1.1 The Underlying Logic of the GATT/WTO System

The Punta del Este Declaration that launched the Uruguay Round in 1986 resulted in the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, the most important achievement of which was the signing of the Agreement Establishing the World Trade Organization (the WTO Agreement). Compared with its predecessor, the General Agreement on Tariffs and Trade (the GATT), the WTO not only has wider scope because it includes trade in services and trade-related intellectual property rights but also deeper disciplines of positive integration on sanitary and phytosanitary measures, and on technical barriers to trade. The Uruguay Round negotiations resulted in the adoption of a comprehensive and ambitious trade liberalisation package; the resultant WTO rules were most concerned with access to foreign markets and the establishment of disciplines that would ensure regulatory measures were not merely protectionist measures in disguise.

The emphasis on the liberalisation of import barriers can be attributed to the built-in mercantilist tendencies of the GATT/WTO system – an arm of the post–World War II international economic order – and viewed as a direct response to the earlier erection of insurmountable import tariffs, which led to the Great Depression and the accompanying political turmoil. As Douglas Irwin, Petros Mavrodis and Alan Sykes point out, ‘to understand the origins of the GATT, one must appreciate the traumatic events of the 1920s and 1930s’,Footnote ¹ a period of political and economic disasters. During this period, ‘beggar-thy-neighbour‘ commercial policies were prevalent, as many countries raised trade barriers with a view to protecting national economies from economic downturn. The 1929 passage of the Hawley-Smoot Act by the United States pushed already high protective tariffs much higher; in response, Canada, Spain, Italy and Switzerland retaliated directly, leading to spiralling tariffs, a contraction of world trade and a severe breakdown of the multilateral trade and payments system.Footnote ² Therefore, in negotiating the GATT system the objectives included establishing a legal framework for commercial policy and reducing import tariffs through bilateral negotiations – benefits to be extended to all contracting parties via the Most-Favoured-Nation principle.Footnote ³ In this way, the GATT aims to limit trade restrictions to customs tariffs: taxes imposed by importing countries ‘as a condition of importation of goods into its territory’.Footnote ⁴

The GATT/WTO system, with its built-in export bias, touches only slightly on the export dimension of the international trading system, which stands in stark contrast to voluminous market access commitments and heavy disciplines on domestic regulatory measures. Whether export tariffs fall within the scope of the schedule of concessions as contained in Article II:1(a) of the GATT and are thus subject to the fundamental principle of Most-Favoured-Nation treatment is subject to dispute.

Article II:1(a) of the GATT instructs each Contracting Party to ‘accord to the commerce of the other contracting parties treatment no less favourable than provided for in the appropriate Part of the appropriate Schedule’.Footnote ⁵ Depending on one’s interpretation of ‘commerce’, views diverge as to whether this Most-Favoured-Nation treatment obligation applies to schedules of concessions and export tariffs. As the late renowned international economic lawyer John Jackson observed, no concession relating to export taxes was made during the GATT negotiations. He further maintained that export taxes do not fall within the scope of the ‘commerce’ of the other contracting parties. Even if there were such a concession, it would have been treated like any independent bilateral agreement, and Article I of the GATT, rather than Article II, would apply. His arguments rely mainly on the legal text of the GATT, which, in the subsequent paragraphs of Article II, is concerned only with importation.Footnote ⁶ Jackson’s reading of Article II is bolstered by textual interpretation, as Article II explicitly limits the effects of the Schedule to imports into the territories of contracting parties.

By contrast, Frieder Roessler argues that ‘commerce’ is not limited to importation but also includes exportation. Whereas the following paragraphs of Article II speak only of importation, the wider scope of the introductory paragraph to Article II:1(a) remains unaffected. This broad interpretation is shared by Mitsuo Matsuhita, who argues that the textual interpretation of ‘commerce’ can include imports and exports. The exclusion of export tariff concessions from the scope of Article II merely because Article II:1(b) and subsequent provisions do not mention exports is too restrictive an interpretation.Footnote ⁷ According to Roessler, during negotiations, the drafters intended that export taxes be included – a view supported by reference to Article XXVIII bis, which instructs contracting parties to enter into negotiations on a reciprocal and mutually advantageous basis with a view to ‘substantial reduction of the general level of tariffs and other charges on imports and exports’.Footnote ⁸ The same wording can be found in the Note to Article XVII on trading by state enterprises, which aims for ‘the reduction of duties and other charges on imports and exports’.Footnote ⁹ Roessler also refers to the schedules of Malaysia and Singapore on export duties on tin ore and tin concentrates as evidence that the Schedules as set out in Article II of the GATT cover export taxes.Footnote ¹⁰ While one may have different interpretations of the meaning of ‘commerce’, and make conflicting observations on whether the schedules of concessions of the GATT contracting parties cover export tariffs, it is crystal clear that within the world trading system, trade restrictions on exports have received much less attention than those on imports.

