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Economic Resilience under the Indo-Pacific Economic Framework Supply Chain Agreement: Treading between Geoeconomic Ambitions and World Trade Organization Compatibility?

Published online by Cambridge University Press:  30 June 2025

Christian Delev Open the ORCID record for Christian Delev [Opens in a new window]
Christian Delev*
Affiliation:
University of Bristol Law School, Bristol, UK
*
Email: christian.delev@bristol.ac.uk
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Abstract

The resilience of international supply chains is increasingly becoming a policy objective within international trade law making. Unilaterally, States have resorted to a myriad of trade tools to achieve this objective, including subsidizing domestic industries, facilitating critical minerals, and imposing tariffs on dominant supplying States to encourage supply diversification. In this context, the Indo-Pacific Economic Framework for Prosperity Supply Chain Agreement is the first major international trade agreement primarily aimed at achieving regional supply chain resilience. This Research Note explores the WTO compatibility of the economic interventions that underpin the Supply Chain Agreement’s ‘managed trade’ approach to supply chain resilience. First, it outlines the firm-centred governance approach that is central to supply chain management under the Supply Chain Agreement. Second, it explores the likely challenges and justifications of the envisaged interventions under GATT 1994 and Agreement on Safeguards. Finally, it reflects on the potential role of the WTO to shape cooperative supply chain governance interventions.

Keywords

IPEFeconomic resilienceWTO compatibilityeconomic securityArticle XX(j) GATTArticle XXI GATT

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Type
Research Note
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World Trade Review , First View , pp. 1 - 17
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
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© The Author(s), 2025. Published by Cambridge University Press on behalf of The Secretariat of the World Trade Organization.

1. Introduction

In the aftermath of the supply chain shortages experienced during the COVID-19 pandemic, a newfound concern for the resilience of trade flows is recasting international trade policy-making.Footnote 1 Unilaterally, States have responded to experiences of sudden supply shortages in a myriad of ways. These responses included enhancing their trade facilitation measures for critical minerals,Footnote 2 subsidizing domestic production of electric vehicles,Footnote 3 and imposing tariff hikes on sensitive products originating from dominant supplying States.Footnote 4 The experiences of supply chain shocks further revealed the need for States to cooperate in response to disruptions around global and regional supply chains. As supply chains are transnational formations which cross State jurisdictions and involve multiple firms, ensuring their stability requires effective regulatory cooperation between States. This urgency for international supply chain resilience partly motivated the creation of the Indo-Pacific Economic Framework for Prosperity (IPEF) and the conclusion of the IPEF Supply Chain Agreement (SCA) in November 2023.Footnote 5

This Research Note explores the compatibility of economic interventions envisaged under the SCA with World Trade Organization (WTO) law. In the ongoing context where States continue to grapple with the challenges raised by supply chain governance, two contributions are made to the emerging discussion around supply chain resilience: one positive, and the other normative. The first contribution is to ascertain whether the forms of economic interventions to supply chain shocks expressly envisaged by the SCA – whereby States actively intervene and shape the economic choices of IPEF supply chain participants to resolve ‘disruptions’ – are likely compatible with WTO law. The second contribution made is in identifying the circumstances under which WTO law enables regulatory cooperation between States as they pursue policies to achieve economic resilience within regional supply chains.

The argument is developed in five sections. Section 2 provides a broad overview of the SCA objectives and its approach to achieving economic resilience within IPEF supply chains. Section 3 considers the likely challenges and justifications for ex post economic interventions implementing the SCA under the General Agreement on Tariffs and Trade 1994 (GATT). In turn, Section 4 evaluates likely challenges under the Agreement on Safeguards (AS). Section 5 reflects on the potential of the WTO to shape Members’ efforts to pursue resilient supply chain governance cooperatively. Section 6 offers concluding remarks.

2. Economic resilience under the SCA

2.1 SCA supply chain resilience objectives

In its preamble, the SCA sets out as its main purpose to achieve ‘resilient and robust’ supply chains, namely ‘resilience, efficiency, productivity, sustainability, transparency, diversification, security, fairness, and inclusivity’.Footnote 6 These objectives are broad in terms of both the scenarios in which the agreement aims to coordinate IPEF Parties’ economic interventions, and what is conceptually meant by economic resilience.

The SCA is intended to coordinate efforts between Parties to prevent or respond to supply chain disruptions. In Article 1, a disruption is defined by three main characteristics: (i) that there is a ‘severe interruption, delay, or shortage’, (ii) that there is impact on ‘one or more Parties’, and (iii) that this impact ‘significantly impairs the production of, the cross-border movement of, or access to, materials, articles, or commodities or the delivery of related essential services, as determined by an affected Party’.Footnote 7 As set out, the SCA thus empowers Parties to coordinate in a wide range of circumstances, which includes disruptions that solely affect individual Parties and concern any ‘materials, articles, or commodities’.Footnote 8 This breadth is further confirmed by the SCA preamble, which indicates that the ‘causes’ of disruptions may include, inter alia, ‘pandemics and regional epidemics, weather events, disasters declared or recognized by a central, regional, or local government, cyber incidents, logistical interruptions, insufficient supply of raw materials or components, bottlenecks, or armed conflict’.Footnote 9

In setting out what is meant by ‘resilient and robust’ supply chain cooperation, the SCA preamble clusters together concerns for market adaptability, labour protection, and broader welfare distribution.Footnote 10 With respect to market adaptability, the preamble places emphasis inter alia on ‘encourag[ing] supply chain diversification’, ‘mobiliz[ing] investments’, ‘risk awareness’, and ‘encourag[ing] technical cooperation’, while also stressing the need to ‘minimize market distortions’.Footnote 11 Notably, the role of both ‘the private sector’ and ‘representative workers’ organizations’ is acknowledged as ‘stakeholders’.Footnote 12 As such, resilience is linked to both guarantees for ‘health and safety’ as well as ‘labor rights’ protection, alongside ‘the development of a skilled workforce’.Footnote 13 In terms of welfare distribution, the SCA preamble notes the need to ‘advance shared prosperity across and within the Parties’.Footnote 14 However, such welfare distribution concerns are framed as a benefit of ‘supply chain development’, rather than an objective of specific economic interventions.Footnote 15

In brief, the SCA adopts a flexible definition of the supply chain disruptions to which it applies and likewise reflects a wide understanding of what supply chain resilience, which extends beyond market adaptability to include concerns over labour protection and welfare distribution, constitutes. In exploring what this expansive approach to cooperative supply chain governance means in practice, Section 2.2 examines the types of economic interventions that are envisaged, and Section 2.3 considers how the SCA institutional framework facilitates cooperation between Parties and stakeholders.

2.2 Economic interventions promoting supply chain resilience

In its pursuit of supply chain resilience, the SCA introduces a range of commitments regarding ex ante and ex post economic interventions that Parties intend to undertake to either prevent or respond to IPEF supply chain disruptions. These commitments – which largely take the form of soft law norms and obligations of conductFootnote 16 – envisage a firm-centric governance approach, under which the Parties create incentives for firm participation in IPEF supply chains and institutional forums.Footnote 17 In return, firms are expected to be involved in IPEF decision-making and follow the voluntary cues set by Parties when responding to supply chain disruptions.

Ex ante interventions principally involve positive measures aimed at ‘strengthen[ing]’ IPEF supply chains.Footnote 18 As such, ex ante interventions are enabling, in the sense that they serve to reduce IPEF supply chain participation costs and create entry incentives for new participants. As such, these interventions are seemingly intended to achieve the twin objectives of ensuring deeper engagement by existing IPEF supply chain participants and encouraging broader and more diversified participants to take part in supply chain formation and development.

