The EU Asks To Be Able To Sanction WTO Offenders Despite The Appeal Block

The European Commission (EC) today presented a legal proposal to impose countermeasures on countries that violate the rules of the World Trade Organization (WTO), despite the paralysis of the Appellate Body of the institution for the blockade to which it has submitted United States.

The changes proposed today "will allow us to defend our companies, workers and consumers as long as our partners do not play according to the rules," warned European Commerce Commissioner Phil Hogan, who presented the initiative at a press conference.

European Union (EU) countries face difficulties in asserting their rights before the WTO now that the Appellate Body has stopped working and issuing binding decisions on dispute resolution.

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To overcome the tax, the European Commission today presented an amendment to the 2014 implementing regulation that allows it to act on behalf of the Twenty-Eight in matters related to international trade.

According to Brussels, this modification may be the basis for 'imposing countermeasures' when it wins a dispute resolution procedure in the WTO or in the framework of a bilateral agreement between the EU and another partner, and the latter appeals the decision 'in a vacuum' to an appeal body that is no longer operational.

Hogan said that with the Appellate Body "excluded from the equation," an executable dispute settlement system has been lost that has been an independent guarantor that the WTO rules are applied impartially.

"While we seek a WTO reform and restore a system that works well, we cannot afford to be helpless if there is no possibility of obtaining a satisfactory solution within the organization," said the Irish commissioner.

The Appellate Body, which had been operating since 1995 and had the final say in the conflicts that the 164 WTO member countries submit to the agency's discretion, ceased to be operational since Wednesday.

It was an 'announced death' since Donald Trump became president of the United States in 2017, as he systematically refused to approve the appointment of new judges for that body and the positions that were left vacant were not filled.

On December 10, the maximum term of eight years for two of the three remaining judges ended, so the body was left with only one member and, therefore, paralyzed, needing a minimum of three members to function.

Under current dispute rules under multilateral trade law, the EU can only take countermeasures at the end of the dispute resolution procedure and after receiving an authorization from the WTO.

On the other hand, following the collapse of the Appellate Body, a WTO member country could, in the future, 'escape a binding judgment' and, therefore, that countermeasures against it are authorized 'simply by resorting to the report of a panel '.

The proposed amendment, according to the EC, will allow you to activate countermeasures in situations where a partner prevents the dispute from reaching the point where such authorization could be granted.

"The proposal will allow the EU to react even if the WTO does not issue a final ruling at the appeal level because another member of the organization blocks the dispute procedure by appealing to the void," the Commission explained.

This new mechanism, he explained, will also apply to provisions for dispute resolution in trade or regional agreements of which the EU is a part.

In addition, to devote more attention to compliance and implementation of the Union's trade agreements, the Commission today created the position of Director of Trade Control, which will be held in early 2020.

The proposal presented today by the EC must still be supported by the European Parliament and the EU countries so that it can move forward.

In parallel, the EC has achieved this year with partners such as Canada and Norway two interim agreements to, in case of commercial disputes, solve them according to WTO rules in place of the appeals body.

"We will do our best to better protect the rules … Countries will realize that this is more urgent than they thought," concluded Hogan.

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