Then how shall we define export restrictions? Like import restrictions, export restrictions cover tariffs and non-tariff measures and may take the form of bans, taxes, quotas, licensing, minimum prices and reductions of value added tax (VAT) rebates.Footnote ¹¹ The deciding element of export restrictions is the limiting effect on exportation or the potential to limit. The most important provision pertaining to such export restrictive measures in the existent WTO framework is the general elimination of quantitative restrictions. This general obligation to eliminate quantitative restrictions applies both to the importation and exportation of goods.Footnote ¹² Besides, the Agreement on Agriculture (AoA), in response to concerns that the reform programme may threaten food security in net food importing countries and least developed countries, also addresses export restrictions on agricultural products. Additionally, when export restrictions are imposed with a view to ensuring a sufficient supply of inputs to domestic processors, they may constitute subsidies as regulated by the Agreement on Subsidies and Countervailing Duties (ASCM), as export restrictions lead to a comparative advantage for domestic processors due to price differentials.Footnote ¹³ Furthermore, the WTO Agreement has brought so-called grey area measures, such as voluntary export restraints (the VERs), within the purview of the Agreement on Safeguards (the ASG).

Since the signing of the WTO Agreement, export restrictions have gradually caught the attention of WTO members, as is reflected in subsequent accession negotiations and on-going Doha Round negotiations. A large number of newly acceded or acceding countries, in particular natural-resource-rich countries, have been subject to requests to undertake commitments or obligations relating to export restrictions. Under the auspices of Doha Round negotiations, various proposals aiming to discipline export restrictions have been advanced during agriculture negotiations and under non-agricultural market access (NAMA) negotiations. Export restrictions are also an important element during negotiations on free trade agreements.

Due to the slow progress of the Doha Development Agenda (the DDA), and in view of a series of export restrictions on agricultural products introduced between 2007 and 2009, some WTO members have advanced proposals addressing export restrictions outside the framework of the DDA. With the aim of extending application of the commitment in accordance with paragraph 40 of the Action Plan on Food Price Volatility and Agriculture, under the auspice of the World Food Program to all WTO members, the EU, along with other members, submitted a draft declaration for consideration and acceptance at the 2011 Ministerial Conference.Footnote ¹⁴ This Ministerial declaration would transcribe the pertinent paragraph of the Action Plan

While recognising the utmost responsibility of members to secure food supplies for their own population, the draft declaration also cautions against the danger of penalising the most needy by imposing food export barriers restricting humanitarian aid. Therefore, the draft declaration urges WTO members to eliminate food export restrictions or extraordinary taxes from food purchases for non-commercial purposes by the WFP.

Similarly, for developing countries that are net food importers, African and Arab groups proposed a draft declaration entitled WTO Work Programme to Mitigate the Impact of the Food Market Prices and Volatility on WTO Least-Developed and Net-Food Importing Developing Members.Footnote ¹⁶ This Work Programme has two arms: trade and finance. The trade arm of the Work Programme aims to develop rules to exempt purchases of least developed countries (LDCs) and net food importing developing countries (NFIDCs) from export restrictions adopted by foodstuff-exporting members based on Article XI:2(a) of the GATT 1994. In other words, while food-exporting members may invoke Article XI:2(a) of the GATT 1994 as a justification for the imposition of export quantitative restrictions, LDCs and NFIDCs may seek exemptions from these export restrictions and thus secure their food supplies. These exemptions would shield food-exporting members imposing export quantitative restrictions from discipline due to this breach of their MFN obligations.