With respect to their forms, ex ante interventions identified under the SCA can be grouped into four categories.Footnote 19 The first category covers measures primarily intended to promote investment flows linked to supply chain development. These are primarily enabling efforts by Parties, including ‘organizing investment missions’, ‘encouraging public–private joint efforts’, and ‘sharing expertise’ on project development.Footnote 20 The second category comprises unilateral trade facilitation measures. These chiefly involve improvements to physical transportation infrastructure (e.g., improving ‘logistics services and logistics infrastructure’ and developing ‘multimodal transport corridors’)Footnote 21 and the adoption of deeper trade facilitation rules.Footnote 22 The third category involves policy measure cooperation between Parties, primarily concerning the alignment of their trade facilitation rules and approaches to risk management across supply chains.Footnote 23 Finally, the SCA identifies measures aimed at promoting the participation of micro-, small- and medium-sized enterprises (MSMEs) in IPEF supply chains, and their broader capacity building.Footnote 24

By contrast, ex post interventions envisaged under the SCA reflect a ‘managed trade’ approach to supply chain governance, characterized by the closer involvement of States in both supply chain management broadly and firm-level economic choices specifically. Such involvement in market decision-making may be direct (for instance, by removing technical or physical causes of disruptions) or indirect (for instance, by setting up voluntary arrangements intended to influence the behaviour of supply chain participants).

While the SCA introduces an open list of ex post economic interventions, which Parties may choose to adopt in response to supply chain shocks faced by another Party, it specifically identifies a range of measures that could be adopted. These measures can be broadly grouped across three categories. The least intrusive interventions take the form of information-sharing activities, which principally involve ‘sharing best practices or experiences’ with IPEF Parties affected by disruptions and ‘dialogue with [a Party’s] private sector to provide greater certainty in the flow of materials, articles, or commodities during supply chain disruptions’.Footnote 25 More significant are facilitative measures adopted in response to disruptions. These measures, which take a range of forms, are seemingly targeted at specific disruptions. They include enabling ‘joint procurements and delivery of goods and related essential service’, trade facilitation measures (for instance, ‘facilitating and identifying alternative shipping or air routes’ and providing ‘access to shipping or air capacity where appropriate’), and the physical construction of new market access routes (for instance, ‘facilitating hinterland transportation where possible and appropriate to support efficient movements in and out of ports’).Footnote 26 The final category includes measures that rely on voluntary schemes or cues to supply chain participants. Article 12(3) SCA provides for a wide range of such firm-specific interventions, including ‘business matching’ initiatives, ‘encouraging’ production and ‘temporary repurposing and conversion of production to address shortages in affected goods’, as well as ‘discouraging hoarding’.Footnote 27

In summary, the SCA provides a regulatory framework that requires close interaction between State regulators and supply chain participants, both within and between its Parties. This involves both ex ante support for broader and deeper engagement by firms in regional supply chains, and closer cooperation when addressing specific disruptions. At the same time, by relying on obligations of conduct and soft law norms, the SCA is designed around ensuring that Parties maintain their regulatory flexibility in choosing specific approaches to strengthening IPEF supply chains and responding to disruptions.

2.3 Institutional framework for supply chain governance cooperation

Both unilateral and collective economic interventions under the SCA require a high degree of cooperation between Parties in order to reduce the harm of supply chain disruptions. Accordingly, a defining feature of how the SCA approaches economic governance is its cooperative framework. Across global and regional supply chains, economic activities are facilitated and defined by the regulatory frameworks of different States.Footnote 28 The SCA thus introduces three treaty bodies which serve to facilitate regulatory transparency and enable policy coordination between Parties, as well as between relevant stakeholders.

The IPEF Supply Chain Council (SCC) forms the central governance body under the agreement, comprising ‘a relevant senior official from the central level of government of each Party’.Footnote 29 While the express powers and voting procedures of the SCC remain to be defined in its terms of reference,Footnote 30 the treaty body’s decision-making functions extend to creating new treaty bodies to assist in pursuing supply chain resilience and setting up voluntary ‘Action Plan teams’ that offer ‘recommendations to increase the resilience and competitiveness of critical sectors or key goods from among those notified by at least three Parties in accordance with Article 10’.Footnote 31 While the SCC appears to play a limited top–down decision-making role in shaping IPEF Parties’ commitments, its primary institutional function is as a ‘choreographer’: that is, where there is uncertainty over how Parties should individually or collectively approach supply chain disruptions, the SCC can provide social cues by – directly or indirectly – indicating specific responses which Parties may adopt.Footnote 32 As Article 6 indicates, such cues could take a variety of forms: comments and recommendations issued during reviews of Parties’ Action Plans, indications of where ‘technical assistance’ or ‘capacity building’ is needed, or by delegating this role to Action Plan teams and even a private sector-led ‘independent mechanism’ that could respectively issue targeted recommendations.Footnote 33

Moreover, the SCC may assist in achieving regulatory transparency between Parties, as well as resolving cooperation problems that emerge in their efforts to govern supply chains. In addition to their commitments to ensure transparency under Article 4, Parties are required periodically to submit ‘written reports’ detailing their efforts to ‘implement Articles 2 through 5 and 11’ SCA.Footnote 34 Beyond providing information on formal compliance with the SCA to the IPEF membership, such practices also embed two mechanisms for holding Parties to account. First, by embedding ‘reflexivity’ through the written report submission process, individual Parties are encouraged to continually rationalize their domestic legal approaches in light of SCA norms, independent of whether they take the form of soft law or hard law commitments.Footnote 35 Second, the SCC is itself enabled to identify specific collective action problems through its information-gathering and policy review processes.Footnote 36 In so doing, Parties could collectively decide on what responses to adopt, either to prevent or to resolve supply chain disruptions.

With respect to preparations and responses to ‘supply chain disruptions’, information sharing and response coordination between the Parties is further facilitated through the IPEF Supply Chain Crisis Response Network (SCCRN). As designed, the SCCRN is set to perform a narrow, technical role to primarily prepare Parties for future supply chain disruptions and to ensure that long-term policy cooperation does not collapse owing to collective action problems. This is reflected in its four main functions: (i) to creat ‘an emergency communications channel to rapidly disseminate relevant information’ during disruptions, (ii) to serve as a cooperative mechanism for Party responses, (iii) to ‘consider the use of table-tops, stress tests, or similar exercises’ to assist Parties with ‘prepar[ing] and test[ing] strategies’ for responses, and (iv) to provide assessments of past responses and present strategies to address disruptions.Footnote 37

The final treaty body created under the SCA is the IPEF Labor Rights Advisory Board. Comprising ‘senior officials’ from Parties, as well as worker and employer ‘representatives’, the Advisory Board is intended to largely provide information on opportunities to firms participating in Indo-Pacific supply chains and to minimizerisks and strengthen ‘the resilience of IPEF supply chains’ by promoting ‘labor rights’.Footnote 38 While the treaty body directly involves stakeholder voices, only a ‘Subcommittee’ made up of the IPEF Party representatives on the Advisory Board may elect the latter’s ‘Chair’ from one of its members.Footnote 39

The Advisory Board functions in two senses as a mechanism to promote transnational legal ordering:Footnote 40 it provides a formal institutional setting within which State, firm, and worker representatives can address and coordinate approaches to supply chain ‘resilience’, and a means for creating ‘recommendations’ that feed into decision-making by the Parties in the SCC.Footnote 41 However, the sectors that are the focus of its central output – that is, producing ‘up to two sector-specific technical reports annually on labor rights in IPEF supply chains’ – are set by the Advisory Board Subcommittee.Footnote 42 In this sense, the contributions made by the Advisory Board may be restricted or expanded ex ante by the Parties’ representatives.

3. Legal risks under GATT

The overall effectiveness of the SCA approach to supply chain governance depends on the specific economic interventions its Parties adopt when implementing their soft law commitments and obligations of conduct. As such, the legal risks raised by the SCA are implementation problems affecting the responses by both (i) Parties individually addressing supply chain disruptions and (ii) Parties involved in collective efforts to address such disruptions. While the SCA provides an open list of economic intervention tools that may be adopted, for the sake of clarity, this section focuses only on the legal risks raised by ex post interventions explicitly listed under Article 12 SCA.

