'International rules on trade restrictions for security reasons need to be renegotiated'

Since the signing of the first multilateral trade agreement in 1947, countries have successfully protected the multilateral trading system from deciding on whether national security was a legitimate defense for any given country’s measure, be it a trade ban, a sanction, or an export restriction. There were just not a lot of cases where countries invoked security exceptions. But even when they did, the disputes were eventually withdrawn or settled by diplomatic means.

Emerging security concerns

In the past decade, however, national security rhetoric has gained prominence, partly due to emerging concerns raised by cybersecurity, geo-economic rivalry, technological nationalism, climate change, supply chain crises, and migration flows. These developments have provoked many states to introduce reforms and strategic economic policies to protect domestic interests. The most recent example is the trade restrictions adopted by the United States, the Netherlands, and Japan in the advanced chip production and supercomputing sectors.

Starting in 2017, the World Trade Organization (WTO) was asked on multiple occasions to decide whether trade measures adopted to protect the essential security interests of different states were legal. By claiming that security exceptions can allow anything under the sun, states have actually enlarged insecurity in the global economy. 

Research question

Olga Hrynkiv investigated how the balance can be restored between states’ autonomy to protect national security and binding international law, taking into account new economic and political realities. She looked at the application of security exceptions under international trade and investment law and included case studies of the United States, the European Union, and BRICS countries (Brazil, Russia, India, China, and South Africa) by virtue of their economic and political power, their importance in global supply chains, and their roles in the transformation of the global order.

Research findings

Hrynkiv found that the existing security exceptions in international trade and investment law are either drafted too broadly, making it difficult to control their good faith application and creating verification problems for international courts, or too narrowly, arguably excluding from their scope the protection against insidious, imminent, yet severe emerging security threats. Both approaches might undermine the balance between states’ sovereignty and international economic law by unjustifiably limiting the ability of states to take efficient security actions or opening the door to protectionism or opportunism by allowing any measure that a state considers necessary. 

Recommendations

In order to restore the balance, Hrynkiv suggests that states should renegotiate existing security exceptions and change the approach to drafting them in future agreements. The rulebook on the application of security exceptions should be expanded, cooperation between the WTO and the United Nations improved, and states incentivized to use trade and investment restrictions more efficiently. This may lead to more policy space for calibrated responses to new externalities while reinforcing the function of security exceptions to shield states from responsibility only in extreme situations. 

PhD defense

Olga Hrynkiv LLM will defend her PhD thesis, entitled National Security Exceptions: A Shield or a Weapon? Balancing States’ Autonomy to Adopt Security Measures and International Economic Law, on Friday, August 25, 2023, at 13:30 hrs. in Tilburg University’s Auditorium. Supervisors: Prof. P. Delimatsis, Prof. J. Trachtman. The defense will also be livestreamed.