked the measure before the GATT was prompted, it may be
inferred that Sweden's measure was in furtherance of its commercial interests.

Further, it is important to note that although members have autonomy in deciding when to
invoke Article XXI, their decision must be in furtherance of "for the protection of its
essential security interests." In the present case, whilst taking precautions for the possibility
of war is an action in furtherance of a national security interest, I would argue that
restricting the importation of certain footwear to ensure a surplus of the same in case of a
war is too broad a linkage to be made. In support of the above argument, the Indian
delegation has suggested that a reasonable nexus should be established between the
national security interest and the measure taken. Judicial review by the Panel i s o n e
w a y to ensure a reasonable nexus exists. The same has view has been elaborated upon in
 the case of Nicaragua (II). The Panel in the case of Nicaragua (II) opined that a review is
required to ensure that Article XXI is not invoked for other purposes than those enlisted in
the sub-paragraphs.

Apart from ensuring the existence of a reasonable nexus as stated in the above argument, I
would further argue that judicial review is also required as the ambiguity surrounding
certain phrases such as "necessity" and "essential security interests" were not dealt with
until recently. The Russia -Ukraine case was one of the first cases to clarify the
interpretation of Article XXI(b). The term "essential security interests" was interpreted as a
responsibility of the state to maintain law and order and protect the population of Russia
from external threats.

The lack of precedents concerning such interpretation of Article XXI allows member states
to misuse the provision for commercial interests in the name of security interests. The steel
tariffs imposed by The U.S. can be cited as an example to support the above argument that a
lack of interpretation allows for economic protectionism. Steel tariffs were imposed by
Donald Trump using Article 232 of The Trade Expansion Act 1962. A tariff of 25% was
imposed on imported steel but the Commerce Department was instructed to exempt
American businesses from the tariff. To qualify for an exemption, companies were to
demonstrate that domestic metal supplies are insufficient for their needs. Article 232
provides for tariffs to be imposed only for national security interests and not for reasons
such as economic protectionism. That being said, protectionism seems to be a significant
reason for which exemptions are being granted. At this juncture, we must note that although
there is a possibility of Article XXI being misused, member states cannot be denied their
autonomy when determining the circumstances that they believe amount to a national
security interest. This resulting conflict can be resolved by allowing members to state their
interpretations of "necessity" and "essential security interests." These interpretations would
be subject to review against Article XXI (b)

Moreover, we must also consider the possibility of Article XXI being invoked simply
because member states have the option to do so; a review perhaps prevents such acts. I
would like to cite the case involving trade restrictions on Argentina as an example wherein
Australia and Canada took a measure for the sole purpose that upon their interpretation of
Article XXI, they possessed an inherent right to do so. Following the attempted annexation
of the Falkland Islands, Australia and Canada chose to restrict trade with Argentina. Such
actions set a dangerous precedent and may even be perhaps considered as violative of the
good faith principle, which involves interpreting an Article per its underlying objectives and
purposes. Therefore, to ensure that the principles of good faith and those of Article XXI(b)
are not violated, I would argue that a judicial review by the panel is required.

This paper will make the final argument of the importance of checks and balances in the
sphere of international law. I shall argue that although Article XXI is a "self-judging”
provision it is not liberated from all forms of review, as shall be further observed. Although
it is an exception clause, it does not imply that it must be interpreted in any special manner.
As states in the case of Nicaragua (II), the Panel held that Article XXI must be read
together with other provisions of the treaty, as all international treaties are to be read. It
may also be argued that perhaps a review is even favored by individual member states as
well. This have been inferred from a case involving the Socialist Federal Republic of
Yugoslavia. The Socialist Federal Republic of Yugoslavia challenged trade restrictions
imposed by the E.C., following the Yugoslavia civil war. In this case, a panel was
established to review Article XXI's invocation by the European Committee, and there was
no objection to the same. As there are only a few disputes concerning Article XXI that the
W.T.O. has chosen to deliberate upon, various other factors must be considered in deciding
the extent to which Article XXI is a self-judging exception. In pursuance of the same,
according to Article 31 and 32 of The Vienna Convention on the law of treaties, member
states are required to take into consideration the application of treaties as preferred by
states.

Reference to state practice is another important tool used when determining the underlying
objective of an article. Taking into consideration all such determinants and previously
mentioned cased (Sweden Footwear Restrictions and imposition of steel tariffs by The
U.S.), I would argue that the impulsive and callous manner in which member states have
invoked Article XXI necessitates judicial review by the Panel. I would like to conclude by
citing the opinion of Brazil as stated in the Panel report, concerning the trade embargo
against Argentina by the European Community (along with Australia and Canada):" The
embargo against Argentina could set a dangerous precedent if the measures.. were
considered necessary for the protection of essential security interests [when] such interests
had not been demonstrated."

Key Words: Article XXI(b), national security exception, self-judging provision, autonomy
of member states,

Sahaana Chhabria, final year law student, BALLB, Jindal Global Law School