By Jemy Gatdula
Adam Smith noted wryly that national security is “of much more importance than opulence,” which is really self-evident considering its effect on states reaches the level of the existential. Several mechanisms exist, however, in international law giving protection for countries needing to deal with the machinations and intrusions of the global economic theater.
There are, of course, the trade remedies: safeguards, anti-dumping, and countervailing measures, implemented by states through domestic legislation. In the Philippines, such are found in the provisions of the Customs Modernization and Tariff Act (CMTA). Recent World Trade Organization (WTO) findings indicate that the use of trade remedies have surprisingly declined despite global uncertainties, the latter historically giving rise to protectionist temptations precipitating unilateral actions. Nevertheless, it is undeniable that for the Philippines, trade remedies remain an important tool for economic self-defense.
In the same law are procedures for tariff adjustments, particularly for those products not subjected to the bound rates. Thus, Article 714 of the CMTA mandates the president, without prejudice to Philippine commitment in any ratified international agreements or treaties, should public interest be served thereby, to declare new or additional duties in an amount not exceeding 100% ad valorem on imported goods. For those, however, subject to the WTO bound rates, then the provisions (particularly Article XXVIII) of the General Agreement on Tariffs and Trade (GATT) come in.
Speaking of the GATT, Article XXI provides the national security exception vis-à-vis WTO obligations. Thus, “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.”
Notably, while national security exceptions have pretty much been used with considerable restraint by GATT Contracting Parties and then later by WTO Members, nevertheless, security uncertainties post-9/11 have seen such restraint considerably evaporate. With the multiplication of GATT Article XXI invocations, the possibility of abuse (and the ways with which to contain it) have come to the forefront of international trade discussions.
In this regard, the 2019 WTO panel for Russia — Traffic in Transit has been most instructive, particularly in looking at how the various permutations of international relations issues can be worked within the framework of Article XXI. Specifically, the panel determined the phrase “which it considers” qualifies both the terms “necessary” and “essential security interests.” Hence, it seems to leave it up to the discretion of the invoking Member whether a measure is indeed “necessary.”
And yet, regarding that discretion to determine the presence of “essential security interests,” the WTO panel also declared that such would be considerably subject to the demands of good faith, the latter being “crystallized” by the demand “that the measures at issue meet a minimum requirement of plausibility in relation to the proffered essential security interests.” Hence, a State is duty bound not to use the exceptions in Article XXI as a means to circumvent their obligations under the GATT.
Also, the more an international exigency is removed from the nature of an armed conflict (or at least a situation contemplating the breakdown of law and order), then the need for a higher level of articulation regarding the security interest involved is greater.
Ultimately, while indeed a wide margin of discretion is allotted to any Member invoking Article XXI(b)(iii), nevertheless, any panel investigation arising from that matter will be mandated to determine existence of abuse of said provision, and thus shall determine:
• whether there is a war or other emergency in international relations?
• whether the measure at issue is taken in times of such war or emergency?
• whether the invoking Member’s decision on what its “essential security interests” are is taken in good faith, i.e., not as a means to circumvent its obligations under the GATT; and,
• whether the measure at issue is so remote from, or unrelated to, the “emergency in international relations” that it is implausible that the Member implemented the measures for the protection of its essential security interests.
The proliferation of free trade agreements all the more emphasize the importance of security exceptions and it is notable that the Regional Comprehensive Economic Partnership recently entered into by the Philippines contain provisions on trade remedies (Chapter 7) and security exceptions (Article 17.13), which the academe and policymakers are well advised to know judiciously.
Jemy Gatdula is a senior fellow of the Philippine Council for Foreign Relations and a Philippine Judicial Academy law lecturer for constitutional philosophy and jurisprudence