East Asia Forum

Economics, Politics and Public Policy in East Asia

and the Pacific
https://www.eastasiaforum.org

Australia’s Huawei ban raises difficult questions for the

WTO
22nd April, 2019

Authors: Tania Voon and Andrew Mitchell, University of Melbourne

At a World Trade Organization (WTO) meeting of the Goods Council in Geneva on 12 April
2019, China expressed concerns about Australia’s exclusion of Huawei from the country’s
rollout of 5G mobile telecommunications networks. This alleged ban was communicated as
‘security guidance to Australian carriers’ in an August 2018 media release [1] co-authorised by
Scott Morrison, who has since become Prime Minister.

In the WTO agenda item [2], China described the move as a ‘discriminatory market access
prohibition on 5G equipment’.

In 2015, Professor Shin-yi Peng [3] explored [4] possible WTO breaches in various Australian and
United States restrictions on Huawei. The WTO’s General Agreement on Tariffs and Trade 1994
[5]
(GATT) precludes discrimination against both imported products in comparison to local
products and products imported from one WTO Member in comparison to those from any other
country. GATT also prohibits import quotas and bans.

Australia’s actions could breach any of these provisions, just as a previous Australian
government’s ban on Huawei [6] from tendering for the National Broadband Network [7] may have
done.

Australia argues [8] that it has not banned Huawei [9] from the 5G rollout or breached WTO rules
because it has not singled out any company or country. Rather, the media release states that
‘the involvement of vendors who are likely to be subject to extrajudicial directions from a foreign
government that conflict with Australian law’ would create risks of ‘unauthorised access or

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interference’ that could not be sufficiently mitigated through ‘technical security controls’.

This wording is nevertheless directed at China, whose National Intelligence Law of 2017 [10]
provides for its national intelligence institutions to request assistance from the country’s firms.
The United States [11] has pressured allies [12] to exclude Huawei on cybersecurity [13] grounds,
and the Australian government reportedly [14] contacted Chinese companies Huawei and ZTE
directly to confirm their exclusion.

This does seem discriminatory — if China launched a formal WTO dispute, Australia would have
to rely on general exceptions in GATT Article XX or the security exception in GATT Article XXI.

The general exceptions are stringent. Australia would have to show that the ban was necessary
for purposes such as protecting public morals (perhaps extending to public order and privacy
considerations) or securing compliance with other Australian laws (such as privacy or security
laws), and that no other less trade-restrictive alternatives such as technical protocols were
reasonably available.

Defences under the security exception [15] are also subject to review. Article XXI(b) protects
actions a WTO Member ‘considers necessary for the protection of its essential security
interests’, but such actions must fall within a specific sub-paragraph such as those ‘taken in
time of war or other emergency in international relations’.

A recent WTO Panel report [16] assessed the security exception for the first time in a dispute
brought by Ukraine against Russia. The WTO Panel rejected arguments by Russia and the
United States [17] that the security exception is self-judging or non-justiciable. As a third party,
Australia argued [18] that the Panel had to determine whether Russia considered its actions
necessary to protect its security interests.

Having identified an emergency in international relations, the Panel upheld Russia’s invocation
of Article XXI. It found that the Russian measures were not ‘so remote’ that ‘it is implausible
that Russia implemented’ them to protect ‘its essential security interests arising out of that
emergency’. The WTO Appellate Body is currently hamstrung [19], and Russia and Ukraine have
indicated they will not appeal [20] the Panel decision.

The Panel characterised an emergency in international relations as ‘a situation of armed

conflict, or of latent armed conflict, or of heightened tension or crisis, or of general instability
engulfing or surrounding a state’. That description might more readily apply to the relationship
between Russia and Ukraine than to Australia and China.

Australia might instead rely on the reference in Article XXI(b) to traffic in ‘goods and materials …
for the purpose of supplying a military establishment’. The coming 5G networks may be
important for military purposes, but so might an extremely wide range of materials, from boots
[21]
to cars [22]. An overly expansive interpretation of this provision could risk undermining the
multilateral trading system.

The security exception is also at issue in a WTO dispute brought by Qatar against the United

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and the Pacific
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Arab Emirates [23] and in multiple WTO disputes brought against the United States [24] imposition
[25]
of steel and aluminium tariffs. As the WTO Director-General has pointed out, WTO Panel
Reports are case-specific [26] — different Panels may take different approaches.

A successful defence by Australia could require evidence that cybersecurity risks are higher for
Huawei and ZTE equipment, despite the use of Chinese components [27] by many other
telecommunications suppliers. But Australia could contend that the details of its security
assessments are beyond the scope of the WTO — Article XXI(a) confirms that a WTO Member
need not provide information ‘the disclosure of which it considers contrary to its essential
security interests’.

Ultimately, China is unlikely [28] to bring a WTO dispute against Australia, because Beijing itself
frequently invokes concepts such as public morals and national security to justify various
restrictions and censorship [29], including in telecommunications [30] and technology [31].