Unfortunately, neither the EU’s proposal to extend the commitment under paragraph 40 the Action Plan on Food Price Volatility and Agriculture to all WTO members nor the African and Arab groups’ draft declaration on WTO Work Programme to Mitigate the Impact of the Food Market Prices and Volatility on WTO Least-Developed and Net-Food Importing Developing Members was adopted at the 2011 Geneva Ministerial Conference. Export restrictions by food exporting countries may continue to adversely impact LDCs and NFIDCs in the years to come. Whereas the Bali Package adopts a decision on Public Stockholding for Food Security Purposes, it seems that most WTO members are not ready to accept WTO rules on export restrictions beyond the present weak rules, even though ‘export prohibitions as well as export taxes and quotas [are] a major cause of the food crisis and of price volatility’Footnote ¹⁷ and twice victimize NFIDCs.

In parallel with food insecurity exacerbated by export restrictions on agricultural products, the race to secure access to rare earths has been heating up since 2010. Due to a dispute over the Diayu (Senkoku) Islands, China reportedly imposed an export embargo on rare earths to Japan. Although this export embargo was soon lifted, the incident aroused concern in Japan and other major trading powers.Footnote ¹⁸ Eventually, the United States, Japan and the European Union (EU), brought the dispute before the WTO dispute settlement mechanism.Footnote ¹⁹ Before that, in China – Measures Related to the Exportation of Various Raw Materials (China – Raw Materials), a complaint brought by the United States, EU and Mexico, China was found to have violated its WTO obligations and accession commitments by imposing export restrictions on various raw materials.Footnote ²⁰ Although China – Raw Materials was not the first dispute wherein the WTO Panel/Appellate Body was called on to examine the WTO-consistency of a member’s export restrictive measures,Footnote ²¹ it has attracted the most attention and debate, by far, among both academics and practitioners.

China – Raw Materials involves several thorny issues. First, the Panel and Appellate Body had to adjudicate whether the pertinent raw materials fell within the scope of ‘other products essential to the exporting contracting party’ as set forth in Article XI:(a) of the GATT 1994. If so, what is the relationship between the specific exceptions put forward in Article XI:(a) and the general exception of Article XX? The Panel and Appellate Body had to clarify the relationship between obligations contained in the accession protocols and the WTO Agreement – more specifically, the applicability of the general exception of Article XX of the GATT 1994. If the general exception is applicable, then the Panel and Appellate Body have to ascertain whether it justifies China’s export restrictions. As commitments and obligations relating to export restrictions are largely assumed by newly acceded members during accession negotiations, the ruling of the Panel and Appellate Body in China – Raw Materials has had a great impact on the interpretation of these ‘WTO-plus’ commitments or obligations, in particular with regards to the applicability of general exception.

In the wake of the Ukraine Crisis in 2013, the EU, the United States and other Western countries adopted a number of sanction measures, taking mostly the form of import and export restrictions, against Russia. In response, Russia during the 10th Ministerial Conference held in Nairobi, proposed an agenda focusing on the interpretation of security exception to be adopted. It reads as follows

This proposal was an attempt to clarify the meaning of security exception through legislative approach,Footnote ²³ either by authoritative interpretation or ‘subsequent agreement between the parties’. However, Russia’s proposal did not obtain sufficient support to be adopted at the 10th Ministerial Conference and thus died away.

Nonetheless, export restrictions with potential invocation of national security for justification do not fade away but rather turn out to be a preferred instrument for trade nations to wield in the pursuit of geopolitical and geostrategic purpose. In the wake of the US–China trade war since the start of the Trump presidency in 2017, export restrictions have been adopted by the Trump Administration, first against Zhongxing Telecommunications Equipment Corporation (ZTE)Footnote ²⁴ and subsequently against Huawei and its affiliates.Footnote ²⁵ In the midst of the Japan–Korea dispute over wartime labour compensation, Japan removed South Korea from its whitelist of preferred trading partners on 2 August 2019,Footnote ²⁶ which may cause significant delay to the export of critical components of semiconductors to South Korea. In response, South Korea did the same against Japan and launched a WTO complaint. It is reported that Japan would invoke Article XXI of the GATT 1994 as a justification.Footnote ²⁷ Similar geopolitics-induced trade measures are apparent in Gulf countries. In the context of Qatar’s diplomatic crisis, Saudi Arabia, in conjunction with other Gulf countries, imposed a scheme of diplomatic, political and economic measures against Qatar. Qatar referred these measures to the WTO dispute settlement mechanism and Saudi Arabia invokes the national security exception as a justification.Footnote ²⁸ The link between export restrictions under the trade regime and sanctions (or export control) under the public international law context poses a thorny issue of the justifiability of national security exception. Does the WTO adjudicator have the jurisdiction to hear a case relating to national security? Is national security self-judging?

