Russia's WTO 'national security' victory cuts both ways for Trump

GENEVA (Reuters) - Russia won a dispute about “national security” at the World Trade Organization on Friday, in a ruling over a Ukrainian transit dispute that may also affect global automobile tariffs that could be imposed by U.S. President Donald Trump.

FILE PHOTO: The World Trade Organization (WTO) headquarters are pictured in Geneva, Switzerland, July 26, 2018. REUTERS/Denis Balibouse/File Photo

The WTO panel ruling, the first ever on the right to a national security exemption from the global trade rules, awarded Russia a legal victory because it had successfully invoked national security.

The panel also confirmed the WTO’s right to review national security claims, denting U.S. claims that national security was not subject to review, and said any such claim should be “objectively” true, relating to weapons, war, fissionable materials or an “emergency in international relations”.

“An emergency in international relations would, therefore, appear to refer generally to a situation of armed conflict, or of latent armed conflict, or of heightened tension or crisis, or of general instability engulfing or surrounding a state,” it said.

Opponents of Trump’s tariffs have ridiculed the White House’s assertion that “economic security is national security” and have retaliated against U.S. steel and aluminium tariffs imposed in March last year, saying they are mere protectionism, with no link to national security.

Trump is considering using the same legal basis for a 25 percent tariff on global imports of cars, which the WTO has said would be a bigger economic shock than the U.S.-China trade war.

Invoking national security was taboo at the WTO for decades after it was founded in 1995. Diplomats referred to it as “Pandora’s box” which could never be closed once it was opened, and would undermine the discipline of the WTO’s widely accepted rules.

But in the past three years, Russia has cited it in the dispute with Ukraine, Trump has invoked it, and Bahrain, the United Arab Emirates and Saudi Arabia have cited it in a dispute with Qatar.

Ukraine went to the WTO in 2016, complaining of a huge reduction in trade with Asia and the Caucasus region after Russian President Vladimir Putin banned road and rail transport from Ukraine unless the route also went through Belarus.

Russia’s Economy Ministry said that Friday’s ruling had recognised Ukraine’s arguments to be unfounded, and said the issue was of systemic importance for the WTO.

Economy Minister Maxim Oreshkin said the ruling added weight to Russia’s arguments against Trump’s metals tariffs.

The ruling can be challenged on appeal by Russia or Ukraine. The panel comprised Georges Abi-Saab, an Egyptian former head of the WTO’s Appellate Body, Ichiro Araki, a Japanese expert on WTO law, and Mohammed Saeed, a Pakistani expert on customs and trade.

Reporting by Tom Miles, additional reporting by Maria Kiselyova in Moscow; Editing by Hugh Lawson, William Maclean