Can the developed world respond to Russia’s invasion of Ukraine — a flagrant violation of international law — by adopting measures not rooted in international law? The United States, Canada, and the European Union (EU) are using all the levers available to impose punitive economic sanctions on Russia. An important arrow in the sanctions quiver is trade restrictions. For instance, Canada has suspended the most favoured nation (MFN) treatment to Russia, which it owes to the latter under the rules of the World Trade Organization (WTO), i.e., the global institution that polices the international law on multilateral trade. Canada believes that “those who do not support the rules-based international order cannot benefit from it”. Likewise, the EU and the U.S. are contemplating similar moves.
In a parallel development, the U.S. and the EU have formally notified the WTO General Council that Russia’s participation in the “Developed Countries Coordinating Group” (i.e., an informal group at the WTO) stands suspended due to its “egregious violation of international law, [the] UN Charter and fundamental principles of international peace and security”.
Article XXI, trade, security
Based on the public justifications offered by these countries, the question is this: does the WTO allow its members to take actions against any other member for breaching international law obligations on peace and security?
Under the WTO regime, the right of countries to impose trade sanctions, such as suspending MFN, on security grounds, is regulated by Article XXI of the General Agreement on Tariffs and Trade (GATT). Article XXI, the only provision governing trade and security linkages in the WTO, empowers a member country to adopt measures “which it considers” necessary for the protection of its essential security interests (ESI) taken in time of “war” or other “emergency in international relations”. Article XXI is not entirely self-judging, though the words “which it considers” give significant discretion to the country to determine the necessity of the measure adopted to protect its ESI.
Article XXI is a defence that countries can employ when charged with violating their WTO obligations. Thus, Canada can justify deviating from the MFN rule by demonstrating that it is protecting its ESI due to an ongoing war or emergency in international relations. However, Article XXI cannot be employed to judge whether Russia has breached international law on peace and security.
As international trade lawyer Mona Pinchis-Paulsen has argued, this interpretation of Article XXI was confirmed by a 2019 WTO panel in the ‘Russia – Measures Concerning Traffic in Transit’ case that incidentally involved Russia and Ukraine. This dispute arose after Russia’s annexation of Crimea (2014), which, in turn, triggered economic sanctions against Russia. Russia hit back by imposing transit bans and restrictions on the movement of Ukrainian goods to Kyrgyzstan. While hearing Ukraine’s challenge of the Russian transit bans, the WTO panel refused to characterise the Russian invasion of Ukraine as a violation of international law in general.
International law justification
If Russia challenges the Canadian suspension of MFN before the WTO’s Dispute Settlement Body (DSB), Canada will have to show that its actions are backed by Article XXI. Canada’s argument that it is doing so because Russia does not respect the rule-based order will have no basis in the WTO law. Even if it is judicially established that the Russian invasion of Ukraine is a breach of international law, that alone will not be sufficient to impose trade sanctions against Russia as per the WTO law unless countries make a clear case under Article XXI.
The Russia-Ukraine war undoubtedly constitutes an international armed conflict, as attested by the recent United Nations General Assembly Resolution. Furthermore, violation of Ukraine’s territorial integrity is a threat to the ESI of several countries. Thus, countries can use the legal cover of Article XXI for trade sanctions.
Many argue that none of this matters because the dispute will not go before the DSB, which remains severely crippled due to the U.S.; America has been blocking, with impunity, the appointment of appellate body members for the last several years. But this argument is unable to see the wood for the trees. Countries that want Russia to respect the rule-based order should follow it themselves irrespective of whether their actions are judicially tested. Countering Russian illegality with measures not ingrained in international law amounts to reprisal. If every country starts taking the law into its own hands, the legitimacy of a rule-based international order, which is already at a low ebb, will come crashing down.
Prabhash Ranjan is Professor and Vice Dean, Jindal Global Law School, O.P. Jindal Global University. The views expressed are personal
