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EU enacted “enforcement of trade regulation” to circumvent WTO rules

Europe / Business and Finance

The EU has been given the opportunity to punish its trading partners if they impede effective dispute resolution, for example, by blocking the composition of the WTO commissions.

EU enacted “enforcement of trade regulation” to circumvent WTO rules

New trade rules empower the EU to act to protect its trade interests in the World Trade Organization (WTO) and in accordance with bilateral agreements when a trade dispute is blocked by another party.

“The European Union must be able to protect itself from unfair trade practices. These new rules will help protect us from those who try to take advantage of our openness, ”said Valdis Dombrovskis, Executive Vice President and Trade Commissioner.

Revised Regulation allows the EU to impose trade restriction and anti-dumping measures, even if the WTO has not made a final decision, in the event that another WTO member blocks the dispute resolution procedure by appealing to the non-functioning Appeals body and not agreeing to alternative arbitration under the WTO Dispute Settlement Agreement.

This new mechanism also applies to the settlement of disputes regarding regional or bilateral trade agreements to which the EU is a party if a similar blockage occurs.

In addition, the EU has broadened the scope of regulation and possible countermeasures of trade policy in relation to services and some trade-related aspects of intellectual property rights (IPRs) (previously, regulation only allowed countermeasures to goods).

Since December 11, 2019, the WTO appellate body has actually stopped working. It should include seven arbitrators, but recently there were three of them, which was the minimum number necessary to continue the work. On December 10, the term of office of two members of the body expired. The United States has blocked the appointment of its arbitrators to the WTO court since the beginning of 2017. As an interim measure, the EU agreed with 15 other members of the organization to create an interim dispute settlement mechanism.

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