OTHER EXCEPTIONS

Aktieva Tri Tjitrawati

2023
SECURITY EXCEPTIONS
 Security Exceptions (Art. XXI GATT)
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 ARTICLES XXI, XXII AND XXIII:
(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 emergency 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
Interpretation and Application of Article XXI
(b)
Nothing in this Agreement shall be construed …
(b) to prevent any contracting party from taking any action which
it considers necessary for the protection of its essential security
interests
(1) “relating to fissionable materials or the materials from which they
are derived”
(2) “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”
(3) “taken in time of war or other emergency in international
relations” .
List of Actions of Article XXI (b)
(1) “relating to fissionable materials or the materials from which
they are derived”
(2) “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”
(3) “taken in time of war or other emergency in international
relations” .
Chapeu of Art. XXI(b)
Nothing in this Agreement shall be construed …
(b) to prevent any WTO Member from taking
any action which it considers necessary for the
protection of its essential security interests.
 The Possible Reading of Art. XXI(b)
I. the phrase ‘which it considers’ qualifies only the term ‘necessary’,
implying the other elements, i.e. ‘essential security interests’ and the
conditions in the subparagraphs, are not self-judging but subject to
objective determination.

II. the phrase ‘which it considers’ qualifies both the terms ‘necessary’
and ‘essential security interests’, rendering only the subparagraphs (i)-
(iii) capable of objective determination.

