Reed Smith LLP

EU Law Live

The EU strengthens its Trade Retaliation Powers

Subscribe
Home Perspectives The EU strengthens its Trade Retaliation Powers
On 28 October 2020, the European Parliament, the Council of the European Union (EU) and the European Commission reached an agreement to amend the EU Trade Enforcement Regulation of 2014 (Regulation 654/2014 or Enforcement Regulation). Once those changes enter into force, the EU will be able to impose retaliation measures against third countries breaching their international obligations vis-à-vis the EU under the World Trade Organization (WTO), despite the paralysis of the Appellate Body of the WTO dispute settlement body. The changes also broaden the type of measures the European Commission can adopt against third countries infringing their trade commitments vis-à-vis the EU: in addition to retaliatory duties on goods originating in those third countries, the Commission will be able to impose restriction on services provided from, and suspend IP rights of companies established there. The obvious targets of those changes include the United States, and closer to home, the United Kingdom as well.

Overcome the paralysis of the WTO dispute settlement mechanism

In its current form, the Enforcement Regulation entitles the EU to immediately suspend concessions on goods and public procurement, or impose retaliatory tariffs only to respond to illegal safeguard measures adopted by third countries or to react to the unilateral withdrawal of trade concessions by other WTO Members. The EU has resorted to this type of immediate retaliation only once, against the United States, after it imposed Section 232 duties on EU steel and aluminium.  The EU considered the Section 232 duties to be illegal safeguard measures (See Commission Implementing Regulation (EU) 2018/724 and Commission Implementing Regulation (EU) 2018/886.)

To read the full article, please visit EU Law Live.