EU Proposes to Allow Quick Retaliatory Tariffs After WTO Appeals Cease to Function
The European Union is proposing to amend its rules on tariff retaliation so it can still impose tariffs and other restrictions after the World Trade Organization’s dispute settlement appellate body ceased to function on Dec. 11, the EU Commission said in a press release.
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Under current EU rules, the full WTO dispute settlement process must play out before the EU imposes retaliatory tariffs, quotas or other restrictions in trade disputes. The proposal would allow for the EU to impose tariffs following the reports of WTO dispute settlement panels, which are still functioning, in cases where the WTO full dispute settlement process can’t be completed “and if the third country has not agreed to interim appeal arbitration.”
“The lack of a functioning WTO Appellate Body allows WTO Members to avoid their obligations and escape a binding ruling by simply appealing a panel report,” the press release said. “The Commission's proposal will enable the EU to react even if the WTO is not delivering a final ruling at the appellate level because the other WTO member blocks the dispute procedure by appealing into the void.”
The proposal also extends this principle to the EU’s regional or bilateral trade agreements. It would allow retaliatory tariffs “if adjudication is not possible” under a regional or bilateral agreement because the FTA partner “is not taking the steps that are necessary for a dispute settlement procedure to function.” In both cases, the level of retaliation would have to be “commensurate to the nullification or impairment of the Union’s commercial interests caused by the measures of that third country,” as required under WTO rules.
As of Dec. 11, the WTO appellate body no longer has a quorum of judges to issue any new rulings, though the current judges plan to complete the four cases they have already heard arguments in (see 1912090031). The U.S. is refusing to approve new members of the appellate body until certain changes are made to the process.