Background

The world’s international trade has changed in the past ten years. Through diverse trade and improvement, the first quarter of 2018 has shown an increase in international merchandise trade by 5.3%in exports and 5.8% in imports, considered the fastest growth in comparison to the past two years. This is because of the role that the World Trade Organization (WTO) has played in ensuring the expansion of trade, the WTO Director-General Roberto Azevêdo, stated: “Robust data and statistics provide an essential basis for all of our work at the WTO, helping us to pursue our mission of making the opportunities that trade offers available to all”. Since its creation in 1994, the prominence of regulating International trade has increased exponentially. An important principle in the WTO is the ‘Most-Favoured-Nation (MFN)’, which is incorporated in the three major agreements of the WTO; The General Agreement on Tariffs and Trade (GATT), the General Agreement on Trade in Services (GATS), the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). They cover the trade aspects handled by the WTO. As Article 1 of the GATT states in paragraph 1:

‘With respect to customs duties and charges of any kind, and of which are imposed on or in connection with importation, exportation, or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article III,* any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties’

The Article implements ‘immediately and unconditionally’ any type of trade facilitation for all contracting parties without discrimination to any party regardless of how they act or behave in terms of fulfilling the obligations under the agreement. The MFN principle, therefore, promotes treating members equally and eliminates discrimination between trading partners. It is also covered in the major agreements of WTO that slight changes have been made to make the principle applicable and ensure that the liberations of WTO are smoothly operational.  

However, there is a critical exception in the GATT, which is all about the Security Exceptions demonstrated in Article XXI. The Article allows the contracting parties to evade their general obligations under the GATT agreement for national security reasons. The Article excludes preventing contracting parties of the GATT:

(b) 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.

Literature Review

Significantly, as this Article is subject to various interpretations, it could create confusion especially when countries abuse the Article and implement sanctions on other members of the WTO through invoking of Article XXI as a justification for such actions.

In June 2017, a Saudi-led quartet, involving the United Arab Emirates (UAE), Bahrain, and Egypt, imposed a diplomatic and economic blockade on the state of Qatar. The crisis started by the publication of fake political statements attributed to the Emir of Qatar on the Qatar National TV Chanel, which, according to the investigations associated with the Federal Bureau of Investigation (FBI), was hacked. Qatar’s Ministry of Interior stated that the cyber-crime used innovative technology. The revealed results confirmed that ‘The investigation team was able to identify the sources through which the crime of piracy was committed’. Since then, Qatar was economically and diplomatically cut by the Saudi-led quartet where they adopted a full economic blockade on goods, services and different aspects of intellectual property rights. Based on that Qatar decided to contest the blockade’s legality at the WTO Dispute Settlement Body (DSB) as the economic restrictions may constitute a violation of the WTO obligations. Qatar requested the WTO start consultations with Saudi Arabia, the (UAE) and Bahrain concerning measures adopted by these three countries, which allegedly restrict trade in goods, services, and trade-related intellectual property rights. In contrast, the three countries invoked the National Security Article by alleging that Qatar funds terrorist organizations and the action taken against Qatar was based on essential national security.

In relation to the subject matter, this dissertation aims to examine the legality of Qatar Blockade under the WTO Rules by looking into Article 1 General Most Favoured Nation Treatment and Article XXI Security Exceptions.

Research Hypothesis: the hypothesis is that Qatar blockade is illegal under the WTO rules because the sanctioned countries used the exception to justify their position rather than fulfilling the general obligation under the WTO agreements.   

In the Gulf region (GCC), this blockade has set a precedent as it has not occurred before due to the historical solid relations between the Gulf countries. Moreover, this is also the first incidence where a Gulf country has sought justice under the WTO settlement system. This dissertation sheds the light on:

Qatar is a member of the World Trade Organisation and all the countries that are under the World Trade Organisation give each other most favored Nation of MFN and National Treatment status. This status ensures that countries that are under this status should have a trade advantage, which involves the reduced rate of tariff and increasing import Quotas. There are some exceptions to the clause regarding situations where higher levels of preference are allowed. Therefore, as part, this regulation Qatar can claim that the ban imposed has been unfair in nature. On the other hand, there are other sections of the GATT regulations that have to be taken into consideration in this case.

Article XXI that is security exception was invoked by The Saudi-led quartet to justify the Blockade.  The security exception claims that it is important to make sure that each country has the freedom to make the judgment regarding the activities that are harming their security. This article allows each country to make a decision regarding their security under certain circumstances.   

Article I General Most Favoured Nation Treatment

The provisions of Article I of the GATT on the ‘Most-Favoured-Nation (MFN) Treatment’ are considered among the most important principles in trade. The WTO Appellate Body (AB) ruled in an earlier case that ‘for more than fifty years, the obligation to provide most-favored-nation treatment I of GATT 1994 has been both central and essential to assuring the success of the global rules-based system for trade in goods’. It also stated that:

‘With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article III,* any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties’.

