A week in Brussels, EU trade policy, ISDS ICS, Mercosur, South Asia & ASEAN, Steel, Trade defence, WTO & Plurilaterals, WTO disputes

A week in Brussels: Latin America, Vietnam, TDI, MIC

This week’s trade highlights of the week have been: Latin America, the EU-Vietnam free trade agreement, trade defence and the EU’s multilateral investment court plans.

 

Deal or no deal in Mercosur, that is the question

 

The EU has been negotiating hard with both Mercosur and Mexico this week to achieve trade agreements as soon as possible. Whether it’s Christmas, as the EU wishes, is yet an open question. There are increasing doubts the Buenos Aires ministerial meeting of the World Trade Organization on 10-13 December can be the place and time to announce a deal, and the possibility that an agreement is announced in January frequently crops up in conversations in Brussels.

 

The fact that Argentina blocked 20 non-governmental organisations from attending the WTO ministerial on Thursday is casting a shadow over the whole event, and could well complicate the politics of the Mercosur deal. In the list of excluded NGOs, there are a couple from the EU, such as Britain’s Global Justice Now and the Netherlands’ Transnational Institute.

 

Vietnam FTA ratification in slow lane

 

The Vietnamese are becoming frustrated with the slow pace at which the ratification process of their free trade agreement with the EU – signed back in 2015 – is advancing. The Friends of Vietnam group hosted by Czech europarliamentarian Jan Zahradil convened this week in the plush Stanhope Hotel ahead of a visit by the new Vietnamese trade minister, Tran Tuan Anh, to Brussels. Tran hopes to get the EU to accelerate the process. But it won’t be easy.

 

The EU isn’t happy with the human rights situation in Vietnam. A human rights dialogue was held this week in Hanoi. “The EU underlined the deterioration of civil and political rights,” reads the European External Action statement released this morning. “The EU expressed serious concerns about the extensive application of the national security provisions in Vietnam’s penal code and noted the steep rise in the number of detentions, arrests and sentencing of Vietnamese citizens related to the expression of their opinions.”

 

Berlin continues to hold a grudge against Hanoi after Vietnam allegedly kidnapped a man pursued for financial misconduct on German territory this summer. The diplomatic rift runs deep.

 

EU member states haven’t yet agreed to separate the ratification process of the FTA’s ‘EU-only’ topics and the investment protection and/or ‘mixed competence’ provisions. This is a key European Commission ask following the May 2017 Court of Justice ruling on the EU-Singapore FTA. But capitals are dragging their feet.

 

The European Parliament is also pressing Vietnam to come up with a detailed action plan on how it will ratify and implement the core International Labour Organization conventions with which it committed to comply in the trade pact.

 

Finally, there is the Japan FTA. The commission is confident the agreement will be signed in the coming weeks. The rumour is that the commission wants the Japan deal to be ratified before Vietnam’s next year.

 

Steel and trade defence

 

Eurofer, the EU steel lobby group, is pleased with the outcome of the Global Forum on Excess Capacity held in Berlin yesterday. “This framework provides a hook to structure and channel the real implementation work ahead of us, with the ultimate goal of enforceable rules that provide a real global level playing field for European steelmakers,” said Axel Eggert, the group’s chief. More in Jennifer Freedman’s article on the Berlin steel meeting.

 

Steel overcapacity is one of the reasons behind the big fuss made around trade-defence instruments in the EU, and in the parliament in particular, this year.

 

“EU trade-defence instruments will continue to be indispensable over the long term so as to level the playing field for EU steel producers, even as countries not party to the agreement – such as Iran – continue to build up supplementary excess steel capacity,” Eggert said.

 

Proceedings on the China-EU dispute at the WTO about China’s market economy treatment only begin next week, but the US is showing a keen interest in the dispute. See Jennifer’s article.

 

Another trade-defence regulatory package is winding its way, the ‘TDI reform’ in the policy jargon. A technical ‘trilogue’ meeting in Brussels yesterday brought member states and the parliamentary delegation closer to an agreement.

 

Final outstanding issues: threshold of raw materials distortions above which to waive the EU’s famous ‘lesser duty rule’, the timing of early disclosure of duties to importers and the ‘union interest’ test in the decision to waive the rule. The latter was a key member state ask: now the haggling is about the exact wording and conditions.

 

All sides hope to announce a trilogue deal next Tuesday (5 December 2017).

 

Intra-EU BITs not into the multilateral investment court

 

Everyone’s obsessed with the EU’s multilateral investment court plans these days. There was a civil society meeting this week on this topic as the commission drew up an impact assessment.

 

Trade commissioner Cecilia Malmström also briefed the parliament during a late-night plenary session on Wednesday about where the EU’s plans for the MIC are headed, in response to an ‘oral question’ tabled by the trade committee.

 

“We are clearly still in the early stages,” Malmström said. The commission requested a mandate from member states to start negotiations for the court but “we still have no indication of when this will come”, she added.

 

The EU isn’t planning to dock its intra-EU bilateral investment treaties – which the Advocate General* of European Court of Justice surprisingly deemed compatible with the bloc’s law – into the new global investment protection order the commission plans to establish. “There are internal bilateral investment treaties between EU member states,” Malmström said. “They will have to be outside this reform initiative.” The EU trade chief said the commission continued to regard these treaties as incompatible with bloc-wide law.

 

There has been talk of docking the multilateral investment court onto the existing multilateral framework under UNCITRAL – what Nikos Lavranos termed the Mauritius Approach in a recent analysis for Borderlex.

 

“It is still too early to say whether the multilateral investment court would be a standalone institution, which is one possibility, or docked into another,” Malmström said. “There are different views on this and options are on the table. It is a little too early to decide this yet.”

 

Brexit

 

We are edging closer to the possibility that Britain and the EU27 manage to agree to start phase two of Brexit negotiations – discussing the future trade relationship – in December after Britain agreed this week to pay in full for the liabilities it incurs for the remainder of its EU membership.

 

This is a good moment to look at Britain’s non-EU trade policy plans. These are undergoing a reality check, I argue this week.

 

And if you want to catch up on the inside story of the dual-use regulation process in the European Parliament, this is the time!

 

* This sentence was amended to make clear this is an opinion held by the Advocate General not the Court itself, which has not yet ruled on the Achmea case.

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