3.1 Article I:1 GATT

As ex post interventions under the SCA rely heavily on facilitative measures affecting product importation and exportation, they are potentially subject to the most favoured nation (MFN) treatment obligation under Article I:1 GATT. This determination depends primarily on establishing whether the anticipated trade facilitation and transport infrastructure measures constitute ‘rules and formalities in connection with importation and exportation’ for the purposes of Article I:1.Footnote 43 While the US–Poultry (China) panel broadly construed the phrase ‘in connection with importation and exportation’ to cover measures which ‘relate to other aspects of the importation of a product’ than directly relate to importation (for instance, customs processing) or ‘have an impact on actual importation’, the Argentina – Financial Services panel clarified this by requiring that the measure has a clear impact on cross-border trade.Footnote 44 Trade facilitation measures directly impact import and export of goods, which is reflected in the Trade Facilitation Agreement as a relevant treaty context.Footnote 45 International transportation rules may likewise demonstrably ‘relate’ to aspects of importation and exportation, particularly where they directly impact how cross-border trade flows physically enter or leave a Member.Footnote 46 For present purposes, it is assumed that both types of measures fall under Article I:1 GATT.

On this basis, it must now be determined whether the measures accord ‘any advantage, favour, privilege or immunity’ to ‘like’ product groups from different WTO Members.Footnote 47 What constitutes an ‘advantage’ must be seen in light of the competitive impact of such measures.Footnote 48 Trade facilitation measures are most likely to create competitive advantages vis-à-vis the speed and efficiency of customs processing. By contrast, international transportation measures are likely to create advantages regarding the speed or volume of trade flows, for instance by improving the quality of international roads or setting up alternative hinterland routes.

This leaves the question as to whether the measures are discriminatory: that is, whether the identified advantages are accorded ‘immediately and unconditionally’. Textually, the term ‘immediately’ should be understood in temporal terms and requires ‘like products’ from different Members to receive the same treatment at the same time,Footnote 49 such as by providing importers from both IPEF and non-IPEF Parties with advance access to customs document processing.

The term ‘unconditionally’, in turn, concerns the circumstances under which an ‘advantage’ will be ‘accorded’. Differentiating treatment of ‘like products’ from different Members on the basis of nationality will constitute de jure discrimination, for instance, where access to simplified customs procedures or international transportation advantages (e.g., access to hinterland transportation routes) are restricted on the grounds of product origin alone.

A more significant challenge for such facilitative measures, however, would be whether they constitute de facto discrimination by creating ‘conditions that entailed different treatment of imported products depending upon their origin’.Footnote 50 Such ‘conditions’ could emerge, in particular, where Members apply their measures on the basis of purely geographical factors, as this would be directly related to product origin.Footnote 51 Suppose, for instance, India introduces simplified customs checks only at ports to widgets arriving by sea (where most products from IPEF Parties typically arrive), but not at land-border crossings where ‘like’ products from neighbouring non-IPEF Parties are imported.Footnote 52 In this hypothetical example, while ‘like’ products originating from each Member would face identical customs checks at ports or land-border crossings, the competitive advantage depends on imports from adjacent Members being redirected from land-crossings to ports. The ‘advantage’ would thus be subject to origin-related conditions affecting conditions of competition.

In brief, Members’ duty to grant MFN treatment under Article I:1 GATT poses a key hurdle for efforts by IPEF Parties to adopt limited trade facilitation or international transportation measures in response to supply chain disruptions. Where such measures create competitive advantages, these must be granted immediately and unconditionally to like products from all WTO Members, preventing either explicit origin-based discrimination, or de facto discrimination based on origin-related factors, including geography.

3.2 Article XI:1 GATT

Another prominent challenge is whether measures taken by IPEF Parties in accordance with the SCA are compatible with the prohibition on quantitative restrictions under Article XI:1 GATT. The provision reads:Footnote 53

No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.

The latent category of ‘other measures’ was broadly construed by the Colombia– Ports of Entry panel as covering ‘any form of limitation imposed on, or in relation to importation’, as well as for export or sale for export outside of ‘duties, taxes, or other charges’.Footnote 54 Since Article XI:1 serves to preserve conditions of competition, panels have determined that measures ‘penalizing’ and ‘making [market access] prohibitively costly’, or creating significant ‘uncertainties’ for traders, would fall within this category.Footnote 55 Where these effects are sufficiently clear from the measure, a de jure restriction may be established and there is no need for recourse to positive evidence to determine breaches of Article XI:1.Footnote 56 In this sense, binding measures, taken to ensure supply chain resilience, and that directly affect conditions of competition for non-IPEF Party traders may breach Article XI:1 based on their design alone.

However, as the SCA primarily relies on a cooperative model of supply chain governance and their effectiveness depends on voluntary compliance by firms, such measures do not prima facie impact conditions of competition. As the Argentina– Hydes and Furs panel held, ‘it is inevitable, as an evidentiary matter, that greater weight attaches to the actual trade impact of a measure’ where a de facto restriction that does not have a self-evident effect on conditions of competition is concerned.Footnote 57 As Mavroidis suggests, this higher evidentiary standard emerged from the risk that ‘[a] low burden of persuasion can lead to false positives, and WTO panels might be outlawing perfectly legitimate measures’.Footnote 58 In the context of voluntary export restraints and redirections – for instance, recommendations by the US for domestic firms not to export widget parts to non-IPEF Parties, or to redirect widget part exports to Australia to alleviate a supply chain disruption the latter is facing – the determination effectively depends on the causal nexus drawn between Members’ adopted measures and the market response by economic actors (viz., supply chain participants).Footnote 59 The two-part test for determining whether voluntary measures fall under Article XI:1 was originally articulated by the Japan– Semiconductors GATT panel. To establish that the measure has an effect on conditions of competition, we must examine whether (i) ‘sufficient incentives or disincentives existed for non-mandatory measures to take effect’, and (ii) the ‘operation of the measures’ is ‘essentially dependent on Government intervention’.Footnote 60

While a determination ultimately rests on the design and implementation of individual voluntary measures, it is notable that the SCA institutional framework overtly resembles crucial aspects of the voluntary measure in Japan–Semiconductors. In both instances, the measures are adopted in the ‘background’ of an inter-State treaty (that is, the SCA and 1986 US–Japan Price Arrangement) that create compliance incentives.Footnote 61 Likewise, Japan had set information-sharing obligations on firms and hosted ‘regular’ meetings of its ‘Supply and Demand Forecasts Committee, involving producers’ to build its trade flow forecasts.Footnote 62 Potential parallels can be drawn to the information-sharing and advisory roles envisaged for the IPEF Labour Rights Advisory Board, and the closer domestic State–firm interactions underpinning SCA economic interventions, such as through business-matching exercises. Both similarities could be significant in establishing a causal nexus between the voluntary measures and supply chain participant responses.

Assuming that the Article XI:1 conditions are met, IPEF Parties may argue that their measures fall within the Article XI:2 carve-outs.Footnote 63 The principal carve-out to the prohibition concerns export measures ‘applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting’ Member under Article XI:2(a). The Appellate Body narrowly construed the concept of ‘essential’ products to refer only to a narrow set of ‘absolutely indispensable or necessary’ products, comparable to ‘foodstuffs’.Footnote 64 Moreover, such measures may only be ‘temporary’ and adopted in response to (actual or potential) ‘critical’ shortages affecting the exporting Member itself, as opposed to extraterritorial shortages experienced by their trade partners.Footnote 65 As such, the carve-out creates limited scope for adopting measures, especially where they concern extraterritorial shortages faced by other IPEF Parties, as envisaged under Article 12(3) SCA.

In summary, voluntary export restraints or redirections as framed in Article 12(3) SCA may constitute de facto ‘measures’ for the purposes of Article XI:1 GATT, depending on their actual effects, incentive structure, and reliance on government interventions. While Article XI:2(a) creates a limited carve-out from the prohibition, this only exempts temporary interventions preventing or addressing ‘critical shortages’ of ‘essential products’ and applies to measures adopted by Members directly facing (the prospect of) shortages.

