NEWS

The EU can resort to various measures to defend itself, from appealing to the World Trade Organization (WTO) to starting a real trade war.

EU trade policy takes full advantage of globalization. The European economy thrives, among other things, thanks to free trade. However, this right can sometimes be undermined because some countries set unfair tariffs for their products, or sell their goods at abnormally low prices. There is also the risk that conflicts over transactions result in a trade war. This conflict occurs when two or more parties continue to increase rates or create other barriers, which can make products more expensive and hinder the activity of companies. The EU can use several trade defense instruments when such situations occur. Read below some recent examples of trade disputes.

Appeal to the WTO

The EU and its member states are among the 164 members of the World Trade Organization (WTO), which exists to ensure a rules-based international trading system. It has the power to rule on commercial disputes and enforce decisions. In the past, this has helped prevent the worsening of commercial disputes.

Any member of the WTO can file a claim if it detects a breach of the rules of this organization and request compensation.

Since the creation of the WTO in 1995, the EU has been involved in 181 cases: 97 as a complainant and 84 as a defendant.

Tackling unfairly cheap imports

Being a member of the WTO does not prevent the EU from developing legislation to counteract the impact of products that reach the European market at an abnormally low price and harm the premises. The low price may be due to different issues, from the lack of competition in the country where the product was manufactured, the strong interference of the state in the production process or even because the company in question does not respect international labor and environmental standards.

The EU can respond by imposing anti-dumping duties. In 2017, MEPs voted to update the rules that regulate when and how those fees can be imposed. MEPs approved imposing higher rates on products at abnormally reduced or subsidized prices in May 2018.

From steel to Spanish olive: current disputes

The president of the United States, Donald Trump, announced on March 8 new tariffs on imports of steel and aluminum. MEPs considered this decision "unacceptable and incompatible with WTO rules". During the plenary session that took place in Strasbourg (France), on March 14, MEPs discussed with the European Trade Commissioner, Cecilia Malmström, the common EU response to this challenge. The main conclusion of the debate was that the EU should not launch a trade war, but defend its citizens.

Parliament is also concerned about the tariffs that the United States has imposed on table olives from Spain, the world's leading producer. In 2017, the US imposed a first rate against its import to which another has been added at the beginning of the year. The first measure taxed 4.47% on average the import of this product, while the second has raised the tariff to 21.6%.

Banana and other previous trade conflicts

The so-called “banana war” was one of the most extensive commercial confrontations between the EU and the US due to European limitations on the entry of Latin American fruit. Washington rejected special access to the European market that the EU allowed bananas from the former colonies of the Caribbean, Asia and Pacific. The dispute concluded with an agreement within the WTO, which facilitated the export of Latin American bananas to the Union.

The EU has also disagreed with the US and Canada regarding beef treated with hormones, which it considers a possible health risk. In this case, the confrontation was resolved in 2012, when the EU agreed to increase imports of hormone-free beef from both countries.