2019 2018 2017 2016

European Commission adopts mandate to extend interim appeal arbitration arrangement


On 25 July 2019, the EU and Canada reached an agreement on an interim appeal arbitration arrangement and is motivated by the current blockage in the WTO Appellate Body, the highest instance of WTO dispute resolution. If the current impasse persists – both stated – the Appellate Body will be unable to hear new appeals after 10 December 2019. Following this agreement, in early September the European Commission adopted a decision laying the groundwork to deal with the consequences of a possible blockage of the WTO Appellate Body. This decision will enable the Commission to enter into interim appeal arbitration arrangements with third countries based on existing WTO rules and will remain in effect until the Appellate Body is operational. More specifically, the EU Trade Commissioner Cecilia Malmström said: “The EU is committed to the rules-based international order and a functioning World Trade Organization (WTO) dispute settlement system. We will continue to work on solutions to modernise and strengthen the WTO and to restore an operational Appellate Body as soon as possible. But until that happens, we have to be sure that we can preserve our rights in WTO disputes”.

EU–Canada Summit: strengthening the rules-based international order


At the 17th Summit between the European Union and Canada held on 18 July 2019 in Montreal, the EU and Canada reaffirmed their determination to jointly address global challenges in a manner that strengthens the rules based international order, benefits citizens, and protects the planet by delivering on climate change and ocean commitments. Leaders expressed their resolve for rapid and concerted action to address the challenges facing the multilateral trading system. The European Union and Canada have agreed a Joint Summit Declaration.

The European Union was represented by the President of the European Council, Donald Tusk, with the participation of Trade Commissioner Cecilia Malmström. Canada was represented by its Prime Minister, Justin Trudeau. Three years after the signature of the Comprehensive Economic and Trade Agreement (CETA) and the Strategic Partnership Agreement (SPA) the EU and Canada emphasised the progress they have made since.

At the summit, the European Union and Canada also signed an ocean partnership agreement for ensuring the conservation and sustainable use of oceans, their resources and ecosystems. The agreement includes commitments to combating the negative effects of illegal, unreported and unregulated fisheries, marine pollution and climate change thus helping facilitate the sustainable development of marine and maritime sectors and the implementation of the 2030 Agenda for Sustainable Development.

Both sides also welcomed the conclusion of the negotiations on a new EU-Canada Passenger Names Record (PNR) agreement, pending its finalisation. They acknowledged the vital role of this agreement in enhancing security while ensuring privacy and the protection of personal data.

The leaders agreed to advance consultation and coordination on foreign policy issues regarding, among other examples, Ukraine, Iran, China, Syria and Venezuela. The EU and Canada intend also to expand practical cooperation to support democracy based on a new arrangement that will facilitate Canada’s participation in EU Election Observation Missions. Finally, the Summit took stock of the successful cooperation between EU and Canada in the framework of the EU’s Common Security and Defence Policy and welcomed Canadian deployments to EU civilian missions in Ukraine (EUAM Ukraine), the West Bank (EUPOL COPPS), Mali (EUCAP Sahel Mali) and Iraq (EUAM Iraq).

EU and Mercosur reach agreement in principle for a comprehensive trade agreement


On 28 June, the EU and Mercosur, the bloc comprising Argentina, Brazil Paraguay and Uruguay, have reached a political agreement in principle for a new comprehensive trade agreement.

The agreement will benefit EU companies exporting to Mercosur countries in a number of ways, in particular by removing over time duties on 91% of goods that EU companies export to Mercosur, providing new opportunities to invest through establishment in both services and manufacturing sectors, and opening up procurement markets.

In line with the Commission’s strategy “Trade for all”, the EU-Mercosur agreement includes a chapter dedicated to sustainable development that will cover issues such as sustainable management and conservation of forests, respect for labour rights and promotion of responsible business conduct. It also offers civil society organisations an active role to overview the implementation of the agreement, including any environmental concerns. Further, the agreement commits the EU and Mercosur to effectively implement a number of international conventions on sustainable development, including the Paris Agreement on Climate Change and implement the International Labour Organization's fundamental standards.

