Legislative Train Schedule
European Parliament
Please fill in this field to search

Exercise of the Union's rights for the application and enforcement of international trade rules

In “A Stronger Europe in the World”

PDF version

Background and state of play

On 11 December 2019, the Appellate Body of the WTO Dispute Settlement Body ceased to function, as the term of two of the three remaining judges necessary to decide upon appealed first instance panel reports came to an end. This situation resulted from the US blocking the nomination of new judges since 2016 on both procedural and substantive grounds.

In the absence of agreements on alternative dispute resolution under Article 25 of the WTO Dispute Settlement Understanding (DSU), future appeals by defendant WTO members against panel reports decided in favour of complainant WTO members will be caught in a legal void. As complainant WTO members depend on the completion of dispute settlement procedures resulting in a binding ruling to proceed to enforcement action against WTO members found to be violating WTO law, they will be deprived of their enforcement rights.

Moreover, a similar blockage of dispute settlement processes could arise in the context of EU bilateral or regional trade agreements, leading to similar situations where EU enforcement action could be compromised.

Against this backdrop on 12 December 2019, the European Commission published a legislative proposal under Article 207 TFEU aimed at amending Regulation (EU) No 654/2014 concerning the exercise of the EU’s rights for the application and enforcement of international trade rules. The proposal would extend the Regulation's scope to two situations where an EU trading partner adopts illegal measures and at the same time

i) blocks WTO dispute settlement procedures and prevents WTO litigation from being completed with a binding ruling required under WTO law for enforcement action or

ii) blocks dispute settlement arrangements included in EU bilateral or regional trade agreements and prevents dispute settlement under EU bilateral or regional trade agreements from being carried out.

The Regulation as amended would allow the EU to introduce economic countermeasures such as customs duties, quantitative restrictions and measures in the area of public procurement in these two situations currently not covered. A review of the regulation's scope is foreseen after five years.

On 20 February 2020, the Committee on International Trade (INTA) of the European Parliament held a first exchange of views on the legislative file. The draft report on the file of 6 May 2020 submitted by rapporteur Marie-Pierre Vedrenne (Renew Europe Group, France) was debated in the INTA meeting of 28 May 2020. The draft report proposes to extend the Regulation's scope to trade in services and trade-related aspects of intellectual property rights, to introduce the possibility of taking immediate action by imposing proportionate provisional measures prior to WTO rulings, to allow Parliament and the Council to propose to initiate the enforcement procedure which so far is the Commission's prerogative and to advance the proposed date for the Regulation's review. The amendments to the draft report were considered in the INTA meeting of 25 June 2020. At the INTA meeting of 6 July 2020, MEPs adopted the draft report. INTA MEPs also decided to enter into inter-institutional negotiations on the basis of this report.

The Council discussed the Commission proposal on 25 February 2020. On 8 April 2020, the Council adopted its negotiating position.

The first political trilogue meeting took place on 17 July 2020 and the second on 23 September 2020. The third trilogue meeting on 28 October 2020 was concluded with a provisional agreement.

The agreed text extends the regulation's scope to cover also services and trade-related aspects of intellectual property rights granted by a Union institution or agency and valid throughout the Union (Union-wide IPR) and provides that the review of the regulation's scope is to be carried out at the latest one year after the entry into force of the regulation as amended. An additional review of the regulation's scope in the field of IPR will be performed within one year after the regulation's entry into force.

Several statements are attached to the agreed text which capture concerns raised by Parliament's amendments, including on the enforcement of trade and sustainable development chapters of international trade agreements. There is notably a joint statement of the Commission, the Council and the Parliament on an instrument to deter and counteract coercive action by third countries that the Commission has pledged in its Work Programme 2021 to submit by the end of 2021.

Parliament adopted the agreed text on 19 January 2021 with 653 votes, with ten against and 30 abstentions. Following the Council's approval, the Regulation as amended entered into force on 13 February 2021.

European Council position

On 12 December 2019, the European Council reiterated 'its full support for the global rules-based international order and note[d] with concern the paralysis of the WTO’s mechanism for settling disputes. It support[ed] the Commission's efforts to set up interim arrangements with third countries while actively pursuing a permanent solution. The European Council call[ed] on the European Parliament and the Council to examine, as a matter of priority, the Commission’s proposal to adapt, in line with WTO rules, the current EU legislation on the effective exercise of the EU’s rights under international trade agreements to this new situation.'

European Parliament position

Prior to the Commission proposal, the European Parliament in its resolution of 28 November 2019 on the crisis of the WTO Appellate Body supported 'recent EU initiatives to conclude interim arrangements for provisional solutions with' the EU's 'major trade partners that would preserve the' EU's 'right to the resolution of trade disputes at the WTO through binding two-level, independent and impartial adjudication, while' it recalled 'that a Standing Appellate Body' remained 'the core objective of the EU’s strategy'.

References:

Further reading:

Author: Gisela Grieger, Members' Research Service, legislative-train@europarl.europa.eu

Visit the European Parliament homepage on globalisation.

As of 20/03/2024.