Tuesday, February 16, 2021

Enforcement of trade rules

The EU has come out with new rules reated to enforcement of WTO provisions in the context of the non-functioning Appellate Body at the WTO. The guidelines that came into force on 13th February 2021 permit the EU to initiate counter-measures against other WTO members whose measures are perceived to be inconsistent with WTO rules even if an appeal is filed before the Appellate Body.

The preamble to the amended rule, inter-alia, states:

(3). The WTO Dispute Settlement Body has been unable to fill the outstanding vacancies on the WTO Appellate Body (the ‘WTO Appellate Body’). The WTO Appellate Body is no longer able to fulfil its function from the moment when there are fewer than three WTO Appellate Body Members left. Until that situation is resolved and in order to preserve the essential principles and features of the WTO dispute settlement system and the Union’s procedural rights in ongoing and future disputes, the Union has sought to agree interim arrangements for appeal arbitration pursuant to Article 25 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (the ‘WTO Dispute Settlement Understanding’). That approach was endorsed by the Council on 27 May 2019, 15 July 2019 and 15 April 2020 and supported in the European Parliament resolution of 28 November 2019 on the crisis of the WTO Appellate Body. If a WTO Member refuses to enter into such an arrangement, and files an appeal to a non-functioning WTO Appellate Body, the resolution of the dispute is effectively blocked.

(4) A similar situation might arise under other international trade agreements, including regional or bilateral agreements, where a third country does not cooperate in the manner necessary for dispute settlement to function, for example by failing to appoint an arbitrator and where there is no mechanism provided to secure the functioning of dispute settlement in such a situation.

(5) If dispute settlement is blocked, the Union is unable to enforce international trade agreements. Therefore, it is appropriate to extend the scope of Regulation (EU) No 654/2014 to cover such situations.

 (6) To that end, the Union should be able to expeditiously suspend concessions or other obligations under international trade agreements, including regional or bilateral agreements, if effective recourse to binding dispute settlement is not possible because the third country does not cooperate in making such recourse possible. 


In effect, does this amended rule make it mandatory for other WTO members to either agree to an interim arrangement for appeal or not file a WTO appeal? Is the WTO's recourse to appeal, albeit non-functioning, effectively curtailed by this resolution? Is it WTO consistent? Can the non-resolution of the Appellate Body impasse in terms of appointing AB members give the right to WTO members to pursue trade remedial measures before the completion fo the mandated process of appeal? It would be interesting to see the reaction of Members who have active trade dispute with the EU on this amended measure - the EU is currently engaged in 45 active WTO cases in which they are complainants in 29 of them.

Another pieceof news, though slightly outdated, is the creation of the role of a Chief Trade Enforcement Officer in the EU to effectively implement and enforce trade agreements that the EU is a party to. Detailed procedures on how the CTEO will act as a single point of contact for trade compliances are useful guides to other countries that face similar issues of trade barriers and enforcement. One has to step up internal institutional mechanisms to enforce agreements that one enters into. As it was rightly said: "any legislation is only as good as its implementation"! This is applicable to both domestic and international law.

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