The trade agreement reached today is part of a comprehensive new Association Agreement under negotiation between the EU and Mercosur countries. It is composed of a political and cooperation pillar – on which negotiators already reached a general agreement in June 2018 in Montevideo – and the trade pillar. 

Signature of the Free Trade Agreement and the Investment Protection Agreement between EU and Viet Nam


On 30 June 2019 the Free Trade Agreement and the Investment Protection Agreement between the EU and Viet Nam were signed in Hanoi by the respective representatives. The agreements will now be presented on the Vietnamese side to the National Assembly for ratification and on the EU side to the European Parliament for its consent, as well as to the respective national parliaments of the EU Member States in the case of the Investment Protection Agreement.

The trade agreement is intended to eliminate nearly all customs duties on goods traded between the two sides in a progressive way that fully respects Viet Nam’s development needs. The agreement also contains specific provisions to remove technical obstacles, such as those in the car sector, and will ensure that 169 traditional European food and drink products recognised as Geographical Indications are protected in Viet Nam. Besides, the agreement contains sustainable development measures recently confirmed by the ratification by Viet Nam of ILO Convention 98 on Collective Bargaining and the plan to adopt the revised labour code at its next session in the autumn of 2019. The EU has welcomed the plan of the Government of the Socialist Republic of Viet Nam to submit the ILO Convention 105 and 87 to the National Assembly of Viet Nam for the ratification procedures.

The investment protection agreement includes modern rules on investment protection enforceable through the new Investment Court System and ensures that the right of the governments on both sides to regulate in the interest of their citizens is preserved. The basic idea is to replace the bilateral investment agreements that 21 EU Members States currently have in place with Vietnam putting in place new legal guarantees preventing conflict of interest and increasing transparency.

The agreements are an integral part of the framework established by the EU-Viet Nam Partnership and Cooperation Framework Agreement, which governs the bilateral relations in various areas, including development cooperation, peace and security, trade and investment, judicial cooperation, social affairs, good governance, rule of law and other issues of common interest. 

European Commission welcomed UNGA resolution on trade in tools torture


The European Commission welcomed the United Nations General Assembly’s passing of a resolution aimed at abolishing trade in equipment used for torture. The idea of a resolution was proposed in September 2018 at the First Ministerial of the Alliance for Torture-Free Trade in New York. The Alliance, founded a year earlier by the EU, Argentina, and Mongolia, now counts over 65 members, with more in the process of joining. In a joint communiqué at the Ministerial, its members agreed to work to create a UN instrument, such as a binding convention, to end trade in the tools of torture. As a co-founder of the Alliance for Torture-Free Trade in 2017 and with its own legislation in place since 2005, the EU is at the vanguard of efforts to stop trade in the tools of torture. Since 2005, the European Union has strictly regulated trade in certain types of equipment and products – such as gallows, electric chairs, and lethal-injection systems – that can be used for capital punishment, torture, and other inhumane treatment. Goods of this nature may never cross EU borders, even for transit. Here the comment of the EU Trade Commissioner Cecilia Malmström: “Today’s UN resolution launches the process to establish international rules on abolishing trade in equipment whose only practical use is torture. It is a big step forward towards our goal of ending the production of these abhorrent tools. In the EU we’ve worked hard to put values at the heart of our trade policy. Together with the other members of the Alliance for Torture-Free Trade we are committed to using international trade rules to make a difference in the world.”

EU mission to Cambodia continues the assessment procedure of the country’s respect of the 15 conventions listed in the GSP regulation


From 3 to 10 June 2019, a mission formed of officials from the European Commission and the European External Action Service visited Cambodia to assess and monitor the human rights situation in Cambodia in view of a re-evaluation of the country’s participation to the Everything But Arms (EBA) trade scheme. The re-evaluation procedure started on 11 February 2019.

The EBA scheme is part of the EU’s Generalised Scheme of Preferences (GSP) which removes import duties from products coming into the EU market from vulnerable developing countries. Such schemes are conditional to the beneficiary countries’ respect of the principles of fifteen core conventions on human rights and labour rights listed in the GSP Regulation.