The principle means that parties normally cannot discriminate in trade between each other.  In other words, it means ‘favor one, favor all’, so, if a Member grants a benefit to a country (such as lower tariffs for a product), it is obliged to extend this benefit immediately and unconditionally to all members of the WTO. It is also considered as a foundation of the Non-Discrimination principle that holds up the trading system; without it, the system could not exist. In terms of Canada’s autos, the AB held that ‘the duty exemption was inconsistent with the most-favored-nation treatment obligation under Art. I:1 on the ground that Art. I:1 covers not only de jure but also de facto discrimination and that the duty exemption at issue, in reality, was given only to the imports from a small number of countries’. Such a conclusion confirms the understanding of the purpose of the MFN under the GATT whereby it prohibits any kind of discrimination between ‘like’ products originating in, or destined for, different countries.

Nevertheless, it has been argued that the MFN benefits riches developed countries rather than poorer countries in terms of low average tariffs. This was recognized in the First World Conference on Trade and Development, wherein the Secretary General’s Report noted that ‘However valid the MFN principle may be in regulating trade relations among equals, it is not a suitable concept for a trade involving countries of vastly unequal economic strength’. However, this argument was challenged by less-developed countries like Brazil and India by playing a core role in shaping the GATT’s Quantitative Restrictions for Balance of Payments purposes. It started when the Indian representative stated, ‘Equality of treatment is equitable only among equals. A weakling cannot carry the burden of a giant’.

Thus, despite the clarity of the principles (MFN and Non-Discrimination), it could be sometimes challenging in practice in terms of interpretation of words such as; ‘advantage’, ‘like’ and ‘immediately and unconditionally’; for instance, when Spain  applied different tariff rates for ‘unroasted coffee’, applying the ‘like product’ measure created a debate on the interpretation of “like product” when by looking into it, it was actually an issue of  “end product”, which is not defined under Article 1 of GATT. The panel concluded by stating ‘that the tariff regime as presently applied by Spain was discriminatory vis-à-vis unroasted coffee originating in Brazil’ and requested Spain to take measures to be in line with Article 1:1 of GATT. A complex issue has also been recognized with the Non-Discrimination as an intricate principle, it was referred to it by a WTO panel in that ‘” Discrimination” is a term to be avoided whenever more precise standards are available, and when employed, it is a term to be interpreted with caution, and with care to add no more precision than the concept contains’. There is also an interpretation issue, as the AB has recently interpreted the generic term ‘non-discriminatory’ in case treating contracting parties differently or in preferentially way accurse.

Article XXI Security Exception

The non-Discrimination principle could be also found in the National Treatment Clause (NT), which could be found also under the GATT, GATS, and TRIPS. The essence of the NT is that no Member State may opt for an exception to the opposition procedure to prevent discrimination between imports and ‘domestic products’ or services. 

As presented, the MFN and the NT both share the same notion and objective of ‘prohibiting discrimination’ on the grounds of nationality, national origin or destination for goods and services, and they both play important role in liberating world trade. However, the application of these principles may sometimes become a burden when they intersect with the exceptions provided under the WTO agreements. to the WTO agreement under the GATT (1994) are (a) are the General Exception Article XX under GATT that deals with parties adopting measures to protect public morals, human, animal or planet in the sense of wellbeing or health. (b)  The Security Exception (Article XXI), discussed in the next part.   

Article XXI states that: ‘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 emergencies 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’.

The security exception is the right to take necessary measures to protect the essential interests of national security that may restrict trade in goods (GATT 1994). A major confusion is associated with this Article regarding its definition and limits. Similar exceptions are provided for in the GATS and the TRIPS Agreement. Article XXI of GATT allows the WTO members to breach their obligations for security reasons.  With the recent political and economic changes, different dimensions have been related to national security, such as cybersecurity and terrorism. The predicament comes from misusing or sometimes abusing the XXI when invoked; this was recognized in the early stages of the GATT, described as creating a ‘very big loophole in the whole GATT Charter’. Thus, Article XXI remains without any amendments since GATT 1974; however, some modifications added in the GATS and TRIPS. In 1987, Nicaragua requested reviewing Article XXI in the Uruguay Round for further discussion of the interpretation of the Article. In Nicaragua’s case, the United States invoked Article XXI and argued that GATT counsel is not entitled to discuss the Security Exception. In response, Nicaragua stated, ‘the position taken by the United States on the embargo reveals a dual inconsistency as to the sphere of competence of the GATT and of the United Nations, and inconsistency with respect to the unity and homogeneity of international law’. Several cases were presented under the GATT and the WTO to challenge Article XXI. However, never ended up with a binding decision.

