[Congressional Record Volume 141, Number 171 (Wednesday, November 1, 1995)]
[Senate]
[Pages S16516-S16523]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
NATIONAL SECURITY PROVISIONS OF THE GATT TREATY AS APPLIED TO ECONOMIC
EMBARGOES
Mr. D'AMATO. Mr. President, I rise today to offer a brief explanation
of article 21 of the GATT, otherwise known as the General Agreement on
Tariffs and Trade, especially as it relates to the imposition of
secondary economic sanctions against Iran. This is particularly
pertinent because of my bill, S. 1228, the Iran Foreign Oil Sanctions
Act.
Briefly, the provisions of article 21, are so broadly written, that
legislation such as S. 1228 is possible, and in fact,
[[Page S 16517]]
sustainable under the GATT. Furthermore, the concept has been tested
before, in relative terms as it relates to economic sanctions imposed
upon Cuba in the 1960's, Nicaragua, and even against Czechoslovakia in
the 1940's.
I want to add that even when President Reagan imposed similar
sanctions against the Soviet Union in the 1980's, in retaliation to the
imposition of martial law in Poland, a Federal court upheld sanctions
against Dresser France.
I feel that this point must be made clear for those who feel that
there would be a challenge to this once it became law, or that it would
cause legal disputes. In light of this, I ask unanimous consent that
the following documents be printed in the Record, explaining the
legality of secondary boycotts under the GATT: First, a memo dated June
28, 1983, from Sherman Unger, then legal counsel for the Department of
Commerce, on the subject of the legality of import sanctions under
GATT; an article from the New York Times from August 25, 1982, entitled
``Judge Backs U.S. Bid to Penalize Company on Soviet Pipeline Sale,''
that details an attempt by Dresser France to defy President Reagan's
secondary boycott against foreign companies supplying oil pipeline
equipment to the Soviet Union; and finally, an analytical index Guide
to GATT Law and Practice, explaining article 21 in GATT, the national
security exception.
In their totality, these documents will help to explain the legality
and I hope that they will go some way toward settling any doubts about
S. 1228.
There being no objection, the material was ordered to be printed in
the Record, as follows:
General Counsel of the
U.S. Department of Commerce,
Washington, DC, June 28, 1983.
Memorandum to Lionel H. Olmer, Under Secretary for
International Trade, from Sherman E. Unger, General
Counsel.
Export Administration Act--International Legality of Proposed Import
Sanction
summary
Proposed amendments to the Export Administration Act would
authorize subjecting violators of national security export
controls to sanctions in the form of import restrictions. The
proper exercise of this authority would be consistent with
United States obligations under the General Agreements on
Tariffs and Trade (GATT) and under other potentially
applicable trade agreements. GATT legality would not preclude
the possibility of a claim of ``nullification or impairment''
under GATT Article XXIII, but the relationship of such
sanctions to security interests and the likelihood of their
relatively insignificant impact on a country's exports
greatly reduce the risk of GATT-sanctioned counter-measures.
background
The Administration bill would amend section 11 of the
Export Administration Act of 1979, as amended (the ``EAA'')
\1\
Footnotes at end of article.
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``(3) Whoever violates any national security control
imposed under section 5 of this Act, or any regulation, order
or license related thereto, may be subject to such controls
on the importing of its goods and technology into the United
States or its territories and possessions as the President
may prescribe.'' \2\
The bill reported by the Senate Banking Committee contains
a similar amendment, but the import controls on a violator
are not limited to ``its'' goods and technology, and the
sanction is also applicable to a violation of ``any
regulation issued pursuant to a multilateral agreement to
control exports for national security purposes, to which the
United States is a part.'' \3\
Under the present statute and regulations, violators of the
export controls under the EAA are subject to criminal
penalties and to administratively imposed civil fines and
denial or limitation of access to exports from the United
States.\4\ When a violator is outside the United States, it
may not be possible to acquire personal jurisdiction over
that person for purposes of criminal proceedings or the
collection of civil fines. The export control authority of
the EAA can be used to deny a violator access to U.S. exports
even if the violator elects not to contest the administrative
enforcement proceedings and remains outside of United States
territory.\5\ Thus, denial of export privileges may be the
only available sanction in certain cases. Whether this
sanction will provide a meaningful penalty to deter further
violations will depend upon the extent to which the violator
needs continued access to U.S.-origin goods and technology.
The ability to restrict imports, as well, would increase the
economic impact on any violator and, for some, might be key
to achieving an effective sanction.
GATT Legality
GATT Article XI bars ``prohibitions or restrictions'' on
imports, with certain exceptions not applicable to the EAA
sanctions under consideration. Article XI applies to
prohibitions or restrictions on the importation of ``any
product of the territory of any other contracting party.''
Thus, the origin of the affected imports, rather than the
nationality or place of business of the sanctioned violator,
would be controlling. Absent an exception in the GATT, an
affected contracting party could challenge the
import sanction as an illegal restraint on the exports of
its products to the United States.\6\
The United States would be able to defend a proper use of
the import sanction against violators on the basis of
exceptions provided in Articles XX and XXI of the GATT.
Among the general exceptions in Article XX is that in
subparagraph (d) with respect to measures ``necessary to
secure compliance with laws or regulations which are not
inconsistent with the provisions of [the GATT] . . . ''. To
qualify for an exception under the terms of Article XX,
measures must not constitute ``a means of arbitrary or
unjustifiable discrimination between countries where the same
conditions prevail'' or ``a disguised restriction on
international trade.''
It should not be subject to serious question that denial of
import privileges to violators would constitute a measure to
secure compliance with the export control laws, with the
likely economic consequences of such a sanction serving as a
deterrent. The real issue, therefore, would be whether the
export controls themselves are consistent with the GATT.
Article XI bars prohibitions or restrictions through export
licenses with respect to the exportation or sale for export
of any product destined for the territory of any other
contracting party. The application of this prohibition is
limited by exclusions stated in paragraph 2 of the Article,
but none of these is applicable to national security export
controls.
For purposes of this memorandum, I shall assume that the
import sanction is imposed in connection with a violation of
a control restricting the export of a product destined for
the territory of a contracting party. It should be noted,
however, that most of the controlled destinations under U.S.
national security controls are Communist countries that
are not GATT contracting parties. Where an export license
must be applied for in connection with an export of a
national security controlled product to a Free World
destination, the basic purpose of licensing (with limited
nuclear-related exceptions) is to assure that the
indicated destination is bona fide and that diversion to a
controlled destination is not in prospect. As the purpose
of these licensing requirements is not to deny these Free
World destinations access to the products, and as the
trade impact in fact is nil because licenses are rarely
denied to these destinations, it is arguable that such
controls are not the kind of trade practice which Article
XI should be deemed to prohibit. This argument would gain
force if Article XI were invoked in a case involving the
unauthorized export of a U.S.-origin product from the
territory of the contracting party lodging the complaint.
It is not unlikely that such reexport controls would be
involved in a complaint, as it is this jurisdictional
reach that distinguishes U.S. controls from those of its
major trading partners.
Even if Article XI were applicable to the national security
export control being enforced, the United States should be
able to GATT--justify its actions under the security
exception in Article XXI. This provides in pertinent part:
``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 (i) relating to fissionable materials or
the materials from which they are derived; (ii) relating to
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. . . .''