In the midst of the Coronavirus (COVID-19) pandemic, sovereign nations imposed export restrictions on a number of goods to secure domestic supply, ranging from medical devices to food. This led to a joint statement by the WTO and IMF, expressing their concerns about the pervasive use of export restrictions threatening disruption of global supply. Whereas the IMF and WTO recognise that WTO rules allow for export restrictions ‘applied to prevent or relieve critical shortages’, they urge sovereign nations to refer to these measures cautiously.

Beyond the trading system, there are some legal instruments which may have a bearing on export restrictions: international investment law and competition law. First, investment policies may be used as instruments to circumvent export trade restrictions and secure access to raw materials. Prior to the entry phase, export restrictions might enhance incentives for foreign investors to invest in local industries and lead to investment diversion. An export restriction, when imposed after an investment is made, may constitute indirect expropriation, and thus should result in compensation. Therefore, to assess the impact of export restrictions, it is essential to further explore the linkages and boundaries between trade and investment regimes.

Another vehicle outside of WTO law for tackling export restrictions is competition law. Here, two issues are most pertinent. The first is so-called grey-area measures, such as voluntary export restraints. Whereas the ASG lays down some regulations on grey-area measures, it does not guarantee the absence of such measures. Further, whether all grey-area measures are incompatible with WTO law is still subject to debate. Private export agreements taking the form of export cartels may be subject to the scrutiny of domestic competition law. The second issue relates to the practices of the Organization of the Petroleum Exporting Countries (OPEC). Is domestic competition law sufficient to tackle the practices of OPEC, or is new international competition law necessary? If the latter, what would be the relationship between trade rules and competition law?

Finally, such trade, investment and competition law and policy linkage has to be appreciated in the context of the global supply chain, where production processes have been distributed to different parts of the world and the imposition of export restrictions, regardless of economic or political motivations, will seriously disrupt its good functioning. How to manage supply chain security is a critical issue facing multinational enterprises.

1.2 Aim, Purpose and Contribution of the Book

To date, export restrictions under WTO law have remained largely unexplored. Most of the relevant literature relates to export embargoes and sanctions under public international law; few researchers have systemically studied export restrictions from the perspective of international economic law. Ilaria Espa’s study of export restrictions on critical minerals and metals is one of the forerunners of such study. However, her work focuses on two sectors where export restrictions are frequently imposed and the focus of her analysis remains the WTO regime.Footnote ³⁰ At the peak of surging commodity prices in 2007 and 2009, the OECD published a study examining the economic impact of export restrictions on raw materials.Footnote ³¹ This study was conducted in the wake of China – Raw Materials and its focus is the economic impact of export restrictions. Recently, Gabriella Marceau wrote about WTO rules on export restrictions and pointed to their insufficiency.Footnote ³² Similarly, Mark Wu commented on the constraints of the WTO rules on export restrictions and their inability to discipline China’s use of such restrictions.Footnote ³³ With the release of China – Raw Materials and China – Rare Earths, several authors also commented on the jurisprudence of the WTO adjudicator.Footnote ³⁴ These analyses are useful starting points for understanding WTO rules in the context of the proliferation of export restrictions but have not taken into account the trade and geopolitics complexities as manifested by the heavy reliance on the national security exception.

This book serves as a modest attempt to examine systematically the role of export restrictions in the world trade system, link it to public international law and expand to investment and competition law and policy in the context of the global supply chain. From the outset, the book examines all of the relevant WTO provisions on the export restrictions, commitments and obligations that new members assumed during accession negotiation processes. Additionally, as export restrictions are employed as an instrument to achieve different policy goals, including food and energy security; environment and development objectives; and even national security purposes, this book investigates the policy implications of export restrictions. The question is then asked: can export restrictions be justified by the exceptions provided under the WTO Agreement, or, alternatively, does the WTO Agreement provide sufficient policy space for trading nations to pursue their policy goals? An intriguing question relevant to this inquiry concerns the relationship between the general exception, as set out in Article XX of the GATT, and specific exceptions such as that in Article XI:2. Further, one has also to determine whether the general exception as set out in Article XX of the GATT 1994 is applicable to the obligations and commitments contained in accession protocols or working party reports. An even more controversial issue relates to the interpretation and application of national security exceptions as set out for in Article XXI of the GATT 1994, if the respondent member decides to invoke it. Would this national security exception turn out to be a self-interpreting clause? What would be the role that international political economy plays in this inquiry? Moving beyond the realm of WTO law, it is essential to explore the boundaries and linkages between trade and investment regulatory regimes, assess how competition law and policy impact export restrictions and reflect how to manage supply chain security once the chain is disrupted by export restrictions. In so doing, we may have a broad and comprehensive understanding of law and politics on export restrictions in international economic relations.

