Title: The Unsettled Governance of the Dual-Use Items under Article XXI(b)(ii) GATT: A New Battleground for WTO Security Exceptions
Domain: Law

Question: Against the backdrop of escalating technological competition and geopolitical conflicts, how to address ambiguities in the governance of dual-use items trade by clarifying the regulatory connotations of Article XXI(b)(ii) of the GATT. This clarification aims to prevent "security exceptions" from being distorted into tools of trade protectionism, thus safeguarding the legitimacy and stability of the multilateral trading system.

Background: 1.Deep integration of technology and military fields: The technologization of modern warfare and privatization of supply chains have endowed numerous civilian technologies (e.g., semiconductors, drones) with military application potential, expanding the scope of dual-use items from traditional weapons to high-end tech products. | 2.Technological competition as a core national security issue: The U.S. restricts exports of critical technologies through the "small yard, high fence" strategy to maintain technological hegemony, essentially practicing trade protectionism under the guise of "security". | 3.Escalation of geopolitical conflicts: The trend of economic decoupling among economies like China-U.S. and Europe-U.S. has intensified. The U.S. has imposed approximately 2,800 export controls on Chinese semiconductors—over 1,000 more than multilateral frameworks—prompting accusations of "disguised protectionism". | 4.Focus of WTO disputes: In the U.S.-China semiconductor dispute, the U.S. claims export restrictions aim to prevent technology from flowing to China’s military, while China accuses it of undermining multilateral trade rules. Such disputes highlight the direct conflict between "security exceptions" and trade rules. | 5.Lagging application of GATT rules: Drafted during the Cold War, GATT Article XXI(b)(ii) only covers "arms, ammunition, implements of war" and items "supplying military establishments directly/indirectly", failing to adapt to controls on emerging technologies like AI and quantum computing. The clause allows members to self-judge "essential security interests", making it difficult for WTO panels to review the legitimacy of control measures.

Definitions: 1.Security Exceptions: Provisions in WTO agreements that allow members to deviate from trade obligations under specific security crises, such as Article 21 of GATT, Article XIV bis of GATS, etc. | 2.Purpose Test: Aburden of proof mechanism required by Article 21(b)(ii) of GATT, obliging the invoking party to demonstrate that the controlled items are "supplied directly or indirectly to military establishments". | 3.Entity List: A trade restriction list issued by the U.S. Department of Commerce's Bureau of Industry and Security (BIS), aiming to restrict specific foreign entities from accessing U.S. technologies to safeguard U.S. national security and foreign policy interests. | 4. Small Yard, High Fence: A U.S. strategy referring to precise and strict controls over critical technologies and "hostile nations". | 5.Quantitative Restrictions: Measures restricting trade through quotas, export bans, etc., which are generally prohibited by WTO principles. | 6.Most-Favoured-Nation Treatment: A fundamental WTO principle requiring members to grant trade treatment to other members no less favorable than that accorded to any third party.

Methodology: 1. Normative Analysis Method: Conduct a strict interpretation of the provisions and terms of Article XXI(b)(ii) of GATT, pointing out that due to its "self-judgment" attribute and the right to information confidentiality, it is difficult to effectively curb the abuse of protectionism. Distinguish the purpose element of the clause "direct/indirect supply to military institutions", and propose a two-stage standard (list formulation and license approval stage) for the "purpose test". Criticize that the framework of the clause lags behind technological development and fails to cover emerging dual-use items such as AI and quantum computing. | 2. Case Analysis Method: Conduct a WTO dispute case analysis, focusing on the semiconductor dispute between China and the United States (WT/DS615), analyzing the legitimacy controversy of the United States' implementation of export control under the pretext of "military modernization". Analyze the Russian transit trade case (WT/DS512), the Saudi intellectual property case, etc., and discuss the issue of "relaxation of the burden of proof" in the invocation of the security exception. Refer to the 1949 Czechoslovakia v. United States export control case for historical reference, explaining the lenient recognition standard of "purpose test" in the early GATT. | 3. Comparative Analysis Method: Compare the Wassenaar Arrangement with GATT rules, pointing out that the former's consensus decision-making failure prompted countries to turn to unilateral control. Trace the negotiation history of Article XXI, explaining the historical limitations of the clause design. | 4. Empirical Analysis Method: Quote the WTO report to indicate that 15% of quantitative restrictions in 2023 invoked Article XXI, reflecting the actual application trend of the security exception.