Most Favoured Nation Treatment

The article main issue is associated with its definitions, which gives a wide range of interpretations and misuses. Terms like ‘considers necessary’, ‘essential security interests’, ‘time of war’ and ‘emergency in international relations’ are subject to different narratives. After September 11, 2001, a shift in defining ‘war’ was noted. The United States undertook a broad expansion in using words like ‘terrorism’ and ‘war on terrorism’. The legal vagueness of ‘war on terrorism’ would not merely have an impact on the approach of the United States to armed battles via non- traditional policies, but the economic measures might be used to counter terrorist financing. This political understanding was reflected in international laws and international relations as a gateway to impose sanctions or economic restrictions by taking advantage of the ambiguity of Article XXI in the GATT as a pretext. An important element associated with Article XXI is that the article is considered ‘Self-Judging’, which is subject to the member’s sole discretion. Sweden’s import restrictions on footwear qualified for invoking Article XXI. Professor John H. Jackson noted that ‘This language is so broad, self-judging, and ambiguous that it obviously can be abused. It has even been claimed that maintenance of shoe production facilities qualifies for the exception because an army must have shoes!’ 

Several debates have taken place between scholars regarding the ability of the DSB to review the measures considered by the members invoking Article XXI. The first group of scholars supports member sovereignty in determining what is essential national security, while the WTO panel exercises self-restraint and recommends alternative dispute resolution methods. The second group of scholars supports reviewing Article XXI and creating certain criteria to evaluate the measures taken by the members. From both views, the formulation of general criteria is deemed useful to reduce the pressure in dealing with the Article and members’ practices. WTO jurisdiction over Article XXI is also debatable, and scholars are divided into two groups. Arguments carried by that favouring jurisdiction group suggest that the Article is structured to limit the reach of self-judging language. That disfavouring jurisdiction group notes the discretionary ‘it considers’ language of the article and the self-defining element within.

Notwithstanding the ambiguity of Article XXI, scholars admit that the Article was drafted in ambiguity to enable the WTO members to respond and take legal action against any national security threats without breaching their obligations under the WTO agreements. However, the text relies (a) on the behaviour of the invoking party who should act in good faith and (b) real security interest where the member should present a prima facie case of real threats based on real national security concerns.  

The worries regarding the maintenance of the elasticity of the term ‘National Security’ assist in explaining the reason that the GATT drafters intentionally kept the GATT Article XXI as an unclear tool. It also clarifies the reason why members of the WTO held autonomous authority. Though the nations have submitted representatives to work with WTO and benefit from its welfares, it is still important to make decisions regarding whether the GATT Article XXI is justifiable. In addition, any sovereignty waiver must be clear, specifically providing its history. Essentially, countries are likely to offer their significant national security queries whenever requested by the WTO panel. this is because the panel has its individual correspondences that the member countries ought to submit when requested.

Qatar, Regional and International Trade System

Qatar is one of the most dynamic Arab countries. With its gas reserves and great investments around the globe, Qatar is considered one of the richest countries in the region with the highest GDP per capita in the world. In the Gulf Region, Qatar ‘is a member of The Cooperation Council for the Arab States of the Gulf’ (GCC) since the establishment of the council in 1981. One aspect of such cooperation is economic cooperation, where all GCC members signed an Economic Agreement between all GCC States on 31 December 2001 in Muscat, Oman. The aim of this agreement is to ease trade between the GCC countries. On a global scale, Qatar joined the GATT on the 7^th of April 1994 and the WTO on the 13^th of January 1996. On November 2010, Qatar held the ‘Doha Round which is the latest trade negotiations among the WTO membership’. As a result, parties announced the Doha Ministerial Declaration, reframing the importance of continued liberation of the services sector in developing countries thereby, encouraging developed countries to open their markets for the free labour movement and increase the flow of technology transitions. Since then, Qatar has been heavily involved in the WTO activities and multiple negations on various subjects, as in July 2018, when, for a consultation on trade in goods, members of the WTO raised concerns over United States Section 232 investigation on automobiles and automotive parts.  

