New rules affecting EU legislature's powers to have negative impact on trade

On March 1 2011 Regulation 182/2011 entered into force. The new regulation sets out new rules on the exercise of implementing powers by the European Commission. The new rules are likely to affect overseas businesses that trade with EU member states for at least two reasons. First, they furnish the commission with greater flexibility in adopting regulatory acts and measures against imports. Second, they give the larger EU member states more power in the process of adopting anti-dumping and antisubsidy regulations concerning imports entering the European Union. This is unfortunate, as some of the larger member states are viewed as disproportionately protectionist.

The regulation amends the so-called 'comitology' procedure, which allows for a review of the commission's implementing acts by committees that are made up of member state representatives. Until now, members of these committees were able to vote on commission proposals, although the EU Council had the last word on whether to adopt the measures in question. Under the new regime, the committees are still composed of the member states' representatives, but the council will not be involved as it was before. Although the new regulation is still based on the comitology system, it diminishes the role of the council and transfers more political discretion to the commission.

The new rules apply to implementing acts of general scope as well as specific legislation with a potentially major impact on international trade (including measures targeting imports entering the European Union). Measures for the protection of the environment and consumer health and safety (eg, acts related to chemical substances, toy safety, textiles and electronic devices) will need to be reviewed within the newly introduced examination procedure. More importantly, the same new regime will apply to trade defence measures that are proposed by the commission.

Furthermore, the regulation introduces a modified voting system which strengthens the role of the commission on the one hand, and the larger member states on the other. Exporters to the European Union will be especially alarmed to note that under the new voting rules it will be more difficult for member states to block the commission's proposals. Unlike the old system of simple majority, the new regime requires a majority of 55% of member states' votes, accounting for at least two-thirds of the EU population, to oppose a measure successfully. Moreover, the votes in the committee are no longer counted equally, as the voices of more populated countries are given proportionally more weight.

The commission, in the absence of express opposition by the relevant committee (eg, the Anti-dumping Committee), has the choice of either adopting the act or merely further reviewing it.

It follows that bigger EU countries now enjoy a much stronger voting position. As several of the larger countries – such as Spain, France and Italy – are viewed as protectionist-oriented, they are expected to club together to push through the adoption of trade defence measures. This is likely to make it harder for smaller member states (eg, Sweden and the Netherlands) to block the imposition of measures on imports of products from overseas.

Nevertheless, with respect to anti-dumping and anti-subsidy measures, the regulation foresees the possibility of submitting the commission's proposals to a special appeals procedure. However, this would arise only in those cases where no position is taken by the Anti-dumping Committee under qualified majority voting in the initial examination procedure, and a simple majority of its members opposes the draft legislation. Thereafter, in order to reject the commission's proposal for the trade defence measures, the so-called 'appeal committee' must issue a negative opinion. Until September 1 2012, such decisions will be made through simple majority voting: this brings with it a vestige of hope for more opportunities to block anti-dumping and antisubsidy actions against imports. However, after that date, voting in the appeal committee will be conducted in accordance with the qualified majority rule.

The only circumstances in which the commission needs a positive opinion of the appeal committee to adopt a proposed draft implementing act relates to definitive multilateral trade safeguard measures. This situation is unique and will unfortunately not apply in the case of other trade defence measures (anti-dumping or anti-subsidy measures), which are of particular and major interest to businesses exporting products into the European Union.

In this respect, the voting reform is likely to be detrimental to businesses from non-EU countries, as, by implication, the new procedure will allow less space for approaching and lobbying member states with policy arguments which are not taken into consideration by the commission.

For all comitology procedures, all documents submitted to member states' representative committees will simultaneously be disclosed to the European Parliament and to the council. These two institutions, on an equal footing, will have a so-called 'right of scrutiny' – that is, they may indicate at any time that they consider a draft implementing act to exceed the powers conferred by the relevant legal basis on the commission. In such cases, the commission will merely have to review the draft measure in question and then explain its intentions to the European Parliament and the council.