Tag Archives: European Union

EU makes initial proposals for WTO modernization

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Alicia Nicholls

The European Commission has released a concept paper outlining its initial proposals for making the WTO more relevant and adaptive to current global realities and for strengthening its effectiveness.

The paper originates from a mandate given by the European Council to the European Commission. It was published days after G20 trade and investment ministers called for urgent WTO reform and a month after United States’ President Donald Trump renewed his desire to withdraw the US from the WTO. It also comes against the backdrop of an escalation in unilateralism as Washington readies to impose a further $200 billion in tariffs on Chinese goods imports.

In the paper, the Commission reiterates the EU’s “staunch” support of the multilateral trading system, noting that the 164-member WTO was “indispensable in ensuring free and fair trade”. It warns, however, that the WTO is under threat. It notes that the organisation’s current marginalisation by some of its key members stem from its failure to “adapt sufficiently to the rapidly changing global economy”.

The 17-page concept paper offers proposals under three key areas and is in effect three papers in one. These areas are: rulemaking and development, regular work and transparency and dispute settlement.

The Commission recommends that the EU continue to the work on the issues under the existing Doha mandate, but also states there is urgent need to broaden the negotiating agenda, building on several initiatives launched at the Buenos Aires Ministerial held in December 2017. Lamenting the current inadequacy of the WTO’s Agreement on Subsidies and Countervailing Measures (SCM), the Commission calls for improved transparency and subsidy notifications, rules which better capture subsidies granted by state-owned enterprises and stricter rules for the most trade-distortive types of subsidies.

The Commission recommends updating current trade rules on services and investment, and further reduce existing market access barriers and discriminatory treatment of foreign investors. One issue of which the Commission was particularly critical was the need to tighten rules on forced technology transfer – practices by some States which force foreign investors to directly or indirectly share their technological innovations with the State or domestic investors. Indeed, intellectual property rights issues are a major sore point between US and China trade relations.

The Commission also sounds the alarm about the “grave danger” to the WTO’s dispute settlement system posed by the US’ blocking of Appellate Body judge appointments. By end of September, the Appellate Body would have only the minimum (just three judges on its roster) and by December 2019 will have less than the minimum required to hear an appeal as two more retire. As such, the Commission has made some initial proposals for amendments which would take into account many of the US’ concerns with the WTO dispute settlement system which had been outlined in the President’s Trade Policy Agenda for 2018. For example, the Commission has suggested amending the 90-days rule contained in Article 17.5 of the Dispute Settlement Understanding to provide for more transparency and consultation.

The Commission has made clear that the proposals were meant to be a basis for discussion with the EU Parliament, the Council and other WTO members, and did not prejudice the EU’s final positions on the matters.

The concept paper makes for an interesting read and may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

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5 things the UK’s EU (Withdrawal) Act of 2018 does

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Alicia Nicholls

After months of heated debate, the United Kingdom’s European Union (Withdrawal) Bill, more colloquially called the ‘Brexit Bill’, received the Royal Assent on June 26th, transforming it into law.

Here are five quick things the EU (Withdrawal) Act of 2018 does:

1.Defines Brexit or ‘Exit day’

The UK’s official ‘exit day’ from the EU is now defined in statute as March 29, 2019 at 11:00 pm. However, the Act allows amendment of this date via regulation to ensure it conforms with the date on which the EU treaties are to cease to apply to the UK as per Article 50(3) of the Treaty on European Union (Lisbon Treaty), that is, from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification of withdrawal unless the European Council, in agreement with the UK, unanimously decides to extend this period.

2.Repeals the European Communities Act, 1972 on ‘exit day’

The European Communities Act (ECA), 1972 provided for the UK’s accession to the European Communities. Per the EU (Withdrawal) Act, the ECA will be deemed repealed on March 29, 2019 at 11:00 pm (Exit Day).

3.Saves EU-derived domestic legislation and direct EU legislation with exceptions

The Act saves EU-derived domestic legislation and direct EU legislation which is in operation immediately before exit day, meaning it continues to have effect in domestic law on and after the exit day, but does not include any enactment in the European Communities Act, 1972 (which would be repealed). It also provides a guide for the interpretation of EU derived law.

But there are important exceptions. For instance, the rule of supremacy of EU law and the Charter of Fundamental Rights will obviously no longer apply on and after exit day. Additionally, while there is nothing preventing UK courts from having regard to EU courts’ interpretation of retained EU law, they will no longer be bound to principles decided by the European Court and will no longer refer matters to the court.

4.Parliamentary Approval Required for Outcome of EU Negotiations

The Act mandates parliamentary approval for the ratification of the withdrawal agreement and outlines a detailed process at section 13(1) for same.

5.Makes some prescriptions

With respect to the UK’s future relationship with the EU, the Act requires the Government to lay before both Houses of Parliament before the end of October 31, 2018 a written statement outlining the steps taken towards negotiating a customs arrangement as part of the post-Brexit EU-UK relationship. Another example is the requirement placed on the Government to seek to negotiate on the UK’s behalf an agreement with the EU dealing with family unity for those seeking asylum or other protection in Europe.