As announced in Trade for all, the EU has stepped up its engagement with three GSP beneficiary-countries: Bangladesh, Cambodia and Myanmar. The EU is engaging with these countries due to the gravity of alleged shortcomings in respecting core human rights and labour rights standards, as testified by reports from the United Nations, the International Labour Organization, and civil society.

The EU Commission adopts a proposal for a Council Decision authorising negotiations to modernise the Energy Charter Treaty


The EU Commission has presented a Recommendation for a Council decision on the modernization of the Energy Charter Treaty (“ECT”).

The recommendation aims to bring the ECT in line with the EU reformed approach to international investment law and policy after the entry into force of the Lisbon Treaty and the Commission strategy “Trade for all.” An approach that boils down to better safeguarding the EU’s regulatory powers, promoting investment that supports sustainable development, respect for human rights and high labour and environmental standards, and protecting the essential interests of the EU.

The proposal moves towards that direction by supporting the clarification and better definition of the standards of protection for investors and investments contained in ECT clauses like the “Most favoured nation treatment” provision, including national treatment post-establishment, “Fair and equitable treatment”, and “full protection and security.”

As regard the dispute settlement, the proposal suggests that, given the ongoing international initiatives on the reform of dispute settlement (ICS and MIC), the modernisation of the relevant provisions of the ECT should only be conducted once those international initiatives deliver tangible results.

The Court publishes its long awaited Opinion 1/17 on the compatibility of the Investment Court System in CETA with EU law


Every Cloud has a Silver Lining: Some preliminary thoughts on Opinion 1/17


The CJEU published today its long-awaited Opinion 1/17, which finds the Investment Court System in CETA (“ICS”) compatible with EU law.


Opinion 1/17, summarised below, clarifies some longstanding questions, such as whether an international court may lawfully consider EU law as a matter of “fact”, and whether international investors’ protection through ad hoc judicial mechanisms violates the EU principle of equal treatment of “domestic” investors. Opinion 1/17 can be saluted as a step forward in reinforcing the position of the EU as an international actor with the tools and the responsibility to lead the development of international law. It equally appears to mark a step away from the unrealistic and perilous idea of “supremacy” of EU law over international law in the external relations.


Yet, in the “usual” fashion of the Court, Opinion 1/17 also paves the way to new questions on the scope of the “autonomy” of EU law. In particular, the Court appears now to raise doubts on the “constitutional” compatibility of the mechanism of preliminary reference from international tribunals to the CJEU, which features in a number of negotiated and negotiating international agreements of the EU.




The Court opens its reasoning in Opinion 1/17 with a discussion on the principles withstanding the relationship of the EU with international law, that are, the competence in principle to create courts of law and the need for these courts not to have adverse effects on the EU legal system, its “essential characteristics” and, it goes without saying, the “autonomy of its legal order.” Article 19 TEU and 267 TFEU also feature prominently among the principles that the Court recalls in the opening paragraphs of Opinion 1/17 to highlight the systemic importance of the EU judicial system for the preservation of the legal order.


Yet, the Court clarifies, the fact that the ICS is not part of the EU judicial system does not mean per se that that mechanism adversely affects the autonomy of the EU legal order. That it because, and here is the key to the decision, the jurisdiction of EU courts is not superior to that of courts sitting outside of the EU, that is, in this case, Canadian courts and the ICS itself. Indeed, the Court finally appears to expressly clarify that, was that not the case, the competence of the EU to set up international courts would be substantially deprived of significance by the unnatural lack of reciprocity arising out the fact that the EU and its Member States could virtually never be subject to the jurisdiction of an international court. That, the Court points out, would lead to curtailing the EU powers themselves to maintain and foster international relations (and I would add, its capacity to fulfill the mandate conferred by the Article 21 TEU to preserve and promote EU values abroad).


Significantly, the Court expressly distinguishes the case of the ICS from Achmea. Opinion 1/17 confirms the explanation of the Achmea judgement given by the CJEU President a few weeks ago in a speech at King’s College London, where he clarified that the rationale of that judgment does not reside in any particular issues of compatibility between EU law and arbitration, but rather in the principle of mutual trust among Member States. President Lenaerts explained that the principle of mutual trust is incompatible with mechanisms, such as the intra-EU investment tribunal in Achmea, by which Member States express distrust vis-a-vis the judicial system of fellow Member States. Such principle of mutual trust, the Court confirms in Opinion 1/17, is instead not applicable to a mechanism placed outside of the EU legal system, such as the ICS.


