EU trade: Council agrees its position on revamped enforcement regulation

The EU is making it easier to protect its trade interests and rights in a situation where the World Trade Organization (WTO) is for the time being unable to deliver binding dispute settlement decisions if the WTO member appeals a panel report.

European ambassadors meeting in the Committee of Permanent Representatives (Coreper) today approved the Council’s position on amending a regulation concerning the application and enforcement of international trade rules by the EU. The Council position on the so-called EU enforcement regulation will be the basis for the Presidency to negotiate with the European Parliament.

“Our first choice is and will always be multilateralism. However, we must ensure that we can protect our trade interests and enforce our rights, including through the use of sanctions, if others block the resolution of a trade conflict”

Gordan Grlić Radman, Minister for Foreign and European affairs of Croatia and President of the Council

The existing EU enforcement regulation has been in place since 2014. It provides a common legislative framework for the enforcement of the EU’s rights under international trade agreements. Thanks to these rules the Commission has been able to impose counter measures at the end of a dispute settlement procedure, once it has received authorisation from the WTO.

Given the current paralysis of the WTO Appellate Body, the existing rules needed to be updated to allow the Commission to take action in a situation where dispute settlement procedures are blocked. The main focus of the proposed amendment is to cater for situations where, after the EU has succeeded in obtaining a favourable ruling from a WTO dispute settlement panel, the process is blocked because the other party appeals a WTO panel report “into the void” and has not agreed to interim appeal arbitration under Article 25 of the WTO Dispute Settlement Understanding. In such cases, the new rules introduce the possibility of imposing sanctions such as customs duties, quantitative restrictions on imports or exports of goods, and measures in the area of public procurement.

The Commission will also have the right to take countermeasures when a trade partner under a bilateral or regional trade agreement imposes illegal trade measures and subsequently blocks the dispute settlement process under that agreement.

The Council position remains close to the spirit of the Commission’s proposal, but provides for a review clause which calls on the Commission to assess the functioning of the new rules and assess a potential need for extending the scope to services and intellectual property rights at the latest within three years from adoption of the regulation.

Next steps

Following today’s agreement, the Council is ready to start negotiations with the European Parliament as soon as the latter has agreed its stance.

A qualified majority is needed for adoption by the Council, in agreement with the European Parliament.