Characterizing War in a Trade Context

Characterizing War in a Trade Context

[Dr. Mona Paulsen is an Assistant Professor in International Economic Law at the London School of Economics and Political Science.]

Dramatic escalation of economic sanctions on the Russian Federation have made one thing clear – trade and security are no longer strange bedfellows. On 2 March 2022, Ukraine formally invoked the security exceptions of the World Trade Organization (Article XXI of the GATT 1994, Article XIVbis of the GATS, and Article 73 of the TRIPS Agreement) to ‘impose a complete economic embargo’ and no longer apply the WTO rules to trade relations with Russia. In addition, Ukraine asked all other Members of the World Trade Organization (WTO) to join them in suspending Russia’s participation due to the ‘violation of the purpose and principles of this Organization.’

Within hours, the European Union made public an intention to end most-favoured-nation (MFN) treatment to Russian trade. For the next six months (with possible extension), as of 3 March 2022, Canada has removed MFN Tariff entitlement to ‘virtually’ all imports from Russia and Belarus (with a thirty-five percent tariff now applicable). Canada takes this action ‘to ensure those who do not support the rules-based international order cannot benefit from it.’ The MFN treatment obligation, a cornerstone of trade multilateralism, commits all WTO Members to non-discriminatory treatment in trade relations with all other Members. It remains recommended that the United States follow suit.

On 4 March 2022, the largest developed country Members took their actions a step further. The United States and the European Union formally notified the WTO General Council that the Russian Federation could no longer participate in the Developed Countries Coordinating Group. This Group takes part behind-the-scenes, consulting the General Chair on appointments to chair WTO bodies. As former WTO Secretariat Peter Ungpakorn observed, the Group’s main role is ‘the most secretive and over-rated of WTO activities.’ The jointly-authored letter reinforces that trade is deeply political. This move, perhaps the beginning of responses, inevitably weakens Russia’s ability to be in ‘the room where it happens’.

Most striking about the letter is the justification for booting the Russian Federation. The letter asserts Russian aggression is ‘an egregious violation of international law, the UN Charter and fundamental principles of international peace and security.’ At the time of writing, there are no judgments rendered against the Russian Federation. On 2 March 2022, a 141 UN Members voted in favour of a General Assembly resolution that reaffirmed Ukrainian sovereignty, independence, and territorial integrity. Which begs the question – were these WTO Members invoking the WTO security exceptions, not simply as a justification for WTO rule-breaking, but more fundamentally arguing that Russia’s violation of international law is incongruous with the WTO?

I am not aware of a time when a WTO group or body has characterized any Member’s international responsibilities. Traditionally, trade is analysed separately from international peace and security. The International Trade Organization (ITO), predecessor to the WTO, planned to ‘co-operate’ with the United Nations to restore international peace (Article 72, Havana draft). Today, the Marrakesh Agreement establishing the World Trade Organization lacks a similar provision. The only reference to international peace is found in Article XXI of the GATT 1994, whereby Members may determine those actions necessary to pursue their obligations under the UN Charter. The letter of 4 March 2022 does not provide a legal justification for condemning the Russian Federation, nor the decision to exclude Russia from its participation in the Developed Countries Coordinating Group.


The 2019 Russia-Ukraine trade dispute, Russia-Measures Concerning Traffic in Transit dispute (the DS512 dispute) was the first dispute to formally analyse the invocation of Article XXI. Yet, this report offers more than an analytical framework for approaching the trading rule/security exception dichotomy. Less discussed than the question as to whether the exceptions are subject to judicial review, I argue that the report reveals the panel’s role in characterizing Russia’s aggression in Ukraine in 2014, with the annexation of Crimea.

The annexation of Crimea led to the imposition of economic sanctions against Russian entities and persons. In response, Russia imposed transit bans and restrictions preventing, inter alia, the transit of goods from Ukraine to Kazakhstan or the Kyrgyz Republic without additional authorizations, surveillance, and other restrictions. Ukraine brought a dispute to the WTO, where Russia asserted that the measures were necessary for the protection of its essential security interests. Invoking the sleeping dragon that was Article XXI of the GATT, Russia argued the panel lacked jurisdiction to evaluate its measures as consistent with its GATT commitments. On 26 April 2019, the panel found that Russia had met the requirements for invoking the security exceptions (para. 7.148). This was the first formal review of these provisions, and Russia’s refusal to participate in the proceedings severely impacted the panel’s function.

As a trade dispute, the panel was careful to ‘not … pass upon the parties’ respective legal characterizations of those events, or to assign responsibility for them, as was done in other international fora.’ (para. 7.5). The reasoning presented a paradox. Inevitably, the panel drew some boundaries around the notion of purely self-judging security exceptions, finding it had recourse to consider the timing and nature of the events to assess whether the ‘situation’ fell within the meaning of subparagraph (iii) of Article XXI:b. Nevertheless, the panel treated trade and international security as analytically separate from one another. Ultimately, the panel observed that it was ‘not relevant’ to its determination whether Russia bears ‘any international responsibility for the existence of this situation to which Russia refers.’ (para. 7.121) To be clear, the panel refused to assess Russia’s international law responsibilities in general.

