Export Controls: A Trans-Atlantic Opening?

The Trump and Biden administrations have significantly expanded export controls, which prohibit the unlicensed export of certain products or information.

Biden has also called for modernization of international trade rules.

These could be connected. (bloomberg.com/news/articles/…) The 1947 General Agreement on Tariffs and Trade has a pretty sweeping obligation for countries to not restrict exports. (wto.org/english/docs_e…)

But the GATT also has a pretty sweeping national security exception.

As @KrzPelc writes, the exception is so broad that governments have been loath to invoke it, for fear that it would inspire copycat actions and trade wars.

Trump’s natsec-driven steel tariffs would seem to have shattered that. (washingtonpost.com/news/monkey-ca…) In fact, and as documented in Pelc’s book, the US has a long history of justifying its export control regime — challenged by Czechoslovakia in 1949 — on natsec / XXI grounds, maintaining that it is self-judging for the country invoking it. (worldtradelaw.net/reports/gattpa…)

More recently, in a WTO-sponsored trade policy review of the US in 2008, China challenged US export controls as violating free trade, and the Bush administration reaffirmed the 1949 US position. (h/t @snlester) (docs.wto.org/dol2fe/Pages/S…)

But several things have changed since then.

First, whether one agrees with the underlying policy or not, export controls in 2021 are arguably driven by economic as much as natsec concerns. (industryweek.com/the-economy/pu…) From a US law perspective, that is not fatal, as rules going back decades mix national security and economic security rationales and permit consideration of both or either. (toddntucker.medium.com/are-national-s…) However, and here’s the second thing, WTO adjudicators have since made a historic pronouncement that they will not give blanket deference to countries’ invocation of GATT Article XXI. (washingtonpost.com/politics/2019/…) In particular, adjudicators have noted that the WTO law and practice makes sharper distinctions between natsec and economic concerns. (wto.org/english/tratop…)

The adjudicators made particular note of where the US delegation had started in the GATT negotiations (wanting more policy flexibility) and where they ended up (agreeing with other countries to limit policy flexibility).

Those quotes are likely on tattoos in the Chinese trade ministry’s general counsel’s office, who could be expected to contest the existence of every element of Article XXI (“war”, “other emergency”, “international relations”)
See also @loyaladvisor here: (repository.law.umich.edu/mjil/vol41/iss…)

But… and this is thing 3, the dispute settlement functions at the WTO are seriously impaired, to say the least. This may limit the practical consequence of any conflict between GATT/WTO obligations and the US export control regime. (thenation.com/article/archiv…)

Indeed, Europe has indicated some openness to working with Biden on tech. There’s no reason this couldn’t include some joint declaration/posture at the WTO on the interconnectedness of security and economic resilience. (politico.eu/article/eu-see…)

Adapted from this thread by Todd N. Tucker.

I write about democracy, political economy, and trade. Fellow at the Roosevelt Institute and Roosevelt Forward.

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