The use in Article XXI of the term ``which it considers
necessary'' is indicative of the deference to the judgment of
contracting parties when they wish to justify measures on
security grounds. The very limited testing of this Article in
GATT proceedings has confirmed this deference.\7\ Professor
Jackson quotes statements from the GATT preparatory
conference that ``some latitude must be granted for security
as opposed to commercial purposes'' and that ``the spirit
in which the Members of the Organization would interpret
these provisions was the only guarantee against abuse.''
\8\ The United States invoked Article XXI in successfully
defending its export controls against a Czechoslovak
challenge in 1949. In May 1982, Argentina complained to
the GATT Council that the trade sanctions (not limited to
military or strategic items) imposed by the United
kingdom, the European Community, Canada and Australia
violated various GATT requirements and could not be
justified under Article XXI. The complaint remains
unresolved.
The scarcity of official interpretations of Article XXI is
due not only to the very few complaints in which it has been
invoked, but also to the fact that the broad wording of the
Article XXI exception relieves contracting parties of the
obligation to provide notification of security-related
measures.
[[Page S 16518]]
If the GATT were to be invoked with respect to controls on
industrial goods being exported for industrial use, it might
be contended that the controls are not within the Article XXI
reference to traffic in ``other goods and materials . . .
carried on directly or indirectly for the purpose of
supplying a military establishment.'' Weighing strongly
against the success of any such contention, however, is the
fact that, from the earliest years of the GATT, the United
States and the major industrialized countries of the West
have operated a coordinated system of export controls with
very broad product coverage and often with little or no
concern as to whether supply of a military establishment was
involved. In fact, in the early years of the GATT, Western
embargoes of Communist countries were not confined to
strategic goods, but included common industrial raw
materials, so as to impair the growth of the economic base
that could support a military effort. The targets of these
controls included Czechoslovakia, a GATT contracting party.
If there is little likelihood of a successful GATT
challenge to the security-related export control measure
itself, might import sanctions imposed against a violator of
that control nonetheless be found to be ``arbitrary or
unjustifiable discrimination between countries'' or a
``disguised restriction on international trade'', preventing
justification under the Article XX general exception? GATT
negotiating history is not helpful in interpreting
these provisions.\9\ Import sanctions are unlikely to be
overtly discriminatory between countries, for, as already
noted, restrictions would apply to imports of a violator,
irrespective of the country of origin. In practice, the
impact of the import restraints would fall most heavily on
the country where most of the violator's production
occurs. It is conceivable, however, unlikely, that a
pattern of selective use the import sanction could develop
over time sufficient to sustain a claim of unjustifiable
discrimination. The type of situation that could more
reasonably be expected to lead to a GATT challenge and
possible success would be a transparent use of the import
sanction to achieve protectionist objectives.
Circumstances suggesting such abuse would include the
targeting of sanctions toward particular products
accounting for troublesome import competition for domestic
producers and the imposition of import restraints of such
breadth or duration as to give them an economic impact
disproportionate to other penalties for violation of
export controls. (Note that denial of export privileges
can serve both as a penalty and as a protective device--a
blanket cut-off of a violator's access to U.S. goods and
technology reduces that person's ability to engage in
further diversions of strategic items).
Justification of import sanctions under Article XX would
also require a showing that the measures were ``necessary''
to secure compliance--whereas Article XXI permits a
contracting party to take measures ``which it considers
necessary'' to protect its essential security interests.
Where Article XX is applied to enforcement measures relating
to security controls, however, it is reasonable to expect the
same GATT deference to a party's assessment of its security
needs and reluctance to render a decision on what would be
viewed as a ``political'' matter.
nullification or impairment
The imposition of the import sanction against one of its
companies could cause a contracting party to invoke Article
XXIII claiming that the reduction of its exports to the U.S.
has ``nullified or impaired'' benefits accruing to it under
the GATT. It is not necessary to claim or establish that a
GATT obligation has been breached. Art. XXIII: ((b) and (c).
If the complaint is not satisfactorily adjusted between the
parties concerned, it may be referred to the GATT disputes
machinery and result in a panel proceeding and a GATT
Council recommendation or ruling. The contracting parties
could authorize the complaining country to suspend the
application of concessions or obligations under the GATT
to the country imposing the measures found to nullify or
impair benefits.
Given the extreme rarity of Article XXIII complaints
actually proceeding to authorized retaliation, it is hard to
believe that an import sanction case would ever lead to this
result. Specific factors weighing against a finding of
nullification or impairment are 1) the likelihood that other
producers in the country concerned would remain free to
supply the exports to the U.S. barred to the violator 2) the
likelihood that the economic impact of the sanction would be
insignificant in relation to the concerned country's overall
trade and 3) the likelihood that the contracting parties
would avoid acting with respect to security-related measures
even though they would not have to rule on their legality.
other considerations
United States treaties such as our Friendship, Commerce and
Navigation treaties typically provide ``most favored nation''
treatment for imports from the other country. In general,
import sanctions would seem even less vulnerable under such
treaties then under the GATT. First, an enforcement system
that treats similarly situated violators the same, without
regard to country of origin, arguably does not violate an MFN
obligation. Secondly, these treaties typically contain a
``security'' or ``vital interests'' exception more broadly
worded than GATT Article XXI. However, a consideration that
could induce a country to invoke such a treaty rather than
GATT procedures would be concern over the difficulty of
getting such cases decided in GATT and the belief that the
World Court would be more willing to adjudicate.
The EAA import sanction amendment has been criticized as an
example of the allegedly improper extraterritorial extension
of U.S. export controls. Although the sanction is available
whether the violation involves conduct within United States
territory or abroad, it is undoubtedly recognized that the
sanction would most likely be applied to persons beyond the
reach of U.S. legal process. It is to be expected that the
violations charged would often involve activity abroad, such
as unauthorized reexports, which other governments claim is
beyond the regulatory jurisdiction of the United States. The
new sanction, of course, does not extend the jurisdictional
reach of the regulations. Like the existing authority to deny
export privileges, it simply supplies an enforcement tool
that can be effective against persons outside the United
States. In any possible challenge to the import sanction
under the GATT, these questions of legal jurisdiction
should be irrelevant. The Article XX exception is for
measures to secure compliance with laws or regulations
``which are not inconsistent with the provisions of this
Agreement.'' The Agreement contains no provision affecting
rule-making jurisdiction, so claimed jurisdictional
excesses ought not to bear on GATT justification based on
Article XX. It should not be a surprise, nonetheless, if a
government that finds cause to complain in the GATT of a
U.S. export control action involving conduct abroad seeks
to inject the jurisdictional issue. That government may
well recognize that it has no real chance of having
positive action taken on its complaint yet it may hope to
get a GATT panel report to include some potentially useful
criticism of the jurisdictional reach of the controls.
Finally, it should be noted that the factors that would be
most important in sustaining the international legality of
the proposed import sanction would be, for the most part,
inapplicable to the other proposed EAA amendment that would
permit controls to be imposed against imports from a country
as to which export controls had been applied for foreign
policy purposes. The Article XXI exception would be
unavailable unless the controls could somehow be brought
within that Article's characterization of ``security
interests''. In contrast with sanctions against companies and
individuals, sanctions against countries would entail literal
conflict with the terms of pertinent GATT articles and MFN
provisions in treaties.
In conclusion, the reasonable use of the import sanction
against violators of security-related controls can be
justified under pertinent GATT and treaty provisions. A
government's good faith in imposing import controls is more
likely to be questioned, due to the protectionist potential
of such measures. Notwithstanding the traditional deference
in official proceedings to a country's security-related
justification of its measures, it will be important for our
government to avoid measures which debase the national
security standard and invite corresponding measures damaging
to our trading interests and to the integrity of the
international system of trade discipline.
footnotes
\1\ 50 U.S.C. app. Sec. 2410(c) (Supp V, 1981).