That said, the Court moves on to explain that the actual compatibility of the ICS with the autonomy of the EU legal order depends on whether that tribunal: a) is not conferred any power to interpret or apply EU law; and b) doesn’t have the power, by means of its awards, to prevent in practice the EU institutions from operating in accordance with the EU constitutional framework (the CJEU’s usual condition that the operation of international courts should not affect the balance of powers among the Institutions and the Member States).


The Court firstly clarifies the longstanding question of whether the applicable law provision in CETA that denies jurisdiction to the ICS “to determine the legality of a measure, alleged to constitute a breach of this Agreement, under the domestic law of a Party” and only allows it to take into account domestic law of the negotiating parties (thus also EU law) as a matter of “fact” solves incompatibilities with EU law. The answer appears to be yes. The devil is in the details: for the Court, an “examination” of domestic law on the part of the ICS tribunal made with the purpose to make a decision is different from an “interpretation” of EU law, which would inadmissibly affect the autonomy of EU law.


The Court also affirms that the powers conferred to the ICS do not affect the balance of powers among the EU and its Member States. Indeed the Court notes that the fact that it is for the EU to decide whether it will be the EU or its Member States to act as respondent in a case, is sufficient to preserve the jurisdiction of the CJEU to give rulings on the division of powers between the Union and its Member States.


In an unexpected twist, the Court appears to support the compatibility of the ICS with the EU legal system on the basis that CETA does not provide a preliminary reference mechanisms to the Court. This sentence, which appears almost casually “dropped” by the Court in the middle of its opinion (para 134) without being supported by any further reasoning, will give rise to an extensive debate in the coming months. It should be recalled here that many saw in an “EU Ukraine AA-style” reference mechanism the key to the compatibility of international dispute mechanisms with EU law. Belgium itself, in its request for an opinion on the CETA agreement, pointed at the absence of such a preliminary reference mechanism in the CETA agreement as one of the indicators of the alleged incompatibility of the ICS with EU law (para 50 of the Court’s Opinion). The scope and meaning of the decision of the Court on this point remain unclear. Were the Court really intending to exclude the compatibility with EU law of preliminary reference mechanisms, issues would arise not only in relation to the EU-Ukraine Association Agreement, but also to the Draft Withdrawal agreement with the UK and the negotiating EU-Switzerland framework agreement.


In the following part of Opinion 1/17, which will be analysed in more details elsewhere, the Court confirms the compatibility of the ICS with the institutional framework of the EU and the principle of equal treatment of investors (an issue that had remained pending in the Achmea judgement).


As for the compatibility of the ICS with the institutional framework of the EU, the Court states that, while the ICS is set up to protect the interest of foreign investors by ensuring their “fair and equitable treatment” (Article 28.3.2 of the CETA Agreement), the CETA agreement does not affect the powers of the Union to protect the public interest and to regulate (Article 8.9.1 of the CETA agreement).


The Court is equally not persuaded that the establishment of the ICS violates the general principle of equal treatment as enshrined in Article 20 of the Charter of Fundamental Rights of the EU (equality before the law), and Article 21(2) of the Charter of Fundamental Rights of the EU  (discrimination on grounds of nationality). Indeed, as equal treatment requires that comparable situations must not be treated differently and different situations must not be treated in the same way the different situation of Canadian enterprises and natural persons that invest within the Union compared to that of enterprises and natural persons of Member States that invest within the Union leaves no ground for finding a violation of equal treatment provisions.


Some tentative conclusions


Opinion 1/17 sends out a positive message of renewed inter-institutional cooperation, where the judiciary rightfully scrutinizes the actions of the executive in the light of the constitutional principles of the EU, but restricts itself from interfering with policy making. The Opinion strengthens the role of the European Union in the international relations, and opens to a more "international law-friendly" approach of the trading block by clarifying that supremacy of EU law cannot go as far as operating in the external relations of the EU. Perhaps it is not too much to hope that enhanced unity in the EU trade relations will help overcome divisions, populism, rule of law issues, and the uncertainties around the imminent formation of a new Parliament and Commission.