On the 25^th of May 2017, the Qatar News Agency (QNA), and Qatari official news website and its social media accounts were hacked and used to published fake statements attributed to the ‘Emir of Qatar, Sheikh Tamim bin Hamad Al Thani; this led to investigations to which the FBI contributed. According to Qatar’s Ministry of Interior, the cyber-attack used innovative technology; however, the results confirm that ‘The investigation team was able to identify the sources through which the cyber-attack was carried out and legal action shall take place’. Days later, on the 5^th of June 2017, Saudi Arabia, UAE, Bahrain, and Egypt decided to cut diplomatic ties with Qatar and block their naval, aerial and only land borders, with Saudi Arabia. This has led to ceasing all imports and exports to and from Qatar through original channels. All types of goods and services, including food and medicine, were suspended by the Saudi-led quartet, as well as ‘trade-related aspects of intellectual property rights’, such as illegally rebroadcasting the World Cup 2018 from BeIN Sports TV channel which belongs to Qatar and has exclusive rights to broadcast the World Cup in the Middle East. Moreover, human rights were violated by the blockade whereby Qatari citizens were asked to leave Saudi Arabia, UAE, Bahrain, and Egypt within fourteen days, and, vice versa, these countries asked their civilians to leave Qatar within the same period and prohibited them from traveling to Qatar. On the 23^rd of June 2017, the four countries raised a list of 13 demands that Qatar had to comply with within ten days to lift the blockade. The 13 demands revolve around Qatar’s allegedly funding terrorism and supporting ‘terrorist organizations’ and ‘that Qatar should “align itself with the other Gulf and Arab countries militarily, politically, socially and economically”.Other demands like; cutting the diplomatic ties with Iran, shutting down Al Jazeera TV Chanel, terminating all collaborations with the Turkish Military in Qatar and that Qatar’s compliance with the demands would be audited on a quarterly basis by the Saudi-led quartet upon consent to the demands. This was considered by Qatar as‏ a blatant intervention in Qatar’s sovereignty as well as its internal and foreign affairs as stated by Qatar’s Foreign Affairs Minister: ‘the illegal blockade has nothing to do with combating terrorism, it is about limiting Qatar’s sovereignty, and outsourcing our foreign policy’. Therefore, Qatar was open to fair negations to solve the situation, but without prejudice to the sovereignty of the State. As reported in the Minister’s speech, ‘Anything not related to [the affairs of the Gulf Cooperation Council] is not subject to negotiation. Al Jazeera is Qatar’s affairs, Qatari foreign policy on regional issues is Qatar’s affairs. And we are not going to negotiate on our own affairs’. Kuwait, as a neutral party, took the lead to bring Qatar, Saudi Arabia, UAE, and Bahrain to sit at the negotiation table to solve the issue, but the GCC blockading countries refused to negotiate or to lift the blockade. Moreover, they reduced their representation of the 38th round of the Supreme Council of Gulf Cooperation Council held at Kuwait in the last minute. Accordingly, Qatar blockade was not discussed in the round and the agenda was shortened by half. Despite multiple diplomatic attempts from different parties globally, the blockade is still in force.

As a result of the blockade, Qatar had to find alternatives to maintain the same level of living and same lifestyle for its citizens and residents, finding alternative suppliers and service providers. Several legal actions were taken to protect the rights and obligations that were affected by the blockade. On the 31st of July 2017, Qatar requested a consultation from the WTO against the imposed economic restrictions imposed by the GCC blockading countries on trade goods, services, and aspects of intellectual property rights. By this Qatar would be the first GCC country to recourse the Dispute Settlement Body (DSB) of the WTO. The records show that since the establishment of the WTO until 2008, DSB reviewed 378 complaints and none was from or against an Arab/GCC country. In June 2018, Qatar took the UAE to the UN for major human rights infringements and discrimination against Qatar .  

Analysis of the Three Consultation Requests by Qatar to the Dispute Settlements Body under the Dispute Settlement Understanding (DSU)

On 31 July 2017 the delegation of Qatar communicated with the delegation of UAE and the Chairperson of the Dispute Settlement requesting for Consultation with UAE regarding the economic isolations imposed on Qatar by UAE in respect of goods, services and trade-related aspects of intellectual property rights.

The request was made pursuant to ’Articles I:1, V:2, X:1, X:2, XI:1, and XIII:1 of the GATT 1994; Articles II:1, III:1, III:2, III:3, and XVI of the GATS; and Articles 3 and 4 of the TRIPS Agreement’ with an exclusion to the ‘first sentence of article 4.11 of DSU’. According to the request, the measures revolved around three aspects;

Where the ban forbids and/or restricts ‘the import, export, sale, purchase, license, transfer, receipt and shipment of goods originating in, transiting through, towards or from, or with the destination of Qatar’,^. the actions taken by UAE including but not limited to: (a); closing the Maritime border and airspace closure by the UAE. (b); Prohibition on entry into UAE ports of (i) all ships owned by Qatar, Qatari individuals or Qatari companies; and (ii) all ships bearing the Qatari flag, (c); Prohibition on the landing of Qatari aircraft at airports in the UAE;(d); Prohibition on the discharge in UAE ports and airports of any goods transported from Qatar; (e); Prohibition on the loading at UAE ports and airports of any goods destined for Qatar.

(A) The actions considered by Qatar as a major violation to Article I, GATT 1994 and involves blatant violation to the Non-discrimination principle, where UAE failed to accord “immediately and unconditionally to like product originating in or destined for or to or from Qatar. In this regard, a similar concern was noted in the United States-Brazil dispute, the panel noted that: ‘this provision clearly prohibits a contracting party from according an advantage to a product originating in another country while denying the same advantage to a like product originating in the territories of other contracting parties’.   