\2\ Section 8(6) H.R. 2500, 98th Cong., 1st Sess., 129th
Cong. Rec. H. 1992 (April 12, 1983); Section 8(6) S. 979,
98th Cong., 1st Sess., 129th Cong. Rec. S. 4183, 4186 (April
6, 1983).
\3\ Section 7 S. 979, 98th Cong., 1st Sess.
\4\ 50 U.S.C. app. Sec. 2410 (a)-(c); 15 CFR Sec. Sec. 387.1,
388.3 (1982).
\5\ 15 CFR Sec. 388.8.
\6\ The imposition of the import sanction arguably would not
violate the ``most favored nation'' (MFN) requirements of
Articles I and XIII of the GATT. Presumably, such sanctions
would be applied in a source-neutral manner, that is, to bar
all imports by or from the violator irrespective of the
country of origin. The clear applicability of Article XI
makes it unnecessary to pursue the question of MFN, but the
issue of discrimination is addressed below with respect to
the availability of an exception under the GATT.
\7\ See Jackson, World Trade and the Law of GATT, 748-752
(1969).
\8\ Id., at 748-49.
\9\ Id., at 744.
____
[From the New York Times, Aug. 25, 1982]
Judge Backs U.S. Bid to Penalize Company on Soviet Pipeline Sale
(By Clyde H. Farnsworth)
Washington, Aug. 24.--A Federal judge today cleared the way
for the Commerce Department to penalize an American company
for refusing to comply with President Reagan's sanctions
against supplying equipment for the Siberian natural gas
pipeline.
The company, Dresser Industries, has declined to order its
French subsidiary to defy a French Government order to
deliver equipment to be used for the Soviet pipeline.
In another move against the company, two Administration
sources said, Cabinet members recommended during a meeting
held in unusual secrecy that Dresser and Dresser France, the
subsidiary, be placed on an American ``denial list.'' The
action would prevent the subsidiary from having any
commercial relations with the United States.
They said the blacklist was one of the options that
President Reagan was asked to consider in an options paper
that went to him tonight in California after the meeting,
which was under the chairmanship of Secretary of State George
P. Shultz.
[[Page S 16519]]
Another meeting began at the Justice Department tonight to
prepare for enforcement of the denial order once the pipeline
equipment is actually loaded on a Russian freighter, the
Borodin, at Le Havre. The loading, which was to take place
today, has reportedly been delayed until Wednesday.
The sources stressed that it was still up to the President
to decide on a course of action in the developing
confrontation with France and other Western European
countries over the pipeline and the extraterritorial reach of
American laws.
United States District Judge Thomas O. Flannery, turning
down a last minute appeal by Dresser, refused to bar the
Administration from punishing the company.
judge denies dresser request
The judge was asked by a lawyer representing Dresser, John
Vanderstar of the Washington law firm of Covington & Burling,
to issue a temporary restraining order that would prohibit
the Government from issuing penalties against Dresser.
However, the judge said that Mr. Vanderstar had failed to
show that the Dallas-based company would suffer ``immediate
and irreparable harm'' if the order was not issued.
Dresser France has agreed to supply three compressors,
worth $2 million, that it has already built. The Russians
have ordered a total of 21 compressors from Dresser, worth
$18 million to $20 million, to pump natural gas through the
3,600 mile pipeline. The company argued that if its
subsidiary did not ship the equipment, it would be liable to
criminal and civil penalties in France.
On the other hand, if it did ship the compressors, it would
violate the ban on supplying pipeline equipment to the
Russians imposed by President Reagan under an executive
decree last June 22. The American Export Administration Act
of 1979, under which that decree was issued, also calls for
civil and criminal penalties against violators.
That ruling extended American export controls not only to
the foreign activities of United States companies, but also
to foreign companies that use American technological licenses
to manufacture products of their own. The controls were
intended to deny American technology for the pipeline in
retaliation for Soviet-inspired repression in Poland.
``The plaintiff is in a terrible jam,'' Mr. Vanderstar
said. ``Congress simply cannot have intended to authorize the
Secretary of Commerce, no matter how good his intentions, to
impose sanctions against this company.''
Richard Willard, Acting Assistant Attorney General in the
civil division of the Justice Department, told the judge that
injunctive relief would ``severely damage the foreign
relations of the United States.'' He emphasized that this was
an issue on which the President felt strongly.
He also said that the United States was not prepared to
concede that the French Government order to Dresser France to
ship the compressors represented even a ``valid exercise of
French law.''
On the other hand, the French and other Europeans, who have
filed a strong protest against the American sanctions, argue
that Europe cannot accept the right of the United States to
extend its jurisdiction to companies established outside its
territory.
Although it is the subsidiary of a Dallas-based company,
Dresser France is a French company and operates under French
laws.
Many other American subsidiaries in Europe and European
companies that produce pipeline equipment under American
license are affected by the June 22 order of the President.
The reason that Dresser became the target is that, according
to an Administration source, ``it just happened to have the
earliest delivery schedule.''
Commerce Secretary Malcolm Baldrige, who was cited as a
defendant in Dresser's petition for injunctive relief, said
he was ``pleased with the judge's ruling.'' But neither he,
nor Secretary of State Shultz, nor any other participant at
the Cabinet-level meeting would comment on the results of the
hearing.
The President has justified his action by citing both the
Polish repression and the financial and political advantages
the pipeline would bring to the Soviet Union. Europeans are
both financing and providing equipment for the line to
diversify energy sources and to provide employment for
depressed industries.
The President said that the Russians stand to earn $10
billion to $12 billion a year from the gas and could use the
proceeds to become an even greater military threat.
The penalties that may be levied against Dresser are
discretionary, meaning that at one extreme the Government
need do nothing at all. At the other extreme, officials
explained, the United States could seek extradition of chief
executives of offending companies and seek to jail them in
the United States.
Although Secretary of State Shultz has supported the
sanctions, he had gone on record before joining the
Administration as opposing the use of trade as an instrument
of United States foreign policy.
He was quoted once, for instance, as saying that trade
cannot be ``turned on and off like a light switch,'' and
called for a ``predictable set of rules'' to avoid domestic
and foreign confusion.
Compressors For Pipeline
Compressors are devices that increase the pressure of a
gas, vapor, or mixture of gas and vapor by reducing the
volume of such fluids as they pass through the device. In a
pipeline, they are used to increase the amount of fuel that
can be pumped through a line of a given diameter.
Dresser Industries manufactures a variety of compressors
used in transporting fuels, including centrifugal,
reciprocating, and axial compressors.
There are 21 50-ton centrifugal compressors involved in the
current dispute, according to Edward Luter, Dresser's senior
vice president. They cost about $700,000 each.
``Each compressor order is to certain specifications,'' Mr.
Luter said yesterday in a telephone interview from Dresser's
Dallas headquarters.