Giorgia Sangiuolo, King's College London



Commission reports good advancement in the trade talks with Australia and Chile


The EU Commission has recently reported on the good advancements in the Free Trade Agreement (FTA).negotiations with Australia and Chile.

The  third round of negotiations with Australia, started in mid-2018, saw 16 working groups formed of representatives of both parties meet to discuss almost all areas of the future EU-Australia FTA. Important progresses appear to have been done in the chapter on services and investment, where both sides have been able to achieve consolidated texts based upon the initial EU proposals for texts comprehensively dealing with the liberalisation of services and investment during this round. Further, Australia and the EU discussed all articles of the EU proposal on transparency and agreed in principle on several provisions, although some issues, such as the inclusion of judicial decisions into the scope and the application of dispute settlement to the chapter, still remain open. Trade and sustainable development commitments, on the topic of which the EU has presented ambitious proposals including climate change, labour and corporate social responsibility, also saw a substantive advancement, with both sides conducting discussions on topics like right to regulate, multilateral labour standards and agreements, including core labour standards, multilateral environmental governance and agreements, trade and climate change, biological diversity, sustainable forest management, sustainable fisheries, as well as institutional provisions.

The EU negotiations with Chile for the modernization of the FTA currently in force between the parties, started in late 2017, have reached their fourth round. The parties report good progress in a significant number of topics, including rules of origin, SMEs, services and competition, with important progress on the text. Important progresses appear to have been done with regards to the chapter on public procurement, where discussions continued on the consolidated text, in particular on how the proposed provisions that replicate commitments and obligations of the WTO Government Procurement agreement, or build on it, are in line with their domestic legislation. Likewise, advancements of negotiations regarding the chapter on customs and trade facilitations, and particularly on procedures for the release of goods, publication of customs-related information, the availability of advance binding decisions from customs, and disciplines relating to customs fees and formalities, are described as “significant. Interestingly, the EU and Chile are also holding talks on “Trade and Gender” provisions, evaluating the incorporation of references to the Convention on the Elimination of all forms of Discrimination against Women and the 2030 agenda aims in their trade agreement.

EU-Japan Joint Committee adopts decisions for the implementation of the Economic Partnership Agreement


Today the EU-Japan Joint Committee has adopted a set of decisions on procedures for the implementation of the  EU and Japan's Economic Partnership Agreement, which entered into force on 1 February 2019. The Joint Committee has also started a bilateral cooperation to monitor and support the implementation of the agreement

The agreement benefits the bilateral trade relations in multiple ways, by for instance

  • scrapping duties on many agricultural products (eg. Gouda and Cheddar cheese and wine exports);
  • ensuring the protection in Japan of multiple Geographical Indications;
  • facilitating the access of EU companies access to the procurement markets of 54 large Japanese cities, and removing obstacles to procurement in the economically important railway sector at national level;
  • setting very high standards of labour, safety, environmental and consumer protection and strengthening EU and Japan's commitments on sustainable development and climate change;
  • recognizing the equivalent protection of data on the territory of the two partners (in so creating the world's largest area of safe data flows).

As of 1 February, a large part of another agreement – the Strategic Partnership Agreement between the European Union and Japan – also applies on a provisional basis. This agreement, which was signed in July of last year together with the Economic Partnership Agreement, is the first-ever bilateral framework agreement between the EU and Japan and strengthens the overall partnership by providing an overarching framework for enhanced political and sectoral cooperation and joint actions on issues of common interest, including on regional and global challenges.

The Agreement will enter into force once it has been ratified by all EU Member States.

Commission publishes its Annual Report on EU trade defence


On 28 April the Commission released its annual report on trade defence.

Trade defence instruments (anti-dumping, anti-subsidy, safeguards) are particularly important for EU trade, as they shield European industry from the harmful effects of dumped or subsidized imports. The Commission has put in place in the last few years a new defense policy, based on the principles of transparency, engagement with third countries, and effectiveness.