Answer: 1.Setting the Scene: The Blurring Line between Military and Civilian Applications in the Times of Global Insecurity | The concept of dual-use products reflects the reality that certain commodities have both civilian and military value. However, the specific meaning of this concept is dynamically changing, contingent upon the epistemological context and instrumental interpretation. In recent years, significant changes have occurred in both dimensions, leading to a notable expansion of the scope of dual-use products. First, the technologization of modern warfare and the commercialization of military applications have greatly widened the range of dual-use products. Concurrently, the evolution of the concept of security has resulted in items previously outside the scope of conventional security concerns being incorporated into it. | | 1.1 Recent disputes regarding restrictions on dual-use items by the World Trade Organization | In 2022, China initiated a trade dispute against the US semiconductor export control measures, pointing out that the US imposed export controls on civilian items or commercial entities' activities, aiming to undermine the technological development of other WTO member countries and maintain its technological superiority. The US continued to implement its "Small Yard, High Fence" strategy under the slogan of "economic security equals national security", formulating regulatory policies based on the premise of economic growth, resources, and technological innovation necessary for maintaining advanced military forces. Other countries also followed suit. In the "European Economic Security Package" released in early 2024, the European Commission further called for enhanced coordination of control lists among countries to ensure that the EU has a common voice in European security and international trade control of dual-use items. The further expansion of export control measures by various countries and regions may trigger new trade disputes and retaliatory actions, further highlighting the urgency of clearly defining trade rules applicable to dual-use items. | | 1.2 Increase in the variety of dual-purpose products | In everyday language, the term "dual-use" refers to products, activities, or technologies that have at least two different uses. Traditionally, the definition of dual-use products is based on the binary opposition of civilian and military. In the current geopolitical confrontation context, there are three trends that have expanded the scope of dual-use products, thereby posing new challenges to the regulation of these products: | Firstly, the technologicalization of modern warfare and the privatization of military supply chains. The enhancement of the technological level of modern warfare and the privatization of military supply chains have accelerated the expansion of dual-use items that can be used for both military and civilian purposes, while further enhancing the role of private contractors in defense-related procurements. | Secondly, the control of dual-use items based on moral or value considerations. Based on the more ethical and value-oriented "good" and "bad" purposes, the identification of dual-use items is increasing. These purposes typically involve counter-terrorism, combating crime, cybersecurity, and human rights protection. In recent years, the subjectivity of identifying dual-use items has become increasingly prominent. Not only are products used for military purposes reviewed, but those that may be used for malicious purposes are also reviewed. | Finally, are the deficiencies of multilateral export control systems. So far, the export control of dual-use items has been managed under the "Vassenar Agreement". This agreement was created in the 1990s to limit the transfer of weapons and dual-use technologies to communist countries during the Cold War. With the change in the traditional security basis of the "Vassenar Agreement", this list is considered outdated as it no longer meets new security concerns and gradually becomes obsolete. At the same time, there is a lack of a multilateral platform for discussing emerging security issues, leading to the absence of multilateral solutions. | | 2.Dual-Use Items within the Meaning of Article XXI(b)(ii) GATT | WTO rules do not distinguish between dual-use items and single-use items. Any measure restricting international trade in dual-use items must comply with WTO rules. If the regulation of dual-use items takes the form of export controls, it may violate basic obligations such as the prohibition on quantitative restrictions and non-discrimination principles, and may undermine related commitments. At this point, the WTO Member may be exempt from liability by invoking exceptions in the agreements, and Article XXI(b)(ii) GATT is precisely the key basis for regulating trade in dual-use items. | | Through doctrinal analysis, the following conclusions can be drawn: First, unlike Article XXI(b)(iii), which applies only to "war or other emergency in international relations", paragraph (b)(ii) can be invoked in peacetime without relying on war or emergency as a prerequisite. Second, paragraph (b)(ii) only focuses on trade in military supplies and does not cover emerging issues such as human rights. Third, paragraph (b)(ii) is divided into two parts, both of which may apply to trade restrictions on dual-use