 (B) Article V: 2 in terms of freedom of transit where it states: ‘There shall be freedom of transit through the territory of each contracting party, via the routes most convenient for international transit, for traffic in transit to or from the territory of other contracting parties. No distinction shall be made which is based on the flag of vessels, the place of origin, departure, entry, exit o destination, or on any circumstances relating to the ownership of goods, of vessels or of other means of transport’. By the blockade UAE imposed on Qatar, the most convenient trade routes were blocked on Qatar. The transfer of transit between the UAE is the most convenient route for Qatar (c) ‘X:1 and X:2 regarding Publication and Administration of Trade Regulations’, the measures were taken by UAE affect the trade of goods directly by enforcing them directly without prior publication. Article X:1 specifically states that laws, regulations, judgments and general administrative decisions applicable to a Party concerning the application of customs duties, interest, taxes or payments or other claims, restrictions or exclusions for the purpose of import or export or servicing of debt, or of the dissemination or pricing of effects. Sales, distribution, removal, insurance, warehousing, inspection, display, processing, merger or other purposes will be promptly disclosed to authorities and traders. UAE did not publish any written or unwritten statements prior to the actions taken. The same applies to Article X:2: ‘Prepayments for customs or other payments for goods imported in accordance with established and concerted practices or new requirements, imports, restrictions, exclusions or relocations are not published or disclosed’.

The measures carry on identifying breaches under the regarding General Elimination of Quantitative Restrictions and measures related to Nullification or impairment.

Measures Related to Services

The encroachment of obligations of UAE under the GATS agreement was listed as follows:

• Banning Qatari persons or vessels and vehicles from crossing maritime borders with the UAE, or entering the UAE via airspace, to supply services, as well as persons from the UAE crossing maritime borders with Qatar, or entering Qatar via airspace, to consume services;
• Banning (i) all ships owned by Qatar, Qatari individuals or Qatari companies; and (ii) all ships bearing the Qatari flag, from entering UAE ports;
•  Banning aircraft registered in Qatar from operating flights to and from the UAE, including prohibiting the landing of Qatari aircraft at airports in the UAE; and,
• Banning Qatari service suppliers, such as Qatar Postal Services Company, from providing services in relation to mail items that are originating from or designated to Qatar,’

With reference to the article (a) Article II:1 about Most-Favoured-Nation Treatment UAE.

The UAE service suppliers have failed to provide immediate and unconditional supply to Qatar in different sectors of supply, affecting service supply systems which depend on Qatar and other countries.

(b) In accordance with Article XVI, Market Access, UAE restricted market access for Qatari service suppliers and service providers. (c) The request highlighted Article XXIII on Dispute Settlement and Enforcement paragraph 1 and 3 for non-compliance and violation of obligations.

Measures related to Trade-Related Aspects of Intellection Property Right

As mentioned in the request, violations of obligations under TRIPS agreements were carried out by UAE by:

‘•  Making it impossible for those forms who hold trademarks and copyright licenses. For those people who hold Qatari nationals and also have property in Qatar to honour their obligations under licensing agreements; and,

• The copyright process is impossible for Qatar trademarks and for those forms which have intellectual licensees and also for those who have property rights in the premises of UAE.

Under TRIPS, Article 3: National Treatment and Article 4: Most-Favoured-Nation Treatment, UAE failed to allow holders of copyright, trademark and other forms of Intellection Property (IP) Qatar nationals to honor their obligations in the UAE or to use and practice their right in the UAE. The UAE failed to treat Qatar citizens as nationals with respect to the protection of IP rights.

More violations through the blockade were found, and, to prevent dismissal of any additional violations, the request mentioned that ‘Qatar maintains the right to raise other issues during the consultation process and in all future issues’.

On the 10 of August 2017, the Chairman of the DSB sent the UAE communications stating that it would not engage in consultations with Qatar. Therefore, Qatar took the next step: ‘pursuant to Article 4.7 and Article 6 of the DSU, Article XXIII of the GATT 1994, Article XXIII of the GATS and Article 64.1 of the TRIPS Agreement, with the standard terms of reference provided by Article 7.1 of the DSU’ .

• Review the minutes of the DSU meetings  

According to Article 4.7 from the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU)  if the consultation fails to settle the dispute within 60 days, ‘the requested party may ask to establish a panel, that created from a group of professionals. the complainant may request a period of 60 days If the consulates agree that the dispute was not resolved With this understanding of the article, Qatar requested establishing a panel. The panel was established on 22 November 2017 and composed on 3 September 2018 led by the Chairman, Mr. Virachai Plasai,. On 23 October 2017 panel, the Chairman agreed to revert to Qatar disputes measures. Qatar’s representative stated by stating that the efforts to find reconciliation to resolve the disputes have failed and the economic restrictions are still in place. He focused on the WTO cornerstone principles, the MFN and Non-discrimination treatments affirming that the actions taken by Qatar nearest trading partners in respect to good and services and trade aspects of intellectual property violate the WTO rules. He highlighted that the measures were targeting Qatar only denying all it’s right under the WTO membership. The UAE’s representative responded that this dispute is not under the WTO jurisdictions, hence ‘the establishment of the panel to adjudicate a matter fell outside the purview of the WTO and its dispute settlement system’. Continuing that UAE took the measures that were necessary to protect its essential national security interests, thus, for this invoking Article XXI cannot be considered as a violation of the WTO obligations. Furthermore, he stated that the measures were taken in response to Qatar’s actions in refusing to cease it supporting and funding terrorism and that Qatar failed to show compliance with its international counter-terrorism obligations. He concluded his statement by restating that the WTO had no authority to second-guess UAE action to protect its national security.

