New EU law may encourage increased trade defence measures

On December 16 2010 the European Commission announced that the European Parliament had finally reached an agreement with the EU Council over new rules regarding the commission's implementing powers. In practical terms, the new rules are likely to be of interest to businesses from third countries which export their goods into the European Union, as they will also apply to trade defence measures adopted by the EU legislature.

The new Treaty of Lisbon foresees granting the commission so-called 'implementing powers'. In the past, such powers were submitted to traditional so-called 'comitology procedures'. In essence, this means that committees comprising member state representatives were able to vote for or against the commission's proposals, as was the case with regard to anti-dumping measures, where a simple majority voting system
was used.

The mechanism of control foreseen by the new regulation is still based on so-called 'comitology' (ie, the process through which the commission submits draft implementing measures to committees comprising member state representatives), but in contrast to the existing system, there can be no subsequent intervention by the council as a further appeals body.

More importantly for third-country exporters, the regulation foresees that implementing measures in policy areas such as trade defence will be included in the normal regime. Hitherto, these measures have been submitted to special procedures in which the council has frequently had the last word, allowing certain political arguments to be considered.

The new procedures will give more flexibility and, in effect, greater political discretion to the commission. In the absence of a qualified majority in favour of, or against, a commission draft implementing act (eg, a draft anti-dumping regulation), the commission will have the option either to adopt the act or merely to further review it.

The only exception to this – that is, the only scenario in which the commission will need a positive opinion from the committee in order to adopt a draft implementing act – relates to definitive multilateral trade safeguard measures. However, this scenario is unique and will unfortunately not apply in the case of other trade defence measures (eg, anti-dumping and countervailing definitive measures) which are of particular interest to businesses which export products from countries such as China and India.

As a result, the commission's proposals for most trade defence measures will be adopted through qualified majority voting, which will require at least two-thirds of the votes cast to be opposed to a measure in order for it to be blocked, in contrast to the existing simple majority system. In addition, the votes cast by member states will no longer be counted equally: the voice of more populous countries will be given proportionally more weight. This will make it much harder for member states to block the imposition of measures on imports of products. This is because some of the larger, protectionist-oriented member states (eg, Spain, France and Italy) are expected to club together to push through the adoption of trade defence measures.

Trade Commissioner Karel De Gucht criticised the existing legislative procedure under which trade defence measures are being adopted, claiming that member state representatives who sit on the Anti-dumping Committee are allegedly susceptible to lobbying and geopolitical pressure. The new system will reduce this.

In this respect, the voting reform is likely to be detrimental to traders from third countries as, by extension, the new procedure will allow less room to approach member states with policy arguments which have not been taken into consideration by the commission.

For all comitology procedures, all documents submitted to the committees will be disclosed simultaneously to the European Parliament and to the EU Council. These two institutions, on a completely equal footing, will also have a so-called 'scrutiny right', whereby they may indicate at any time that they consider a draft implementing act to exceed the powers conferred by the relevant legal basis on the commission. In such cases, the commission will merely have to review the draft measure in question and then explain to the European Parliament and the council what it intends to do.

The new comitology regulation will enter into force on March 1 2011 and will automatically replace the existing system.