The crisis in the Middle East and China’s 15th Five-Year Plan for National Economic and Social Development (2026–2030) have dominated news headlines, while two changes to China’s Foreign Trade Law seem to have gone unnoticed.  These changes are small but significant, as China’s application of these new provisions will reveal whether the trade powerhouse can adhere to objective standards and, thereby, create more certainty amidst growing trade uncertainty around the world.

China’s Newly Revised Foreign Trade Law

Adopted in late December 2025, the latest version of China’s Foreign Trade Law (“Foreign Trade Law 2025”) came into effect on March 1, 2026.  Among the new changes is the inclusion of “safeguarding national sovereignty, security, and development interests” as one of the purposes of the law.

The revision also added a few words to two provisions.  Article 19 Paragraph 2 of the Foreign Trade Law 2025 now reads:

The State may, in time of war or other emergency in international relations, or in order to maintain international peace and security, take any necessary measures regarding the import and export of goods and technologies.

[emphasis added]

And Article 30 Paragraph 2 of the Foreign Trade Law 2025 provides:

The State may, in time of war or other emergency in international relations, or in order to maintain international peace and security, take any necessary measures regarding international trade in services.

[emphasis added]

“The addition of the words ‘or other emergency in international relations’ has turned these two provisions into the legal basis for China to take any necessary measures […].”

The addition of the words “or other emergency in international relations” has turned these two provisions into the legal basis for China to take any necessary measures related to the import and export of goods and technologies and/or international trade in services “in time of war or other emergency in international relations”.

The phrase “in time of war or other emergency in international relations” is not defined in the Foreign Trade Law 2025.  Yet China’s contribution (as a third party) to a WTO dispute involving the interpretation of this phrase as used in the General Agreement on Tariffs and Trade 1994 (“GATT 1994”)—which is contained in an annex of the WTO Agreement—provides insight into China’s potential interpretative approach.

The WTO and “In Time of War or Other Emergency in International Relations”

Article XXI (“Security Exceptions”) of GATT 1994 provides:

Nothing in this Agreement shall be construed

(a) […]; or

(b) to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests

(i) […];

(ii) […];

(iii) taken in time of war orother emergency in international relations; or

(c) […].

[emphasis added]

The interpretation of Article XXI(b) was the focus of United States—Origin Marking Requirement, a dispute concerning whether the United States could require goods produced in “Hong Kong, China”—a member of the WTO since January 1, 1995 and a member of GATT since April 23, 1986—to be marked as originating from “China” instead of “Hong Kong”.  The U.S. adoption of this requirement was a result of the U.S. President’s Executive Order 13936 signed on July 14, 2020, which asserted that Hong Kong, China lacked sufficient autonomy to justify differential treatment from China in certain areas, such as origin marking.

In December 2022, the report of a WTO panel established to handle this dispute was released.  In the report, the panel rejected the U.S. interpretation of Article XXI(b) and ultimately found that the United States had violated GATT 1994’s rules regarding origin marking.  Although the United States notified the WTO in January 2023 of its decision to appeal to the Appellate Body, the body’s lack of a quorum to hear appeals since December 2019 has, in effect, suspended the dispute.

Despite such suspension, the panel’s interpretation of Article XXI(b) and how it referenced arguments contributed by China and other third parties to reach its conclusions are worthy of close attention.

In the dispute, the United States argued that Article XXI(b) should be read as entirely “self-judging”, essentially asserting that the provision excludes any review of the challenged measure by the WTO panel.  While agreeing that a WTO member invoking Article XXI(b) can, due to the expression “which it considers”, judge by itself “any action” “necessary for the protection of its essential security interests”, the WTO panel concluded that the expression “which it considers” does not apply to the three sub-paragraphs of Article XXI(b).  This means that whether a condition specified in one of the sub-paragraphs is met to justify any action taken by an invoking WTO member is subject to review by a WTO panel.

As the United States relied on subparagraph (iii)—“taken in time of war or other emergency in international relations”—to justify the challenged origin marking requirement, the panel focused on the interpretation of the expression “emergency in international relations”.  In the end, the panel determined that the expression refers to “a state of affairs, of the utmost gravity, in effect a situation representing a breakdown or near-breakdown in the relations between states or other participants in international relations”.  The panel further noted that the state of relevant international relations could be conceptualized as a spectrum ranging from “friendly and peaceful interaction” between WTO members on the one end to “a breakdown” of their relations (e.g., war) on the other.  The panel considered “emergency in international relations” to be closer to the latter end of the spectrum.

“Therefore, the origin marking requirement imposed by the United States on Hong Kong, China could not be justified.”

Applying the above interpretation to this dispute, the panel concluded that while there was evidence showing the United States and other WTO members were expressing concerns about the human rights situation in Hong Kong, China, “the situation ha[d] not escalated to a threshold of requisite gravity to constitute an emergency in international relations”.  Therefore, the origin marking requirement imposed by the United States on Hong Kong, China could not be justified.

China and “In Time of War or Other Emergency in International Relations”

A review of the arguments submitted by China to help the WTO panel reach its conclusions in this dispute shows that China’s interpretative approach to Article XXI(b) is basically the same as the panel’s approach.  Specifically, China argued:

The United States’ proposed interpretation of Article XXI(b) is completely unfounded […].  The applicability of the sub-paragraphs of Article XXI(b) […] is an objective matter to be determined by the panel.

[…] Furthermore, an interpretation of Article XXI(b) that would render this provision entirely self-judging, including its sub-paragraphs, would gravely undermine the “security and predictability” of the multilateral trading system […].

[…] As the party invoking an affirmative defense, the United States bears the burden of demonstrating the applicability of Article XXI(b) to the measures at issue. […The United States] has failed completely to fulfill its burden to establish the prima facie case for its affirmative defense.

[emphasis added]

China’s support for taking an objective approach to interpreting the sub-paragraphs of Article XXI(b)—one sub-paragraph, as mentioned above, includes: “in time of war or other emergency in international relations”, which is exactly the phrase now used in the Foreign Trade Law 2025—should be welcome.  So should its strong views that a nation seeking to impose “necessary” measures bears the burden to prove the need for such measures.

In line with this reasoning, if China is able to adopt a set of objective standards to help interpret the phrase “in time of war or other emergency in international relations”, as used in Article 19 Paragraph 2 and Article 30 Paragraph 2 of the Foreign Trade Law 2025, and present clear facts proving the need for necessary measures authorized by these two excessively broad provisions, it would be helping to maintain a rules-based trading system even as the actual global trading system based on internationally accepted rules appears to be fading.

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• The citation of this article is: The Editorial Board of SINOTALKS^®, War, Emergency, and China’s Foreign Trade Law, SINOTALKS.COM^®, SinoExpress™, Mar. 11, 2026, https://sinotalks.com/sinoexpress/war-emergency-china-trade. ↩︎

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