EU takes tougher stance on international trade law enforcement

• Ireland

• Corporate

26-04-2021

On 13 February 2021, the European Commission announced that robust new trade enforcement rules had entered into force through Regulation (EU) 2021/167 amending Regulation (EU) No 654/2014 (the “Regulations”) further strengthening the EU’s capabilities in defending its trade interests against unfair trade practices.

The amendment to the Regulations will allow the EU to act in order to enforce international trade rules in circumstances where the WTO is unable to deliver binding dispute settlement decisions. The WTO settles international trade disputes between participating countries in the following manner:

1. following consultation between the parties in dispute, a panel is appointed to make rulings or recommendations; and
2. if either party is unhappy with a ruling by a panel, they can appeal its ruling which is heard by 3 members of the 7 member Appellate Body of the WTO.

However, since December 2019 the WTO dispute settlement system, binding on members, is no longer functioning as the membership of its Appellate Body fell below the quorum necessary to make new rulings when two members' terms expired. Without the adoption by the EU of an amendment to the Regulations, a WTO Member in dispute with the EU could in the future have escaped from a binding ruling of the WTO, and hence escaped any countermeasures by the EU against it, by simply appealing a ruling of a WTO panel. This is because prior to the amendment of the Regulations, the EU could only adopt countermeasures in an international trade dispute once the WTO dispute settlement procedure had been exhausted.

This new mechanism also applies to dispute settlements in relation to regional or bilateral trade agreements to which the EU is party if a similar blockage in bilateral trade dispute settlement arises.

The amendment to the Regulations also expands the scope of trade policy countermeasures to include services and certain trade-related aspects of intellectual property rights. Prior to the amendment of the Regulations, countermeasures were only permitted in connection with goods.

Additional efforts on implementation and enforcement by the EU

Several other steps have been taken since 2019 to strengthen and target EU trade policy implementation and enforcement efforts including:

• the appointment of a Chief Trade Enforcement Officer;
• the creation of a new Directorate in DG Trade for enforcement, market access and SMEs; and
• the establishment under ‘Access2Markets’ of a single entry point for complaints from EU stakeholders and businesses on trade barriers on foreign markets and violations of sustainable trade commitments in EU trade agreements.

For more information, please contact

Sean Ryan, Partner in our Corporate department - SeanRyan@eversheds-sutherland.ie

Katie Haberlin, Senior Associate in our Corporate department - KatieHaberlin@eversheds-sutherland.ie

Shane Kelly, Solicitor in our Corporate department - ShaneMKelly@eversheds-sutherland.ie