Trade agreement between EU and US potentially breaches WTO regulations?

EU-US Trade Agreement: A Potentially Controversial First Step

The European Union (EU) and the United States (US) entered into a significant trade agreement on August 21, 2021, marking a first step in a process that could be expanded over time to improve their trade and investment relationship. However, the agreement's validity and compliance with World Trade Organization (WTO) rules are facing challenges.

According to a senior EU official, the deal aims to liberalize and lower tariffs in a reciprocal manner. The EU Commission claims that the agreement is an attempt to improve market access and increase trade and investment between the EU and the US. However, the deal offers preferential tariffs to US imports, which breaches the Most-Favoured-Nation (MFN) principle, a fundamental principle of the WTO.

Julien Blanquart, a lawyer at SheppardMullin, has stated that from the perspective of WTO rules, the deal is discriminatory. The agreement discriminates against the EU's other international partners who do not benefit from the same access to the EU market. This could potentially lead to a challenge of the agreement's validity by a WTO member country.

The WTO Dispute Settlement Body has been paralyzed due to the US refusing to renew the mandates of some of its judges. This paralysis could potentially impact the challenge of the EU-US agreement's validity. If the agreement is declared non-compliant with WTO rules, it could be another blow to multilateralism.

The EU's stance as a champion of multilateralism could be affected if the agreement is declared non-compliant with WTO rules. The EU argues that the deal is allowed under article 24 of the WTO, which permits free trade areas or interim agreements if they cover the majority of trade. However, the compatibility of the agreement with WTO rules remains legally fragile until an official text is presented.

The political impact for the EU could be significant if the agreement is declared non-compliant with WTO rules. The EU has been accused of betraying its commitments to the WTO and to multilateralism due to the deal with the US. If the agreement is non-compliant, it could have far-reaching implications for the EU's reputation as a champion of international trade rules.

The lawyer, Blanquart, has also stated that the political impact for the EU could be another blow to multilateralism if the agreement is declared non-compliant with WTO rules. The EU's political impact could be significant if the agreement is declared non-compliant, given its stance as a champion of multilateralism.

The WTO-compatible final version of the agreement between the EU and the US will be issued by the European Commission and communicated to the WTO through official notifications following agreement and ratification processes involving the European Parliament and the Council of the European Union. The political agreement was reached by US President Donald Trump and European Commission President Ursula von der Leyen on July 27, 2021, and the formalization and notification to the WTO depend on subsequent legal and administrative steps by both parties.

In conclusion, while the EU-US trade agreement marks a significant step towards improving trade and investment relations, its validity and compliance with WTO rules are a matter of controversy. The potential impact on multilateralism and the EU's reputation as a champion of international trade rules could be significant if the agreement is declared non-compliant with WTO rules.