Sanctions and the World Trade Organization

Sanctions are by their nature discriminatory trade barriers and prime facie conflict with World Trade Organization (WTO) obligations if undertaken between WTO Members. However, General Agreement on Tariffs and Trade 1994 (GATT) Article XXI (‘security exceptions’) expressly permits WTO Members to impose sanctions in certain situations. GATT art XXI(c) definitively covers only sanctions mandated by Security Council resolutions under ch VII. GATT art XXI(b), while allowing Members considerable discretion in taking unilateral sanctions on national security grounds, is nonetheless subject to more intensive review by WTO dispute settlement panels and the Appellate Body. A third type of sanction, in addition to UN and unilateral sanctions, is the so-called ‘hybrid’ sanction, which is related to but exceeds the scope of a ch VII resolution. In those circumstances, art XXI(c) will excuse that portion of the sanctions regime that complies with the ch VII resolution, but art XXI(b) must be relied upon to excuse the remaining portion. Specifically, for a WTO Member to justify measures pursuant to GATT art XXI(b), it must have determined that the scope of the relevant resolution leaves its essential security interest exposed, such that it considers trade restrictions necessary to protect them.