On 5 April 2019, the WTO circulated the panel report in Russia – Measures Concerning Traffic In Transit (DS512). The decision is the first time that a WTO panel has had to decide the extent of WTO jurisdiction over a claim by a Member that its actions were appropriate under Article XXI, the essential security exemption from WTO rules. Ukraine brought the dispute in September 2016 after the Russian Federation imposed restrictions preventing Ukraine from using roads and railways to trade goods with several former Soviet republics. Ukraine claimed that the measures appear to be inconsistent with:

  • Articles V:2, V:3, V:4, V:5, X:1, X:2, X:3(a), XI:1, XVI:4 of the General Agreements on Tariff and Trade 1994 (GATT 1994); and
  • Paragraph 2 of Part I of the Russian Federation’s Accession Protocol (to the extent that it incorporates paragraphs 1161, 1426 (first sentence), 1427 (first and third sentences) and 1428 of the Report of the Working Party on the Accession of the Russian Federation).

Russia asserted that the measures were among those that it considered necessary for the protection of its essential security interests, which it took in response to the emergency in international relations that occurred in 2014, and which presented threats to Russia’s essential security interests. Russia invoked the provisions of Article XXI(b)(iii) of the GATT, arguing that actions taken pursuant to Article XXI were “self-judging” and were not subject to WTO review because they were necessary to protect its “essential security interests.” Russia said that once Article XXI was invoked, the WTO could no longer review the issue and, as a result, the Panel lacked jurisdiction to further address the matter.

Article XXI(b)(iii) provides, inter alia, that “in a time of war or other emergency in international relations” a Party to the GATT may take action that it considers necessary to protect its essential security interests.

The Panel disagreed and found that WTO panels have jurisdiction to review aspects of a Member’s invocation of Article XXI(b)(iii). Specifically, the Panel found that, while the chapeau of Article XXI(b) allows a Member to take action “which it considers necessary” for the protection of its essential security interests, this discretion is limited to circumstances that objectively fall within the scope of the three subparagraphs of Article XXI(b). Once it is determined that required circumstances exist, it is left in general to every Member to define what it considers to be its essential security interests. Moreover, the Panel found that the specific language “which it considers” meant that it is for a Member itself to decide on the “necessity” of its actions for the protection of its essential security interests.

The Panel found that Russia had met the requirements for invoking Article XXI(b)(iii) in relation to the measures at issue, and therefore, that the transit bans and restrictions were covered by Article XXI(b)(iii) of the GATT 1994.

[It should be noted that in several current WTO proceedings, the United States has claimed Article XXI as its justification for imposition of the Section 232 tariffs on steel and aluminum.]