items. The first part covers trade in "arms, ammunition and implements of war", including raw materials, technologies and services that contribute to their manufacture and maintenance. The second part covers trade in other items "carried directly or indirectly for the purpose of supplying a military establishment", which must satisfy the "purpose test". In practice, governments that wish to impose restrictions on dual-use items under paragraph (b)(ii) must show that they have conducted due diligence or obtained evidence from reliable sources, leading them to believe that the restricted products serve military purposes "directly" or "indirectly". This is crucial to prevent abuse of the provision. | | | 2.1 Interpretation of "Self-Judging" Elements in Security Exceptions | Article XXI of the General Agreement on Tariffs and Trade reads as follows: | Noting in this Agreement shall be construed | (a) to require any contracting party to furnish any information the disclosure of which it considers contrary to its essential security interests; or | (b) to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests | (i) relating to fissionable materials or the materials from which they are derived; | (ii) relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried directly or indirectly for the purpose of supplying a military establishment; | (iii) taken in time of war or other emergency in international relations. | | Article XXI provides two grounds for WTO Members to legitimize their trade restrictions. Paragraph (a) permits states to withhold information they consider detrimental to their essential security interests, while paragraph (b) allows trade-restrictive measures to be taken to protect essential security interests under certain circumstances. Regarding the chapeau of paragraph (b), there has long been a debate over whether its wording constitutes self-judgment. Proponents argue that sovereign states have unrestricted discretion in defining security interests and the actions needed to protect those interests; opponents, however, are concerned about the unrestricted invocation of the provision and call for the development of appropriate legal standards to review such invocations. | | In a series of recent cases, WTO panels have been required to consider the interpretation of the chapeau of paragraph (b) and its sub-paragraphs. Despite minor differences, the panels have almost consistently held that security exceptions include both subjective and objective elements. When invoking security exceptions, WTO Members are entitled to determine the specific content of their core security interests, including any interests or threats deemed essential to the existence of the state, such as international war, civil war, domestic riots, terrorism, and even human rights violations occurring in territories other than that of the invoking state. Regardless of what a WTO Member considers to be its essential security interests, it must articulate those interests sufficiently to demonstrate their veracity and convince the panel that the invocation is made in good faith. Meanwhile, the elements mentioned in sub-paragraphs (i), (ii) and (iii) can and should be objectively verified by the panel. From these cases, it can be concluded that the panels’ interpretation of "it considers" in the chapeau of paragraph (b) falls into two parts: first, it grants WTO Members significant discretion over their essential security interests and the means of protection; second, it lowers the standard of proof for the specific paragraphs mentioned in the sub-paragraphs. | | 2.2 Interpretation of Objective Elements in Sub-Paragraph (b)(ii) | Sub-paragraph (b)(ii) covers trade in "arms, ammunition and implements of war" and trade in goods "carried directly or indirectly for the purpose of supplying a military establishment". Unlike the security measures in emergency situations mentioned in sub-paragraph (b)(iii), this indicates that such trade can be restricted even in peacetime. | | Structurally, Article XXI(b)(ii) is divided into two separate parts by the conjunction "and", with mutually exclusive scopes of coverage. "Traffic" is equivalent to "trade". "Arms, ammunition and implements of war" shall be understood in their ordinary sense unless there is evidence to the contrary. Meanwhile, the juxtaposition of "implements of war" with the other two items indicates that this definition should exclude items that may be used by the military but are not specifically intended for combat. However, there remains controversy over whether raw materials, technological products and services that may be used in weapons manufacturing and maintenance can be included. The second part of sub-paragraph (b)(ii) originated from a proposal by the United States during the negotiations of the International Trade Organization (ITO), aiming to address the "legitimacy of trade restrictions related to military supplies". The United States was the primary drafter of this article, and "military establishment" is regarded in U.S. foreign policy as a broader military bureaucracy or defense system. However, ITO negotiators, except for U.S. representatives, had doubts about the precise meaning of this term. Since the intended purpose of such "traffic" is to support the "military establishment", the "purpose test" is the core of this analysis. From the