In the Panel, Saudi Arabia and Bahrain agreed with the UAE statement and reconfirmed their objection to the panel establishment. The Canadian representative noted that the political solution remains possible if there was a goodwill between the parties and that Canada supports the suggestion to seek the assistance of the Director-General before proceeding to the next phase of this dispute. The Korean representative supported finding a political resolution to solve this matter and encouraged the parties to make efforts in good faith, highlighting that this matter has a significant impact on trade and it’s the obligation of the WTO members to ensure the flow of the world trade and minimize any negative influence on the trade system. In the same context, the United States representative agreed to the UAE’s statement regarding the sovereignty of the countries to decide its essential national security by Stating ’If Article XXI was invoked, there were no findings by the panel that could assist the DSB in making the recommendations provided for in DSU Article 19.1.2 This was because the DSB could make no finding of WTO-inconsistency or recommendation to a Member to bring its measure into conformity with WTO obligations’ in the end, the United State representative agreed to the Canadian suggestion in seeking assistance from the Director-General through his good offices and add or from other person or WTO member. Adding in case of the establishment of the Panel “it should consult with the parties “to develop a mutually satisfactory solution”’

by the end of the panel, Qatar’s representative denied the allegation raised by the UAE’s representative and confirmed that Qatar did not dispute the country right to take bona fade measures on the grounds of national security concerns, however ‘this defense could not be self-regulating as that would threaten the integrity of the entire rules-based system. The UAE representative repeated his statements. Therefore, the DSB took a note and agreed to establish a panel in accordance with Article 6 of the DSU. The representatives of Afghanistan, Australia, Kingdom of Bahrain, Canada, China, Egypt, the European Union, Guatemala, Honduras, Japan, Kazakhstan, Korea, Norway, the Philippines, the Russian Federation, the Kingdom of Saudi Arabia, Singapore, Chinese Taipei, Ukraine, the United States and Yemen reserved their third-party rights to participate in the Panel’s proceedings.

While the economic sanction is mostly an induvial call by the WTO members, the number of sanctions has raised over the years and sanctions became a tool of coercion to the target country. A number of WTO members have quoted GATT 1947 and GATT 1994 Article XXI, either specifically or unstated, both beforehand and after the formation of the WTO. The first case that was settled under GATT 1974 was in 1949 the case of United States–Czechoslovakia, this dispute was a precedent the results from the discussions concluded: (a); “every contracting party should be cautious not to take any step which might have the effect of undermining the General Agreement”, (b); “contracting parties should be informed to the fullest extent possible of trade measures taken under Article XXI”. The second case was United States–Nicaragua (1985), when the United States imposed a full trade embargo against Nicaragua. United Stated invoked Article XXI and stated ‘the panel cannot examine or judge the validity or motivation for invocation of Article XXI’. No judgment was made on the case and the panel noted that; “it could find the United States neither to be complying with its obligations under the General Agreement nor to be failing to carry out its obligations under that Agreement”. The last case is the dispute of the European Communities–Yugoslavia (1992), the European Community and its members (EC) adopted full economic sanction against Yugoslavia and deprived them of the benefits granted by the GATT agreement. Thus, EC invoked Article XXI by stating:” In our view, these measures, taken for purely political reasons, are not consistent with the General Agreement”. The panel was established to examine the measures taken by the EC according to Yugoslavia request but was ceased due to the political situation in Yugoslavia. It could be noted from the cases that the GATT Council did not reject the disputes based on invoking Article XXI. the other two cases under GATT 1947 is Ghana -Portugal 1961 where Ghana imposed a boycott of goods on Portugal on the basis of essential security interest. Ghana justified its action and described Portugal action as “might be threatened by potential as well as an actual danger’ . However, In the case, Ghana did not invoke Article XXI in the end but relied on Article XXXV. The second case is the European Community–Argentina (1982) Argentina reached the GATT council for import suspension imposed by the EEC, Australia, and Canada. Argentina claimed that the measures taken against it were considered to be a violation of the obligations under the GATT. This suspension was posted on Argentina’s military intervention in the Falkland/Malvinas Islands. Parties invoked Article XXI to justify the actions taken against Argentina and denied the jurisprudence of the GATT Council. At the end of the discussions, Argentina noted: ‘that in order to justify restrictive measures a contracting party invoking XXI would especially be required to state reasons for national security…there were no trade restrictions which could be applied without being notified, discussed and justified”. Eventually, the GATT Contracting Parties agreed to issue an interpretation of Article XXI, which provided in part that “the contracting parties undertake, individually and jointly. to abstain from taking restrictive trade measures, for reasons of a non-economic character, not consistent with the General Agreement.”. Those cases were brought under the GATT 1947, and they demonstrate the ambiguity and how the nature of Article XXI is controversial where only one case was adopted in the GATT which is US-imports of sugar from Nicaragua. Cases like the Arab League Boycott against Israel 1970, the Boycott ‘not contravene GATT obligations because it “was considered a political decision and not trade-related”’ also a case like Sweden – Import quota system for footwear have no formal complaint in the DSU thus article XXI was invoked as a defence. Parties in the GATT Council rapidly challenged the legality of the Swedish measure and its validation based on national security. Recognizing international non-approval, Sweden rapidly provided an offer to keep the discussion, and voluntary withdrawing the measure in two years. In the case Taiwan against China, an agreement reached by parties not to invoke Article XXI.A provisional contract between Nicaragua and Colombia to solve the problems prior to the International Court of Justice (ICJ). Lastly; the dispute resolution between the EU and the United States on the “Helms-Burton Act”. These circumstances demonstrate the way that the members of WTO might utilize the present elasticity of the GATT Article XXI, together with diplomatic resolutions, to settle the disputes of the GATT Article XXI. all of these previous examples of Sweden, Nicaragua and Colombia, Taiwan and China and EU and the United States demonstrates the significance of political pressure under the “GATT 1947” regulations of resolving the dispute. Under these regulations, any member is able to obstruct the taking up of the panel report. The WTO tightened the system of resolving the dispute by applying a regulation of “reverse consensus” while adopting the Appellate Body and panel reports.