3.3 Article XX(j) GATT: escape route or fool’s errand?

Assuming a breach of either Article I:1 or XI:1 GATT is established, IPEF Parties may attempt to justify their ex post interventions under the Article XX(j) exception for ‘acquir[ing] or distribut[ing] products’ during an ongoing ‘general or local short supply’. While this exception provides a broad policy ground for relieving product shortages, especially when compared with Article XI:2(a), measures that pursue this objective must satisfy a range of conditions.

First, the measure must be adopted in response to a current ‘general or local short supply’.Footnote 66 The exception may only be invoked where measures are adopted ‘in the event of a supply chain disruption’, as opposed to when ‘[an IPEF] Party expects an imminent supply chain disruption’ under Article 12(1) SCA.Footnote 67 Article XX(j) is thus not an exception promoting economic self-sufficiency, but rather it enables responses to established shortages.

An important area of ambiguity, however, is whether the exception under Article XX(j) GATT enables IPEF Parties to adopt measures in response to supply chain disruptions faced by other IPEF Parties. As already noted, a key feature of the IPEF model for responding to supply chain shortages is that economic interventions may be adopted by both Parties facing economic shocks, as well as by the broader IPEF membership. At a textual level, while Article XX(j) refers to WTO Members’ entitlement to ‘an equitable share of the international supply of such products’, this language could be interpreted as either allowing for economic interventions to resolve extraterritorial ‘short supply’, or – more convincingly – as a condition on how Members can respond to domestic shortages.Footnote 68 Similarly, it is unlikely that Members would be able to establish a ‘legitimate state interest’ in conditions found in other Members based on the SCA alone.Footnote 69 Notably, while the SCA recognizes the importance of supply chain cooperation for Parties’ economies, it does not expressly establish a specific shared legal interest justifying Parties’ extraterritorial jurisdiction.Footnote 70 As such, it is unlikely that IPEF Members’ measures responding to a ‘general or local short supply’ occurring entirely extraterritorially could be justified under Article XX(j) GATT where no domestic shortage is faced. That being said, a sufficient territorial ‘nexus’ could reasonably be established where a shortage in downstream products occurring in another Member had triggered a shortage of finished products in the imposing Member’s own domestic market.Footnote 71

The second condition requires the measure to be temporary in nature. As such, IPEF Parties could only adopt time-sensitive interventions that responded to specific IPEF supply chain disruptions, as opposed to maintaining measures after the disruption had ceased.Footnote 72

The third condition concerns Members’ duty to adopt their measures ‘consistent with the principle that all contracting parties are entitled to an equitable share of the international supply of such products’. In practice, this condition serves to tailor how far-reaching the measures adopted are, especially in excluding non-IPEF Parties from accessing goods in ‘general … short supply’. While a 1950 GATT Working Party on Quantitative Restrictions distinguished between non-discrimination and ‘equitable share’, it stated that what an ‘equitable share’ means would depend on ‘the facts’ of a dispute without providing further guidance.Footnote 73 Nonetheless, additional insights can be drawn from the analysis of the GATT working party. In the Working Party report, the concept of ‘equitable share’ was merely contrasted with a scenario where a Member ‘diverts an excessive share of its own supply to individual countries’, based on the fact-specific nature of the inquiry and the example provided, it seems that the principle would likely be defined by the actual demand and supply needs of the WTO membership generally.Footnote 74 While Members are entitled to address their own domestic supply shortages, this must be principally limited by the distributional needs of the broader membership.Footnote 75 In the specific context of ex post interventions under the SCA, this matters where supply chain resilience measures may, for instance, substantially divert supplies of critical minerals only to IPEF Parties to limit the economic dependence of their manufacturing industries.

The fourth condition requires the measure to be ‘essential’ in responding to a shortage. This requires panels to evaluate the importance of the policy objective, the contribution of the measure in achieving the objective, and whether the measure is the least trade-restrictive alternative available to achieve the level of protection identified by the Member.Footnote 76 The Appellate Body in India– Solar Cells clarified that the adjective ‘essential’ should be narrowly construed as requiring measures to be ‘indispensable’ for ensuring product availability and distribution.Footnote 77 In particular, this could pose challenges for voluntary export restraints or redirections aimed at achieving broader geo-economics policy objectives through trade-restrictive means, such as the ‘diversification of source markets’ for inputs through voluntary import redirections, where shortages could be resolved by lowering market access barriers to all foreign product suppliers or subsidizing domestic production.Footnote 78

Measures must finally satisfy the Article XX chapeau conditions. The first chapeau condition requires that measures are ‘not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail’. In the context of measures justified under Article XX(j), for instance, the relevant country comparators for determining if the same prevailing conditions exist would be whether both IPEF Parties and non-IPEF Members have demand for the product, or where IPEF Parties are dependent on product supplies from both IPEF and non-IPEF Members.Footnote 79 Where the measure discriminates between ‘countries where the same conditions prevail’, a measure must offer a clear justification for the discrimination (i.e., the measure does not create ‘arbitrary’ discrimination), and this justification must be legitimate for the purposes of the Article XX chapeau (i.e., the measure does not create ‘unjustifiable’ discrimination).Footnote 80

The Article XX chapeau further requires that the adopted measure does not form ‘a disguised restriction on international trade’. As set out by the panel in EC–Asbestos, the condition may refer to a trade-restrictive measure that simply has not been ‘published’, but also – and in this instance, pertinently – that ‘a restriction which formally meets the requirements of’ an Article XX sub-paragraph ‘will constitute an abuse if such compliance is in fact only a disguise to conceal the pursuit of trade-restrictive objectives’.Footnote 81 This latter aspect may pose a hurdle should the adopted measures primarily serve to reduce IPEF Parties’ economic dependence on major supplying Members, such as China, instead of resolving domestic product shortages across IPEF supply chains.

As such, while Article XX(j) GATT provides grounds for ex post economic interventions under the SCA, these interventions are limited to directly addressing Member-specific supply shortages and cannot discriminate between similarly positioned Members without a clear justification. Crucially, IPEF Parties adopting measures to alleviate purely extraterritorial shortages occurring in other Parties cannot rely on Article XX(j). This creates strictures for implementing the SCA to the harm or exclusion of non-IPEF supply chains.

3.4 Article XXI(b)(iii) GATT: supply chain resilience as essential security interests?

Alternatively, attempts to justify ex post economic interventions may rely on the ‘essential security interests’ exception under Article XXI(b)(iii) GATT.Footnote 82 This argument presents difficulties, however, insofar as the scope of Article XXI(b)(iii) has been restrictively interpreted by panels.

To establish whether Article XXI(b)(iii) is applicable, Members are first required to demonstrate that the measure was ‘taken in time of war or other emergency in international relations’.Footnote 83 Panels have restrictively interpreted the meaning of other emergency in international relations (OEIRs) to cover situations close to armed conflict,Footnote 84 and applied a strict standard of review, which respondents must satisfy.Footnote 85 This restrictive interpretation excludes from its coverage the ‘new security threats’,Footnote 86 such as supply chain disruptions or the economic rivalry between the US and China, from meeting the ‘level of gravity’ required to qualify as OEIRs, which IPEF generally and the SCA specifically directly respond to,.Footnote 87 This being said, where a disruption occurs as a result of, or during, a ‘war’ or OEIR – such as an economic blockade or collapse in diplomatic relations – then the exception may be invoked.

Additionally, IPEF Parties are be required to demonstrate that their measures are ‘necessary’ to protect their ‘essential security interests’. This creates further hurdles since what constitutes ‘essential security interests’ is subject to a good faith standard of review.Footnote 88 The main difficulties for justifying ex post interventions, in this sense, relate to Members showing that an actual ‘security’ interest is at stake, as opposed to a purely economic interest. As the Russia–Traffic in Transit panel established, the condition prevents a Member from ‘re-labelling trade interests that it had agreed to protect and promote within the system, as “essential security interests”’.Footnote 89 As issues of ‘economic security’ straddle the line between protectionism and preventing broader national security threats (e.g., military threats, public health emergencies, and cyber attacks),Footnote 90 articulating economic resilience as an ‘essential security objective’ and showing that the measure plausibly contributes to the objective may prove a challenge for IPEF Parties, particularly where such measures restrict market access or discriminate against non-IPEF Parties more generally.

