Christophe Bondy

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On 23 October 2023, the Council of the European Union adopted a regulation known as the Anti-Coercion Instrument (ACI), a new trade instrument which will enable the European Union (EU) and its Member States to respond to so-called ‘economic blackmail’ from foreign countries that seek to influence or coerce the EU or a particular Member State to adopt or to decline a specific policy.  The European Parliament had already approved the regulation earlier this month by a margin of 578 votes to 24 and only 19 abstentions.

The ACI breaks new ground in the EU’s arsenal of trade defences in the midst of escalating geopolitical tensions.  It is designed to deter perceived economic coercion primarily through diplomacy and, if necessary, with countermeasures in a wide range of fields, including international trade, investment, and funding.  It is also aimed to secure ‘reparation’ for the injury caused by a third country’s conduct.  The ACI is expected to enter into force before the end of 2023 and will take the form of a regulation binding in its entirety and directly applicable to all Member States.…

Continue Reading European Parliament and Council Adopt New Trade Instrument to Defend European Interests from Economic Coercion

On August 9, 2023, the Biden administration issued a much-anticipated Executive Order establishing a new regime to limit certain U.S. investments in key Chinese technology sectors to prevent the financing of Chinese military advancement. The order, once implemented via regulation, will prohibit U.S. persons from investing in, or engaging in certain other transactions with, Chinese companies engaged in specified conduct involving semiconductors and microelectronics, quantum information technologies, and artificial intelligence. The regulations will likely come into force in 2024 after multiple rounds of public comment, including an initial 45-day comment period that is now underway on an advanced notice of proposed rulemaking (“ANPRM”) issued by the U.S. Department of the Treasury (“Treasury”).

The regulations will prohibit some investments altogether, while others will be subject only to official notification requirements. Treasury, which will implement and enforce the restrictions, stated that it anticipates exempting “certain transactions, including potentially those in publicly traded instruments and intracompany transfers from U.S. parents to subsidiaries.”…

Continue Reading Amid Growing Trade Tensions, U.S. Imposes Unprecedented Restrictions on Outbound Investments to China

On 7 July 2023 the European Commission published a formal proposal for the withdrawal of the European Union (EU) from the Energy Charter Treaty (ECT or the Treaty).  The move comes after many years of intensive efforts (notably by the EU) to modernize the ECT, in response to concerns that the Treaty prevented ECT Contracting States from meeting their climate change mitigation obligations as set out in the Paris Agreement.  The European Commission’s current proposal leaves much to be desired in terms of clarity and legal certainty.  Energy companies covered by the ECT should therefore be well-advised to explore alternative sources of protection to ensure that their investments enjoy adequate coverage in case of disputes.…

Continue Reading We’ll always have Paris? European Commission formally proposes the withdrawal of the European Union from the Energy Charter Treaty, invoking the Paris Agreement

On April 28, 2023, the Secretariats of the International Centre for Settlement of Investment Disputes (ICSID) and the United Nations Commission on International Trade Law (UNCITRAL) published the final draft of the Code of Conduct for Arbitrators in International Investment Disputes (the Code of Conduct). The draft concludes nearly six years of heated debates concerning two primary issues: disclosure obligations for arbitrators sitting on investment treaty tribunals; and “double-hatting,” (i.e., where a lawyer sits as arbitrator while at the same time acting as counsel in other investment treaty matters).

The ICSID and UNCITRAL Secretariats developed the Code of Conduct jointly, with substantive efforts led by Working Group III—UNCITRAL’s task force mandated to consider possible reforms to investor-State dispute settlement (ISDS). A separate Code of Conduct for Judges in International Investment Dispute Resolution was also published for judges who would sit on the prospective Multilateral Investment Court proposed by the European Commission.

On March 27-31, 2023, Working Group III finalized its revisions to the Code of Conduct during its forty-fifth session at the United Nations Headquarters in New York City, with representatives of more than ninety-five State delegations and fifty international organizations in attendance. The primary objective of the Code of Conduct is to provide principles and provisions that clarify the duties of international arbitrators—including impartiality, independence, and the conduct of proceedings with integrity, fairness, efficiency, and civility.

The final drafts of both the Code of Conduct for Arbitrators and the Code of Conduct for Judges will now be presented to UNCITRAL for formal adoption during its fifty-sixth annual session in Vienna on July 3-21, 2023.…

Continue Reading A New Code of Conduct for Arbitrators May Soon Be Available to Parties in Investor-State Disputes—But No Ban on Double-Hatting

The United Kingdom’s (U.K.) accession to the Comprehensive and Progressive Agreement for Trans‑Pacific Partnership (CPTPP) might have been a bumpy ride, but it will soon come to fruition.  While all eyes are on the trade implications of the CPTPP, another component of the CPTPP that is getting comparatively little attention – the CPTPP treaty provisions on investment – may turn out to have a much greater impact for the United Kingdom.…

Continue Reading Coming to a Country Near You: The U.K. Announces Imminent Accession to the CPTPP – Including Its Investment Chapter

On February 21, 2023, the Comprehensive and Progressive Agreement for Trans‑Pacific Partnership (CPTPP) formally entered into force for Chile, after undergoing an intense, four-year legislative process.  The CPTPP covers the full range of modern trade agreements, including market access for goods and services, public procurement disciplines, temporary entry, and investment protection, among others.  Despite the CPTPP’s entry into force, the future of investor-State dispute settlement (ISDS) in Chile remains a point of controversy.…

Continue Reading The CPTPP Enters into Force for Chile – but Mind the Fine Print

Canadian, Mexican and United States investors considering bringing a claim under the North American Free Trade Agreement (NAFTA) against a NAFTA State Party should be aware that the three-year window for notifying their claim will soon come to an end.  They must therefore take quick action to notify their claim by the end of March 2023 to be in a position to submit their request for arbitration before July 1, 2023, the final deadline for the submission of legacy NAFTA investment claims.