Under the WTO only three disputes related to Article XXI invocation as a defense and all were settled in the consultation stage. The first case is the United States and EC, where the United States applied Sanction over Cuba. The irony was not that the dispute was not resolved under the DSU, but that the panel under WTO could not explain the ambiguity of Article XXI. The resolution of this dispute presents the importance of the diplomatic pressure and the possibilities of reaching a solution that satisfies all parties. The second case is United States restrictions against China.  There are no official records of accusations by China yet, however, if China raised the claim in front of the DSB, the United States will not be able to invoke Article XXI due to the lack of justification and the good faith aspect of the dispute.

The last one is the economic sanctions over Ukraine imposed by the Russia Federation (RF) since 2013, where the disputes involve The European Union, RF and the United States, the WTO members and Permanent Representatives of the United Nations Security Council, however, A major issue in the adoption of the GATT system to the WTO, that the WTO is still outside the UN system. The countries applied ‘unilateral restrictive measures (including economic and trade restrictions) by the EU and United States against RF, followed by the latter’s response in the form of import restrictions on the United States and EU products’. Hence, no further actions initiated before the WTO.

Meanwhile, Qatar dispute would be added to the three cases demonstrated above but with the actual invocation of Article XXI by Saudi Arabia, UAE and Bahrain. Due to the infringements to the three major WTO agreement (GATT, GATS, and TRIPS) and the actual invocation of Article XXI, it is time to address this issue and request to reviewing Article XXI under the WTO related bodies.    

United Arab Emirates, Saudi Arabia, and Bahrain have relied on Article XXI to legitimize the economic restrictions on Qatar in respect of goods, services and trade aspects of intellectual property in Qatar. Nevertheless, according to WTO agreements, it can be extrapolated that the blockade is illegal in many aspects. First, the countries used the exception to divert from the original obligations under the WTO agreements. Second, the three countries did not notify Qatar before taking the actions, where the blockade was imposed on every and each level of trade including goods, services, and Intellectual property aspects. No justification was given by the GCC blockading countries to the list of thirteen demands and no evidence was submitted to support the allegations of the terrorism funding. The GCC blockading countries showed nothing related directly to ‘National Security’ aspect. Many contradictions can be highlighted in the list of demands. For example, UAE is Iran’s second-biggest export destination after China.  Therefore, Under the principle of Non-discrimination, ‘it is unclear why the UAE’s concerns about the support of terrorism, ties with Iran and military cooperation with Turkey would apply exclusively to Qatar’. Moreover, Saudi Arabia is disturbed by Qatar ties to Hizbullah, Hamas, and the Muslim Brotherhood given that Saudi Arabia classifies them as terrorist groups, but at the same fails to justify its own ties with some ‘armed Syrian militant groups closely linked to al-Qa?ida and ISIS’.

With regard to the good faith principle, the practice entails that ‘’every State has to exercise the obligation incurred by treaty bona fide and is urged thereto by the ordinary sanctions of international law’. It could be almost assured that this full-scale blockade is based on hidden political agenda and purpose, rather than just economic reasons. This can be sensed from the list of the 13 demands and from Sheikh Sabah Al Ahmad Al Sabah, the Emir of Kuwait where he said at his joint press conference with the US President Donald Trump statement: “What is important is that we have stopped any military action”. Nevertheless, the UAE ambassador stated that: ‘further sanctions would be considered if Qatar would refuse to comply’. Clearly, the Saudi led quarter have adhered to this principle and the ‘allocation of the burden of proof would be controversial’, especially with the wide range of statements been made by them since the blockade started in 2017.