negotiating history of the provision, it can be seen that GATT/WTO members were aware that the provision might be interpreted more broadly, but they were not prepared for it to cover "almost everything", and the scope of the provision remains an open question. | | The final compromise was reflected in two aspects: first, "military establishment" should not be interpreted as involving long-term defense or security plans; second, the form of "indirectly" supplying was added during the negotiations. In "directly or indirectly", "direct" refers to situations where items are delivered directly to military establishments; "indirect" refers to situations where items may initially be used in civilian scenarios but ultimately may serve military purposes. This formulation stems from considerations of "the integrity of military supply chains" during the negotiations. | | | 2.3 Legitimate Restrictions on Dual-Use Items | First, it should be clarified that sub-paragraph (b)(ii) can be invoked in peacetime. | Second, sub-paragraph (b)(ii) can only be used to justify trade restrictions on direct or indirect military supplies. Dual-use items are expected to be categorized under the second part of sub-paragraph (b)(ii). This provision does not permit restrictions on dual-use items identified based on ethical or value-based categories outside the civil-military dichotomy. Export controls imposed to restrict trade in goods and technologies that may be used to violate human rights are unlikely to meet the requirements of sub-paragraph (b)(ii) unless such violations are perpetrated by the military using the controlled items. | Third, sub-paragraph (b)(ii) provides a safety valve to curb disguised protectionism. The state invoking this provision must prove that the trade of restricted items is for the purpose of "directly or indirectly supplying a military establishment", rather than based on vague grounds such as long-term defense plans. At the same time, when imposing trade-restrictive measures, the invoking state must have a clear subjective awareness of the items’ purpose of military supply through due diligence or reliable information, and such awareness cannot be established retrospectively. In terms of export controls, the aforementioned purpose test should be carried out in two stages. The first stage is inclusion in the control list, where the invoking state must prove that the items listed have potential military applications to justify their inclusion in the control list. The second stage involves the granting of export licenses, where the invoking state must demonstrate its awareness that the export of specific batches of items may directly or indirectly supply military establishments. However, the highly confidential nature of military supply means that importing countries and traders usually do not disclose information about military-related transactions, increasing the difficulty of verifying the "purpose test". | Invoking states should be given a certain degree of flexibility in determining the ultimate use and destination of items. Nevertheless, this poses challenges for reviewing bodies in defining the boundaries of the invoking states’ discretion, and this challenge ultimately translates into the issue of the standard of proof in adjudication. In addition, even if the invoking state has accurate information, requiring it to disclose such information to the reviewing body may endanger national security interests. | | 3.The Standard of Proof Issue | The difficulty in effectively reviewing the conditions specified in sub-paragraph (b)(ii) lies in the fact that WTO Members have the right to refuse to provide specific confidential information. Therefore, adjudicators may consider that the invoking country has fulfilled its burden of proof if it can demonstrate that certain products were included in the control list because they have military uses, regardless of whether they are actually used or will be used in the future. This limits the effectiveness of the purpose test in preventing the abuse of this provision. | | In the 1949 Czechoslovakia v. US case, the US imposed export controls on the grounds that "ball bearings could be used for military purposes". Although Czechoslovakia argued that the scope of the controls was too broad, the GATT Contracting Parties ultimately rejected its claim. This case shows that the "purpose test" requires the invoking country to prove its subjective awareness of the ultimate military use of the items, but the actual determination is extremely difficult. The US was able to meet the proof requirements merely by inferring military use from product specifications, reflecting the relaxation of the standard of proof. The US argues that the "purpose test" should be judged by the invoking country itself and opposes secondary review by adjudicative bodies. This conflicts with the position confirmed by recent WTO panels that "the elements of sub-paragraphs need to be objectively verified". However, the "subjective awareness" element still weakens the objective standard of proof. | | Article XXI(a) GATT explicitly allows contracting parties to refuse to disclose information that "is contrary to their essential security interests". In the "Russia – Measures Concerning Traffic in Transit" case, Russia refused to explain the specific basis for the "emergency in international