The reports highlights that at the end of 2018 the EU had 93 definitive anti-dumping measures and 12 countervailing measures in force. The total number of trade defense instrument measures in force in other countries affecting EU exports, amounted instead to 174 in 2018 (as compared to 162 in 2017). According to the report, this trend is expected to continue over the next years.

As for the investigative work of the Commission of situations regarding he need of adoption of trade defense measures, that remained at a high level, reaching nearly that of 2017. The work consisted mainly of new investigations under new sets of trade defense investigation rules, as well as of a still significant number of reviews. At the end of 2018, 45 investigations were ongoing, as well as six refund investigations covering 99 refund requests.

According to the report, trade defense measures kept busy also the judicial organs of the EU; the General Court and the Court of Justice rendered 26 judgments in the area, while 15 new cases – against the 20 for 2017 – were filed.

EU Commission to hold a meeting with stakeholders on the establishment of the Multilateral Investment Court on 22 March 2019


On 22 March 2019, the EU Commission will hold a meeting with stakeholders on the reform of investor-State dispute settlement (ISDS).

The meeting will focus on the establishment of a fully-fledged two-tiers’ multilateral investment court, the Commission’s proposal for ISDS reform arised out of the TTIP negotiations in 2015.

After the impact assessment process on options for a multilateral reform of the investment dispute settlement system, on 20 March 2018 the Council adopted and published the negotiating directives for the multilateral investment court.

The EU is also negotiating the establishment of the court at the multilateral level in UNCITRAL Working Group III. The submissions presented by the EU in UNCITRAL are available here and here.

 Registration for th event is available here. The event will be livestreamed.

The European Parliament adopts a resolution on the recommendations for opening of trade negotiations between the EU and the US


After that on 19 January 2019 the international trade committee voted in favour of a resolution calling for new talks between the EU and the US to start, the EU Parliament is engaged in an effort to make sure that such relations develop in the framework of the EU values.

Notably, with the input of Mr. Bernd Lange, chair of the international trade committee,the European Parliament has adopted a resolution pointing out that the mentioned negotiations shall not start before the US complies with some of the conditions indicated in the resolution of the the international trade committee of 19 January 2019.

These are specifically that the negotiations exclude agriculture and that the US lifts its tariffs on aluminium and steel.

The Commission will have to take into account the position of the EU Parliament: any deal resulting from these talks has to be approved by the European Parliament before it can enter into force.

The European Commission submitted its draft negotiating mandates to the Council for approval on 18 January. The mandates will authorise the Commission to negotiate with the US on eliminating tariffs on industrial goods and on harmonising conformity assessment.

Parliament will vote on its stance on the mandates in March. EU Council of Ministers is expected to adopt the draft negotiating mandates in the same month. The Commission will start negotiations on the basis of the final mandate.

EU Parliament approves the new European framework for screening of foreign direct investments


On 14 February 2014, the European Parliament has approved the new European framework for screening of foreign direct investments.

The approval follows the political agreement reached on 20 November 2018 by the European Parliament and the Council on the proposal of the Commission for the first comprehensive European Union (EU) framework for the screening of Foreign Direct Investments.

The framework responds to growing concerns in many EU countries that state-owned or state-controlled foreign investors are increasingly acquiring control over high-tech companies and critical infrastructure in Europe.

The framework does not establish EU-level screening nor it harmonizes existing screening mechanisms of the Member States.Rather, it sets up a common legal framework in which such mechanisms can develop. Specifically, among other things, the framework:

1.Lays down minimum requirements for Member States’ FDI screening schemes (judicial protection, non-discrimination, transparency);

2. Will allow the Commission to provide advice to Member States if it considers that a planned or executed investment could have an impact on safety or public order in one or more Member States.

3. Provides for a cooperation mechanism between the Member States and the Commission. Under the framework, Member States should keep each other and the Commission informed of any foreign direct investment that is screened by their national authority. They must also share certain information on request, such as the ownership structure of the foreign investor and the financing method.

The Regulation needs now to be approved by the Council to enter into force.