____
Guide to GATT Law and Practice
i. text of article xxi
Article XXI--Security Exceptions
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
(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.
ii. interpretation and application of article xxi
A. Scope and application of article XXI
1. Paragraphs (a) and (b): ``it considers . . . essential
security interests'':
During discussions in the Geneva session of the Preparatory
Committee, in response to an inquiry as to the meaning of
``essential security interests'', it was stated by one of the
drafters of the original Draft Charter that ``We gave a good
deal of thought to the question of the security exception
which we thought should be included in the Charter. We
recognized that there was a great danger of having too wide
an exception and we could not put it into the Charter, simply
by saying: `by any Member of measures relating to a Member's
security interests,' because that would permit anything under
the sun. Therefore we thought it well to draft provisions
which would take care of real security interests and, at the
same time, so far as we could, to limit the exception so as
to prevent the adoption of protection for maintaining
industries under every conceivable circumstance. . . . There
must be some latitude here for security measures. It is
really a question of balance. We have got to have some
exceptions. We cannot make it too tight, because we cannot
prohibit measures which are needed purely for security
reasons. On the other hand, we cannot make it so broad that,
under the guise of security, countries will put on measures
which really have a commercial purpose''. The Chairman of
Commission A suggested in response that the spirit in which
Members of the Organization would interpret these provisions
was the only guarantee against abuses of this kind.\1\
Footnotes at end of article.
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During the discussion of the complaint of Czechoslovakia at
the Third Session in 1949 (see page 556) it was stated, inter
alia, that ``every country must be the judge in the last
resort on questions relating to its own security. On the
other hand, every contracting party should be cautious not to
take any step which might have the effect of undermining the
General Agreement.\2\
In 1961, on the occasion of the accession of Portugal,
Ghana stated that its boycott of Portuguese goods was
justified under the provisions of Article XXI:(b)(iii),
noting that
``. . . under this Article each contracting party was the
sole judge of what was necessary in its essential security
interest. There could therefore be no objection to Ghana
regarding the boycott of goods as justified by security
interests. It might be observed that a country's security
interests might be threatened by a potential as well as an
actual danger. The Ghanaian Government's view was that the
situation in Angola was a constant threat to the peace of the
African continent and that any action which, by bringing
pressure to bear on the Portuguese Government, might lead to
a lessening of this danger, was therefore justified in the
essential security interests of Ghana''.\3\
During the Council discussion in 1982 of trade restrictions
applied for non-economic reasons by the EEC, its member
States, Canada and Australia against imports from Argentina
(see page 557), the representative of the EEC stated that
``the EEC and its member States had taken certain measures on
the basis of their inherent rights, of which Article XXI of
the General Agreement was a reflection. The exercise of these
rights constituted a general exception, and required neither
notification, justification nor approval, a procedure
confirmed by thirty-five years of implementation of the
General Agreement. He said that in effect, this procedure
showed that every contracting party
[[Page S 16520]]
was--in the last resort--the judge of its exercise of these
rights''. The representative of Canada stated that ``Canada's
sovereign action was to be seen as a political response to a
political issue . . . Canada was convinced that the situation
which had necessitated the measures had to be satisfactorily
resolved by appropriate action elsewhere, as the GATT had
neither the competence nor the responsibility to deal with
the political issue which had been raised. His delegation
could not, therefore, accept the notion that there had been a
violation of the General Agreement''.\4\ The representative
of Australia ``stated that the Australian measures were in
conformity with the provisions of Article XXI:(c), which did
not require notification or justification''.\5\ The
representative of the United States stated that ``The General
Agreement left to each contracting party the judgment as to
what it considered to be necessary to protect its security
interests. The Contracting Parties had no power to question
that judgement''.\6\
The representative of Argentina noted that it had attempted
to submit to GATT only the trade aspects of this case and
stated ``that in order to justify restrictive measures a
contracting party invoking Article XXI would specifically be
required to state reasons of national security . . . there
were no trade restrictions which could be applied without
being notified, discussed and justified''.\7\
Paragraph 7(iii) of the Ministerial Declaration adopted 29
November 1982 at the Thirty-eighth Session of the Contracting
Parties provides that ``. . .the contracting parties
undertake, individually and jointly: . . . to abstain from
taking restrictive trade measures, for reasons of a non-
economic character, not consistent with the General
Agreement''.\8\
The question of whether and to what extent the Contracting
Parties can review the national security reasons for measures
taken under Article XXI was discussed again in the GATT
Council in May and July 1985 in relation to the US trade
embargo against Nicaragua which had taken effect on 7 May
1985.\9\ While a panel was established to examine the US
measures, its terms of reference stated that ``the Panel
cannot examine or judge the validity or motivation for the
invocation of Article XXI(b)(iii) by the United States''.\10\
In the Panel Report on ``United States--Trade Measures
affecting Nicaragua'', which has not been adopted,
``. . . The Panel noted that, while both parties to the
dispute agreed that the United States, by imposing the
embargo, had acted contrary to certain trade-facilitating
provisions of the General Agreement, they disagreed on the
question of whether the non-observance of these provisions
was justified by Article XXI(b)(iii) . . .
``The Panel further noted that, in the view of Nicaragua,
this provision should be interpreted in the light of the
basic principles of international law and in harmony with the
decisions of the United Nations and of the International
Court of Justice and should therefore be regarded as merely
providing contracting parties subjected to an aggression with
the right of self-defence. The Panel also noted that, in the
view of the United States, Article XXI applied to any action
which the contracting party taking it considered necessary
for the protection of its essential security interests and
that the Panel, both by the terms of Article XXI and by its
mandate, was precluded from examining the validity of the
United States' invocation of Article XXI.
``The Panel did not consider the question of whether the
terms of Article XXI precluded it from examining the validity
of the United States' invocation of that Article as this
examination was precluded by its mandate. It recalled that
its terms of reference put strict limits on its activities
because they stipulated that the Panel could not examine or
judge the validity of or the motivation for the invocation of
Article XXI:(b)(iii) by the United States . . . The Panel
concluded that, as it was not authorized to examine the
justification for the United States' invocation of a general
exception to the obligations under the General Agreement, it
could find the United States neither to be complying with its
obligations under the General Agreement nor to be failing to
carry out its obligations under that Agreement''.\11\
2. Paragraph (a): ``disclose . . . any information'':
During the discussion at the Third Session of a
Czechoslovak complaint concerning United States national
security export controls, in response to a request by
Czechoslovakia for information under Article XIII:3 on the
export licensing system concerned, the US representative
stated that while it would comply with a substantial part of
the request, ``Article XXI . . . provides that a contracting
party shall not be required to give information which it
considers contrary to its essential security interests. The
United States does consider it contrary to its security
interest--and to the security interest of other friendly
countries--to reveal the names of the commodities that it
considers to be most strategic''.\12\
The ``Decision Concerning Article XXI of the General
Agreement'' of 30 November 1982 (see page 559 below) provides
inter alia that ``Subject to the exception in Article XXI:a,
contracting parties should be informed to the fullest extent
possible of trade measures taken under Article XXI''.\13\
3. Paragraph (b): ``action'':
(1) ``relating to fissionable materials or the materials
from which they are derived'':
The records of the Geneva discussions of the Preparatory
Committee indicate that the representative of Australia
withdrew its reservation on the inclusion of a reference to
``fissionable materials'' in the light of a statement that
the provisions of Article 35 [XXIII] would apply to Article
XXI; see below at page 560.\14\
(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'':
During discussions in the Geneva session of the Preparatory
Committee, in connection with a proposal to modify Article
37(g) [XX(g)] to permit export restrictions on raw materials
for long-term defense purposes, the question was put whether
the phrase ``for the purpose of supplying a military
establishment'' would permit restrictions on the export of
iron ore when it was believed that the ore would be used by
ordinary smelting works and ultimately for military purposes
by another country. It was stated in response that ``if a
Member exporting commodities is satisfied that the purpose of
the transaction was to supply a military establishment,
immediately or ultimately, this language would cover it''.
