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Security Interests, Trade Wars & the International Economic Law

Security Interests, Trade Wars & the International Economic Law


According to Roberto Azevêdo, the Director-General of the World Trade Organization (WTO), seeds of impending ‘trade war’ have been sown. He recently wrote:

“Global trade is under threat. Whether or not you call the current situation a trade war, certainly the first shots have been fired. This calls for our attention, and most importantly, our action.”

His statement is inchoate in the sense that it does intimidate without specifically pointing out the cause or reason of the befalling situation. The epicentre of the latest scene of the global trade is ‘the security interest’ – not only politically, but also legally. The instant write-up will show how the existing international economic law along with the US national law had kept an exception to the global trade law system, which has been invoked by the US President Donald Trump in his recent proclamations that imposed tariffs on China and other countries, and how far the exception can be dealt with by the dispute settlement system of the international trade and economic law.

The WTO and Security Interests

The World Trade Organization (WTO) was constituted in the Uruguay Round of trade negotiations. The legal texts of the agreement comprise a Final Act, An Agreement Establishing the WTO and four Annexes, each dealing with a separate conceptual theme like areas of trade (goods, services and intellectual property), dispute settlement, review mechanism and plurilateral agreements. Annex 1 provided a General Agreement on Tariffs and Trade, 1994 (GATT 1994), which had continued the earlier General Agreement of Tariffs and Trade, 1947 (GATT 1947). The GATT 1947 had an exception to the global trade law in its Article XXI (2) (b) that read:

“Nothing in this Agreement shall be construed

(a) to require any contracting party to furnish any information the disclosure of which it considers contrary to its essential security interests; or
(b) to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests
(I) relating to fissionable materials or the materials from which they are derived;
(ii) relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment;
(iii) taken in time of war or other emergency in international relations; or
(c) to prevent any contracting party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.”

Read More: Globalization at a Crossroads, The changing economic world order

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About Kamran Adil

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The author is an independent researcher and has done his BCL from the University of Oxford. kamranadil@gmail.com

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