I heard that the U.S. is considering imposing sanctions against Germany if it proceeds to build the Nord Stream 2 pipeline and import gas from Russia, but I was wondering if such trade restrictions against Germany might be considered illegal under the WTO. Doesn't this give the U.S. a lot more economic strength since this will increase the cost of energy in Germany?

News outlets have picked up on this and have written reports on it:


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These US proposals/threats are against a limited number of German companies, rather than Germany economy as a whole, e.g.

U.S. Ambassador Richard Grenell addressed the issue in a letter sent to several companies, the U.S. Embassy said on Sunday.

“The letter reminds that any company operating in the Russian energy export pipeline sector is in danger under CAATSA of U.S. sanctions,” the embassy spokesman said, adding that other European states also opposed the planned pipeline.

Germany and European allies accuse Washington of using its Countering America’s Adversaries Through Sanctions Act (CAATSA]) to meddle in their foreign and energy policies.

There's no mention anywhere in the long Wikipedia article on CATSAA of a WTO-related challenge, although the EU has threatened with retaliations if the US law is used against its companies.

There's one article by a Politico journalist which claims that the EU could consider "Possible World Trade Organization retaliatory measures". I'm skeptical given that no official EU source seems to have mentioned this avenue. Apparently the EU Commission chose instead (of using an official channel) to leak a memo mentioning such a possibility of WTO action.

There's also one article in Japan Times written by an Indian academic suggesting that even Japan, India and South Korea should also challenge CAASTA at the WTO. It also says

Past experience indicates that when the U.S. is internationally isolated, it ultimately caves in to the demands of its friends who show resolve to defy its sanctions threat. For example, in 1997, the U.S. reached agreement with the EU to suspend enforcement of the extraterritorial dimensions of its Cuba-related sanctions after the threat of an EU complaint to the WTO.

That's perhaps the best argument I've heard so far that the EU could challenge such US sanctions at the WTO. And the EU really did take the US to WTO on that back in the late 1990s; the case was DS38.

I'm not aware of an EU reaction to the Cruz-Shaheen bill proposal, which was only announced a couple of days ago.

If approved, the bill would place targeted sanctions against vessels that would be used to construct deep sea pipelines, including the one which would take natural gas to Germany.

There is not much precedent at the WTO for challenging such targeted sanctions, but mainly because past targets of such sanctions were often not WTO members; e.g. a 2017 German paper says

The GATT also includes several exceptions in Art. XXI. Two exceptions might arise most often in cases of economic sanctions for foreign policy reasons. There is, first, an exception for ‘war or other emergency in international relations’, but that national security exception has rarely been invoked. Article XXI also has an exception for a Member taking ‘any action’ in pursuance of an economic sanction mandated by the UN Security Council. In other situations, however, the GATT does not allow tariffs or other measures that would discriminate against a Member on foreign policy grounds, such as human rights, the form of government, or proliferation policies. Thus, a Member cannot use limits on imports as an economic sanction in these cases against another Member, thus blocking a common type of economic sanction often used in the past. [...]

Because many of the recent targets of sanctions are not WTO members (eg Iran, Libya, Iraq, terrorist organizations) and because of the exceptions in the GATT agreement mentioned above, the vast majority of the 100-plus uses of economic sanctions in the last three decades have clearly not violated these treaties, and other cases are unclear. Moreover, few, if any, of these sanctions arguably violate any bilateral treaty, and the questionable cases require further investigation of the facts and the specific treaties.

However the kinds of sanctions that the US seems to consider, might not fall under those explicitly prohibited by the WTO, because they are not import/export limits.

Russia has argued circa 2014 that US and EU sanctions against them were violating WTO rules, but I don't think these complaints were addressed by the WTO in a formal manner. There's some rather vague news from 2015 that Russia had given up challenging the sanctions at the WTO, preferring to challenge the EU sanction in EU courts. The EU courts upheld the sanctions.

On the other hand, the US-Cuba-EU-WTO issue is back in the news as of May this year...

The European Union could take the United States to the World Trade Organization or use retaliatory sanctions to protect its companies in Cuba after President Donald Trump lifted a ban on U.S. citizens filing lawsuits against investors there.

“The EU considers the extra-territorial application of unilateral restrictive measures to be contrary to international law and will draw on all appropriate measures,” the EU’s foreign policy chief Federica Mogherini said in a statement.

Mogherini said those steps could include a World Trade Organization case on the issue or using a “Blocking Statute” that allows EU companies sued in the United States to recover any damages from U.S. claimants in EU courts.

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