\15\
At the Third Session in 1949, Czechoslovakia requested a
decision under Article XXIII as to whether the US had failed
to carry out its obligations under Articles I and XIII, by
reason of the 1948 US administration of its export licensing
controls (both short-supply controls and new export controls
instituted in 1948 discriminating between destination
countries for security reasons). The US stated that its
controls for security reasons applied to a narrow group of
exports of goods which could be used for military purposes
\16\ and also stated that ``the provisions of Article I would
not require uniformity of formalities, as applied to
different countries, in respect of restrictions imposed for
security reasons''. \17\ It was also stated by one
contracting party that ``goods which were of a nature that
could contribute to war potential'' came within the exception
of Article XXI.\18\ The complaint was rejected by a roll-call
vote of 17 to 1 with 3 abstentions.\19\
(3) ``taken in time of war or other emergency in
international relations'':
The 1970 Working Party Report on ``Accession of the United
Arab Republic'' notes that in response to concerns raised
regarding the Arab League boycott against Israel and the
secondary boycott against firms having relations with Israel,
the representative of the UAR stated that ``the history of
the Arab boycott was beyond doubt related to the
extraordinary circumstances to which the Middle East area had
been exposed. The state of war which had long prevailed in
that area necessitated the resorting to this system. . . . In
view of the political character of this issue, the United
Arab Republic did not wish to discuss it within GATT. . . .
It would not be reasonable to ask that the United Arab
Republic should do business with a firm that transferred all
or part of its profits from sales to the United Arab Republic
to an enemy country''. \20\ Several members of the working
party supported the views of the representative of the UAR
that the background of the boycott measures was political and
not commercial.\21\
In November 1975 Sweden introduced a global import quota
system for certain footwear. The Swedish Government
considered that the measure was taken in conformity with the
spirit of Article XXI and stated, inter alia, that the
``decrease in domestic production has become a critical
threat to the emergency planning of Sweden's economic defence
as an integral part of the country's security policy. This
policy necessitates the maintenance of a minimum domestic
production capacity in vital industries. Such a capacity is
indispensable in order to secure the provision of essential
products necessary to meet basic needs in case of war or
other emergency in international relations''.\22\ In the
discussion of this measure in the GATT Council, ``Many
representatives . . . expressed doubts as to the
justification of these measures under the General Agreement .
. . Many delegations reserved their rights under the GATT and
took note of Sweden's offer to consult''.\23\ Sweden notified
the termination of the quotas as far as leather and plastic
shoes were concerned as of 1 July 1977.\24\
In April 1982, the EEC and its member states, Canada, and
Australia suspended indefinitely imports into their
territories of products of Argentina. In notifying these
measures they stated that ``they have taken certain measures
in the light of the situation addressed in the Security
Council Resolution 502 [the Falkland/Malvinas issue]; they
have taken these measures on the basis of their inherent
rights of which Article XXI of the General Agreement is a
reflection''.\25\ Argentina took the position that, in
addition to infringing the principles and objectives
underlying the GATT, these measures were in violation of
Articles I;1, II, XI:1, XIII, and Part IV. The legal aspects
of these trade restrictions affecting Argentina were
discussed extensively in the Council.\26\ The measures were
removed in June 1982. Argentina sought an interpretation of
Article XXI; these efforts led to the inclusion of paragraph
7(iii) in the Ministerial Declaration of November 1982, which
provides that ``. . . the contracting parties undertake,
individually and
[[Page S 16521]]
jointly: . . . to abstain from taking restrictive trade
measures, for reasons of a non-economic charter, not
consistent with the General Agreement'' \27\ and also led to
the adoption of the text below at page 559.
On 7 May 1985 the US notified the contracting parties of an
Executive Order prohibiting all imports of goods and services
of Nicaraguan origin, all exports from the US of goods to or
destined for Nicaragua (except those destined for the
organized democratic resistance) and transactions relating
thereto. \28\ In Council discussions of this matter,
Nicaragua stated that these measures contravened Article I,
II, V, XI, XIII and Part IV of the GATT, and that ``this was
not a matter of national security but one of coercion''.\29\
Nicaragua further stated that Article XXI could not be
applied in an arbitrary fashion; there had to be some
correspondence between the measures adopted and the situation
giving rise to such adoption.\30\ Nicaragua stated that the
text of Article XXI made it clear that the Contracting
Parties were competent to judge whether a situation of ``war
or other emergency in international relations'' existed and
requested that a Panel be set up under Article XXIII:2 to
examine the issue.\31\ The United States stated that its
actions had been taken for national security reasons and were
covered by Article XXI:(b)(iii) of the GATT; and that this
provision left it to each contracting party to judge what
action it considered necessary for the protection of its
essential security interest.\32\ The terms of reference of
the Panel precluded it from examining or judging the validity
of the invocation of Article XXI(b)(ii) by the U.S.
Concerning the Panel decision on this issue, see page 555 and
the discussion of Article XXIII below. When the Council
discussed the Panel Report, Nicaragua requested that the
Council recommend removal of the embargo; authorized special
support measures for Nicaragua so that countries wanting to
do so could grant trade preferences aimed at re-establishing
a balance in Nicaragua's pre-embargo global trade relations
and at compensating Nicaragua for the damage caused by the
embargo; and prepare an interpretative note on Article XXI.
Consensus was not reached on any of these alternatives. The
Panel Report has not been adopted. At the meeting of the
Council on 3 April 1990 Nicaragua announced the lifting of
the trade embargo. The representative of the US announced
that the conditions which had necessitated action under
Article XXI had ceased to exist, his country's national
security emergency with respect to Nicaragua had been
terminated, and all economic sanctions, including the trade
embargo, had been lifted.\33\
In November 1991, the European Community notified the
contracting parties that the EC and its member States had
decided to adopt trade measures against Yugoslavia ``on the
grounds that the situation prevailing in Yugoslavia no longer
permits the preferential treatment of this country to be
upheld. Therefore, as from 11 November, imports from
Yugoslavia into the Community are applied m.f.n. treatment .
. . These measures are taken by the European Community upon
consideration of its essential security interests and based
on GATT Article XXI.''\34\ The measures comprised suspension
of trade concessions granted to the Socialist Federal
Republic of Yugoslavia under its bilateral trade agreement
with the EC; application of certain limitations (previously
suspended) to textile imports from Yugoslavia; withdrawal of
GSP benefits; suspension of similar concessions and GSP
benefits for ECSC products; and action to denounce or suspend
the application of the bilateral trade agreements between the
EC and its member states and Yugoslavia. On 2 December the
Community and its member states decided to apply selective
measures in favor of ``those parties which contribute to
progress toward peace.'' Economic sanctions or withdrawal of
preferential benefits from the Yugoslavia were also taken by
Australia, Austria, Canada, Finland, Japan, New Zealand,
Norway, Sweden, Switzerland, and the United States.