In brief, the difficulty of justifying ex post economic interventions based on Article XXI(b)(iii) chiefly stem from (i) identifying whether a measure was adopted during a war or OEIR and (ii) articulating the ‘essential security interests’ that are at stake. Notably, supply chain disruptions or bottlenecks envisaged under the SCA are unlikely to constitute an OEIR per se, and it is difficult to disentangle coherently economic resilience concerns from trade partners’ broader economic interests. For these reasons, it is unlikely that Article XXI(b)(iii) GATT may justify ex post interventions to supply chain disruptions envisaged in the SCA.

4. Legal risks under the agreement on safeguards

Beyond the risks of legal challenges under the GATT, complaints may be brought that ex post interventions adopted pursuant to the SCA are in breach of Article 11(1)(b) under the Agreement on Safeguards. The provision, in its operative part, reads:Footnote 91

Furthermore, a Member shall not seek, take or maintain any voluntary export restraints, orderly marketing arrangements or any other similar measures on the export or the import side.

Article 11(1)(b), as suggested by the adverb ‘furthermore’, operates as a restriction on Members adopting policy alternatives to safeguard measures.Footnote 92 The provision thus creates an open list of measures which may be adopted, covering ‘any voluntary export restraints’ and ‘orderly marketing arrangements’, with additional ‘examples’ provided under footnote 4.Footnote 93 Moreover, for measures to qualify as ‘other similar measures’ for the purposes of Article 11(1)(b), they are required to ‘afford protection’.Footnote 94 This choice of language suggests that measures may fall under the prohibition where they affect conditions of competition, similar to the requirements under Article XI:1 GATT as discussed in Section 3.2 above.Footnote 95 The provision accordingly serves to confirm the broad interpretation of what constitutes ‘other measures’ under Article XI:1 GATT and does not set a lower burden of proof for establishing a breach. For this reason, voluntary export restraints and redirections adopted pursuant to Article 12(3) SCA and which breach Article XI:1 are likewise inconsistent with Article 11(1)(b) AS.

IPEF Parties may attempt to invoke the Article 11(1)(c) carve-out to the prohibition under Article 11(1)(b). The carve-out, in its relevant part, includes measures ‘sought, taken or maintained by a Member pursuant to provisions of GATT 1994 other than Article XIX …’, inter alia.Footnote 96 The circumstances in which the carve-out applies largely rest on how the phrase ‘pursuant to’ is interpreted. In the appealed US–Steel and Aluminium Products (Turkey) report, which first addressed this issue, the panel interpreted the phrase as not requiring ‘consistency’ with a GATT provision, such as Article XX or XXI.Footnote 97 Instead, the panel effectively developed a ‘centre of gravity’ test, which takes into account the ‘central aspects’ of the measure, – including its design, the domestic legislative history, and characterization within WTO bodies.Footnote 98

The approach developed by the US–Steel and Aluminium Products (Turkey) panel, however, is problematic for two reasons. First, while the term ‘pursuant’ was not interpreted to require ‘consistency’, the panel did not identify whether the measure must objectively relate to a specific public policy objective identified under a general or security exception.Footnote 99 Second, even assuming that the measure was intended to pursue such an objective, the application of the test did not establish whether the US measure was minimally effective in contributing to this policy objective. As such, it is unclear how close the notional or material ‘relationship’ between the measure and a GATT provision must be for Article 11(1)(c) AS to be applicable.Footnote 100

For these reasons, it is likely that ex post interventions, which could demonstrate their pursuit of the public policy grounds under either Articles XX(j) or XXI(b)(iii) GATT, would fall under the Article 11(1)(c) AS carve-out, even where they fell short of demonstrating compliance with further conditions.

5. Navigating between economic resilience, WTO-compatibility, and geoeconomic priorities

As economic resilience and supply chain management increasingly become policy priorities within international trade law-making, the likelihood of legal challenges being brought against resilience-focused measures also arises. While WTO dispute settlement may not necessarily induce compliance in Members adopting these measures, it nonetheless raises ‘legitimacy penalties’ and could serve to mobilize pressure against the Member imposing the measure.Footnote 101 Hence, the legitimacy of cooperative agreements such as the IPEF SCA, particularly in shaping the norms around global supply chain governance, may depend on how they are implemented. In this sense, WTO law may deter a broader policy shift towards unfettered ‘managed trade’ policies and the adoption of measures needed to pursue such objectives.

While WTO law presents notable challenges around how such measures are constructed, notably through Articles I:1 and XI:1 GATT, it also serves to meaningfully shape when and how Members may pursue economic resilience policies targeting supply chains. The WTO as a normative and institutional framework performs a constitutive role, which – going beyond the functions of its dispute settlement system – exerts its grip by shaping the context within which its Members choose to adopt measures. When a Member chooses to adopt a trade measure in response to domestic demands, its design choice is shaped by the obligations and policy exceptions that WTO law sets out,Footnote 102 and by the ‘peer pressure’ faced from the broader membership.Footnote 103 The broader role of WTO law corresponds to these two factors.

First, and most immediately, WTO law conditions the types of responses to supply chain disruptions that its Members may adopt. If Members breach their obligations under the GATT, policy exceptions such as Article XX(j) GATT provide conditions on the types of disruptions Members may respond to, the duration and economic impact of their responses, as well as the need to legitimize any discriminatory treatment arising from the adopted measures. The incentive, in other words, is for supply chain disruptions to be addressed in a manner that responds to such constraints. This may already be reflected in Article 12(3) IPEF SCA, which notably does not require a specific approach to be followed; rather, it identifies what measures IPEF Parties may adopt in implementing their commitments. By operating within these limits and internalizing relevant exception conditions, IPEF Parties are able to legitimize their collective efforts and limit the economic repercussions on non-IPEF supply chains.Footnote 104 This may involve either operating within the existing framework and rethinking what ‘resilience’ means if alignjng with existing WTO jurisprudence, or advocating for a shift to a broader reading of relevant exceptions to address resilience issues.

The difficulties of changing settled interpretations, however, are evident in efforts to securitize trade interests under the scope of Article XXI GATT. As panels have consistently framed Article XXI(b)(iii) in narrow terms and limited its applicability to circumstances resembling war or diplomatic breakdowns, ex post economic interventions are unlikely to fall within its scope absent treaty amendment. In this sense, it is difficult to justify attempts at achieving economic resilience with a broader shift to relying on a managed trade approach under the SCA as a default.

The second role that the WTO may serve is based on its negotiating function. While it is unlikely that supply chain resilience will be addressed explicitly within the WTO through the adoption of a covered agreement, given the practical difficulties of achieving multilateral consensus,Footnote 105 its committee may serve as a forum for diplomatic and regulatory scrutiny.Footnote 106 As formations such as the IPEF SCA demonstrate a move toward collaborative responses to supply chain disruptions, WTO committees may serve as forums to address the negative externalities that stem from such efforts. Notably, general concerns may be voiced during meetings of the Council for Trade in Goods. Likewise, specific measures adopted to address supply chain disruptions could face pressure, for instance, during meetings of the Committee on Market Access or the Committee on Trade Facilitation.