EU-Japan EPA Enters Into Force


Today the Economic Partnership Agreement (EPA) between the EU and Japan entered into force. As of today, also a large part of another agreement between the two parties – the Strategic Partnership Agreement – becomes provisionally applicable.

The EPA, which represents the outcome of longstanding negotiations started in 2013, addresses several aspects of the commercial relations between Japan and the EU, by for instance:

  • Removing customs duties – tariffs on more than 90% of the EU's exports to Japan;
  • Safeguarding the geographical indications of  numerous EU exports;
  • Reducing many non-tariff measures, is so facilitating the access of EU companies to the highly regulated Japanese markets, such as the automotive sector;
  • Opening the services sectors;
  • Removing a number of access barriers to the market of public procurements in Japan.

The deal also includes a comprehensive chapter on trade and sustainable development and sets the highest standards of labour, safety, environmental and consumer protection.

AG Bot finds that the ICS – the mechanism for the settlement of disputes between investors and States provided in CETA – is compatible with EU law


In his much anticipated opinion rendered today, Advocate General Bot found that the mechanism for the settlement of disputes between investors and States provided for by the free trade agreement between the EU and Canada is compatible with EU law.

The AG’s opinion sparks from the request for an opinion (C-1/17) of the European Court of Justice (“ECJ”) pursuant to Article 218(11) TFEU filed by Belgium on 7 September 2017 regarding the compatibility with EU law of the Investment Court System (“ICS”) provided for by the Comprehensive Economic and Trade Agreement between the EU and Canada (“CETA”). Specifically, Belgium expressed reservations as regards to the effects of that mechanism on the autonomy of EU law, the general principle of equal treatment, the requirement that EU law is effective, and the right of access to an independent and impartial tribunal.

In the opinion of AG Bot, “autonomy” of the EU legal order cannot be understood as autarchy. Indeed, the creation of a common set of rules and standards to regulate the EU relations with third countries calls for the creation of an independent system of protection for investors, both in the EU and on the territory of the Union’s trade partners. This conclusion is also supported by the absence of direct effect of CETA, which excludes that national courts may enforce the safeguards included therein. The AG also draws a comparison – and underlines the differences – between the ICS and the system of investment arbitration, found incompatible by the ECJ in the Achmea judgement (C-284/16): whilst the Court in Achmea was safeguarding the essential principles of mutual trust and loyal cooperation which govern the relationship between the Member States, the ICS does not impinge in such principles.

AG Bot further observes that the ICS would not be able to interpret and apply EU law, it would be unable to order the annulment of EU law measures considered in violation of CETA, and it would be prohibited from ruling on the division of powers between the EU and its Member States. Thus, its structure and functioning safeguard the “autonomy” of EU law. Of particular relevance is the observation that the law applicable by the ICS consists of the provisions of CETA, applied in the light of international law. On those instances where the ICS would be requested to apply EU law, it would be bound by the decisions of the ECJ (CETA, para. 8.31.2).

The AG also concludes that the ICS does not undermine either the application of EU law or the role of national courts to start preliminary references procedures: on the one hand, its jurisdiction does not limit the substantive rights enjoyed by investors in the EU; on the other, the role of national courts “to hear and determine actions brought with a view to ensuring the observance of such rights as are afforded by internal EU law” remains untouched.

Finally, for AG Bot, the ICS affords investors with the right of access to an independent and impartial tribunal as provided under Article 47 of the European Charter of Fundamental Rights. Not only the ICS is only an alternative method of dispute resolution relating to the application of the free trade agreement – which complements the remedies offered by the contracting parties – but also it includes procedural safeguards essential to ensuring the right of access to an independent and impartial tribunal, such as the remuneration of the judges, the rules for their appointment and possible removal, and the specific rules on ethics applicable to them.