At the Forty-seventh Session in December 1991, Yugoslavia
referred to the Decision of 1982 on notification of measures
taken under Article XXI (see page 559 below) and reserved its
GATT rights. In February 1992 Yugoslavia requested
establishment of a panel under Article XXIII:2, stating that
the measures taken by the EC were inconsistent with Articles
I, XXI and the Enabling Clause; departed from the letter and
intention of paragraph 7(iii) of the Ministerial Decision of
November 1982; and impeded the attainment of the objectives
of the General Agreement. Yugoslavia further stated:
``The situation in Yugoslavia is a specific one and does
not correspond to the notion and meaning of Article XXI (b)
and (c). There is no decision or resolution of the relevant
UN body to impose economic sanctions against Yugoslavia based
on the reasoning embodied in the UN Charger. . . . the
`positive compensatory measures' applied by the European
Community to certain parts of Yugoslavia [are] contrary to
the MFN treatment of `products originating in or destined for
the territories'--taken as a whole--`of all contracting
parties' ''.\35\
In March 1992, the Council agreed to establish a panel with
the standard terms of reference unless, as provided in the
Decision of 12 April 1989, the parties agreed otherwise
within twenty days.\36\ At the April 1992 Council meeting, in
discussion of the notification of the transformation of the
Socialist Federal Republic of Yugoslavia (SFRY) into the
Federal Republic of Yugoslavia (FRY) consisting of the
Republics of Serbia and Montenegro, the EC representative
said that until the question of succession to Yugoslavia's
contracting party status had been resolved, the Panel process
which had been initiated between the former SFRY and the EC
no longer had any foundation and could not proceed.\37\ At
the May 1992 Council meeting, in a discussion concerning the
status of the FRY as a successor to the former SFRY as a
contracting party, the Chairman stated that ``In these
circumstances, without prejudice to the question of who
should succeed the former SFRY in the GATT, and until the
Council returned to this issue, he proposed that the
representative of the FRY should refrain from participating
in the business of the Council''. The Council so agreed.\38\
At the June 1993 Council meeting this decision was modified
taking into account United Nations General Assembly
Resolution 47/1 to provide that the FRY could not continue
automatically the contracting party status of the former SFRY
and that it shall not participate in the work of the Council
and its subsidiary bodies.\39\
4. Other invocations of Article XXI:
The United States embargo on trade with Cuba, which was
imposed by means of Proclamation 3447 by the President of the
United States, dated 3 February 1962, was not formally raised
in the Contracting Parties but notified by Cuba in the
inventory of non-tariff measures. The United States invoked
Article XXI as justification for its action.\40\
5. Procedures concerning notification of measures under
Article XXI:
During the Council discussion in 1982 of trade measures for
non-economic reasons taken against Argentina (see page 557),
it was stated by the countries taking these measures that
``Article XXI did not mention notification'' and that many
contracting parties had, in the past, invoked Article XXI
without there having been any notification or challenge to
the situation in GATT.\41\ Argentina sought an interpretation
of Article XXI. Informal consultations took place during the
Thirty-eighth Session in November 1982 in connection with the
adoption of the Council report to the Contracting Parties, in
so far as it related to these trade restrictions.\42\ As a
result, on 30 November 1982 the Contracting Parties adopted
the following ``Decision Concerning Article XXI of the
General Agreement'':
``Considering that the exceptions envisaged in Article XXI
of the General Agreement constitute an important element for
safeguarding the rights of contracting parties when they
consider that reasons of security are involved;
``Noting that recourse to Article XXI could constitute, in
certain circumstances, an element of disruption and
uncertainty for international trade and affect benefits
accruing to contracting parties under the General Agreement;
``Recognizing that in taking action in terms of the
exceptions provided in Article XXI of the General Agreement,
contracting parties should take into consideration the
interests of third parties which may be affected;
``That until such time as the Contracting Parties may
decide to make a formal interpretation of Article XXI it is
appropriate to set procedural guidelines for its application;
The Contracting Parties decide that:
``1. Subject to the exception in Article XXI:a, contracting
parties should be informed to the fullest extent possible of
trade measures taken under Article XXI.
``2. When action is taken under Article XXI, all
contracting parties affected by such action retain their full
rights under the General Agreement.
``3. The Council may be requested to give further
consideration to this matter in due course''.\43\
See the references to this Decision above in the case of EC
measures on trade with Yugoslavia.
B. Relationship between article XXI and other articles of the General
Agreement
1. Articles I and XIII:
During the discussion at the Third Session of the complaint
of Czechoslovakia that U.S. export controls were administered
inconsistently with Articles I and XIII (see page 556), the
US representative stated that these restrictions were
justified under Article XXI(b)(ii). In calling for a
decision, the Chairman indicated that Article XXI ``embodied
exceptions to the general rule contained in Article I''. In a
Decision of 8 June 1949 under Article XXIII:2, the
Contracting Parties rejected the contention of the
Czechoslovak delegation.\44\
2. Article XXIII:
During discussions in Geneva in 1947 in connection with the
removal of the provisions now contained in Article XXI and
their relocation in a separate exception (Article 94) at the
end of the Charter, the question was raised whether the
dispute settlement provisions of Article 35 of the New York
Draft [XXII/XXIII] would nevertheless apply. It was stated
that ``It is true that an action taken by a Member under
Article 94 could not be challenged in the sense that it could
not be claimed that a Member was violating the Charter; but
if that action, even though not in conflict with the terms of
Article 94, should affect another Member, I should think that
that Member would have the right to seek redress of some kind
under Article 37 as it now stands. In other words, there is
no exception from the application of Article 35 to this or
any other Article''.\45\ The
[[Page S 16522]]
addition of a note to clarify that the provisions of
paragraph 2 of Article 35 [XXIII] applied to Article 94 was
rejected as unnecessary.\46\
See the discussion above of the Czechoslovak complaint
concerning export controls, in which the Contracting Parties
make a decision under Article XXIII:2 as to ``whether the
Government of the United States had failed to carry out its
obligations under the Agreement through its administration of
the issue of export licences''.\47\
During the discussion of the trade restrictions affecting
Argentina applied for non-economic reasons, the view was
expressed ``that the provisions of Article XXI were subject
to those of Article XXIII:2''. Argentina reserved its rights
under Article XXIII in respect of any injury resulting from
trade restrictions applied in the context of Article XXI.\48\
Paragraph 2 of the ``Decision Concerning Article XXI of the
General Agreement'' of 30 November 1982 stipulates that ``. .
. when action is taken under Article XXI, all contracting
parties affected by such action retain their full rights
under the General Agreement''.\49\
The 1984 Panel Report on ``United States--Imports of Sugar
from Nicaragua'' examined the action taken by the US
government to reduce the share of the US sugar import quota
allocated to Nicaragua and distribute the reduction in
Nicaragua's allocation to El Salvador, Honduras and Costa
Rica. The Panel Report notes that ``The United States stated
that it was neither invoking any exceptions under the
provisions of the General Agreement nor intending to defend
its actions in GATT terms . . . the action of the United
States did of course affect trade, but was not taken for
trade policy reasons.'' \50\
``The Panel noted that the measures taken by the United
States concerning sugar imports from Nicaragua were but one
aspect of a more general problem. The Panel, in accordance
with its terms of reference . . . examined those measures
solely in the light of the relevant GATT provisions,
concerning itself only with the trade issue under dispute.''
\51\
``. . . The Panel . . . concluded that the sugar quota
allocated to Nicaragua for the fiscal year 1983/84 was
inconsistent with the United States' obligations under
Article XIII:2.
``The Panel noted that the United States had not invoked
any of the exceptions provided for in the General Agreement
permitting discriminatory quantitative restrictions contrary
to Article XXIII. The Panel did not examine whether the
reduction in Nicaragua's quota could be justified under any
such provision.'' \52\
The follow-up on the Panel report was discussed in the
Council meetings of May and July 1984. The United States said
that it ``had not obstructed Nicaragua's resort to GATT's
dispute settlement process; it had stated explicitly the
conditions under which the issue might be resolved; and it
recognized that Nicaragua had certain rights under Article
XXIII which it had reserved and could continue to
exercise''.\53\ Nicaragua stated that it was aware of its
rights under Article XXIII.
