What is the World Trade Organization's National Security Exception clause ? USA (Trump) threatened to invoke it, and now UAE is threatening to invoke it.
National security exception was introduced as a part of the original 1947 General Agreement on Tariffs and Trade (GATT) is part of most other major Free Trade Agreements including those of WTO. GATT 1994 Article XXI says:
Nothing in this Agreement shall be construed
to require any contracting party to furnish any information the disclosure of which it considers contrary to its essential security interests; or
to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests
relating to fissionable materials or the materials from which they are derived;
relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment;
taken in time of war or other emergency in international relations; or
to prevent any contracting party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.
The wording of this is sufficiently vague and general that, in theory, very wide swath of actions can be covered by it.
From the TradeLaw analysis in 2015:
Upon review of GATT/ WTO cases in which Article XXI has been invoked, it becomes quite clear that this particular Article may create a “slippery slope” for abusive and/or protectionist trade-barriers. For instance, in 1975, Sweden cited Article XXI to justify its imposition of a global import restriction on certain footwear. Specifically, Sweden stated that a decrease in domestic production of footwear had reached the point of representing “a critical threat to the emergency planning of its economic defence” and therefore required and properly justified the imposition of an import ban. This broad application of Article XXI seems somewhat problematic, and even more so when considering restrictions on the use of exceptions found in Article XX (General Exceptions), which require that measures taken by a State not be “applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade.” Interestingly, the restrictions under Article XX do not apply to Article XXI.
Or from generally very anti-protectionist and pro-globalization article in LawFare
What counts as a “security interest?”
The drafting commissions recognized that ultimately, avoiding abuse depended on the restraint of WTO members. Countries on the receiving end of perceived unfair national security-related trade barriers unsurprisingly tend to argue for narrow interpretations of “national security interests” and urge caution when invoking the exceptions. The GATT and WTO, however, have generally interpreted the provision to mean that “no WTO Member nor group of Members, and no WTO panel or other adjudicatory body, has any right to determine whether a measure taken by a sanctioning member satisfies the requirements.”
The lack of reviewability does not prevent public criticism for expansive definitions of “essential security interests”—the international community harshly criticized Sweden for the aforementioned footwear case. Still, the fact remains that contracting parties enjoy something approaching immunity from WTO review when exercising their national security prerogatives.
Probably the most prominent articulation of the self-judging nature of Article XXI was in a 1961 dispute between Ghana and Portugal. Ghana, a party to the GATT, cited Article XXI(b)(iii) as justification to boycott goods from Portugal, whose colonial government in Angola was at war with several revolutionary groups. Ghana justified an embargo against Portugal, arguing that "under this Article each contracting party was the sole judge of what was necessary in its essential security interest. There could therefore be no objection to Ghana regarding the boycott of goods as justified by security interests." The understanding from 1961 remains the same today: individual countries are their own judges for the purposes of the national security exception.