SSU Forum “Security Exceptions Clauses under Free Trade Agreements”

On February 28, the Security Studies Unit of The University of Tokyo Institute for Future Initiatives welcomed Professor Takemasa Sekine from Yokohama National University’s Graduate School of International Social Sciences to deliver a keynote speech regarding his working paper on security exception clauses under free trade agreements (FTAs). Dr. Yoshiaki Takayama, Research Fellow at The Japan Institute of International Affairs, joined the discussion after Professor Sekine’s speech, after which questions were invited from the audience. The forum was moderated by Associate Professor Ryo Sahashi (Institute for Advanced Studies on Asia at The University of Tokyo).

Keynote speech

Professor Sekine opened his speech by stating the conclusion of the seminar as follows: Today, there is a tendency in FTAs to “implicitly rewrite” the security exception clause of GATT Article 21, and although the impact of this trend is currently small, it should not be underestimated if the importance of FTAs increases in the future. He explained the analytical process that led to this conclusion.

Referring to a recent WTO panel case in which a decision on GATT Article 21 was required, Professor Sekine explained the significance and challenges of GATT Article 21. He then compared the contents of the security exception clauses in the TPP (Article 29.2) to GATT Article 21. He also introduced FTAs concluded by the United States in recent years (i.e., TPP-type clauses in which the judgment of the country invoking the exception tends to be respected) as well as other FTAs (those having GATT Article 21-type clauses) and explained recent developments in security exception clauses under FTAs. The recent development of FTAs with “TPP-type clauses in which the judgment of the country invoking the exception tends to be respected” means that there is now more room for countries taking exception measures to justify their policy with security exception clauses. On the other hand, he pointed out that the number of FTAs and trade agreements concluded by the U.S. has remained at 13 (20 countries) and such security exception clauses are effective only within the scope of trade relations governed by the FTAs, thus limiting the impact of this movement.

As one of the important issues, Professor Sekine also raised the issue of sorting out the relationship between GATT Article 21 and the security exception clauses in FTAs when a country is a party to both the GATT and a U.S.-style FTA (in particular when the overlapping obligations in the GATT and the FTA are the subject of dispute). With regards to whether the U.S. could invoke the security exception clause in an FTA if the country with which the U.S. has the FTA sued the U.S. for violation of the GATT, he referenced recent WTO panel decisions and concluded that the possibility of such a case remains limited. Finally, regarding Japan’s position on security exception clauses, he explained that, although the situation is partially sympathetic to the U.S. trend, the general direction is to adopt GATT-type security exception clauses, as seen in the economic partnership agreement (EPA) between Japan and the EU.

Discussion and Q&A

In response to the above-mentioned presentation, Dr. Takayama commented from the perspective of international politics. In particular, he raised the issue of how to view the significance of security exception clauses in the face of scenarios that were not originally envisioned in the GATT, as exemplified by recent international developments in economic security. He also raised the issue of whether there are limits to security exceptions against the GATT disciplines amid moves by the U.S. and others to formulate economic rules outside the scope of the WTO, and whether, under such circumstances, moves to correct or leave the existing framework or to form new forums or rules will become more active. In response, Professor Sekine pointed out that in the midst of international developments that the WTO had never envisioned, there is a limit to which we can rely only on GATT Article 21 as a provision to coordinate with security issues in the trade area; and in the future, it will be necessary to consider more detailed rule changes and to formulate balanced and comprehensive security exception clauses.

Then, the audience raised the following questions: Even if a disputing party were to sue the U.S. under GATT Article 21, wouldn’t that have limited effect without a functioning WTO? Is there any movement to amend GATT Article 21? How should a country reconcile its national security interests with domestic interests that want to promote trade? How do you deal with the gap between the U.S. which wants to take a broad security exception and other countries that do not? To what extent could the security exception be extended to semiconductors, digital products, data, and other areas?

To these questions, Professor Sekine responded as follows: Although the dysfunction of the WTO Senior Committee is an important factor to be considered, it is believed that the party suing the U.S. will still insist on GATT Article 21, under which security exceptions tend to be treated narrowly. There is a move by the U.S. to have the WTO issue guidelines for the interpretation of GATT Article 21, but it remains to be seen to what extent this will be feasible in the WTO, which adopts a consensus system. As for the gap between the U.S. and the partner country with which it has a trade agreement, since the agreement is essentially bilateral, the situation will be the same for both countries (i.e., security exceptions will be treated broadly for the U.S. partner country as well). However, this balance has been shifting in recent years and thus future developments should be closely monitored. Regarding the possibility of expanding the scope of the security exception, goods, services, and other categories (e.g., the digital category) must first be made distinctive in order to be considered in the area of international trade law, and the conclusion will vary depending on each category.

＊The conference was organized by subsidies from the Ministry of Foreign Affairs of Japan.
＊Only Japanese audio is available.

=SSU Forum= Part1

=SSU Forum= Part2