Frenemies, perhaps, but international trade and national security were not designed to be antinomies. While the United States aligned with Russia’s interpretation of a purely self-judging determination of Article XXI of the GATT in the DS512 dispute, it also aided Ukraine by imposing economic sanctions on Russia at the time of the invasion. Russia responded to those (and others) sanctions on 7 August 2014 by passing Resolution 778. Russia imposed import bans on select agricultural products, raw materials, and food originating from the United States and other WTO Members. (para. 7.122 note 205).

The details of the ‘situation with respect to Ukraine’ (para. 7.8) are largely absent from the findings of the DS512 panel. Russia refused to provide any factual evidence or legal arguments in the dispute. This required the panel to consider ‘publicly known’ information. (para. 7.119). Russian aggression in Ukraine led to several resolutions in the UN General Assembly. At the 80th plenary meeting on 27 March 2014, Resolution 68/262 was adopted to affirm the sovereignty, political independence, unity, and territorial integrity of Ukraine and to call upon all States to ‘desist and refrain from actions aimed at the partial or total disruption of the national unity and territorial integrity of Ukraine’ including ‘any attempts to modify Ukraine’s borders through the threat or use of force or other unlawful means.’ A subsequent UN General Assembly Resolution 71/205, on 19 December 2016, condemned the ‘serious’ ‘abuses, measures and practices of discrimination against the residents of the temporarily occupied Crimea.’

The interim DS512 panel report captures the battle between the disputing Members and the panel’s choices as to how to phrase Russian’s aggression in Ukraine. For example, both parties took issue with the following passage from the report:

7.122. There is evidence before the Panel that, at least as of March 2014, and continuing at least until the end of 2016, relations between Ukraine and Russia had deteriorated to such a degree that they were a matter of concern to the international community. By December 2016, the situation between Ukraine and Russia was recognized by the UN General Assembly as involving armed conflict. Further evidence of the gravity of the situation is the fact that, since 2014, a number of countries have imposed sanctions against Russia in connection with this situation.

The panel drew from UN General Assembly Resolution 68/262 and UN General Assembly Resolution 71/205, as well as Russian sanctions imposed on the United States, EU Member States, Canada, Australia, and Norway. (para. 7.122).

The original language of the paragraph had the ‘situation’ in Ukraine described as ‘recognized internationally as involving armed conflict.’ For the Panel, the resolutions condemned the ‘temporary occupation of part of the territory of Ukraine’ by Russia. (interim report, para 2.66).

As is typical in the interim phase, Russia proposed amendments to the report. Russia requested that the panel amend the language to recognition of ‘certain countries’ as involving armed conflict. Russia argued that the panel should recognize that UN General Assembly Resolution 71/205 of December 19, 2016, received 70 votes in favour, 26 against (including Russia), and 77 abstentions.

For the panel, Resolution 71/205 was adopted by the constitutionally required majority, therefore constituting the ‘position of the UN General Assembly.’ Moreover, the express reference to the Geneva Conventions of 12 August 1949 as relating to ‘cases of declared war or other armed conflict’ confirmed to the panel that the ‘situation’ involved ‘armed conflict.’ The panel agreed to improve the ‘precision’ of the report, replacing the term ‘internationally’ with the phrase ‘by the UN General Assembly.’ (interim report, para 2.66). In paragraph 7.144, the panel replaced the phrase ‘the international community’ with the phrase ‘by the UN General Assembly’. (interim report, para 2.81).

A few paragraphs later, the interim report reveals that Russia refused to acknowledge it was ‘a party to any armed conflict that Ukraine is involved in.’ (interim report para 2.71) It asserted the panel should modify the report to clarify that the 2014 emergency involved ‘armed conflict with a neighbouring country and exhibiting the other features identified by Russia.’

Once again, the Panel refused to ‘take a position’ and ultimately modified its language of paragraph 7.137 to conform to its other characterization of the events as ‘the 2014 emergency, as one that has been recognized by the UN General Assembly as involving armed conflict, and which affects the security of the border with an adjacent country and exhibits the other features identified by Russia.’


Several WTO Members have asserted that the Russian Federation has violated international law and principles of peace and security at the WTO. There are strong political and moral justifications to have taken these steps, but such diplomatic choices are notably detached from a clear WTO rule. These actions offer a strong position of the 2022 Russian invasion – and set an even stronger precedent for the remaining WTO Membership. As evidenced by the DS512 dispute, a key priority of the Russian Federation was that the final, binding report contain no legal characterization of the invasion of Ukraine. Considering these actions against the panel’s careful characterization of the Russian invasion of Ukraine in 2014, these moves are striking.

Regardless of whether a WTO dispute is brought by any of these parties, two of the largest economies have brought the question of international peace and security to the WTO’s roundtable. It remains an open question as to whether we will see an escalation of these discussions, or further demands for pushing the Russian Federation out of the WTO. It is no longer an academic question as to whether the WTO institutions should address security. A very real question is to what to do – not just in the time of crisis – but beyond crisis – for the discipline of international trade.


As of 8 March 2022, a U.S. House of Representatives bill has been introduced to suspend the importation of energy products from Russia, with no mention of MFN treatment. By Executive Order, President Biden invoked the International Emergency Economic Powers Act to prohibit the importation of energy products from Russia. The 8 March 2022 Executive Order finds that the Russian war against Ukraine and ‘violation of international law’ constitutes ‘an unusual and extraordinary threat to the national security and foreign policy of the United States.’

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Europe, Featured, General, Public International Law, Trade & Economic Law
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