Russia wins landmark WTO ‘national security’ case against Ukraine

Russia has won a dispute about “national security” at the World Trade Organization (WTO) in a ruling that may lend support to global car tariffs that could be imposed by the United States.

The WTO panel ruling on Friday – the first ever on the right to a national security exemption from global trade rules – awarded Russia a legal victory in the Ukrainian transit dispute.

The panel also confirmed the WTO’s right to assess national security claims, denting US arguments that national security was not subject to review by the global trade body.

Any such claim should be “objectively” true and relating to weapons, war, fissionable materials or an “emergency in international relations”, it said.

Kiev went to the Geneva-based trade body in 2016, complaining of a huge reduction in trade with Asia and the Caucasus region after Russian President Vladimir Putin banned road and rail transport from Ukraine unless the route also went through neighbouring Belarus.

Russia argued that the diversion was necessary to protect its national security following a conflict with Ukraine over the annexation of Crimea in 2014.

The panel said there “existed a situation in Russia’s relations with Ukraine that constitutes an emergency in international relations”, which meant Russia had “met the requirements” for invoking national security. 

Russia’s Economy Minister Maxim Oreshkin said the ruling, which can be appealed by either side within 60 days, had recognised Ukraine’s arguments to be unfounded and said the issue was of “systemic importance” for the WTO.

WTO issues panel report regarding Russian restrictions on traffic in transit #TradeDisputes https://t.co/6fPk66woXh pic.twitter.com/JH5jNgse8k

— WTO (@wto) April 5, 2019

Friday’s decisions could have ramifications for a number of WTO cases hinging on claims of national security threats, including US President Donald Trump’s tariffs for steel, aluminium and potentially cars.

Canada, the European Union and several other US trading partners have asked the WTO to determine if the tariffs are indeed necessary to protect the US’s national security.

Invoking national security was taboo at the WTO for decades after it was founded in 1995, with diplomats referring to the issue as a “Pandora’s box”, which could never be closed once it was opened and would undermine the discipline of the WTO’s widely-accepted rules.

The body’s General Agreement on Tariffs and Trade includes a clause allowing countries to take steps to protect their “essential security interests”. However, the WTO panel determined in Friday’s ruling that the agency has the “jurisdiction” to rule in cases where national security concerns are invoked. 

In the past three years, however, Russia has cited national security in the dispute with Ukraine, Trump has used it to justify tariffs and Bahrain, the United Arab Emirates and Saudi Arabia have cited it in a diplomatic spat with Qatar.