relations" on the grounds that "the information is confidential" and only cited public information as evidence. The panel ultimately recognized that its "elaboration of essential security interests meets the minimum standard". This indicates that when the invoking country refuses to disclose information on the grounds of national security, adjudicative bodies can only rely on public information, making it difficult to verify whether the "purpose test" has actually been satisfied. | | Although the purpose test is intended to curb the abuse of Article XXI(b)(ii) GATT, imposing countries still retain considerable flexibility in their decisions. The question as to whether the invoking states adequately fulfill the ‘purpose test’, and discharge their burden of proof in so doing, can only be decided on a case-by-case basis. Furthermore, when the WTO Members refuse to provide certain information on the grounds of security, the panels will have to consider publicly available information. This provides significant room for maneuver to countries seeking to use, or abuse, security exceptions to justify trade restrictions on certain products. | | 4.The Provision in Action: Implications for Trade Governance | Take export control measures as an example. According to the Wassenaar Arrangement, Article XXI(b)(ii) of the GATT is based on traditional security concepts. Therefore, this clause only covers items used for military deployment. It is outdated in reflecting emerging security threats and demonstrates its lack of inclusiveness. Besides, another defect of this clause lies in its weakness in curbing malicious citation. This is mainly attributed to the difficulty in implementing the "purpose test". Export control already allows for taking punitive measures against companies that fail to meet the notification requirements. This means that traders may face penalties such as bans and fines for being preliminarily identified as dual-use items, without the need for further investigation into their actual transactions. | | Moreover, due to the lower proof standard, the licensing authority will have greater discretion when conducting such investigations. The core issue lies in whether the citing country actually has the information to support its judgment on military supplies. Under a more lenient proof standard, it is difficult for the referee to verify this information. Therefore, this clause is prone to being abused to restrict trade for products that have dual uses but are not intended for military institutions. | | Conclusion | While the Purpose Test aims to curb abuse, its effectiveness is limited by relaxed proof standards for security measures, leaving states substantial flexibility in interpreting the test. When Members withhold evidence on security grounds, panels must rely on public data, enabling broad misuse of security exceptions to justify trade restrictions on dual-use items. | | Security exceptions embody a realist challenge to the neoliberal foundations of the international trading system. The "self-judging" elements in these clauses, rooted in negotiators’ consensus, render them prone to abuse. For seven decades, states exercised political (not legal) self-restraint in invoking these clauses, but this restraint has eroded as states increasingly exploit security exceptions for expanding or pretextual security interests. Restrictions on dual-use items now pose the next challenge to the global trading system, with uncertainties growing as the dysfunctional WTO dispute settlement mechanism fails to resolve emerging trade conflicts.

Checklist: 1. Correctly elaborate the concept of dual-use items and analyze the international situation to demonstrate the urgency of clearly establishing trade rules applicable to dual-use items. 
2. Correctly elaborate several factors that have expanded the scope of dual-use products, including the technologization of modern warfare and privatization of military supply chains, ethics- or value-based control of dual-use items, and deficiencies of multilateral export control regimes. 
3. Correctly understand that Article XXI(b)(ii) GATT is the core provision regulating trade in dual-use items, applicable in peacetime, covering trade in "arms, ammunition and implements of war" and trade in other goods "carried on directly or indirectly for the purpose of supplying a military establishment". 
4. Correctly understand the "purpose test" contained in Article XXI(b)(ii) GATT, which requires the invoking state to prove that the trade of restricted items is for the purpose of directly or indirectly supplying a military establishment and that it had subjective awareness of this when invoking the provision. This is a key safeguard to prevent abuse of the provision. 
5. Correctly understand the difficulty in the standard of proof when applying this provision: due to the right to non-disclosure of national security information, reviewing bodies often rely on publicly available information, resulting in a relaxed standard of proof, which makes it difficult to effectively verify whether the "purpose test" is satisfied. 
6. Point out that the ambiguity of this provision and challenges in its application may pose a threat to multilateral trade governance, making it hard to balance legitimate security needs and trade protectionism, and this issue needs to be addressed urgently.