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Former US, WTO Officials Float Compromise on WTO Reviews of Nat'l Security Trade Issues

World Trade Organization members negatively affected by national security-related trade restrictions may be able to impose retaliatory measures as a way to address the U.S. gripe with the body's review of national security issues, former Office of the U.S. Trade Representative counsel Warren Maruyama and former WTO deputy director-general Alan Wolff said. In a working paper released by the Peterson Institute for International Economics, Maruyama and Wolff propose a compromise to the U.S. position that national security claims are nonreviewable.

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The U.S. has routinely criticized the WTO's review of national security issues, including in December 2022 after a series of WTO panel rulings found that U.S. Section 232 national security duties violated global trade rules. The panels said that the tariffs, which the Donald Trump administration said were needed to maintain U.S. national security, were not taken in a time of war or other emergency in international relations (see 2212090060).

"The judgment of a country invoking the national security exception" under the General Agreement on Tariffs and Trade "would be nonjusticiable, just as the drafters" of the agreement "apparently intended," the paper said. "However, members adversely affected could be authorized, after litigation or as part of a rebalancing procedure, to suspend substantially equivalent concessions on the grounds that such actions nullify or impair the benefits of trade concessions."

The result would be a "shortened and simplified dispute settlement procedure" in which a member can act in its national security interests, with the director-general then "immediately" appointing "a panel to consider the matter with a 60-day fuse to reach a preliminary determination." The authors said the panel would decide whether the restriction "impairs a tariff concession or otherwise has a negative impact on imports or exports of others" and then would assess the amount of the resulting damage.

This rule change could be achieved de facto or could be more formalized through a National Security Multi-Party Interim Arrangement, the paper suggested. The WTO could also adopt a new renegotiation procedure in which national security actions would be notified to the WTO and subject to "accelerated procedures," the paper said. Maruyama and Wolff added that if the original country felt the retaliatory measures were too extreme, the country could bring a case to the WTO for adjudication to rebalance the level of concessions.

"Providing for automatic rebalancing would likely have a positive impact by making members more reluctant to apply broad-based purported 'security' measures against their trading partners, particularly with a shaky justification," the paper said. "The potential adverse effects on its trade from compensation or retaliation would impose large costs, and without the 3-5 years of delay that is incurred when a case meanders through the WTO’s dispute settlement mechanism."