It’s getting ever clearer: the EU is planning to rely increasingly on its bilateral free trade agreements to settle trade disputes with its partners. It is now actively testing the ground.
Part of the reason the Europeans suddenly rushed into the concluding long-standing negotiations with the South American bloc Mercosur this summer also has to with this: speaking at the think tank Bruegel recently, trade commissioner Cecilia Malmström said the Mercosur deal has increased in importance as a form of insurance against the faltering World Trade Organization. “If the WTO were collapsing it is of value in itself to have rules on which to operate [with Mercosur],” said Malmström.
The fact that Korea announced that it would ratify three outstanding core International Labour Organisation conventions this autumn is not stopping the European Commission from steam-rolling ahead and formally requesting the establishment of a panel of experts to review the situation and keep the political pressure on Seoul to deliver on its promise.
The dispute panel the EU requested with Ukraine a fortnight ago over its eastern neighbour’s continued ban on wood exports is puzzling trade law experts. “Why is the EU not going to the WTO?”, is the question one hears in private Twitter and other WhatsApp groups. After all, the rule the EU is invoking is the WTO’s very own: Article XI of the GATT which prohibits export restrictions. That article had simply been copy-pasted into the Association Agreement between Ukraine and the EU.
The conventional wisdom among trade policy veterans is that bilateral disputes and judicial or semi-judicial panels established under bilateral agreements don’t work. Countries that share a deep trade agreement still prefer to litigate in Geneva. The prime example are the United States, Mexico and Canada, who have failed to settle disputes within NAFTA – now USMCA — and instead kept judges busy on the shores of Lac Léman.
Times are changing. As we know the WTO’s Appellate Body will cease to function later this year. Peter Van den Bossche, an outgoing member of the venerable institution, thinks this will destabilise the entire process of dispute settlement and weaken dispute panels in the first stage of WTO dispute settlement.
This doesn’t mean there will be less jobs for trade law professors keen on producing sophisticated jurisprudence. The most powerful and the richest economic powers will snatch them to help them resolve their bilateral disputes. This week the EU Commission has circulated the list of panellists and chairs of panels it agreed to with Japan in case a commercial dispute arises under their brand new Economic Partnership Agreement.
From Akio Shimizu from Waseda University or Peter Jan Kluiper from Amsterdam University to Jennifer Hillman from Georgetown; Brussels and Tokyo are making sure they are getting the best and brightest.
Dear readers, a new era in the international trading system is opening up.