The ability of WTO committees to proactively shape how supply chain resilience is addressed within extra-WTO formations, however, is at present limited. Notably, committee mandates are typically restricted to addressing specific types of measures (e.g., market access barriers, trade facilitation, or technical barriers to trade) or linkage issues (e.g., trade and environment, or trade and development). Supply chain resilience, however, is a cross-cutting issue that cannot easily be siloed within the remit of a single committee.Footnote 107 This risks resilience concerns playing an uneven role within different committee dialogues and leaving Members to operate entirely outside the WTO. The potential of WTO committees rests on their ability to institutionally reconfigure and develop a structured dialogue that can effectively consider global supply chain resilience as a self-standing topic. This may be by setting up a separate committee or technical group to proactively address supply chain resilience issues and develop guidelines,Footnote 108 or through effective efforts by the Council for Trade in Goods to coordinate the information sharing and scrutiny functions of existing committees on these issues.

6. Conclusion

The IPEF SCA is a landmark treaty that represents a novel cooperative effort to address expansively regional supply chain resilience. Its core innovations are its introduction of a typology of firm-centered economic interventions that IPEF Parties may adopt unilaterally or cooperatively to address supply chain disruptions, and its institutional framework that serves to strengthen cooperation between Parties and stakeholders.

However, as SCA commitments primarily consist of soft law norms and obligations of conduct, their consistency with WTO law is an implementation problem. In examining this problem, two contributions have been made. First, it is established that targeted trade facilitation and international transportation measures may discriminate between ‘like’ products from different Members and breach Article I:1 GATT where they affect conditions of competition effectively based on product origin-related conditions. Likewise, voluntary export restraints and redirections may potentially breach Article XI:1 GATT and Article 11(1)(b) AS, depending on their design and limiting effects on export or sale for export. While such breaches may be justified, Articles XX(j) and XXI(b)(iii) GATT create limited opportunities for doing so.

The second contribution focuses on the broader role of the WTO in shaping the recent turn to cooperative supply chain resilience. In addition to delegitimizing WTO-incompatible approaches, relevant WTO law obligations and exceptions condition how Members design their instruments to achieve economic resilience objectives, thus allowing for the concerns of the broader membership to be internalized. Likewise, regulatory and diplomatic dialogue within WTO committees provides important opportunities to scrutinize and share information on supply chain governance policies. This creates opportunities for mutual learning and even cooperation, particularly in a political environment where Members increasingly intervene in and reshape the operation of international supply chains to their advantage.

Acknowledgements

The author is thankful for comments from Jochelle Greaves Siew, Gregory Messenger, and Xuan Shao on earlier versions. All potential errors are those of the author.

References

1 Supply chains herein refer to the processes of commodity transfer – including raw materials, as well as intermediate and finished products – necessary for the production and dispersal of finished products to consumers.

2 Articles 9 and 34 Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024 establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) No. 168/2013, (EU) 2018/858, (EU) 2018/1724, and (EU) 2019/1020 [2024] OJ L/1252/1.

3 Sections 13402 and 13403 Inflation Reduction Act of 2022, Pub L No. 117–169, 136 Stat 1818 (2022).

4 Demetri Sevastopulo and Edward White (2024) ‘US Sharply Raises Tariffs on Chinese EVs and Semiconductor Imports’, Financial Times, 14 May 2024, www.ft.com/content/972cabfb-f587-4cb3-ab21-ec3380b049da (accessed 28 December 2024).

5 Indo-Pacific Framework for Prosperity Agreement Relating to Supply Chain Resilience (SCA) (adopted 14 November 2023, entered into force 24 February 2024) accessed 28 December 2024. The SCA forms a treaty as it satisfies the requirements under Article 2(1)(a) Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980) 1155 UNTS 331 and creates legally binding obligations (see discussion in Section 2.2).

6 SCA preamble.

7 Article 1.

8 Note, however, that coordination and cooperation on disruptions affecting ‘critical sectors or key goods’ is subject to deeper coordination commitments per Article 10.

9 SCA preamble.

10 This reflects the richness of ‘resilience’ as a concept that can apply to many actors and situations: Anthea Roberts (2023) ‘Risk, Reward, and Resilience Framework: Integrative Policy Making in a Complex World’, Journal of International Economic Law 26(2), 233, 244–247.

11 SCA preamble. Notably for the US, this approach seems to be a cooperative complement to, rather than a departure from, earlier unilateral tariff increases on Chinese imports. See, exploring the limited diversification of supply chains from tariff increases, Caroline Freund et al. (2023) ‘Is US Trade Policy Reshaping Global Supply Chains?’, OECD Policy Research Working Paper 10593, 12–16, documents1.worldbank.org/curated/en/099812010312311610/pdf/IDU0938e50fe0608704ef70b7d005cda58b5af0d.pdf (accessed 28 December 2024).

12 SCA preamble.

13 SCA preamble.

14 SCA preamble.

15 SCA preamble: ‘Acknowledging that … supply chain development can be a source of quality job creation, poverty reduction, and economic opportunity for their enterprises, especially MSMEs, workers; and communities, including women, Indigenous Peoples, persons with disabilities, rural and remote populations, minorities, and local communities.’

16 Soft law obligations under the SCA typically rely on modal language (for instance, see the use of ‘may’ in Article 12(1)) or through references to Party intentions (for instance, the use of ‘intend to’ in Article 11). By contrast, obligations of conduct concern the way that a Party must respond to a scenario, rather than the duty to achieve a specific result (for instance, Article 12(3)).

17 In light of the broader US approach to trade governance, see Kathleen Claussen (2024) ‘Trade Law Policing on the Factory Floor: Next Generation Agreements and Their Corporate Accountability Tools’, Cambridge International Law Journal 13(1), 6.

18 Article 2 SCA.

19 While Article 2 refers to additional efforts, such as ‘promoting resource efficiency’ and encourages ‘production of key logistics inputs’, it is unclear what specific economic interventions are envisaged that extend beyond government recommendations.

20 Article 2(3)(a) and (b).

21 Article 2(4).

22 Article 2(5).

23 Article 2(6), (7), and (11).

24 Article 2(14).

25 Article 12(3)(a).

26 Article 12(3) (e), (f), (g), and (h).

27 Article 12(3)(b), (c), (i), (j), and (k).

28 For illustration of the division of labour across firms and economic specialization of economies in the semiconductor supply chain, see Akhil Thadani and Gregory C. Allen, ‘Mapping the Semiconductor Supply Chain: The Critical Role of the Indo-Pacific Region’, Center for Strategic and International Studies, 30 May 2023, www.csis.org/analysis/mapping-semiconductor-supply-chain-critical-role-indo-pacific-region (accessed 28 December 2024).

29 Article 6(1) SCA.

30 Article 6(4).

31 Article 6(7)(b).

32 See, on the significance of ‘choreographers’ in establishing cooperation within game theory, Herbert Gintis (2014) The Bounds of Reason: Game Theory and the Unification of the Behavioral Sciences. Princeton University Press, 143–149.

33 Article 6(7)(a), (7)(b), 7(d), (10), and (13) SCA.

34 Article 6(5).

35 See, with reference to IPEF generally, Andrew Lang (2024) ‘Global Disordering’: Practices of Reflexivity in Global Economic Governance’, European Journal of International Law 35(1), 93, 133–137.

36 Such feedback loops additionally serve to adjust domestic structures, by ‘adapting’ or ‘transforming’ public and private systems to function in response to supply chain disruptions: Roberts, supra n. 10, 246–247.

37 Article 7(2) SCA.

38 Article 8(2) and (7) SCA.

39 Article 8(4) and (5).

40 Transnational legal ordering refers to ‘the transnational production of legal norms and institutional forms in particular fields and their migration across borders, regardless of whether they address transnational activities or purely national ones’: Gregory Shaffer (2012) ‘Transnational Legal Ordering and State Change’, in G.C. Shaffer (ed.), Transnational Legal Ordering and State Change. Cambridge University Press, 6.

41 Article 8(7) SCA.

42 Article 8(8).

43 Article I:1 General Agreement on Tariffs and Trade 1994 (GATT).

44 Panel Report, United States – Certain Measures Affecting Imports of Poultry from China, WT/DS392/R, adopted 26 October 2010, para. 7.410; Panel Report, Argentina – Measures Relating to Trade in Goods and Services, WT/DS453/R, adopted 9 May 2016, paras. 7.980–7.999 (excluding ‘a government measure that might hypothetically affect exports or imports’).

