POSITION | FOREIGN ECONOMIC POLICY
Modernizing the EU Enforcement Regulation For Better Responsiveness in Trade Disputes
21 January 2020 Background The World Trade Organization’s (WTO) dispute settlement mechanism is in23. crisis. Since December Oktober 2017 11, 2019, the Appellate Body (AB) has ceased to function as the United States is blocking the necessary appointment of AB members. Without a properly functioning second instance, trade disputes, in which the defeated party appealed after the first panel decision, end in limbo. Whether or not and when the United States will give up its blockage is up in the air. The European Commission has consequently taken three measures. Firstly, it strongly supports the reform of the AB and dispute settlement procedure in order to restore the functioning of the WTO’s dispute settlement. Secondly, the EU is trying to reach bilateral and plurilateral agreements with WTO members exclusively for the period of the blockade. This is to provide for alternative arbitration of WTO cases similar to the AB procedure on the basis of a first WTO panel ruling (according to Article 25 of the Dispute Settlement Understanding, the WTO Director -General shall appoint an Appeal Panel for individual cases upon request of the dispute parties. The signatories of the agreements undertake to give binding effect to the following arbitral award). Thirdly, the European Commission wishes to obtain the ability to react independently with trade policy measures in accordance with its own internal EU procedures in case third countries block further proceedings through the AB or in case they do not agree to an alternative dispute settlement under Article 25. These measures could take the form of increased import duties, quantitative restrictions, and restrictions on public procurement. So far, such reactions have only been possible after formal authorization through a WTO procedure. To this end, the European Commission has submitted a corresponding amendment to the EU Enforcement Regulation on 12 December 2019. According to the Commission, the amendments are in line with international law and must be adopted by the European Parliament and the Council of Ministers according to ordinary legislative procedures.
Dr. Annika-Stormy Mildner | Foreign Trade | T: +49 30 2028-1568 | S.Mildner@bdi.eu | www.bdi.eu
Changes of the EU Enforcement Regulation
BDI Position ▪
Open and rule-based world trade is a top priority for German industry. The WTO is and will always be the preferred framework for it.
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German industry therefore welcomes the European Commission’s strong commitment to reforming the WTO and to an independent and binding dispute settlement system.
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Rules need to be enforceable. An escalation of trade disputes can only be avoided if orderly procedures for rule enforcement are in place.
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When trading partners block agreed rules and independent arbitration procedures, the EU must be able to respond in accordance with multilateral rules and principles.
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The interests of the Union must be considered. Protectionism should be avoided at home and abroad.
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German industry supports the European Commission’s proposed amendment to the Enforcement Regulation.
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Changes of the EU Enforcement Regulation
Imprint Federation of German Industries (BDI) Breite StraĂ&#x;e 29, 10178 Berlin www.bdi.eu T: +49 30 2028-0 Editorial office Dr. Stormy-Annika Mildner T: +49 30 2028-1568 S.Mildner@bdi.eu Eckart von Unger T: +32 2 792 1020 E.vonUnger@bdi.eu
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