The New National Security Challenge to the Economic Order.

• Author: Heath, J. Benton

AUTHOR. Acting Assistant Professor of Lawyering, New York University School of Law. Many thanks to Jose E. Alvarez, Alberto Alvarez-Jimenez, Julian Arato, Simon Batifort, Ilya Beylin, Pamela Bookman, Elena Chachko, Kathleen Claussen, Harlan Cohen, Melissa Durkee, Robin Effron, Seth Endo, Geoffrey Gertz, Carla Greenberg, Mohamed Helal, Esther Hong, Robert Howse, Rebecca Ingber, Maryam Jamshidi, Tal Kastner, Benedict Kingsbury, Steven Koh, Nicolas Lamp, Simon Lester, Will Moon, Stratos Pahis, Mona Pinchis-Paulsen, Sergio Puig, Danya Reda, Anthea Roberts, Shalev Roisman, Aaron Simowitz, Thomas Streinz, Emily Winston, Alyson Zureick, and participants in conferences and workshops at McGill University, Brooklyn Law School, the Cato Institute, and New York University School of Law. Thanks also to Rachel Brown, Josh Zoffer, and the staff of the Yale Law Journal for careful, skilled, and conscientious editing.

ARTICLE CONTENTS INTRODUCTION 1022 I. NEW NATIONAL SECURITY AND THE CHALLENGE TO INTERNATIONAL 1031 ECONOMIC LAW A. New Security Threats 1034 B. New Actors 1040 C. New Vulnerabilities 1042 D. New Temporalities 1045 E. New Politics 1047 II. THE FATE OF NATIONAL SECURITY EXCEPTIONALISM 1050 A. The Cold War Settlement 1051 B. Corrosion of the Cold War Settlement 1060 III. JUDGING THE NATIONAL SECURITY STATE IN ECONOMIC TRIBUNALS 1063 A. Controlling for Abuse 1066 B. Substantive Review of Security Measures 1070 C. Procedural Review and the National Security State 1074 IV. RETHINKING INSTITUTIONAL ARRANGEMENTS FOR SECURITY 1080 GOVERNANCE A. Leveraging Domestic Administrative Procedure to Enhance 1081 Security Governance B. Flexibility and the Return of the Political in Economic 1084 Disputes C. Internalizing the Costs of Security Measures through 1090 Dejudicialized Dispute Settlement D. Security Governance and the Centralization of 1093 International Economic Law CONCLUSION 1096 INTRODUCTION

National security rhetoric is increasingly infiltrating global economic affairs. In the United States, the Trump Administration has embraced an expansive national security policy to justify aggressive economic measures abroad and discriminatory immigration restrictions at home. (1) But the United States is hardly alone. In 2019, the World Trade Organization (WTO) faced challenges to measures taken by Russia, Japan, the United Arab Emirates, and the United States, all of which were justified on security grounds. (2) Other observers have noted a disturbing intertwining of economic and military objectives in Chinese trade and investment policy. (3) Similar developments have taken place across Europe, Africa, and other parts of Asia. (4) These developments have provoked considerable anxiety about the future of the international economic order, as many fear that the existing rules or the road could crumble under a series or tit-ror-tat security claims. (5)

The response in the legal literature to the national security challenge has focused on whether and how international tribunals can apply trade and investment treaties to sift legitimate claims from abusive ones. (6) Today, these arguments arise most frequently regarding the Trump Administration's tariffs on steel and aluminum and its threat to impose similar measures on automobiles and other products. (7) This intensive focus on the Trump Administration's policies might lead a casual observer to think that a relatively precise division between ordinary economic activity and national security concerns can be restored, if only those particular abuses could be put in check. (8)

This Article challenges that assumption. The global economic order and the concept of national security are today deeply intertwined and difficult to disentangle. Major geopolitical disputes now play out within trade and investment institutions rather than outside them. In particular, and in contrast to the Cold War period, major strategic rivals such as China, Russia, and the United States are also economic competitors within the same multilateral trading system. At the same time, the concept of national security has transformed from its relatively stable Cold War meaning anchored in the context of interstate conflict. Today, national security has evolved to address a range of threats, including non-state actors and nonmilitary and nonhuman threats, such as economic crises, cybersecurity, infectious disease, climate change, transnational crime, and corruption, which are often unmoored from interstate rivalries. These developments give rise to the "new" national security: a growing collection of security practices agnostic to the source or nature of a threat, unbounded by time and space, and decentered from any overriding great-power or interstate conflict. (9)