The core thesis of this book is that the GATT/WTO regime is built on an export bias, with trading nations aiming to export goods and services while keeping foreign producers from their domestic market so as to protect domestic producers from competition. Due to this export bias, the vast majority of WTO rules are concerned with regulation of the liberalisation of import restrictions, tariffs and non-tariff barriers, but touch only lightly on export restrictions. This book thus first examines the limited number of WTO rules impacting export restrictions, notably, Article XI of the GATT 1994, Article 12 of the AoA and Article 11 of the ASG. Nonetheless, one-sided regulation focusing on import restrictions proves insufficient in a globalised economy – considering that countries may impose export restrictions on critical components or raw materials of strategic importance and that enterprises between upstream and downstream producers, buyers and suppliers may also enter into private agreements limiting exports. In recognition of such insufficiency, trading nations aim to discipline export restrictions using three approaches: WTO accession negotiations, multilateral Doha negotiations and regional trade agreements. When countries/territories seek WTO accession, it has become common to compel these applicants to commit to disciplines on export restrictions. This bilateral rule-making through accession negotiations nonetheless introduces the thorny issue of the applicability of Article XX of the GATT 1994 (general exception) to obligations and commitments in accession protocols and working party reports. While countries have aimed, through the Doha negotiations, to introduce multilateral disciplines on export restrictions, there has been no measurable progress; therefore, export restrictions are only patchily disciplined in the regional trade agreements context.

Second, export restrictions are measures that represent the changing international political economy of the dissolution of the Coordinating Committee for Multilateral Export Controls (COCOM), the collapse of the Soviet Union and the expansion of WTO membership, as well as technological progress blurring the line between civilian and dual-use goods, which in turn gives rise to frequent references to the national security exception. In the post-war era, free trade was conducted mainly in the Western camp within the GATT context and controlled trade mainly targeted the former Soviet Union and China through the COCOM. However, the logic of free trade and controlled trade, and the division of the GATT/WTO regime on the one hand and the COCOM and Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement) on the other ceased to be feasible as the line among civilian, military/strategic and dual-use goods grew increasingly blurred, and former Soviet countries and China joined the WTO. The technological complexities of goods and services, and expansion of WTO membership, have created a new challenge for the WTO: reliance on trade measures for political and diplomatic aims seeking justification based on the national security exception. These developments point to the links between WTO law and public international law on different fronts. Obviously, countries may adopt export restrictions to comply with their UN obligations if a UN resolution is passed, for instance, imposing an export embargo. Even in the absence of such an explicit resolution, relevant decisions in the UN may constitute evidence to determine the existence of war, or some other emergency in international relations. As for the Wassenaar Arrangement, it plays a key role in defining the scope of XXI:(b)(ii), in particular goods and materials directly or indirectly for the purpose of suppling a military establishment. Finally, a country may use trade measures as countermeasures against infringements of obligations other than WTO law, as demonstrated by Germany – Icelandic Fishery Dispute.Footnote ³⁵

Export restrictions are closely intertwined with investment and competition; so investment law and policy complement and sometimes conflict with international trade law, while competition law complements international trade law in regulating private forms of export restrictions. When a country imposes export restrictions, enterprises in foreign countries may wish to circumvent these export restrictions by investments in that country, which may also try to prevent this by an investment screening mechanism, such as the Committee on Foreign Investment in the United States (CFIUS). At the same time, export restrictions, as far as existent investors and investment are concerned, may infringe international investment laws. Competition law complements international trade law in regulating private forms of export restrictions maintained by private enterprises, vertically or horizontally. Demands for regulation of private forms of export restrictions are surging in view of global supply chains. Among these private forms of export restrictions, export cartels, shared with similar export bias, are mostly permitted on condition that they do not affect the domestic market.