In July 1985, following a request by Nicaragua for the
establishment of a panel to review certain US trade measures
affecting Nicaragua, the right of a contracting party to
invoke Article XXIII in cases involving Article XXI was
discussed again in the GATT Council.\54\ At its meetings in
October 1985 and March 1986 respectively the Council
established a panel with the following terms of reference to
deal with the complaint by Nicaragua:
``To examine, in the light of the relevant GATT provisions,
of the understanding reached at the Council on 10 October
1985 that the Panel cannot examine or judge the validity of
or motivation for the invocation of Article XXI(b)(iii) by
the United States, of the relevant provisions of the
Understanding Regarding Notification, Consultation, Dispute
Settlement and Surveillance (BISD 26S/211-218), and of the
agreed Dispute Settlement Procedures contained in the 1982
Ministerial Declaration (BISD 29S/13-16), the measures taken
by the United States on 7 May 1985 and their trade effects in
order to establish to what extent benefits accruing to
Nicaragua under the General Agreement have been nullified or
impaired, and to make such findings as will assist the
Contracting Parties in further action in this matter''.\55\
In the Panel Report on ``United States--Trade Measures
affecting Nicaragua'', which has not been adopted, the Panel
noted the different views of the parties regarding whether
the United States' invocation of Article XXI(b)(iii) was
proper, and concluded that this issue was not within its
terms of reference; see above at page 555. With regard to
Nicaragua's claim of non-violation nullification or
impairment, the Panel ``decided not to propose a ruling in
this case on the basic question of whether actions under
Article XXI could nullify or impair GATT benefits of the
adversely affected contracting party''.\56\
When the Panel's report was discussed by the Council in
November 1986, the US representative stated that
``Nullification or impairment when no GATT violation had been
found was a delicate issue, linked to the concept of
`reasonable expectations'. It was not simply a question of
trade damage, since no one doubted the existence of trade
damage. Applying the concept of `reasonable expectations' to
a case of trade sanctions motivated by national security
considerations would be particularly perilous, since at a
broader level those security considerations would
nevertheless enter into expectations . . . the Panel had
acted wisely in refraining from a decision that could create
a precedent of much wider ramifications for the scope of GATT
rights and obligations . . .''.\57\ The representative of
Nicaragua stated that her delegation could not support
adoption of the report, inter alia because it could only be
adopted once the Council was in a position to make
recommendations.\58\
C. Relationship between article XXI and general international law
The 1986 Panel Report on ``United States--Trade Measures
Affecting Nicaragua'', which has not been adopted, noted the
different views of the parties to the dispute concerning the
relationship between Article XXI and general international
law including decisions of the United Nations and the
International Court of Justice.\59\
In discussion at the Forty-seventh Session in December 1991
concerning trade measures for non-economic purposes against
Yugoslavia, the representative of India stated that ``India
did not favour the use of trade measures for non-economic
reasons. Such measures should only be taken within the
framework of a decision by the United Nations Security
Council. In the absence of such a decision or resolution,
there was serious risk that such measures might be unilateral
or arbitrary and would undermine the multilateral trading
system''. \60\
III. PREPARATORY WORK
In the US Draft Charter, and London and New York Draft
Charter texts, the Article on exceptions to the commercial
policy chapter included the provisions of what is now GATT
Article XXI (see Article 32, US draft; Article 37, London and
New York drafts). Also in these drafts, the exceptions clause
for the chapter on commodity agreements included provisions
excepting arrangements relating to fissionable materials; to
the traffic in arms, ammunition and implements of war and
traffic in goods and materials for the purpose of supply a
military establishment; or in time of war or other emergency
in international relations, to the protection of the
essential security interests of a member (Article 49:2, US
Draft; Article 59(2), London Draft; article 59(c), New York
Draft). At Geneva it was decided to take paragraphs (c), (d),
(e) and (k) of Article 37 and place them in a separate
Article. \61\ It was agreed that this Article would be a
general exception applicable to the entire Charter. \62\ The
corresponding security exception was also removed from the
commodity chapter. The security exception provisions became
Article 94 in Chapter VII of the Geneva draft Charter, which
was virtually identical to the present text of Article XXI.
The text of Article 94 was extensively discussed at Havana
in the Sixth Committee on Organization. Article 94 became
Article 99 of the Charter on General Exceptions, of which
paragraphs 1(a) and (b) were almost identical to those of
Article XXI, the only differences being (i) an addition in
the first line of paragraph (b) as follows: ``to prevent any
Member from taking, either singly or with other States, any
action . . .'', and (ii) an addition to paragraph (b)(ii) as
follows: ``a military establishment of any other country''.
Article 99 also included a paragraph 1(c) exempting
intergovernmental military supply agreements \63\; a
paragraph 1(d) on trade relations between India and Pakistan
(dealt with in the General Agreement by the provisions of
Article XXIV:11); and a paragraph 2 providing that nothing in
the Charter would override the provisions of peace treaties
resulting from the Second World War or UN instruments
creating trust territories or other special regimes.
However, ``on examining several of the proposals submitted
by delegations relating to action taken in connection with
political matters or with the essential interests of Members,
the Committee concluded that the provisions regarding such
action should be made in connection with an article on
`Relations with the United Nations', since the question of
the proper allocation of responsibility as between the
Organization and the United Nations was involved'', \64\
Accordingly a new Article 86 of the Charter on ``Relations
with the United Nations'' was drafted, including the former
paragraph 1(c) of Article 94 [XXI:(c)].
Article 86 of the Charter dealt with various institutional
questions such as the conclusion of a specialized agency
agreement between the ITO and the UN. It also stated, in
paragraph 3, that:
``3. The Members recognize that the Organization should not
attempt to take action which would involve passing judgment
in any way on essentially political matters. Accordingly, and
in order to avoid conflict of responsibility between the
United Nations and the Organization with respect to such
matters, any measure taken by a Member directly in connection
with a political matter brought before the United Nations in
accordance with the provisions of Chapters IV or VI of the
United Nations Charter shall be deemed to fall within the
scope of the United Nations, and shall not be subject to the
provisions of this Charter.
``4. No action, taken by a Member in pursuance of its
obligations under the United Nations Charter for the
maintenance or restoration of international peace and
security, shall be deemed to conflict with the provisions of
this Charter''.
The interpretative notes to paragraph 3 provided that:
[[Page S 16523]]
``1. If any Member raises the question whether a measure is
in fact taken directly in connection with a political matter
brought before the United Nations in accordance with the
provisions of Chapters IV or VI of the United Nations
Charter, the responsibility for making a determination on the
question shall rest with the Organization. If, however,
political issues beyond the competence of the Organization
are involved in making such a determination, the question
shall be deemed to fall within the scope of the United
Nations.
``2. If a Member which has no direct political concern in a
matter brought before the United Nations considers that a
measure taken directly in connection therewith and falling
within the scope of paragraph 3 of Article 86 constitutes a
nullification or impairment within the terms of paragraph 1
of Article 93, it shall seek redress only by recource to the
procedures set forth in Chapter VIII of this Charter''.