The full text of the European Union (Withdrawal) Act may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Brexit Bill Clears First Parliamentary Hurdle

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Alicia Nicholls

The Theresa May government may have lost its Supreme Court Appeal last month but today the Government’s Brexit bill cleared its first parliamentary hurdle. After fourteen hours of debate spread over two days, the House of Commons voted 498 to 114 in favour of the European Union (Notification of Withdrawal) Bill, a bill to confer power on the Prime Minister to notify the UK’s intention to withdraw from the European Union under Article 50(2) of the Treaty on European Union (Lisbon Treaty).

Article 50(1) of the Treaty on European Union provides for any member state to decide to withdraw from the EU in accordance with that state’s own constitutional requirements. Last month, the UK Supreme Court, in dismissing an appeal by the UK government, held that a parliamentary vote was required in order for the Brexit process to begin. It should be noted that many of the parliamentarians who voted in favour of the Bill’s advancement had originally supported staying in the EU. However, many felt compelled to put aside personal views in order to give effect to the will of the 52% of British voters who had voted for Brexit. Mrs. May has reportedly indicated that she will publish a White Paper outlining the Government’s Brexit plans.

So what’s next?

Today’s House of Commons vote (the second reading) means that the Brexit bill is one step closer to becoming law, and will go to the next stage in the parliamentary process – the Committee Stage. During the committee stage, the Bill will be subjected to more enhanced scrutiny and it is here that any amendments may be made.

Upon leaving the Committee stage, the bill (whether or not amended) will again be debated and subjected to a final vote in the House of Commons. If the ayes have it, then it will pass to the House of Lords where the process will be repeated. The bill will be referred back to the House of Commons if the Peers make amendments to the bill.

However, once everything goes smoothly (i.e. there are no further amendments and the peers vote in favour of the bill), the Brexit bill will be sent to the Queen for the royal assent and thereupon will become law. This confers on the May Government the legal authority to make the Article 50 notification which commences the formal withdrawal negotiations with the EU. Mrs. May has indicated the end of March 2017 as her timeline for the notification. She has also promised that she will put the final withdrawal deal to a parliamentary vote.

The full text of the Brexit bill and further reporting on the UK House of Commons’ vote may be found here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

EU-Canada CETA: Seven Things to Know

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Alicia Nicholls

After a week more akin to the nail-biting final minutes of a suspense film, the European Union and Canada have finally signed the Comprehensive Economic and Trade Agreement (CETA) today Sunday, October 30, 2016. This sets the stage for the agreement to be provisionally applied.

Here are seven quick things to know about CETA:

  1. CETA is the EU’s first completed  free trade agreement with a G-7 country and its most ambitious trade agreement to date -By numbers, it encompasses over 500 million people (500 million in the EU-28 and  35 million in Canada), 29 countries and 24 languages. Prior to CETA’s signature, trade relations between the EU and Canada were guided by the Framework Agreement for Commercial and Economic Cooperation, in force since 1976 as well as a number of sectoral agreements.
  2. Canada was the EU’s 11th largest trading partner in 2015 – This is according to EUROSTAT data as at April 2016 which valued Canada-EU trade in 2015 at 63,479 million euro, accounting for 1.8% of EU trade with non-EU partners. On the flip side, the EU is second only to the United States as Canada’s largest  trading partner. According to Statcan data, Canada exported $39,454.8 million ($CAN) in goods to the EU in 2015 and imported $53.004.5 in the same period.
  3. CETA was several years in the making –  Negotiations between the EU and Canada began in 2009 and the text was concluded in 2014 and received legal approval in February 2016. However,the agreement has had to overcome several hurdles, including the fact that as a “mixed” agreement under EU law, it had to obtain the approval of each of the 28 EU member countries (in accordance with their own constitutional arrangements). There has been popular and political opposition to the Agreement, including the impasse between the Belgium Federal Government and the regional government of Wallonia which had threatened  to be the final nail in the coffin until a last minute internal deal saved the day. Despite the resolution of this political impasse, some popular dissent towards the Agreement remains as evidenced by the anti-CETA protests.
  4.  Almost 99% of tariffs will be eliminated on goods trade between the EU and Canada – The exceptions are a few sensitive agricultural products. However, tariff-eliminations are only a small part of CETA and the Agreement is WTO-plus in many aspects. It includes provisions on trade in services, investment,  sustainable development, labour, environment, inter alia. It also opens up the procurement market in the EU and Canada so businesses in those countries can bid on government contracts in each other’s countries.
  5. CETA provides for a novel Investment Court System – The permanent bilateral investment tribunal provided for in CETA’s Investment Chapter (Chapter 8) is a marked departure from the ad hoc tribunals used in traditional investor-state dispute settlement systems. The tribunal will be comprised of 15 members (five EU nationals, five Canadian nationals and five nationals of third states). In addition to this new ISDS system, the investment chapter provides more explicit language regarding the State’s right to regulate, an appellate tribunal, greater provisions on transparency of proceedings and conflict of interests, as well as commitment by the EU and Canada towards the shared objective of working towards the establishment of a permanent multilateral investment court which will replace the bilateral court under CETA.
  6. CETA is expected to boost income in both the EU and Canada. According to a 2008 joint study by the European Commission and the Government of Canada, conducted prior to the launch of the negotiations, it was found that the annual real income gain  within seven years of CETA’s implementation is to be an estimated  11.6 billion euros for the EU and 8.2 billion euros for Canada. The stated benefits of CETA are job creation, a liberalised procurement market and increased merchandise and services trade and investment flows between Canada and the EU and cheaper goods and services for consumers.
  7. CETA will be the benchmark for future agreements signed by both the EU and Canada with subsequent trade partners.  The standard of ambition in the Agreement is high. CETA is likely to be the last trade agreement signed by the UK as an EU-member before the UK is expected to make its Article 50 notification and BREXIT negotiations begin (slated for March 2017).