45 Trade Facilitation Agreement.

46 Lorand Bartels (2012) ‘The WTO Legality of the Application of the EU’s Emission Trading System to Aviation’, European Journal of International Law 23(2), 429, 444 similarly reads Article I:1 GATT in light of Article XI:1 as context and suggests otherwise that Members may discriminate between like products imported from different Members based on transportation means. Article V:2, first sentence, further demonstrates GATT applicability to international transportation issues by requiring ‘freedom of transit … via the routes most convenient for international transit’.

47 Article I:1 GATT.

48 Appellate Body Report, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/AB/R, WT/DS401/AB/R, adopted 18 June 2014, para. 5.90 (Appellate Body, EC–Seal Products).

49 ‘immediately’ in Catherine Soanes and Sara Hawker (2005) Compact Oxford English Dictionary of Current English, 3rd edn. Oxford University Press.

50 Panel Report, Canada – Certain Measures Affecting the Automotive Industry, WT/DS139/R, WT/DS142/R, adopted 19 June 2000, paras. 10.24–10.26; Appellate Body, EC–Seal Products, para. 5.88. See similarly, concerning Article III:4 GATT, Appellate Body Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19 May 2005, paras. 95–96.

51 Developing a similar argument on geography-based discrimination, see Bartels, supra n. 64, 445–446.

52 This interpretation is supported by the context of Article I:1 GATT. Notably, Article XXIV:3(a) GATT introduces an exception for ‘[a]dvantages accorded by any contracting party to adjacent countries in order to facilitate frontier traffic’. This would apply in the reverse scenario, i.e., if India adopted trade facilitation measures benefitting imports destined from ‘adjacent countries’ arriving by land to clear ‘frontier traffic’, but not at ports where imports from non-adjacent Members arrive by sea. However, India would not be able to differentiate the advantages accorded to imports arriving on land-crossings from different ‘adjacent countries’ based on Art XXIV:3(a), as suggested by the use of the plural ‘countries’.

53 Article XI:1 GATT.

54 Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry, WT/DS366/R, adopted 20 May 2009, para. 7.227 (Panel, Colombia–Ports of Entry). See discussion in Christian Delev (2023) ‘Regulating TRQ Schemes under WTO Law: Time to Throw Away Old Bananas?’, Journal of World Trade 57(3), 411, 414–415.

55 Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/R, adopted 17 December 2007, paras. 7.370–7.373 (Panel, Brazil–Retreaded Tyres); Panel, Colombia–Ports of Entry, paras. 7.271–7.275.

56 Panel, Colombia–Ports of Entry, paras. 7.249–7.256.

57 Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather, WT/DS155/R, adopted 16 February 2001, para. 11.20.

58 Petros C Mavroidis (2015) The Regulation of International Trade: GATT. MIT Press, 98.

59 The question of whether voluntary measures constitute ‘prohibitions or restrictions’ under Article XI:1 GATT has been regarded by some in the literature as an issue of attributing private conduct: see, illustratively, Bernard Hoekman and Petros C Mavroidis (2003) ‘Economic Development, Competition Policy and the World Trade Organization’, Journal of World Trade 37(1). 1, 13–14 and Rex J Zedalis (2007) ‘When Do the Activities of Private Parties Trigger WTO Rules?’, Journal of International Economic Law 10(2), 335, 342–344. However, this view is based on a misreading of GATT Panel Report, Japan – Trade in Semi-Conductors, 35S/116, adopted 4 May 1988, paras. 107–109 (GATT Panel, Japan–Semiconductors). While the GATT panel did address the broad language of Article XI:1 GATT, the test set for evaluating voluntary measures focuses on establishing their competitive effect, as opposed to treating the firm response itself as conduct attributable to Members.

60 GATT Panel, Japan–Semi-Conductors, para. 109.

61 GATT Panel, Japan–Semi-Conductors, paras. 110–111.

62 GATT Panel, Japan–Semi-Conductors, paras. 113–114.

63 On the distinction between carve-outs excluding conduct from an obligation and exceptions justifying breaches, Jorge E Viñuales (2020) ‘Seven Ways of Escaping a Rule: Of Exceptions and Their Avatars in International Law’, in L. Bartels and F. Paddeu (eds), Exceptions in International Law. Oxford Universtiy Press, 67–74.

64 Appellate Body Report, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R, WT/DS395/AB/R, WT/DS398/AB/R, adopted 22 February 2012, para. 7.276.

65 See Panel Report, Indonesia – Measures Relating to Raw Materials, WT/DS592/R, not yet adopted, paras. 7.99–7.102 rejecting Indonesia’s argument that nickel ores were ‘essential’ based on projected demand by the future Indonesian ‘EV battery production’ sector and existing demand from its ‘minor’ stainless steel production sector.

66 Appellate Body Report, India – Certain Measures Relating to Solar Cells and Solar Modules, WT/DS456/AB/R, adopted 14 October 2016, para. 5.89 (Appellate Body, India–Solar Cells) indicated panels must determine ‘the extent to which a particular product is “available” for purchase in a particular geographic area or market, and whether this is sufficient to meet demand in the relevant area or market’ based on domestic production levels, the nature of the ‘product and geographic market’, ‘potential price fluctuations’, domestic and foreign ‘purchasing power’, and ‘the role that domestic and foreign producers play in a particular market’. Curiously, Article 10(2) SCA additionally allows for the ‘extent of interconnectedness with other critical sectors or key goods’ to be considered when identifying ‘critical sectors or key goods’.

67 Article 12(3) SCA. See, relevantly, Appellate Body, India–Solar Cells, paras. 5.75–5.83; Panel Report, European Union and its Member States – Certain Measures Relating to the Energy Sector, WT/R/DS476, not yet adopted, paras. 7.1343–7.1353. For a realist critique, Anna-Alexandra Marhold (2023) ‘Towards a “Security-Centred” Energy Transition: Balancing the European Union’s Ambitions and Geopolitical Realities’, Journal of International Economic Law 26(4), 756, 762.

68 As such, the text of Article XX(j) may be interpreted restrictively in light of the inclusio unius principle.

69 Lorand Bartels (2002) ‘Article XX of GATT and the Problem of Extraterritorial Jurisdiction’, Journal of World Trade 36(2), 353, 374; Christian Delev (2022) ‘A Moral Stretch? US–Tariff Measures and the Public Morals Exception in WTO Law’, World Trade Review 21(2), 249, 258–259.

70 See preamble, SCA which refers to shared benefits from supply chain resilience but fails to establish clear legal interests in supply chain activities more broadly. This may also be confirmed by the heavy reliance on soft law language and obligations of conduct under the SCA, as discussed in Section 2 supra.

71 See, relevantly, Appellate Body, India–Solar Cells, para. 5.71 recognizing the significance of ‘the extent to which international supply of a product is stable and accessible, including by examining factors such as the distance between a particular geographical area or market and production sites, as well as the reliability of local or transnational supply chains’ in determining whether there is ‘short supply’.

72 Caroline Glöckle (2021) ‘Exempting and Justifying Covid-19 Related Export Restrictions under WTO Law’, Legal Issues of Economic Integration 48(2), 201, 212.

73 GATT, Report of Working Party ‘D’ on Quantitative Restrictions (28 March 1950) GATT/GP.4/33, paras. 8 and 9(d) (GATT, Working Party on Quantitative Restrictions). See, for discussion of the Working Party report, Mona Paulsen (2025) ‘The Past, Present, and Potential of Economic Security’, Yale Journal of International Law, forthcoming.

74 GATT, Working Party on Quantitative Restrictions, paras. 9(b) and (d). This reading may reflect the broader ‘needs-driven’ development and applicability of general principles within international law: Xuan Shao (2021) ‘What We Talk About When We Talk About General Principles of Law’, Chinese Journal of International Law 20(2), 219, 230.