By looking into the specific measure of export restrictions, this book links four key areas of WTO law, public international law, investment and competition law to expose how and why WTO rules on export dimension are insufficient due to export bias, how public international law helps to justify their adoption or maintenance, and how investment and competition law contribute to their regulation. Built on such research and the growing volume of literature on accession protocols and national security exceptions, this book endeavours to go beyond international trade law and look into international political economy, competition and investment law. By using export restrictions as subject matter to link the aforementioned two growing strands of scholarly works, this book contributes to academic debates in conceptualising public and private forms of export restrictions; appreciating the complementary nature of trade and competition law in disciplining them; capturing the dynamic between trade and investment policies for their effectuation and circumvention; and bridging trade law and public international law to better understand their imposition for political and diplomatic purposes with the invocation of the national security justification. In addition, this book is of great policy relevance, as it also offers practical guidance for practitioners by covering trade remedies for export restrictions, export control regimes in the EU and United States, and investment screening mechanisms.

1.3 Scope, Approach and Structure of the Book

This book takes as its departure point the underlying logic of the world trading system in which nations vie for access to foreign markets, and explores the rationale for a trading nation to impose export restrictions. After surveying the relevant WTO provisions on export restrictions, obligations and commitments as contained in the accession protocols and working party reports, the book further investigates the policy implications of export restrictions imposed by trading nations and asks whether there is sufficient policy space available. In addition, the political economy surrounding export restrictions, in particular when the national security exception is invoked, will also be appreciated. The investigation reaches farther from the realm of international trade law into international investment law and competition law and policy, and reflects on how these different regimes impact on determinations of the legality of export restrictions.

The introductory chapter clarifies some of the terminology employed. This book largely uses the term ‘export restriction’ instead of ‘export control’ or ‘export restraint’, as ‘export control’ is in widespread use and may apply to unrelated areas, the most pertinent being in the context of public international law.Footnote ³⁶ Nonetheless, when referring to domestic law, in particular, US law, and under some public international law regimes, such as the COCOM and the Wassenaar Arrangement, the term ‘export control’ will also be used. In fact, the boundaries between trade regime and public international regimes may overlap and complicate with each other.

According to the Dictionary of Trade Policy Terms, export controls refer to ‘measures instituted by exporting countries to supervise export flows. Reasons for these include compliance with United Nations economic sanctions, adherence to voluntary restraint arrangements, observance of export quotas under international commodity arrangements, management of strategic exports and administration of rules concerning dual purpose exports, as well as a policy of preserving some raw materials and other articles for domestic production or consumption.’Footnote ³⁷ According to this definition, export controls mostly cover measures taken under public international law but also relate to policies implemented with a view to securing sufficiency for domestic production or consumption.

Some scholars offer alternative definitions of ‘export control’. As Yann Aubin and Arnaud Idiart explain, ‘for security reasons mainly, but also for other reasons such as technology protection, nations control the hardware, software or the technology/data from leaving their territory’.Footnote ³⁸ Typical examples of export controls on arms or strategic materials are sanctions imposed by resolutions of the United Nations General Assembly or relevant international conventions, such as the Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction (Biological Weapon Convention); the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction (Chemical Weapons Convention); the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) and the Arms Trade Treaty (ATT). This definition resembles that set forth in the Dictionary of Trade Policy Terms, which suggests that export controls have more public international law implications. Given that this book approaches the subject matter from the perspective of international economic law, the term ‘export control’ does not seem to be a good option.

The term ‘export restraint’ is used in US – Export Restraints, wherein Canada challenged the WTO-consistency of US legislation by treating export restraints as subsidies. For the purpose of resolving the dispute before it, the Panel in US – Export Restraints defined an export restraint as ‘a border measure that takes the form of a government law or regulation which expressly limits the quantity of exports or places explicit conditions on the circumstances under which exports are permitted, or that takes the form of a government-imposed fee or tax on exports of the product calculated to limit the quantity of exports’.Footnote ³⁹ So defined, an export restraint is a measure, tariff or non-tariff, imposed by a government through law or regulation, with a view to limiting the quantity of exports. However, as the United States pointed out in that dispute, the term ‘export restraint’ does not appear in the legal text of the WTO agreements, and thus it is neither practicable nor desirable for the Panel to define it in the abstract. The definition of an export restraint, as noted previously, is offered mainly for the purpose of resolving the dispute before the Panel.

