On Wednesday 8 April, the Member States' Ambassadors to the European Union (Coreper) validated the EU Council's negotiating position on the revision of the European regulation on the application and enforcement of international trade rules.
Last December, the paralysis of the Appellate Body (AB) of the World Trade Organization (WTO) - and thus the lack of an effective dispute resolution mechanism - had led the Commission to propose this revision to improve its trade defence (see EUROPE 12387/23).
Indeed, the circumstances further strengthen the argument in favour of a review. As a result of the measures taken to stem the COVID-19 pandemic, the economic crisis that has now emerged is already described as historic and the weakened sectors are already urging the Commission to step up its trade defence measures (see EUROPE 12461/6).
As a reminder, the proposed amendment would only concern disputes initiated by the EU at the WTO where the judges, in the first stage of dispute resolution, would agree with the European arguments. If the other party does not accept provisional arbitration and appeals - unsuccessfully, in the absence of an FO - against this report that is in favour of European interests, thus blocking the procedure, the EU could impose trade sanctions.
The sanctions cited by the Council include, in addition to customs duties, quantitative restrictions on the import or export of goods and measures in the field of public procurement.
These sanctions may also be applied to any non-EU trading partner which, in the context of a free trade agreement, would impose measures deemed illegal by the EU and would not allow the dispute settlement process contained in the agreement to rule on those measures.
Revision clause
The Council's position "remains close to the spirit of the Commission's proposal", the press release reads. However, as a safeguard, the Member States are adding a review clause with two elements.
Firstly, no later than 3 years after the adoption of the Regulation, the Commission will have to evaluate the functioning of these new rules.
On the other hand, the Commission will also have to assess the need to extend the scope to services and intellectual property rights. Indeed, during the deliberations in the Council, some countries - France, Italy and Spain to a lesser extent - called for the possibility of sanctions to be extended immediately to services and intellectual property.
These same states advocate a more robust regulation, a European-style 'Section 301'. The US version allows Washington to take action to enforce its trade rights in the face of any practices deemed unfair.
It is now up to the Parliament to adopt its negotiating position. The draft report should be tabled at the end of April, but the date for the vote in the Committee on International Trade has not yet been set.
The Commission expects the regulation to be adopted before the end of June 2020. (Original version in French by Hermine Donceel)