The full text of the Agreement may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

EU-Canada CETA trade deal hangs in the balance

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Alicia Nicholls

The Comprehensive Economic and Trade Agreement (CETA) negotiated between the European Union (EU) and Canada appears to be in limbo as Belgium’s French-speaking Walloon region has said a strident non (no in French) to the deal. According to media reporting, two key issues appear to be sticking points for the Walloon government. Firstly, there are concerns about potential increased pork and beef imports from Canada which they believe would be disadvantageous to Walloon farmers. Secondly, there is disagreement about the investment court system mechanism proposed for the settlement of investor-state disputes which they argue is tilted in favour of investors and would infringe on states’ rights to regulate.

The other 27 EU countries (including the UK) have indicated their willingness to sign and so does the Belgium government. So how is it that a Belgium region of roughly 3.6 million out of a total EU population of 500 million could potentially veto a trade agreement which took in essence seven years to negotiate? The CETA is a mixed agreement which means that it requires signature and ratification by each EU member state in accordance with its own constitutional requirements. Under Belgium’s constitutional arrangements, each of that country’s regions must give its consent to the national government  to sign any trade agreement. The Walloon Government has declined to give its consent to the Belgium government to sign the CETA. This has given rise to the quandary now being faced.

The CETA is the EU’s most ambitious free trade agreement to date with a third party. It not only seeks to eliminate customs duties on all industrial goods and on most agricultural and food products, but covers trade in services, intellectual property, government procurement, investment, inter alia. The negotiations were officially completed in September 2014. The text has been legally reviewed but only becomes binding once the Agreement has entered into force.

CETA’s investment chapter is novel as it establishes a permanent investment court which would hear disputes brought by investors, allows for greater transparency in proceedings, defines more narrowly the circumstances under which investors can bring claims, includes an express right of states to regulate and includes an appeal system. This new system is a marked departure from the traditional ISDS system found in old school BITs and in investment chapters of most FTAs like the Trans-Pacific Partnership (TPP). CETA will replace the 8 bilateral investment treaties that currently exist between individual EU states and Canada and under which claims by investors were heard by ad hoc arbitration panels. The provisions in these BITs were tilted heavily in favour of the investor and lacked language protecting states’ regulatory rights. It should be noted that Belgium and Canada do not have a BIT.

This current showdown between Wallonia on the one hand, and the rest of the EU and Canada on the other is just the latest episode in the drama playing out between free trade and the rising anti-trade populism and consequent political opposition sweeping across western countries. For example, US ratification of the Trans-Pacific Partnership remains held up in the US Congress and whether it is indeed ratified is not a certainty given the rhetoric of both major presidential candidates. With regard to CETA itself, this is not the first hurdle the agreement has faced as earlier this year Bulgaria and Romania had raised objections to the agreement over Canada’s failure to remove visa requirements for Bulgarian and Romanian nationals.

The Monday deadline has been missed and it is the first time that one region in an EU country has threatened to derail a negotiated outcome with a third state, a prospect which is not just frustrating for EU leaders and Canada but raises questions about the reliability of the EU as a negotiating partner seeing that this agreement is with a western country with similar values on trade.

To this effect, Canada’s Minister of International Trade, Chrystia Freeland, is reported as stating as follows:

“Canada has worked, and I personally have worked very hard, but it is now evident to me, that the European Union is incapable of reaching an agreement — even with a country with the European values such as Canada, even with a country as nice and patient as Canada.”

Another question is what does this state of affairs mean for the future BREXIT negotiations once the UK makes its Article 50 notification? Some commentators had previously argued that CETA might have been a suitable model for future EU 27-UK relations as it does not involve the free movement of labour. This issue was raised by EU Commissioner, Cecilia Malmstrom, who is quoted in media reports as saying “If we can’t make it with Canada, I’m not sure we could make it with the UK.”

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.