EU rights to apply and enforce international trade rules

KEY POINTS

The regulation sets out rules and procedures for the EU to suspend or withdraw its obligations under an international trade agreement in order to:

• respond to breaches of international trade rules by non-EU countries and enforce a judicial ruling in favour of the EU, to obtain a satisfactory solution that restores benefits for EU businesses;
• rebalance obligations under and in line with a trade agreement, when non-EU countries alter the treatment of goods from the EU, either temporarily through a safeguard measure or long-term through modifying tariff concessions.

Action

To safeguard the EU’s interests, the European Commission can adopt implementing acts to adapt its trade policy in response to the actions of the non-EU country concerned. In urgent cases, the Commission can immediately adopt applicable implementing acts. The Commission, assisted by the EU Member States, consults with relevant stakeholders before adopting these acts.

Available trade policy measures

These consist of:

• suspending tariff concessions and imposing new or increased customs duties;
• introducing or increasing quantitative restrictions (quotas) on imports or exports of goods;
• suspending concessions and introducing certain restrictions in the area of public procurement.

Determining appropriate measures

Trade policy measures are determined based on the following:

• effectiveness of the measures in inducing the non-EU country to comply with international trade rules;
• potential of the measures to provide relief to businesses within the EU affected by non-EU country measures;
• availability of alternative sources of supply for the goods or services concerned;
• avoiding disproportionate administrative complexity and costs in applying the measures;
• measures must be proportionate to and must not exceed the harm that they are introduced to counteract.

Revision of the regulation

Because a current lack of new appointments to the Appellate Body of the World Trade Organization (WTO) has meant that the second tier of its dispute settlement mechanism is not able to function, amending Regulation (EU) 2021/167 introduced some changes to Regulation (EU) No 654/2014.

The amending Regulation (EU) 2021/167:

• allows enforcement action in situations where:
  • the EU obtains a favourable ruling from a WTO dispute settlement panel,
  • the process is then blocked because the non-EU country appeals to the non-functioning WTO Appellate Body, and does not agree to interim appeal arbitration under Article 25 of the WTO Dispute Settlement Understanding;
• allows enforcement action when:
  • a trade partner under a bilateral or regional trade agreement imposes illegal trade measures,
  • subsequently does not take the steps necessary for the dispute settlement process under that agreement to function;
• extends the scope of possible countermeasures to trade in services and some trade-related aspects of intellectual property rights. This extension is accompanied by safeguards to ensure that the most efficient and proportionate countermeasures are used and that EU Member States’ authorities and stakeholders are consulted.