Europe Rushes to Bolster Trade Arsenal After U.S. Challenge

The European Union moved closer to expanding its trade-sanctions powers in response to the U.S. challenge to the global commercial order.

The European Parliament gave the go-ahead on Friday in Brussels for negotiations with EU governments to upgrade the bloc‘s legislation on enforcing international trade rules. The draft law would let the EU impose penalties against countries that illegally restrict commerce and simultaneously block the World Trade Organization’s dispute-settlement process.

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EU Trade Commissioner Phil Hogan proposed the measure in December and won the backing of the blocs member countries in April. A final agreement requires the national governments to iron out differences with the 27-nation Parliament, which wants to go further than Hogan recommended by allowing EU penalties to cover not just goods trade but also services and intellectual property rights.

Europe Moves to Expand Trade Arsenal With Focus on Trump

The EU is rushing to upgrade its trade arsenal after U.S. President Donald Trump‘s administration sidelined the WTO’s key appellate body at the end of last year. The body ceased to be able to handle new cases because a U.S. veto of any appointments to the panel left it without the minimum three members required for verdicts.

Hogans proposal -- an amendment to 2014 European legislation -- would effectively serve as a third line of defense for the EU as it seeks to uphold the WTO system, including through a stopgap appellate process.