The purpose of these provisions was explained by the Sixth
Committee as follows:
``Paragraph 3 of Article [86], which like paragraph 4 is
independent in its operation, is designed to deal with any
measure which is directly in connection with a political
matter brought before the United Nations in a manner which
will avoid conflict of responsibility between the United
Nations and the Organization with respect to political
matters. The Committee agreed that this provision would cover
measures maintained by a Member even though another Member
had brought the particular matter before the United Nations,
so long as the measure was taken directly in connection with
the matter. It was also agreed that such a measure, as well
as the political matter with which it was directly connected,
should remain within the jurisdiction of the United Nations
and not within that of the Organization. The Committee was of
the opinion that the important thing was to maintain the
jurisdiction of the United Nations over political matters and
over economic measures of this sort taken directly in
connection with such a political matter, and nothing in
Article [86] could be held to prejudice the freedom of action
of the United Nations to settle such matters and to take
steps to deal with such economic measures in accordance with
the provisions of the Charter of the United Nations if they
see fit to do so.
``It was the view of the Committee that the word `measure'
in paragraph 3 of Article [86] refers only to a measure which
is taken directly in connection with a political matter
brought before the United Nations in accordance with Chapters
IV and VI of the Charter of the United Nations and does not
refer to any other measure''.\65\
The Charter provisions in Articles 86 and 99 were not not
taken into the General Agreement. While Article XXIX:1
provides that ``The contracting parties undertake to observe
. . . the general principles of Chapters I to VI and of
Chapter IX of the Havana Charter'', the Note Ad Article
XXIX:1 provides that ``Chapters VII and VIII . . . have been
excluded from paragraph 1 because they generally deal with
the organization, functions and procedures of the
International Trade Organization''. In this connection,
during the discussion at the Sixth Session of the Contracting
Parties of the US suspension of trade relations with
Czechoslovakia it was stated with reference to Article 86,
paragraph 3 of the Havana Charter that ``although Chapter VII
of the Charter was not specifically included by reference in
Article XXIX of the Agreement, it had surely been the general
intention that the principles of the Charter should be
guiding ones for the Contracting Parties''.\66\
The present text of Article XXI dates from the 30 October
1948 Geneva Final Act. It has never been amended. Amendment
of Article XXI was neither proposed nor discussed in the
1954-55 Review Session.
iv. relevant documents
Geneva:
Discussion: EPCT/WP.1/SR/11, EPCT/A/SR/25, 30, 33, 40(2),
EPCT/A/PV/25, 30, 33, 40(2).
Reports: EPCT/103.
Other: EPCT/W/23.
Havana:
Discussion: E/CONF.2/C.5/SR.14, E/CONF.2/C.6/SR.18, 19, 37,
and Add. 1.
Reports: E/CONF.2/C.5/14, E/CONF.2/C.6/45, 93, 104.
Other: E/CONF.2/C.6/12/Add.9, E/CONF.2/C.6/W/48.
See also London, New York and Geneva document references
concerning Article XX.
FOOTNOTES
\1\ EPCT/A/PV/33, p. 20-21 and Corr. 1; see also EPCT/A/SR/
33, p. 3.
\2\ GATT/CP.3/SR.22, Corr. 1.
\3\ SR.19/12, p. 196.
\4\ C/M/157, p. 10.
\5\ C/M/157, p. 11.
\6\ C/M/159, p. 19; see also C/M/157, p. 8.
\7\ C/M/157, p. 12; C/M/159, pp. 14-15.
\8\ L/5424, adopted on 29 November 1982, 29S/9, 11.
\9\ C/M/188, pp. 2-16; C/M/191, pp. 41-46.
\10\ C/M/196 at p. 7.
\11\ L/6053, dated 13 October 1953 (unadopted), paras. 5.1-
5.3.
\12\ GATT/CP.3/38, p. 9.
\13\ L/5426, 29S/23-24, para. 1.
\14\ EPCT/A/PV/33, p. 29; see also EPCT/A/PV/33/Corr. 3.
\15\ EPCT/A/PV/36, p. 19; see also proposal referred to at
EPCT/W/264.
\16\ GATT/CP.3/38; GATT/CP.3/SR.22, p. 8.
\17\ GATT/CP.3/SR.22, p. 4-5.
\18\ GATT/CP.3/SR.20, p. 3-4.
\19\ GATT/CP.3/SR.22, p. 9; Decision of 8 June 1949 at II/28.
\20\ L/3362, adopted on 27 February 1970, 17S/33, 39, para.
22.
\21\ Ibid., 17S/40, para. 23.
\22\ L/4250, p. 3.
\23\ C/M/109, p. 8-9.
\24\ L/4250/Add.1; L/4254, p. 17-18.
\25\ L/5319/Rev. 1.
\26\ L/5317, L/5336; C/M/157, C/M/159.
\27\ L/5424. adopted on 29 November 1982, 29S/9, 11.
\28\ L/5803.
\29\ C/M/188l p. 4.
\30\ C/M/188, p. 16.
\31\ L/5802; C/M/191, pp. 41-46.
\32\ C/M/191, pp. 41,46.
\33\ C/M/240, p. 31; L/6661.
\34\ L/6948.
\35\ DS27/2, dated 10 February 1992.
\36\ C/M/255, p. 18.
\37\ C/M/256, p. 32.
\38\ C/M/257 p. 3 and Corr. 1.
\39\ C/M/264, p. 3.
\40\ COM.IND/6/Add.4, p. 53 (notification); MTN/3B/4, p. 559
(response citing binding reolution under Inter-American
Treaty of Reciprocal Assistance). See also Council discussion
May 1986 concerning US measures authorizing denial of sugar
import quota to any failing to certify that it does not
import sugar produced in Cuba for re-export to the US, stated
by US to be a ``procedural safeguard'' against tran-shipment
of sugar in violation of the embargo; C/M/198 p. 33, L/5980.
\41\ C/M/159, p. 18.
\42\ See L/5414 (Council report); see also C/W/402, W.38/5,
L/5426.
\43\ L/5426, 29S/23.
\44\ GATT/CP.3/SR.22, p. 9; II/28.
\45\ EPCT/A/PV/33, p. 26-27.
\46\ EPCT/A/PV/33 p. 27-29 and EPCT/A/PV/33/Corr. 3.
\47\ GATT/CP.3/SR.22, p. 9.
\48\ C/M/157, p. 9; C/M/159, p. 14; C/M/165, p. 18.
\49\ 29S/24.
\50\ L/5607, adopted on 13 March 1984, 31S/67, 72, para.
3.10.
\51\ Ibid., 31S/73, para. 4.1.
\52\ Ibid., 31S/74, paras. 4.4-4.5.
\53\ C/M/178, p. 27.
\54\ C/M/191, pp. 41-46.
\55\ C/M/196, p. 7.
\56\ L/6053 (unadopted), dated 13 October 1986, paras. 5.4-
5.11.
\57\ C/M/204.
\58\ C/M/204. See also communication from Nicaragua at C/W/
506.
\59\ L/6053, unadopted, dated 13 October 1986, prs. 5.2.
\60\ SR.47/3, p. 5.
\61\ See proposal at EPCT/W/23, reports on discussions in
Commission A (commercial policy) at EPCT/WP.1/SR/11, EPCT/103
p. 3, EPCT/A/PV/25 p. 38-42.
\62\ EPCT/A/PV/25 p. 39-42.
\63\ See Havana Reports, p. 118, para. 32 and p. 145-147.
\64\ Havana Reports, p. 153, para. (a).
\65\ Havana Reports, p. 153-154, paras. (b)-(c).
\66\ GATT/CP.6/SR.12, p. 4.
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