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P. Nicolaides - The Dispute-Settlement Provisions of the EU-UK Trade and Cooperation Agreement: Are they Adequate for the Task?

The Trade and Cooperation Agreement between the European Union and the United Kingdom has established new institutions and dispute-settlement arrangements. This article reviews in detail these arrangements and finds that they are mostly intergovernmental in nature. Consequently, they are weaker than the corresponding provisions that used to apply to the UK when it was a member of the European Union. The article then considers the capacity of the new arrangements to resolve disputes. The article proposes that resolution, in this context, means that a dispute can be terminated without further action by either party that obstructs the functioning of the Trade and Cooperation Agreement and prevents it from achieving its objectives. The article identifies design flaws and weaknesses in the dispute-resolution procedures. For example, there is no independent institution responsible for enforcing compliance; the Parties may take “remedial” measures, “safeguard” measures or “rebalancing” measures without any prior authorization; the dispute-settlement tribunals do not have power to enforce compliance or impose sanctions; and the only “punishment” for non-compliance is the authorization of retaliatory action. The article argues that such flaws and weaknesses are likely to reduce the effectiveness of the resolution procedures to bring disputes to a closure or prevent disputes from spilling-over into unrelated policy areas and bilateral issues. Moreover, compliance is incentivized by the threat of retaliation which is an inefficient means of protecting the proper functioning of the Agreement. Retaliation creates by itself new barriers to bilateral trade and investment, instead of removing them.

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WP15.21 - The Dispute-Settlement Provisions of the EU-UK Trade and Cooperation Agreement.pdf225.74 KB