A hallmark of the Trump administration is that it resorts to the “national security” exemption to force trade partners to the negotiating table. Insisting that economic security is national security allows Washington to impose unilateral sanctions that would otherwise be banned by bilateral and multilateral trade agreements. But the United States is using an expansive definition of that term that has virtually no limits; if any job lost is a threat to national security then the exemption has no real meaning. This approach poses a fundamental challenge to the international trade order. Legitimation and embrace of the approach by other countries could bring about its collapse.
The claim that there are circumstances in which national security concerns can trump the preference for free trade makes sense. There are goods and commodities that are essential to national defense and whose supply should be assured or their distribution controlled. Moreover, a strong economy is a critical component to the strength of a nation and its ability to defend itself.
But there are limits to that logic. Some goods are truly vital to national defense; others are peripheral. A strong economy matters, but “strength” is relative and depends on the time frame. The accelerating pace of economic change means that technologies or commodities considered essential may change over time. The national security exemption could be abused to include anything that might at some time become important. Such a claim would swallow the entire trade system.
The debate over the use of the national security exemption intensified this week at a World Trade Organization meeting, when China took the U.S. to task, first for blacklisting Huawei, the Chinese telecommunications giant, and then for using the national security claim to justify tariffs across a wide range of Chinese exports to the U.S. China claims the move has caused “great concern in the membership” of the WTO. Driving the point home, it cited a U.S. negotiator during discussions over the General Agreement on Tariffs and Trade (GATT), the rules that have governed international trade since 1947, who warned of the “great danger of having too wide an exception that would permit anything under the sun.”
The new U.S. logic was tested and found wanting at the WTO. A ruling in a recent case circumscribed the ambit of Article XXI, the GATT clause that established the national security exception. The panel concluded that Moscow could block commerce from Ukraine that transited Russian territory because the two countries were in an armed conflict. But the ruling dismissed the assertion that such claims were “self-judging,” reasoning instead that the WTO has the authority to examine any such assertion and then lay down standards that would determine whether the claim was legitimate.
That conclusion undercuts the U.S. position on two counts: That resorting to the exemption is not justiciable and that national security must be narrowly defined. Since the U.S. is using those measures as leverage to force countries to the negotiating table and seems willing to drop tariffs once a deal has been struck, the prospect of an independent review of their legitimacy will threaten Washington’s resort to the exemption.
The U.S. is not alone in using national security or a similar claim to justify unilateral measures. China uses “national sovereignty” to justify measures that also distort trade and economic relations. In the case of restrictions on data bases and flows, Chinese policy is less offensive because trade frameworks were not set up to handle such issues. China’s industrial development programs raise similar questions. The legal dimensions are different, but the practical impact is very much the same.
An expansive definition of national security poses a conundrum for Japan. Washington has used that justification to impose tariffs on Japanese exports of steel and aluminum to the U.S. and threaten similar measures against automobile exports. Japanese companies are rightly offended when their products are sanctioned by a process that labels them national security threats. Japan is a security ally and partner of the U.S.
Japanese businesses are also troubled by the high-tech curtain that is descending across the Pacific. Their supply chains span the region and almost invariably include China. A U.S. policy that taxes or bans such products will have a profound impact on the Japanese economy.
Yet in important ways Japan’s postwar history and development is premised on the idea that national security and economic strength are indistinguishable. Japan’s domestic and foreign policies have intertwined the two concepts in a strategy that promotes national well-being through the judicious application of economic statecraft. The U.S. approach is more tactical than strategic, but the implications could be far-reaching. Tokyo must adapt, but central to its policy must be hard work to get Washington to recognize the threat its new national security thinking poses to the international order.