By contrast, the term ‘restriction’, sometimes in conjunction with ‘prohibition’, is widely used throughout the WTO agreements; it is thus appropriate to use a term that appears in the legal text of WTO agreements. From the outset, it is clear that a restriction does not necessarily entail prohibition, as many legal provisions expressly cover ‘prohibition or restriction’. Further, the Panel in China – Raw Materials, in referring to previous Panel reports, addresses the definition of a ‘restriction’. The Panel first points to the dictionary definition of a ‘restriction’ as ‘a thing which restricts someone or something, a limitation on action, a limiting condition or regulation’.Footnote ⁴⁰ The Panel refers to the approach set forth in EEC – Minimum Import Prices (taken in the case of importation), and followed in Japan – Semi-Conductors, and holds that the very potential to limit trade is sufficient to constitute a restriction on the exportation, or sale for export, of any product.Footnote ⁴¹ Therefore, an export restriction is a measure with a limiting effect on exportation, or sale for export, of any product. At the same time, it should also be noted that the limiting effects also extend to ‘measures that create uncertainties and affect investment plans, restrict market access for imports or make importation prohibitively costly’.Footnote ⁴² The potential to adversely affect exportation, or sale for export, of a given product is the decisive element for the definition of an ‘export restriction’. Therefore, an export restriction is to be interpreted, in a broad sense, as a capacity to capture all measures directly or indirectly limiting exports.

A similar definition is embraced by the Appellate Body in China – Raw Materials, which, based on the dictionary definition, defines a restriction as ‘a thing which restricts someone or something, a limitation on action, a limiting condition or regulation’, which refers generally to something that has a limiting effect.Footnote ⁴³ The Appellate Body further notes, ‘the use of the word “quantitative” in the title of the provision informs the interpretation of the words “restriction” and “prohibition” in Article XI:1 and XI:2. It suggests that Article XI of the GATT 1994 covers those prohibitions and restrictions that have a limiting effect on the quantity or amount of a product being imported or exported.’Footnote ⁴⁴

With regards to the practices of the WTO, the WTO Trade Policy Review reports normally include a section under the heading of measures (directly) affecting exports: taxes and levies, prohibitions, quotas, licensing and minimum prices. In view of these measures, it is clear that export restrictions, like import restrictions, take the form of tariff and non-tariff measures.Footnote ⁴⁵ In addition to the aforementioned measures, the reduction of VAT rebates is usually regarded as tantamount to an export restriction given that it has similar effects.Footnote ⁴⁶

It should also be noted that this book takes a measure-specific approach instead of a sector-specific approach, and avoids focusing solely on natural resource sectors, even though export restrictions are frequently employed in these sectors. This book looks at various forms of export restrictions, the rationales for trading nations that adopt them, their legality under WTO law and their complexities surrounding international political economy and national security. The reasons for this choice are, first, that such an approach is in line with the practices of the WTO dispute settlement process, under which a dispute may be filed when a member ‘considers that any benefits accruing to it directly or indirectly under the covered agreements are being impaired by measures taken by another Member’.Footnote ⁴⁷ In filing a complaint, the complaining member is required to ‘identify the specific measures at issue’.Footnote ⁴⁸ Thus, readers should be quite familiar with a measure-specific approach. Second, there are abundant sector-oriented works examining the agriculture sector in relation to food security, or the energy sector in relation to energy security.Footnote ⁴⁹ A measure-specific approach would bring a new element to the debates.

Finally, I provide a roadmap for readers. This book comprises five chapters. After this introduction, Chapter 2 offers an analysis of WTO provisions relating to export restrictions, notably, Article XI of the GATT 1994, Article 12 of the AoA and Article 11 of the ASG. It also offers analysis of ‘WTO-plus’ obligations as contained in the accession protocols and working party reports, and of trends in regional trade agreements aimed at regulating export restrictions. Chapter 3 explores governance issues arising from the imposition of export restrictions, ascertains whether the exceptions set out for in the WTO agreements can justify export restrictions imposed by a trading nation and reflects on whether sufficient policy space is provided. Chapter 4 extends the discussion from WTO law to investment, and competition law and policy, and examines how these different regulatory regimes impact states’ and enterprises’ decisions on the imposition and formation of export restrictions/cartels in the context of the global supply chain. Chapter 5 concludes the book.