The European Commission has proposed a new enforcement framework for international trade rules so that the EU can react swiftly and efficiently to enforce its rights, reports Henrietta Clarke.
Safeguarding trade interests
The European Commission wants to step up its efforts to enforce its legitimate rights under bilateral and multilateral agreements in order to open markets that are illegally closed. Ensuring that the EU’s trading partners respect agreed trade rules is important to make trade agreements work for the EU economy and to safeguard the interests of EU companies and workers. The EU’s membership of the World Trade Organization (WTO) and its bilateral trade agreements are beneficial to the EU economy but those agreements have to be respected in order for them to deliver results.
Under WTO and bilateral dispute settlement rules, as well as multilateral and bilateral safeguard measures, the EU may be required to take unilateral measures in order to act against unfair trading practices. The Commission’s proposal covers the EU’s responses to illegal trade measures in other countries, allowing the Commission to take executive action when the trade interests of the EU are threatened. Up to now, the EU has followed a case-by-case approach on the basis of the provisions of the common commercial policy. In each case, the Commission put its proposals to the Council, which then adopted appropriate measures. The EU needs a mechanism within the existing legal framework of the EU Treaty for rapid, efficient and flexible decision-making. A single set of rules is now proposed that would allow the EU to react more quickly and in a more flexible manner.
Measures to enforce rights
The proposed regulation establishes a clear framework for adopting implementing Acts in response to international trade disputes that have a negative impact on the EU. The Commission would be able to take certain measures, as foreseen under international trade rules (see below).
EU trade sanctions could be put in place when a country does not comply with an arbitration ruling under multilateral or bilateral dispute settlement rules, to encourage the offending country to remove illegal measures.
This means that where a WTO member or a Party to an agreement with the EU fails to implement a dispute settlement Panel ruling or an arbitration procedure outcome, and where no settlement or satisfactory compensation is agreed, the EU may respond with defensive temporary measures against the offending country. These may take the form of increased customs duties, restrictions on the volume of imports or exports, or restrictions concerning access to government procurement markets.
Action could be taken to defend EU interests when third countries adopt bilateral or regional safeguarding measures that unduly restrict EU trade.
Countries can take such measures in the form of increased import duties, eg to give an industry some breathing space from an unexpected increase in imports, but there are specific conditions for this. Where the EU is adversely affected by a safeguarding measure, and if the country involved does not provide adequate compensation, then the EU may take defensive measures unilaterally under very short timelines and specific conditions. These measures may take the form of increased duties or volume restrictions, such as quotas on a temporary basis equivalent to the negative impact of the safeguard.
Suspension of benefits
Trade benefits granted to a WTO member that modifies its concessions to the EU and fails to provide compensation to the EU could be suspended.
In this case, when third countries diminish the benefits they committed to grant to EU goods in the WTO, the EU can take reciprocal action, which has to be implemented within a period of no longer than six months.
The proposed regulation will now be discussed by the Council and the European Parliament.