EU steps up engagement with Republic of Korea over labour commitments under the trade agreement


On 21 January 2019, the EU has begun government consultations with the Republic of Korea regarding the implementation of the sustainable development commitments under the EU-Korea trade agreement following the formal request issued on 17 December 2018. The EU-Republic of Korea trade agreement, in place since 2011, was the first of the “new generation” comprehensive trade agreements that include a trade and sustainable development chapter, with a number of labour and environmental commitments based on multilateral standards and agreements. The EU-Republic of Korea trade agreement is now in its eighth year of implementation and the EU considers it is time that progress is made and therefore supports the efforts of President Moon to move forward to ratification and legislative changes in this field. The EU has two key longstanding concerns with regard to Korea’s implementation of the commitments on trade and sustainable development: on the one hand, the respect for the International Labour Organisation (ILO) fundamental principles of freedom of association and the right to collective bargaining and, on the other one, the outstanding ratification by Korea of four fundamental ILO Conventions: two concerning freedom of association and the right to collective bargaining and two concerning forced labour.​


The EU moves forward efforts at UN on multilateral reform of ISDS


On 18 January 2019, the EU and its Member States submitted two papers to the UN Working Group under the United Nations Commission on International Trade Law (UNCITRAL) on the multilateral reform of ISDS. The first EU paper sets out the EU’s proposal of establishing a permanent multilateral investment court with an appeal mechanism and full-time adjudicators. The EU views this as the only reform option that can effectively respond to all the concerns identified in this UN process as it would:

• enhance the predictability and consistency of decisions and ensure their correctness,

• eliminate the ethical concerns of the current system, and

• effectively address the problems of excessive costs and duration.

The second paper makes proposals for an effective work plan so that the Working Group develops concrete solutions and text proposals to be adopted by the UNCITRAL Commission and ultimately the UN General Assembly. The EU papers are a contribution to a multilateral discussion on ISDS reform with broad and inclusive participation of all countries and stakeholders. The proposals by the EU and its Member States and by other countries will be discussed at the next meeting of the Working Group from 1 to 5 April 2019.

The EU Commission submits two proposals to Uncitral Working Group III regarding the reform of investor-state dispute settlement


Following up on the invitation by the President of the UNCITRAL Working Group III to participating parties of 22 November 2018 to present concrete written proposals regarding the future of investor state dispute settlement, on 18 January 2019 the EU Commission submitted two documents for discussion to the Working Group.

A first document, “Establishing a standing mechanism for the settlement of international investment disputes” sets out the coordinates of a standing mechanism to resolve disputes between investors and states. It also reiterates that a permanent mechanism is the only type of reform which can effectively respond to all the concerns identified in the works of UNCITRAL Working Group III since its first meeting on 27 November-1 December 2017 in New York.

The second document, “Possible work plan for Working Group III” identifies the four practical steps that, in the opinion of the EU, the Working Group should undertake in its future work. These are: 1) Identification and proposal by governments of their preferred reform options; 2) Identification of which of the reform options put forward should be the subject of further work on the part of the Working Group; 3) Discussion and decisions in respect of the priority to be given, the sequencing of the deliberations, the possibility of multiple tracks, coordination with other international organisations and inter-sessional work of the options identified; 4) Development of concrete solutions and text proposals, which could be adopted or endorsed by the UNCITRAL Commission and, ultimately, the General Assembly of the United Nations.

The EU to impose definitive safeguard measures on the import of certain steel products


In response to the US’ adoption of protectionist measures for its steel industry, the EU intends to impose definitive safeguard measures on the import of certain steel products.


In a report notified to the WTO on 2 January 2019, the Commission explains that it intends to apply tariff-rate quota on 26 steel product categories (listed in Annex II of the report) to prevent “serious injury” to the EU steel market.


The adoption of the measures is based on an impact assessment carried out by the Commission, which highlighted the negative consequences that the imposition of the US Section 232 measures is having on the vulnerable EU steel market.


The measures will consist of tariff-rate quota by which a duty of 25% will apply when the level of the traditional trade flows is reached


The notification to the WTO explains that the measures will be introduced before 4th February 2019, date when the application of provisional measures already in place for those products from 18 July 2018 (G/SG/N/7/EU/1 and G/SG/N/11/EU/1) will expire. The safeguard measures will last for a period of three years (including the period of imposition of the provisional measures), until 16 July 2021.


Not all steel importers will be however affected. The provisional measures should exclude products originating in certain developing countries, which meet the requirements of Article 9 of the WTO Agreement on Safeguards, and, by reason of the high level of market integration, also steel products originating from EEA countries.