EU Negotiators Agree to Bolster Bloc’s Trade-Sanctions Clout
EU Negotiators Agree to Bolster Bloc’s Trade-Sanctions Clout
(Bloomberg) -- European Union negotiators agreed to reinforce the bloc’s trade-sanctions powers in response to the U.S. challenge to the global commercial order.
Representatives of EU governments and the European Parliament reached a deal on Wednesday in Brussels to upgrade the bloc’s legislation on applying international trade rules.
The accord closes a loophole by ensuring the EU could impose penalties against countries that illegally restrict commerce and simultaneously block the World Trade Organization’s dispute-settlement process.
“We are facing increased international trade uncertainty and this deal strengthens the EU’s defensive toolbox,” Marie-Pierre Vedrenne, a French member of the EU Parliament who helped broker the agreement, said by phone afterward. “It reinforces Europe’s global trade power.”
The European Commission, the EU’s executive arm, proposed the measure last December immediately after U.S. President Donald Trump’s administration sidelined the WTO’s key appellate body. The body ceased to be able to handle new cases because a U.S. veto of any appointments to the panel left it without the minimum three members required for verdicts.
The European negotiators’ breakthrough on Wednesday allows EU penalties to cover not just goods trade but also services and some aspects of intellectual-property rights. That marks a victory for Vedrenne and her EU Parliament colleagues, who had pushed for such an expansion of the scope of the commission’s proposal over initial resistance by the bloc’s national governments.
“This agreement sends a strong political signal that the EU will take action to defend and protect our companies, workers and consumers whenever our partners do not play by the rules,” European Trade Commissioner Valdis Dombrovskis said in an emailed statement.
The upgraded law -- an amendment to 2014 European legislation -- will effectively serve as a third line of defense for the EU as it seeks to uphold the WTO system, including through a stopgap appellate process.
It would come into play in a scenario in which the WTO appellate body is still sidelined and the bloc wins a case against a country that doesn’t accept the initial ruling, hasn’t signed up to the stopgap appellate arrangement and appeals nonetheless.
In that event, the EU would be in a position to impose countermeasures -- an act that the European legislation in its current form would rule out. The deal struck by negotiators on Wednesday still needs the formal approval of EU governments and the 27-nation Parliament -- steps that are usually formalities.
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