Although there is no guarantee to the level of satisfaction which will result from the procedures, yet, one of the possible scenarios suggests that with the involvement of diplomacy the GCC crises will come to an end, by taking the Swedish case as an example, where Sweden quickly offered to hold consultations and eventually withdraw the measure within two years after the involvement of diplomacy and ‘[with] sensing international disproval . Chances of remedies in the event of moving forward with the cases may be considered in the case that the respondent did not comply at the end of the PRT. Negotiations should take place between the complainant and the non-compliance party even by mutually satisfactory compensation. The case of USA’s violation of TRIPS agreement demonstrates an agreement Lump-sum payment. Generally, ‘the WTO provides remedies, including compensation and suspension of concessions, equal to the injury caused by the Member State’s failure to comply with the adverse decision’.

The extent to which such exceptions are self- judging is an open query. As stated in one of the interpretations in an article, a Member State has the right to make the decision for itself whether an action is essential to its interests in security and is associated with one of the numbered situations. One more interpretation would identify the right of a Member State to decide for itself whether a “security exception” can be implemented but would levy a standard of good faith that is dependent on judicial evaluation. The third interpretation states that a Member State is able to make the decision for itself whether “it considers” and action to be compulsory to protect its vital interest to security, however, the counted circumstances are dependent on judicial evaluation. Certain methods move beyond still and oppose that the security exception has both subjective and objective components. Upon this statement, whether an action is compulsory for protecting vital interests of security is a query of self-judging, but other Article XXI provisions are dependent on an aim review standard.

Conclusion

In summary, this article has clearly mentioned that the world’s international trade has changed over the past ten years.  However, since there are diverse trade activities all of which have brought cohesion and improvements. For instance, an increase in international merchandise trade by 5.3%in exports and 5.8% in imports have been witnessed in this year alone. Such improvements are considered the fastest growth in comparison to the past two years. This is because of the role that the World Trade Organization (WTO) has played in ensuring the expansion of trade. As mentioned herein, the WTO Director accepts such facts by providing a statement that robust data and statistics provide an essential basis for all activities performed at WTO. Such data then help the organization to pursue its mission of making the opportunities that trade offers available to all organizations and nations.    

In Conclusion, therefore, security exceptions are considered one of the key components of “international trade law” as the GATT origin but with not much-required alteration stating altered political and economic conditions. The “GATT Article XXI’s” history of drafting demonstrates there is a deprivation of appropriate regulating systems in the provision of the article, specifically openings to direct the application. It is as well observed that also the novel exceptions of security specified in the “TRIPS Agreement and GATS” involve evidently varying and confusing components. The latest economic sanction in contradiction to North Korea after the atomic experiment is an illustration on hand. Even though the recent sanctions are embraced under the Chapter 7 of UN Charter, secondary economic authorizations, in the case used in the upcoming contrary to additional unlawful actions, might result in hypothetically impossible lawful disputes amongst the members of WTO. In addition, the trading system of the world is required to handle the completely diverse aspects of national security at the present time for instance “terrorism, energy security and cyber-security”. These circumstances rise an impending query on the way to form those mysterious provisions of the security exception effectually applicable lawful regulation. The members of WTO are required to state this problem as initially as probable to evade enforcing a pointless and unsuitable pressure to the “dispute settlement system” of WTO.

Whereas the utilization of economic sanctions can be a diplomatically appealing tool of policy, their efficiency is debatable. Governments are eager to “walk the talk”, regardless of how much costs they incur. Certainly, a priori an influential tool and create financial costs, but it was debated that such costs function in both ways. Furthermore, there are in general “third parties” who are keen to acquire benefit from the circumstances and break down the sanctions. It might direct towards an alteration in trade partners and the formation of novel associations and hence totalling to the costs to a minimum of one party. Provided the methods through which trade has developed in the course of time, involving the production globalization and the rising interdependence of trade relationships among countries, the efficacy of “economic sanctions” is lessened even more.

Case Laws

Aerial Incident of March 10th, 1953, U.S. v. Czechoslovakia, Order, 1956 I.C.J. 6 (Mar. 14). United States–Czechoslovakia (1949): Czechoslovakia sought GATT action on a U.S. export control licensing

EEC States, Canada, and Australia VS Argentina (1982)

Nicaragua v. Honduras, 2007 I.C.J. Rep 659 (2007).

Acts and Legislations

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Yenkong Hodu, ‘Relationship of GATT Article XX exceptions to other WTO agreements’ (2011) 80 (2) Nordic Journal of International Law 219-234

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