The EU and WTO are two very different organisations in terms of the extent to which they create rules. They are also significant differences in how the rules are enforced.
The EU has an established ‘policeman’ who makes sure that individual member states adhere to the rules – this is one of the roles of the European Commission. The WTO is very different however, it’s a much looser arrangement and for action to be taken in the event of rules being broken requires:
- That someone notices and
- That someone is sufficiently bothered to make a complaint.
If another country does spot something they don’t like and they believe it contravenes the WTO rules then they would open a ‘dispute case’. The WTO appoint independent investigators who will decide whether there is a case to answer. However even where the investigation finds that a country has behaved in contravention of the rules, there aren’t fixed rules about the remedy.
One way a case may be resolved is if the country carrying out the activity agrees to stop. However they don’t need to stop – and if they choose to carry on regardless the result of the dispute case it’s open to the complaining country to take proportional retaliatory action. This is what’s happened between the US and the EU in respect of Airbus. The US complained about subsidies the EU paid to Airbus, a dispute was opened and it was found that the EU did contravene WTO rules in paying the subsidy. However the EU decided not to stop paying the subsidy and in return the US have imposed tariffs on EU produce in retaliation.
The retaliation should be proportionate – so in the case of the US they shouldn’t impose greater tariffs on the EU than the loss they’ve incurred as a result of the EU subsidising Airbus. However they aren’t restricted in where they apply these tariffs which are often applied strategically, for instance on agricultural products.
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