The U.S. as you know imposed tariffs against foreign steel earlier during Trump's presidency. I was wondering if such political moves can be considered to be illegal under the WTO.
Well, the WTO has reserved the right to judge such matters on merits. Although the Trump ones are still being disputed, there's are recent WTO decision against Ukraine upholding such tariffs based on national-security imposed by Russia.
The WTO panel ruling, the first ever on the right to a national security exemption from the global trade rules, awarded Russia a legal victory because it had successfully invoked national security.
The panel also confirmed the WTO’s right to review national security claims, denting U.S. claims that national security was not subject to review, and said any such claim should be “objectively” true, relating to weapons, war, fissionable materials or an “emergency in international relations”. [...]
Invoking national security was taboo at the WTO for decades after it was founded in 1995. Diplomats referred to it as “Pandora’s box” which could never be closed once it was opened, and would undermine the discipline of the WTO’s widely accepted rules.
But in the past three years, Russia has cited it in the dispute with Ukraine, Trump has invoked it, and Bahrain, the United Arab Emirates and Saudi Arabia have cited it in a dispute with Qatar.
Ukraine can still appeal that to the Appellate Body. The Ukraine-Russia case is DS512. Here's a more detailed explanation from WTO itself:
The Panel found that WTO panels have jurisdiction to review aspects of a Member's invocation of Article XXI(b)(iii), that Russia had met the requirements for invoking Article XXI(b)(iii) in relation to the measures at issue, and therefore, that the transit bans and restrictions were covered by Article XXI(b)(iii) of the GATT 1994.
Specifically, the Panel found that, while the chapeau of Article XXI(b) allows a Member to take action “which it considers necessary” for the protection of its essential security interests, this discretion is limited to circumstances that objectively fall within the scope of the three subparagraphs of Article XXI(b) (see paras. 7.101 and 7.53-7.100). Consequently, the Panel rejected Russia's jurisdictional argument that Article XXI(b)(iii) was totally “self-judging” (paras. 7.102-7.104).
Turning to subparagraph (iii) of Article XXI(b), and based on the particular circumstances affecting relations between Russia and Ukraine, the Panel determined from the evidence before it that the situation between Ukraine and Russia since 2014 was an “emergency in international relations” (paras. 7.76 and 7.114-7.123). The Panel also determined that the challenged transit bans and restrictions were taken in 2014 and 2016, and therefore were “taken in time of” this 2014 emergency (paras. 7.70 and 7.124-7.125). Accordingly, the Panel found that Russia's actions were objectively “taken in time of” an “emergency in international relations” under Article XXI(b)(iii) (see para. 7.126).
As for the discretion accorded to a Member under the chapeau of Article XXI(b), the Panel found that “essential security interests” could be generally understood as referring to those interests relating to the quintessential functions of the state. The Panel observed that the specific interests at issue will depend on the particular situation and perceptions of the state in question and can be expected to vary with changing circumstances. For these reasons, the Panel held that it is left in general to every Member to define what it considers to be its essential security interests (see paras. 7.130-7.131). Moreover, the Panel found that the specific language “which it considers” meant that it is for a Member itself to decide on the “necessity” of its actions for the protection of its essential security interests (see paras. 7.146-7.147).
That said, the Panel considered that a Member's general obligations to interpret and apply Article XXI(b)(iii) in good faith meant that WTO panels may review, (i) whether there was any evidence to suggest that the Member's designation of its essential security interests was not made in good faith, and (ii) whether the challenged measures were “not implausible” as measures to protect those essential security interests (see paras. 7.132-7.135 and 7.138-7.139). Accordingly, the Panel considered that:
The 2014 emergency said to threaten Russia's essential security interests was very close to the “hard core” of war or armed conflict. In these circumstances, the Panel was satisfied of the veracity of Russia's designation of its essential security interests (paras. 7.136-7.137). The challenged transit bans and restrictions were not so remote from or unrelated to the 2014 emergency that it was implausible that Russia implemented these measures for the protection of its essential security interests arising out of the 2014 emergency (paras. 7.140-7.145). The Panel also explained that Article XXI(b)(iii) acknowledges that a war or other emergency in international relations “involves a fundamental change of circumstances which radically alters the factual matrix in which the WTO-consistency of the measures at issue is to be evaluated.” Unlike evaluations of whether measures are covered by the exceptions in Article XX, an evaluation of measures under Article XXI(b)(iii) does not necessitate a prior determination that the measures would be WTO-inconsistent had they been taken in “normal times” (para. 7.108). The Panel therefore considered that, once it had found that the measures at issue were within its terms of reference and that Ukraine had established their existence, the “most logical next step” was to determine whether the measures were covered by Article XXI(b)(iii) of the GATT 1994 (para. 7.109).
The Panel acknowledged, however, that should its findings on Russia's invocation of Article XXI(b)(iii) be reversed in the event of an appeal, it may be necessary for the Appellate Body to complete the analysis (para. 7.154). In this connection, the Panel concluded that had the measures been taken in normal times, i.e. had they not been taken in an “emergency in international relations” (and met the other conditions of Article XXI(b)), Ukraine would have made a prima facie case that the measures at issue were inconsistent with (i) the first or second sentence of Article V:2 of the GATT 1994, or both, and (ii) related commitments in paragraph 1161 of Russia's Working Party Report (see paras. 7.166-7.184, 7.189-7.196 and 7.239-7.240).
So basically the panel gave Russia substantial leeway what measures it could take under national security article(s), but the panel did review the (temporal) circumstances that Russia invoked. It also said that absent these latter circumstances, Russia would have been in violation of core WTO principles.
There's a set of slides which covers some other historical examples when article XXI was invoked up to 1995:
- United States embargo on strategic goods (Czechoslovakia) (1949)
- Ghana – Ban on imports of Portuguese goods (1962)
- US embargo on trade with Cuba (1962)
- Sweden – Import quota system for footwear (1975)
- EC, Australia and Canada – Trade Measures against Argentina (1982)
- US – Embargo on trade with Nicaragua (1982)
- EC – Yugoslavia crisis (1991)
And further list where no explicit mention was made, but probably fell under the same clause:
- US – suspension of obligations between US and Czechoslovakia (1951)
- Prohibition of Czechoslovak imports by Peru (1954)
- Egypt/United Arab Republic – Boycott against Israel and secondary boycott (1970)
- US – Imports of Sugar from Nicaragua (1982)
However, until DS512, these article XXI invocations (explicit or implicit) were not contested much. Only the following WTO/GATT dispute cases involving article XXI are mentioned prior to DS512:
- United States — The Cuban Liberty and Democratic Solidarity Act (DS38)
- Nicaragua — Measures Affecting Imports from Honduras and Colombia (DS201/DS188)
The slides don't go into the details of the resolution of these two cases though. It looks like DS38 was resolved one way or another outside the WTO proceedings; the EC withdrew the complaint (at panel stage). DS201 appears to be one of those perma-stuck cases (in consultation), probably because a change in government in Nicaragua that didn't further pursue the case. Likewise the DS188 panel, although established, it was never composed (never met). So Russia-Ukraine was indeed the first case where a WTO panel really had to deal with this national security issue.
The slides also mention that there's another ongoing Russia-Ukraine case on a similar matter (DS525) and at least four involving the Gulf states, DS526-DS528, and DS567. The US also filed WTO cases against every retaliatory action by those targeted by its national security steel/aluminum decision (these are DS557 to DS561); so the WTO will probably have to deal with the initial US decision in those.