GENEVA, April 5 (WNM staff/News Wires/TASS) - Russia had grounds for imposing restrictions on Ukrainian cargo transit through Russian territory, the World Trade Organization (WTO) Dispute Settlement Body decided, according to the report published on Friday (complete ruling here)
“The Panel found that WTO panels have jurisdiction to review aspects of a Member’s invocation of Article XXI (b) (iii), that Russia had met the requirements for invoking Article XXI (b) (iii) in relation to the measures at issue, and therefore, that the transit bans and restrictions were covered by Article XXI (b) (iii) of the GATT 1994,”
According to the report, “Russia asserted that the measures were among those that it considered necessary for the protection of its essential security interests, which it took in response to the emergency in international relations that occurred in 2014, and which presented threats to Russia’s essential security interests”. As a result, “the Panel lacked jurisdiction to further address the matter”.
Russia imposed restrictions on transit of Ukrainian goods to Kazakhstan and Kyrgyzstan in 2016. From January 1, 2016, the free trade zone between Ukraine and the EU came into force. In the circumstances, Russia, according to the Foreign Ministry, was forced to take measures that leveled the risks for its economy and suspended the free trade zone agreement in relation to Ukraine. In February 2017, Ukraine asked WTO panel to consider its complaints against Russia.
The ruling could be seen as a landmark decision in regard to the U.S.-sanctions imposed on Russian companies. U.S. president Donald Trump had argued that the sanctions on Russian companies had been imposed as the companies are a threat to U.S. national security. But the WTO states that there must be a specific threat such as weapons transport or transport of nuclear material in times of war, tensions or crisis.
NYU law professor Ben Heath gives a first anlysis on Twitter:
"Section 7.5.2 is in some sense as important as the panel's judgment, as it sets out the positions of member states. We already had some sense of the members' positions, and some (US, EU, Australia included) had released their briefs. At least 2 interesting things there:
First, Canada and the EU both accept justiciability of Art XXI, but are on opposite sides on whether the exception has "objective" elements. Notable given that #CETA essentially replicates the Article XXI formulation, as does 2004 Canadian model FIPA.
Second, China's submission reflects its ambiguous position as a rising power seeking flexibility for its own security measures, while also hoping to avoid overbroad application of NatSec policy against Chinese goods & investment.
The overall arc of the panel's analysis on Art XXI could have been ghostwritten by Dapo Akande & Sope Williams (https://bit.ly/2OQyBzz ), probably the most on the mark of any of the prior articles to propose a detailed framework.
Panel's decision that "emergency in int'l rel." is "objective fact, amenable to objective determination" does not expressly leave room for deference to state declarations of emergency. Thus more intrusive than many advocates of justiciability expected - at least facially.
Para. 7.76 appears to give definition of emergency in international relations. This follows the tendency to treat military/defense as paradigmatic emergencies & security interests. Increasingly in tension with policy developments,
Flexibility will depend on meaning given later to terms like "public order," "heightened tension," and "crisis," in this and other paras. Also unclear whether the emergency need be unexpected, sudden, or requiring urgent action, as suggested earlier in the report."
Russia pointed to this aspect in a first reaction.
The decision of the WTO adds weight to Russia’s arguments in a dispute with the United States on duties on steel and aluminum, Russian Economic Development Minister Maxim Oreshkin commented in the decision.
“Last year, the United States imposed duties on steel and aluminum imports, and now the US authorities are trying to explain this step by the need to protect national security. The decision gives weight to our arguments in the dispute with the US. Our victory in the WTO, thus, has a systemic significance for the development of the organization, it should be one of the elements of the planned reform,” the Minister said according to the press service.
The decision can be interpreted as recognizing the legitimacy of Ukraine’s sanctions against Russia, Advisor to the Minister of Economic Development and Trade of Ukraine Roksolana Pidlasa said on Friday.
“Such conclusions of the group of experts mean that all actions of Ukraine in the trade and economic sphere aimed at countering Russian aggression are certainly justified in the eyes of international law and the international community — sanctions, embargo, restrictions in the sphere of monetary and financial regulation and all other restrictive measures,” she said.
According to Pidlasa, the Ministry of Economic Development is studying the materials of the case and is developing a strategy to further protect the interests of Ukraine in the WTO framework.