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Volume 42, Issue 5

A Proposal for “Rebalancing” to Deal with “National Security” Trade Restrictions

National security and trade policy have frequently intersected, but over the past several years, conflict has grown. After decades of careful avoidance of invoking national security in disputes at the GATT/WTO, there has been a recent proliferation of these cases. And most controversially, the Trump administration has adopted an expansive interpretation of “national security” to justify imposing tariffs and quotas on steel and aluminum products (which it may soon apply to automobiles). Many US trading partners responded immediately with tariffs of their own, and both the US tariffs and the retaliatory tariffs are the subject of litigation that will test the limits of the WTO dispute settlement process and the trading system itself. A WTO panel ruling in a different case involving national security has just been published, but it is not clear that any legal ruling can satisfy the parties to disputes where national security has been invoked. This Essay describes the problems with litigation on such matters, and suggests an alternative mechanism to handle these issues. Instead of litigation, a “rebalancing” process like the one used in the context of “safeguard” tariffs and quotas should be utilized for national security trade restrictions. Where such measures are taken, governments should offer compensation (such as lowering trade restrictions in other areas); if compensation cannot be worked out, these governments must accept equivalent trade restrictions imposed by affected trading partners. In this way, the overall balance in the system can be preserved, permanent damage to the WTO dispute system avoided, and a potentially destructive loophole kept closed.

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Recommended Citation:

Simon Lester and Huan Zhu, A Proposal for “Rebalancing” to Deal with “National Security” Trade Restrictions, 42 Fordham Int'l L.J. 1451 (2019). 
Available at: https://ir.lawnet.fordham.edu/ilj/vol42/iss5/5