India’s Ban on Chinese Apps: A Tryst with the Security Exception in GATS

India’s Ban on Chinese Apps: A Tryst with the Security Exception in GATS

[Riddhi Joshi is a published author and a student in the final year of her law programme from Symbiosis Law School.]

The border skirmish between India and China led to escalating tensions in the region. Numerous diplomatic and military-level talks have failed to ease the stand-off as both parties are keen on strengthening their geopolitical position. India’s fresh move to ban 118 apps of Chinese origin follows the previous ban on 59 other Chinese apps. In this backdrop, these measures could be construed as exclusively targeting Chinese investments and reducing the market access to Chinese investors. This leaves India susceptible to action for violating obligations under the WTO’s General Agreement on Trade in Services (GATS).

WTO law is comprised of three central multilateral trade agreements: the General Agreement on Trade and Tariffs (GATT), the GATS, and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). These agreements impose numerous obligations on States for the sustenance and growth of the international trading regime. However, in certain circumstances, Member States may exclude their trade commitments through reliance on the exceptions in these agreements.

In justifying the measure banning Chinese apps, it will be open for India to rely on the security exception in Article XIV bis of the GATS. The purpose of this post is to evaluate the challenges India could be confronted with should she choose to forward this defence before a WTO Panel. Defending India’s application of a ‘zero quota’ on Chinese apps could potentially pose the following difficulties:

  1. Justifying the legality of the measure itself in view of transparency and due process requirements, and
  2. Meeting the ‘good faith’ criterion in the elevated threshold of the security exception as established by recent WTO decisions.

Challenge 1: Legality of the Measure

The only indication of India’s measure is a press release which is considerably opaque in its formulation. The Ministry of Electronics and Information Technology submitted that the threat of data mining posed by these apps necessitated a complete ban to secure India’s sovereignty, and public order. However, if we were to look past the rhetoric, it is clear that statutory requirements have not been complied with. Even in the imposition of an emergency measure, the Information Technology Rules 2009 contemplates safeguards such as deliberation by a special Committee and the recording of reasons in the form of a final order. In the present case, there is no evidence of either having been done. As has been discussed here, the failure to adhere to these explicit conditions could impugn the procedural integrity of the measure itself.

Any investigation into the legal imposition of a measure requires an assessment of its compliance with domestic, statutory requirements along with its adherence to WTO law itself.

Principles of disclosure and transparency have been at the forefront of WTO discourse. Aimed at ensuring certainty and predictability in trade, WTO law requires Member States to promptly publicise and notify any change to their trading policies.

Furthermore, the importance of due process in the application of trade measures has been recognised by the Appellate Body in US – Shrimp. Here, it was observed that US’s “non-transparent and ex-parte nature of internal governmental procedures” resulted in the arbitrary application of the measure. This arbitrariness was deemed sufficient to conclude that the measure was not an exception to treaty obligations.

Thus, the procedure for the imposition of the measure banning Chinese apps can be assailed on two grounds: a) its non-compliance with domestic, statutory requirements, as well as b) its non-adherence of WTO law itself. In the absence of evidence demonstrating compliance with these safeguards, the press release raises serious concerns about lack of transparency and due process. This impugns the legal validity of the measure as a legitimate means that can restrict the rights of investors and trading partners.

Challenge 2: Security Exception, Article XIV bis:1(b)(iii)

Article XIV bis of the GATS is mutatis mutandis to Article XXI of the GATT and Article 73 of the TRIPs. Article XIV bis:1(b)(iii) contemplates that a Member State may take any action necessary for the protection of what it considers an “essential security interest” when confronted with a “war or other emergency in international relations”.

The invocation of Article XIV bis:1(b)(iii) mandates the following:

  1. The existence of a state of “war or other emergency in international relations”,
  2. The demonstration of an “essential security interest” arising from the war or emergency,
  3. The imposition of the measure during the extenuating circumstances, and
  4. The imposition of the measure in good faith.