The new national security presents an acute challenge for international economic institutions. Contemporary security policy provides a deep reservoir of potential justifications for departing from ordinary trade and investment rules. The changing shape of trade politics also provides incentives for states to invoke those new security justifications. Moreover, in contrast to some of the recent invocations of national security by the Trump Administration, these new security claims may be both wide-ranging in their effects and difficult to reject out of hand. In other words, this Article argues that while the high-profile debates about the Trump Administration's tariffs have focused on alleged abuses of national security in economic law, it is the potential for good-faith but novel national security claims that may pose a more significant and permanent threat to the system. This Article sets out the challenges posed by the new national security and identifies implications for the design and reform of the international economic system.

At the international level, many major trade and investment agreements contain a general exception for security measures, reflecting the line between ordinary economic activity and security. (10) Many of these exceptions, including those in the foundational multilateral trade agreements, are often argued to be "self-judging": each state has discretion to determine for itself whether the exception applies. (11) This relatively ungoverned zone of discretion contrasts starkly with ordinary trade and investment adjudication, where international tribunals have for years asserted their authority to review the decision-making processes of national administrative bodies and to issue binding and enforceable judgments. (12) As a result, these exceptions historically allowed national governments to escape their trade and investment commitments, provided that they were willing to accept the political and economic costs of asserting a national security justification for the offending measure. (13) The security exceptions also allowed national security and economic globalization to emerge as two separate spheres of activity in the postwar liberal order. But, as WTO members respond to the first-ever decision from a dispute-settlement panel on the trade regime's national security exception, these two spheres are now colliding. (14)

The question is how this collision will be managed. Here, existing theories fail. The prevailing approach, originally developed during the Cold War, relies on political pressure and mutual restraint to enforce the boundary between ordinary commerce and national security. As a growing number of issues become security sensitive and states' incentives to invoke national security to escape trade commitments increase, this approach appears unsustainable. (15) The alternative approach, developed largely in the literature and only recently in the case law, looks to international adjudicators to police the trade/security boundary for signs of abuse or envelope-pushing. (16) The rapid transformation of national security destabilizes this model as well, eroding the objective perch from which courts can sort abusive security claims from good-faith but novel ones. (17) In light of these new realities, the collision between trade and security cannot be managed either by law or politics alone.

What is missing is an account of the full range of institutional options for channeling and controlling national security claims that impact the global economy. Trade law's focus on the role of tribunals reflects parallel debates in the scholarship on constitutional emergency powers about the role of courts and judicial oversight. (18) But in the emergency-powers literature, an equally relevant (2013); Samuel Issacharoff & Richard H. Pildes, Between Civil Libertanamsm and Executive Unilateralism: An Institutional Process Approach to Rights During Wartime, 5 THEORETICAL INQUIRIES L. 1, 5-6 (2004); Joseph Landau, Chevron Meets Youngstown: National Security and the Administrative State, 92 B.U. L. REV. 1917, 1920-21 (2012); Geoffrey R. Stone, Civil Liberties v. National Security in Law's Open Areas, 86 B.U. L. REV. 1315, 1315-16 (2006); Cass Sunstein, Administrative Law Goes to War, 118 HARV. L. REV. 2663, 2664 (2005); Mark Tushnet, Defending Korematsu?: Reflections on Civil Liberties in Wartime, 2003 WIS. L. REV. 273, 274; John Yoo, National Security and the Rehnquist Court, 74 GEO. WASH. L. REV. 1144, 1144 (2006). strand of thought concerns the role of other institutional mechanisms, beyond judicial review, for managing and controlling the national security state. (19) By contrast, the debate on security measures in trade and investment law has not yet taken on this wider focus. This has led to a brute clash between two relatively impoverished theoretical models--one that depends on politics and self-restraint and another that relies on international adjudication to control security measures. (20) As this Article demonstrates, the rise of the new national security poses a potentially fatal challenge to these two models and demands that we consider solutions that fall between adjudication and politics. (21)

This analysis...