Tania Voon is Professor at Melbourne Law School, the University of Melbourne and a former
Legal Officer with the Appellate Body Secretariat of the World Trade Organization.

Andrew Mitchell is Professor at Melbourne Law School, the University of Melbourne and the
Director of the Global Economic Law Network.

Article from the East Asia Forum: https://www.eastasiaforum.org

URL to article: https://www.eastasiaforum.org/?p=179537

[1] media release:

https://www.minister.communications.gov.au/minister/mitch-fifield/news/government-pro
vides-5g-security-guidance-australian-carriers

[2] agenda item:

https://docs.wto.org/dol2fe/Pages/FE_Search/DDFDocuments/252987/q/G/C/W763.pdf

[3] Shin-yi Peng: http://syp.gapp.nthu.edu.tw/

[4] explored: https://academic.oup.com/jiel/article-abstract/18/2/449/799678

[5] General Agreement on Tariffs and Trade 1994:

https://www.wto.org/english/docs_e/legal_e/06-gatt_e.htm

[6] ban on Huawei:

https://www.reuters.com/article/us-australia-huawei-nbn/australia-blocks-chinas-huawei-f
rom-broadband-tender-idUSBRE82P0GA20120326

[7] National Broadband Network:

http://www5.austlii.edu.au/au/journals/MelbULawRw/2011/20.html

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[8] argues:
https://www.afr.com/news/policy/foreign-affairs/australia-s-huawei-ban-on-shaky-ground-
at-wto-20190415-p51ebi

[9] Huawei:
https://www.eastasiaforum.org/2019/04/15/huaweis-threat-to-democratisation-in-africa/

[10] National Intelligence Law of 2017:

https://www.chinalawtranslate.com/%E4%B8%AD%E5%8D%8E%E4%BA%BA%E6%B0%9
1%E5%85%B1%E5%92%8C%E5%9B%BD%E5%9B%BD%E5%AE%B6%E6%83%85%E6%
8A%A5%E6%B3%95/?lang=en

[11] United States:

https://www.eastasiaforum.org/2016/11/10/are-us-security-officials-rethinking-huaweis-st
atus/

[12] pressured allies:

https://www.wsj.com/articles/washington-asks-allies-to-drop-huawei-1542965105

[13] cybersecurity:
https://www.reuters.com/article/us-usa-cyber-huawei-tech/u-s-to-press-allies-to-keep-hua
wei-out-of-5g-in-prague-meeting-sources-idUSKCN1RR24Y

[14] reportedly:
https://www.smh.com.au/technology/government-implies-5g-china-ban-in-new-security-a
dvice-20180823-p4zz77.html

[15] security exception:

https://www.cambridge.org/core/journals/american-journal-of-international-law/article/sec
urity-exception-in-wto-law-entering-a-new-era/CF8C3DCDF2CD924CAEEDD147840668F9

[16] report: https://www.wto.org/english/news_e/news19_e/512r_e.htm

[17] United States:

https://ustr.gov/sites/default/files/enforcement/DS/US.3d.Pty.Sub.Re.GATT.XXI.fin.%28pu
blic%29.pdf

[18] argued:
https://dfat.gov.au/trade/organisations/wto/wto-disputes/Documents/ds512-australias-wri
tten-third-party-submission-071117.pdf

[19] hamstrung: https://www.wto.org/english/news_e/news19_e/gc_18jan19_e.htm

[20] will not appeal:

https://insidetrade.com/trade/ukraine-wont-appeal-wto-national-security-ruling

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[21] boots: https://docs.wto.org/gattdocs/q/GG/L4399/4250.PDF

[22] cars:
https://www.internationaltradeinsights.com/2019/02/commerce-submits-232-auto-tariff-re
port-president/

[23] United Arab Emirates:

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds526_e.htm

[24] United States: https://www.wto.org/english/news_e/news18_e/dsb_19nov18_e.htm

[25] imposition:
https://www.eastasiaforum.org/2018/10/15/how-to-save-the-world-trading-system-from-tr
ump/

[26] case-specific:
https://insidetrade.com/daily-news/azev%C3%AAdo-panel-ruling-national-security-shoul
d-be-read-case-specific

[27] Chinese components:

https://www.cnbc.com/2019/02/25/gchq-chief-addresses-risks-from-huawei-5g-and-chine
se-technology.html

[28] unlikely:
https://www.abc.net.au/radio/programs/am/china-brings-huawei-complaint-to-wto-australi
a-stands-by-ban/11002700

[29] censorship:
https://www.cambridge.org/core/journals/american-journal-of-international-law/article/chi
nameasures-affecting-trading-rights-and-distribution-services-for-certain-publications-an
d-audiovisual-entertainment-products-wtds363r/F43F166B104D0B509183F9A59881DA7B

[30] telecommunications:
https://academic.oup.com/jiel/article-abstract/13/2/321/853325?redirectedFrom=PDF

[31] technology:
https://www.ictsd.org/opinion/us-section-301-china-and-technology-transfer-law-and-its-l
imitations-revisited

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