Agreement on stronger EU countermeasures in trade disputes
- The EU can use counter-measures after first instance WTO or other dispute settlement ruling when the other party, while not complying with the ruling, blocks further arbitration
- Parliament extended the scope to services and partly to intellectual property rights
- Commission will propose an anti-coercion instrument in 2021 or earlier if necessary
Parliament and Council agreed Wednesday in ways to bolster the EU’s ability to use countermeasures in trade disputes.
The update of the 2014 enforcement regulation was necessary to allow the EU to use countermeasures after it obtained a favourable ruling from a dispute settlement panel of the World Trade Organisation (WTO) while the other party appeals into the void (with the Appellate Body of the WTO currently defunct due to blockage). The EU could similarly retaliate with customs duties and quotas when its partners disregard bilateral or regional trade agreements and at the same time, shun the arbitration mechanisms.
Parliament negotiators agreed with the goals of the proposal and negotiated the following changes:
- the scope of the regulation will now cover not only goods but also services and certain trade-related aspects of intellectual property rights;
- the institutions will revisit a further extension in the field of intellectual property rights in one year after application;
- the Commission is going to examine breaches in the field of sustainable trade with the same attention as breaches of market access; and
- the Commission committed to draft a law on a new instrument to dissuade or counter “coercive” actions of a third country that violates international law, in 2021. Council pledged to work on the proposal.
Bernd Lange (S&D, DE), head of the negotiating team, chair of trade committee
“We have today finalised an urgently needed upgrade of our arsenal of trade instruments, enabling the EU to act in cases in which third countries are trying to exploit the currently non-functioning appellate body of the WTO. The Parliament succeeded in convincing member states of the necessity of enlarging the scope of this regulation, by fully covering services and some aspects of intellectual property. We have also committed to revisit the question of intellectual property soon, since the Parliament is convinced that it is necessary for the EU to have a comprehensive tool to enforce its rights. Lastly, but very importantly, we have paved the way for the EU to adopt legislation on an instrument to counter actions by third countries trying to force policy choices on the EU”, the head of the parliamentary delegation said.
Marie-Pierre Vedrenne (RE, FR), rapporteur
“This agreement is a clear victory for the European Parliament. We convinced member states to muscle up our trade policy and create a more efficient and ambitious enforcement regulation. The EU will be able to adopt countermeasures in the area of services and certain intellectual property rights, a growing part of our trade. We obtained, in a joint declaration of the three institutions, the Commission’s pledge to propose, at the latest by the end of 2021, an efficient new instrument to deter and counteract coercive measures by third countries. The Commission also committed to an enhanced enforcement system in our free trade agreements to give equal weight to breaches of market access and sustainability related provisions. We expect an ambitious proposal to make sustainability chapters in trade agreements fully respected and enforced”, the rapporteur said after the tripartite talks closed with the agreement.
Next steps
After a vote in the Committee on International Trade, the informal agreement reached in the tripartite negotiations will be put to vote in plenary and the Council will also formally adopt the revision of the regulation.