National Security Exception in the General Agreement on Tariffs and Trade (GATT) and India–Pakistan Trade

Abstract

India and Pakistan, two nuclear-armed South Asian neighbours who have shared a turbulent relationship for last seventy years, recently came close to almost fighting a war with each other. The recent terror attack in Pulwama in Kashmir by a terror group based in Pakistan, led India to revoke Pakistan’s most favoured nation (MFN) status under the World Trade Organization (WTO) by imposing 200%tariff rates on all Pakistani imports. This decision was followed by a limited military confrontation between the two countries. Such unilateral increase in the customs tariff rates violate India’s MFN obligation towards Pakistan. This article discusses whether India can justify this measure under Article XXI of GATT – the national security exception. The paper, in light of the scholarly commentary and the recent WTO Panel’s decision in the Russia – Transit case, discusses the key concepts of Article XXI and applies them to the India–Pakistan situation. The paper finds that while a situation of international emergency did exist between the two countries, the Indian measure cannot be justified under Article XXI of GATT. India, Pakistan, National Security, Article XXI, GATT