75 These scenarios were directly considered in GATT, Working Party on Quantitative Restrictions, paras. 9(b) and (c). In this sense, the ‘equitable share’ principle performs a dual role of (i) treating general supply shortages as a ‘common pool’ problem where goods are non-rivalrous but scarce, and (ii) while leaving Members free to unilaterally respond to the crisis, their responses are restricted by the need for the membership to receive an ‘equitable share’. On facilitating cooperation over common pool resources, Elinor Ostrom (2015) Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press.

76 Appellate Body, India–Solar Cells, paras. 5.62–5.63 indicating the same factors used to determine necessity apply to the ‘essential’ test. See, identifying these factors, Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, adopted 17 December 2007, para. 178.

77 Appellate Body, India–Solar Cells, para 5.62.

78 Article 2(8) SCA.

79 Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998, para. 165.

80 Appellate Body, EC–Seal Products, paras. 5.303–5.306. See, for relevant discussion, Lorand Bartels (2015) ‘The Chapeau of the General Exceptions in the WTO GATT and GATS Agreements: A Reconstruction’, American Journal of Economic Law, 109(1), 95; G.C. Leonelli (2023) ‘Anti-deforestation npr-PPMs and Carbon Border Measures: Thinking About the Chapeau of Article XX GATT in Times of Climate Crisis’, Journal of International Economic Law, 26(3), 416.

81 Panel Report, European Communities – Measures Affecting Asbestos and Products Containing Asbestos, WT/DS135/R, adopted 5 April 2001, paras. 8.234–8.236.

82 See, for discussions of Article XXI(b)(iii) GATT vis-à-vis economic resilience, Marhold, supra n. 67; Ruben Heusel and Patricia Wiater (2003) ‘Are we still friends? The US and EU approach to ‘friend-shoring’ of supply chains’, European Journal of International Law: Talk!, 31 October 2023, www.ejiltalk.org/are-we-still-friends-the-u-s-and-eu-approach-to-friend-shoring-of-supply-chains/, accessed 28 December 2024.

83 Article XXI(b)(iii) GATT.

84 Panel Report, Russia – Measures Concerning Traffic in Transit, WT/DS512/R, adopted 26 April 2019, para. 7.76 (Panel, Russia–Traffic in Transit).

85 Panel Report, United States – Origin Marking Requirement, WT/DS597/R, not yet adopted, paras. 7.289–7.290 (Panel, US–Origin Marking (Hong Kong, China)), holding ‘tensions and differences in international relations cannot be characterized as resulting in an emergency in international relations unless the situation they give rise to is of a truly grave character for the relevant international relations [should the situation represent] a breakdown or near-breakdown in those relations.’ While Panel Report, US – Certain Measures on Steel and Aluminium Products, WT/DS544/R, paras. 7.129–7.148, not yet adopted, did not adopt a specific definition, its application aligns with that of earlier panels.

86 J. Benton Heath (2020) ‘The New National Security Challenge to the Economic Order’, Yale Law Journal 129, 1020, 1034–1039.

87 See the factual assessment in Panel, US–Origin Marking (Hong Kong, China), paras. 7.353–7.361.

88 Panel, Russia–Traffic in Transit, para. 7.132.

89 Panel, Russia–Traffic in Transit, para. 7.133. Note, by contrast, the broadening of ‘essential security interests’ in investment tribunal awards: Angel Samuel Seda and others v Republic of Colombia, ICSID Case No. ARB/19/6 Award (27 June 2024), paras. 641–650, 764 (covering ‘sovereign interests outside the realm of territorial integrity or military security, like environmental safety and economic stability’).

90 Oliver Dowden, ‘Speech on Economic Security’ (delivered at Chatham House, 18 April 2024), www.gov.uk/government/speeches/deputy-prime-ministers-speech-on-economic-security (accessed 28 December 2024) (‘our economic and security interests are intertwined as never before’). See also Anthea Roberts, Henrique Choer Moraes and Victor Ferguson, (2019) ‘Toward a Geoeconomic Order in International Trade and Investment’, Journal of International Economic Law 22(4), 655, 659–669.

91 Article 11(1)(b) Agreement on Safeguards (AS). See, notably, Alan O. Sykes (2006) Agreement on Safeguards: A Commentary. Oxford University Press, 249 (describing the prohibition as ‘the crowning achievement of the Agreement in the view of many observers’).

92 Article 11(1)(a) AS prohibits Members from ‘tak[ing] or seek[ing] any emergency action on imports of particular products’ that do not conform with Article XIX GATT and the AS.

93 See Article 11(1)(b) AS and footnote 4.

94 Article 11(1)(b) AS, at footnote 4.

95 Notably, ‘afford protection’ can be contrasted with the broader ‘so as to afford protection’ language found in Article III:1 GATT. However, see Appellate Body Report, Chile – Taxes on Alcoholic Beverages (adopted 12 January 2000), WT/DS87/AB/R, WT/DS110/AB/R, paras. 61–76, where, despite the formal focus on design, ‘the architecture, and the revealing structure of a measure’ (the ‘objective’ aims), the effects of the measure were emphasized as opposed to the ‘statement’ of objectives.

96 Article 11(1)(c) AS.

97 Panel Report, United States – Certain Measures on Steel and Aluminium Products, WT/DS564/R, not yet adopted, paras. 7.93–7.101 (Panel, US–Steel and Aluminium Products (Turkey)).

98 Panel, US–Steel and Aluminium Products (Turkey), paras. 7.102–7.115.

99 This determination was not made by Panel, US–Steel and Aluminium Products (Turkey) in its subsequent analysis of Article XXI(b)(iii) GATT after concluding an OEIR was not present (para. 7.164).

100 Panel (2012) US–Steel and Aluminium Products (Turkey), para. 7.96.

101 Douglas Guilfoyle (forthcoming) ‘Litigation as Statecraft: Small States and the Law of the Sea’, British Yearbook of International Law 1, 19; Benedict Kingsbury, ‘International Courts: Uneven Judicialisation in Global Order’, in James Crawford and Martti Koskenniemi (eds), The Cambridge Companion to International Law. Cambridge University Press, 217–218.

102 Timothy Meyer (2022) ‘The Political Economy of WTO Exceptions’, Washington University Law Review 99, 1299, 1332–1349.

103 Fabian Bohnenberger (2022) ‘What is the ‘regular work’? Constructing and Contesting Everyday Committee Practices in the World Trade Organization’, Review of International Political Economy 29(6), 2088, 2099–2104. See, however, challenging the assumed effectiveness of peer pressure on State reputation as a tool for inducing cooperation, Rachel Brewster (2009) ‘Unpacking the State’s Reputation’, Health Information and Libraries Journal 50(2), 231, 245–249.

104 See, on the question of how the WTO may facilitate dialogue on economic security concerns, Mona Pinchis-Paulsen (2022) ‘Let’s Agree to Disagree: A Strategy for Trade-Security’, Journal of International Economic Law 25(4), 527.

105 Articles IX:1, X:8, and X:9 Marrakesh Agreement Establishing the World Trade Organization.

106 These roles go beyond peer pressure and involve broader information sharing on measure design. See, illustrating the role of the WTO Market Access Committee: WTO, ‘Committee on Market Access hosts second thematic session on supply chain resilience’ (6 May 2024), www.wto.org/english/news_e/news24_e/mark_06may24_e.htm (accessed 28 December 2024).

107 The functional orientation of WTO councils and committees is arguably a key barrier to effective discourse that fragments efforts to coherently address supply chain resilience as a regulatory issue. In this sense, what Rosie Cooney and Andrew Lang (2007) ‘Taking Uncertainty Seriously: Adaptive Governance and International Trade’, European Journal of International Law 18(3), 524, 539–550 call ‘adaptive governance’ may not be sufficiently effective without broader institutional reconfiguration.

108 For a similar proposal on a standalone committee to address national security issues, see Simon Lester and Inu Manak (2020) ‘A Proposal for a Committee on National Security at the WTO’, Duke Journal of Comparative & International Law 30, 267.