The tussle between the ‘self-judging’ nature and the objective assessment of these requirements has arisen in the past. In defending her export restrictions against Czechoslovakia, USA contended that the WTO had no jurisdiction to question a Member State’s exercise of sovereignty. Similarly, the EC defended the suspension of imports from Argentina on the ground that the security exception was a repository of “unspecified, inherent rights”. This exception has been litigated recently in the Russia – Traffic in Transit and Saudi Arabia – Measures Concerning Protection of IPR (Saudi Arabia – IPR), largely putting this debate to rest by rejecting the notion of the security exception as an unlimited escape clause.

“Emergency in international relations”

The understanding of an “emergency in international relations” is nebulous. The Panel in Russia – Traffic in Transit decided that it was not incumbent on the Member State to justify the situation of emergency, but rather it was for the Panel to reach its conclusion through an independent, objective investigation into the facts. The Panel was of the view that leaving the invocation of the security exception to the vagaries of the Member States would undermine the predictability and stability of the international trading regime.

There have been conflicting opinions with respect to circumstances which may be treated as emergencies. One school of thought is that the preceding word, i.e. “war”, qualifies the succeeding phrase. Therefore, an “emergency in international relations” would only be one which involved hostile, military conduct to the extent that it cannot be treated as a war. The opposing view is that an “emergency in international relations” must signify everything other than hostile, military conduct as this would already be accommodated within the category of “war”.

The Panel in Russia – Traffic in Transit found a happy medium between the two opposing perspectives. Thus, while conceding that an emergency could be any situation of “heightened tension” including political or economic crises, there would have to be an element of military or public order interests. Following this approach, the Panel in Saudi Arabia – IPR agreed that Saudi Arabia’s severance of diplomatic, consular and economic ties with Qatar was sufficiently grave to be considered an emergency.

“Essential security interest”

The chapeau of Article XIV bis:1(b) acknowledges that it is within the Member State’s domain to define its “essential security interest”. However, this would leave scope for the potential misuse of the entirely self-judging requirement. Tempering this understanding, the Panel in Russia – Traffic in Transit imposed a good faith obligation on the Member State in identifying its security interest. The good faith also extended to conceiving a measure which would have the least trade-distorting effects. Bona fides could be demonstrated by proving that the “essential security interest” arose from the “emergency in international relations”.

In Saudi Arabia – IPR, the Panel recognised that Saudi Arabia’s “essential security interest” arose from a fundamental function of a State, i.e., the need to protect itself from the “dangers of terrorism and extremism”. The Panel also found that the lack of a rational basis to the measure could assail the Member State’s good faith.

India’s challenges

India could successfully establish that there persisted an “emergency in international relations” as well as an “essential security interest”. The contention of a general situation of “heightened tension” in light of repeated military clashes between India and China could be viewed favourably by a Panel or investment tribunal. India’s subjective determination of her “essential security interest” might also pass muster. The threat posed by fast-growing technology coupled with limited statutory guidance on data protection in India would render the need to protect the data privacy of Indians and sovereignty of India an “essential security interest”.

However, India could potentially fail to establish her bona fides in imposing the measure. Reports show that complaints against Chinese apps had been lodged with Indian authorities in the past as well. Therefore, the security interest of safeguarding India and her citizens had persisted for a substantial duration, even prior to the border skirmish. It could be persuasively argued, thus, that the “essential security interest” did not arise from the “emergency in international relations”.

India’s mala fides could also be evidenced from the general lack of transparency in the imposition of the measure and the fact that the affected parties were not initially provided an opportunity to file representations. Such high-handedness begs the question: In light of the border skirmish, was the threat to India’s data security and sovereignty pressing enough to merit an urgent, immediate ban on 177 Chinese apps? It is likely that the outcome of the dispute will turn on the answer to this question.


India’s circumvention of her trade obligations reignites the issue of States resorting to economic measures for political gains. It also sheds light on a worrying trend of States relying on the security exception as an unlimited escape clause to justify the breach of their international obligations. The recent decisions of the WTO are a step in the right direction in regulating the reliance on this exception and maintaining a balance in the trading regime.

However, should India’s measure be challenged before the WTO, it appears that she would face an uphill task in defending her actions. The absence of a jurisprudence constante in this regard could be both, a boon and a bane for India. The considerable ambiguity in the contours of the good faith requirement would leave it open for the disputing parties to persuade the Panel in favour of either narrative. It remains to be seen how this saga unfolds.

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