III. the phrase ‘which it considers’ qualifies all elements of the provision,
leaving the decisions on the ‘action … necessary’, the ‘essential security
interests’ and the conditions of the subparagraphs (i)-(iii) totally up to
the Member and not subject to objective determination by a panel.
abuse of national security exceptions
• The dangers of abuse of national security exceptions
for the protection of domestic industry and have
acknowledged that such abuse constitutes a serious
threat to the global trading system;
• On 14 September 2016, Ukraine requested
consultations with Russia regarding alleged
restrictions on traffic in transit from Ukraine,
through Russia, to Kazakhstan and other countries.
The panel in Russia – Traffic in Transit (DS512)was
established on 21 March 2017.
• US – Steel and Aluminium Products (EU) (DS548)
In order to avoid abuse of this exception, a panel will be
mandated to examine and determine:
• whether there is a war or other emergency in
international relations?
• whether the measure at issue is taken in times of such war
or emergency?
• whether the invoking Member’s decision on what its
‘essential security interests’ are is taken in good faith, i.e.
not as a means to circumvent its obligations under the
GATT; and
• whether the measure at issue is so remote from, or
unrelated to, the ‘emergency in international relations’
that it is implausible that the Member implemented the
measures for the protection of its essential security
interests?
REGIONAL INTEGRATION EXCEPTIONS
 Regional Integration Exceptions
Accordingly, the provisions of this Agreement shall not prevent,
as between the territories of contracting parties, the formation of a
customs union or of a free-trade area or the adoption of an interim
agreement necessary for the formation of a customs union or of a free trade
area; Provided that:
(a) with respect to a customs union, or an interim agreement leading
to a formation of a customs union, the duties and other
regulations of commerce imposed at the institution of any such
union or interim agreement in respect of trade with contracting
parties not parties to such union or agreement shall not on the
whole be higher or more restrictive than the general incidence of
the duties and regulations of commerce applicable in the
constituent territories prior to the formation of such union or the
adoption of such interim agreement, as the case may be;
(b) with respect to a free-trade area, or an interim agreement leading
to the formation of a free-trade area, the duties and other
regulations of commerce maintained in each if the constituent
territories and applicable at the formation of such free-trade area
or the adoption of such interim agreement to the trade of
contracting parties not included in such area or not parties to
such agreement shall not be higher or more restrictive than the
corresponding duties and other regulations of commerce existing
in the same constituent territories prior to the formation of the
free-trade area, or interim agreement as the case may be; and
(c) any interim agreement referred to in sub-paragraphs (a) and (b)
shall include a plan and schedule for the formation of such a
customs union or of such a free-trade area within a reasonable
length of time.
Balance of Payment Exceptions
(Art. XII)
 Balance of Payment Exceptions
Notwithstanding the provisions of paragraph 1 of Article XI, any
contracting party, in order to safeguard its external financial position
and its balance of payments, may restrict the quantity or value of
merchandise permitted to be imported, subject to the provisions of
the following paragraphs of this Article.
2. (a) Import restrictions instituted, maintained or intensified by a
contracting party under this Article shall not exceed those necessary:
(i) to forestall the imminent threat of, or to stop, a serious decline in
its monetary reserves, or
(ii) in the case of a contracting party with very low monetary
reserves, to achieve a reasonable rate of increase in its
reserves.
Art XII; Art. XXVIII:B GATT Annex 1: Understanding on the
1947, Declaration on
Annex 1A: Multilateral Balance-of-Payments
Trade Measures Taken for
Agreements on Trade in Provisions of the General
Balance-of-Payments
Goods Agreement on Tariffs and
Purposes adopted on 28
GATT 1994 Trade 1994
November 1979
Application of Measures
1. Members confirm their commitment to announce
publicly, as soon as possible, time-schedules for
the removal of restrictive import measures
taken for Balance-of-Payments purposes. It is
understood that such time-schedules may be
modified as appropriate to take into account
changes in the Balance-of-Payments situation.
Whenever a time-schedule is not publicly
announced by a Member, that Member shall
provide justification as to the reasons therefor.
2. Members confirm their commitment to give preference to those
measures which have the least disruptive effect on trade. Such
measures (referred to in this Understanding as “price-based
measures”) shall be understood to include import surcharges,
import deposit requirements or other equivalent trade measures
with an impact on the price of imported goods. It is understood
that, notwithstanding the provisions of Article II, price-based
measures taken for Balance-of-Payments purposes may be
applied by a Member in excess of the duties inscribed in the
Schedule of that Member. Furthermore, that Member shall
indicate the amount by which the price-based measure exceeds
the bound duty clearly and separately under the notification
procedures of this Understanding.
3. Members shall seek to avoid the imposition of new quantitative
restrictions for Balance-of-Payments purposes unless, because of a critical
Balance-of-Payments situation, price-based measures cannot arrest a
sharp deterioration in the external payments position. In those cases in
which a Member applies quantitative restrictions, it shall provide
justification as to the reasons why price-based measures are not an
adequate instrument to deal with the Balance-of-Payments situation. A
Member maintaining quantitative restrictions shall indicate in successive
consultations the progress made in significantly reducing the incidence
and restrictive effect of such measures. It is understood that not more
than one type of restrictive import measure taken for Balance-of-
Payments purposes may be applied on the same product.
4. Members confirm that restrictive import measures taken for Balance-of-Payments
purposes may only be applied to control the general level of imports and may not
exceed what is necessary to address the Balance-of-Payments situation. In order to
minimize any incidental protective effects, a Member shall administer restrictions
in a transparent manner. The authorities of the importing Member shall provide
adequate justification as to the criteria used to determine which products are
subject to restriction. As provided in paragraph 3 of Article XII and paragraph 10 of
Article XVIII, Members may, in the case of certain essential products, exclude or
limit the application of surcharges applied across the board or other measures
applied for Balance-of-Payments purposes. The term “essential products” shall be
understood to mean products which meet basic consumption needs or which
contribute to the Member’s effort to improve its Balance-of-Payments situation,
such as capital goods or inputs needed for production. In the administration of
quantitative restrictions, a Member shall use discretionary licensing only when
unavoidable and shall phase it out progressively. Appropriate justification shall be
provided as to the criteria used to determine allowable import quantities or values.
ECONOMIC DEVELOPMENT
EXCEPTIONS
Economic Development Exceptions
• S&D
• Infant industry protection
 Special and Differential Treatment
• The WTO Agreements contain provisions which give
developing countries special rights. These are called
“special and differential treatment” provisions.
• The Ministers in Doha, at the 4th WTO Ministerial
Conference mandated the Committee on Trade and
Development to examine these special and differential
treatment provisions.
• The Bali Ministerial Conference in December 2013
established a mechanism to review and analyse the
implementation of special and differential treatment
provisions.
The special provisions include:
• longer time periods for implementing Agreements and
commitments,
• measures to increase trading opportunities for developing
countries,
• provisions requiring all WTO members to safeguard the trade
interests of developing countries,
• support to help developing countries build the capacity to
carry out WTO work, handle disputes, and implement
technical standards, and
• provisions related to least-developed country (LDC) Members
reasons behind the infant industry argument

• lack the economies of scale that competitors possess.

• lack the capabilities to leverage their existing
production and require protection until they can
acquire similar economies of scale.
• To encourage and stimulate domestic production.
• To promote national security and reduce reliance on
production from abroad.
• To be a source of government revenue once the infant
industry reaches maturity.
• To attract foreign investment
Rationales for increased flexibility for
developing countries
• Small economic size
• Political economy and “weak” government
• Uncertainty
• Various market failures
• Resource constraints
TERIMAKASIH..