The NAFTA was terminated on July 1, 2020, with the entry into force on that same date of the United States-Mexico-Canada Agreement (USMCA). The USMCA Parties recognized the importance of a smooth transition from the NAFTA to the USMCA, particularly with regard to investors who had invested on the understanding that NAFTA’s Chapter Eleven (Investment) protections would be in place.  Annex 14-C of the USMCA therefore maintains NAFTA provisions on the protection and promotion of legacy investments for a period of three years post entry into force of the new agreement.  These provisions are consistent with the practice of Canada, the United States, and Mexico to provide a sunset period for investment protection under their bilateral investment agreements. …

Continue Reading The Window for Putting a USMCA State Party on Notice of a NAFTA Legacy Investment Claim Closes at the End of March

In 2021, the United Kingdom (UK) exited the EU’s legal regime to become an independent entity for trade purposes – given this, the year witnessed the operation of the Trade and Cooperation Agreement (TCA) which governs the relationship between the UK and the European Union (EU), the negotiation of at least two other free trade agreements (FTAs) ( the UK-Australia FTA and the UK-New Zealand FTA), an application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) along with the establishment of the Trade Remedies Authority (TRA) and the issuance of its first decisions.  The present note summarises these key developments (and more) in UK trade over the past year.
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Continue Reading UK Trade: A Summary of Developments in 2021

2021 was an eventful year for international trade law and policy in the EU, with developments in several key areas.

The EU strengthens its trade policy toolbox

In the light of the recent ongoing problems with multilateralism and the continuing rise of China, the EU focused hard on strengthening its trade enforcement toolbox in a wide variety of trade related areas. This includes the use of recent tools and proposals for new instruments:

  • The Amended Trade Enforcement Regulation entered into force on 13 February 2021. This greatly expands the EU’s capacity to adopt trade countermeasures against third countries. It can now do so even before dispute settlement proceedings at the WTO or under other international agreements have been concluded if these are blocked by the other party. This would include, for instance, situations where a trading partner appeals an adverse panel report “into the void” to the non-functioning Appellate Body at the WTO, as well as in relation to a broader range of violations. The Commission is due to undertake a review of the Trade Enforcement Regulation, to consider additional commercial policy measures in the field of trade-related aspects of intellectual property rights, by 13 February 2022.
  • The FDI Screening Regulation, which has been in force since the end of 2020, has led to a growing number of FDI mechanisms notified or updated by Member States to the European Commission throughout 2021 (see here). For the EU, which did not have a role in FDI screening prior to this, this mechanism is starting to become a game-changer. In November 2021, the Commission published its first annual report on the screening of foreign direct investments into the EU. Of the 265 cases notified to the Commission between 11 October 2020 and 30 June 2021, 80% were closed by the Commission in Phase 1, whereas 14% of cases proceeded to Phase 2, with additional information being requested from the notifying Member State (the remaining 6% were still under assessment on 30 June 2021). The Commission issued an opinion, with recommended measures, in less than 3% of the notified cases. Actual prohibitions of investments by Member States appear to be limited for the moment, although there have been such instances (like Italy’s prohibition of the proposed acquisition of control in LPE, an Italian semiconductor equipment company, by a Chinese company). Moreover, parties sometimes abandon envisaged transactions prior to a formal prohibition. The imposition of conditions appears more common.
  • On 5 May 2021, the Commission published its proposal for a new Regulation to address distortions by foreign subsidies. The Regulation introduces three new instruments that would give the Commission the power to investigate foreign subsidies granted to companies active in the EU and identify whether they are causing distortions in the EU single market. Should the Commission identify distortive foreign subsidies, it could impose redressive measures to counteract their effects (see our blog post describing the Commission’s proposal here). If adopted, which currently appears likely, it would give the Commission far-reaching new powers. The Committee on International Trade, the leading committee in charge of the file within the European Parliament, has released its draft report on the proposal on 17 December 2021, generally supporting the new instruments and suggesting additional protections against home-market monopoly advantages and known future subsidies.
  • On 8 December 2021, the Commission published a proposal for a new anti-coercion instrument. The aim of this instrument would be to deter and, if necessary, retaliate against third countries exerting economic coercion against the EU or its Member States in order to influence their political decisions and policy choices (see our blog post describing the Commission’s proposal here). This is another example of a novel instrument in the field of trade that would grant the Commission with robust powers to address trade policy issues.
  • Negotiations on a proposed new International Procurement Instrument have also progressed in 2021. This instrument would enable the EU to limit, on a case-by-case basis, access to its public procurement market by companies from third countries which restrict access to their own procurement markets by EU businesses. This would represent a significant overhaul of the EU’s current public procurement system, which is currently one of the more open ones globally.

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Continue Reading EU Trade: 2021 Takeaways, 2022 and Beyond – What to Expect