16 December 2024

Season's Greetings

All of us in the International Trade and Food Law practice of FratiniVergano would like to wish our readers, as well as their colleagues and families, all the best for a peaceful holiday season and for a healthy and prosperous 2025.

We hope that you have enjoyed Trade Perspectives^© in 2024 and that you have found it stimulating and timely. As always, we have published a total of 23 issues and invested considerable time and energy in this undertaking. We have done it with our usual passion and drive, eager to play a small, but constant role in defending the multilateral trading system and the rule of law from the temptations of unilateralism and protectionism.

In the new year, we shall continue with our editorial efforts, beginning with the publication of the next issue of Trade Perspectives^© on 13 January 2025. Trade Perspectives^© is circulated to thousands of recipients worldwide. This fills us with pride, but also with a deep sense of commitment and discipline towards our readers’ expectations.

Thank you for your interest in Trade Perspectives^© and for helping us to make it a better and more useful tool of discussion. We look forward to hearing from you regularly and to another year of international trade and food law developments, hopefully not too turbulent. You can follow us on X @FratiniVergano and find all previous issues of Trade Perspectives^© on our website at /en/trade-perspectives.

For this issue, we have decided to make a number of wishes for the New Year and play an optimistic, albeit likely overly ambitious, note as we leave behind 2024 and embark on a new year that looks poised to be shaped by growing economic nationalism, hidden or declared protectionism, increased trade irritants, and geopolitical frictions. Whatever the case, we wish you the very best.

New Year Wishes by FratiniVergano’s International Trade Lawyers
New Year Wishes by FratiniVergano’s International EU-ASEAN Lawyers
New Year Wishes by FratiniVergano’s International Food Lawyers
Recently adopted EU legislation

**New Year Wishes by FratiniVergano’s International Trade Lawyers**

By Alejandro López Bo, Stella Nalwoga, and Paolo R. Vergano

A fully functional World Trade Organization (WTO) dispute settlement system

Since 11 December 2019, the WTO’s Appellate Body, the standing body of seven individuals that hears appeals of the reports issued by WTO dispute settlement panels brought on by WTO Members, has been unable to exercise its functions and deliver binding resolutions of trade disputes, following the blocking of the appointment of new appellate body members.

The Appellate Body constitutes an essential element of the WTO dispute settlement system, without which the enforcement of multilateral trade rules is jeopardised by the practice of “appealing into the void”. This concept refers to the situation where a WTO Member appeals a panel decision to avoid having to enforce the findings, knowing that there is no functional Appellate Body that could hear the appeal. The Multi-Party Interim Appeal Arbitration Arrangement (MPIA), which is the alternative system for resolving WTO disputes that are appealed by a WTO Member of the MPIA, in the absence of a functioning WTO Appellate Body, currently only accounts 53 members and cannot match the role and reach of the WTO’s Appellate Body.

Having back a fully functional WTO dispute settlement system, especially in times like the current period, which is increasingly shaped by unilateral and often WTO-inconsistent measures being proposed and introduced by certain WTO Members, and a looming “tariff war”, would constitute a means to address such measures and help enforcing WTO rules, ensuring a more stable, predictable, and rule-based multilateral trading system.

A multilateral and negotiated regulatory approach to shared challenges

Many countries are independently introducing measures to tackle global challenges, such as climate change, deforestation, reduction of greenhouse gas emissions, and corporate social responsibility, while carbon pricing mechanisms have also become a common policy globally. While such measures reflect legitimate concerns and objectives, they can create trade frictions when designed and implemented unilaterally.

To mitigate such risks, it is essential to prioritise multilateral cooperation whenever possible. Where global regulatory needs are recognised by WTO Members and would be more effectively addressed through international standards or measures, these should be primarily pursued. Unilateral action should be considered only as a last resort, with safeguards in place to minimise trade disruptions. Positive examples of multilateral cooperation on global challenges include the Joint Statement Initiative’s Agreement on Electronic Commerce, which (hopefully) may soon be incorporated into the WTO Agreement.

For environmental sustainability, the WTO’s Committee on Trade and Environment (CTE) should play a strengthened role in facilitating dialogue and cooperation on trade-related environmental measures between countries and organisations. Additionally, a global green Customs policy appears urgent, with a particular focus on reforming the Harmonized System. This could involve developing, within the World Customs Organization, a standardised classification of environmental products, which could help facilitate trade in green goods and services, discourage trade in harmful products, and strengthen the sustainability of global trade.

New rules to help developing countries expand their industrial capacities without obstructing trade

Developing countries account for about two-thirds of WTO Members and the WTO framework provides for special rules to accommodate their needs, namely the so-called Special and Differential Treatment (STD) provisions. While these provisions are intended to provide flexibility for developing countries, they should not be used as a justification for measures that are inconsistent with WTO rules and harmful to global trade.

Many developing countries implement measures like local content requirements or export prohibitions to attract, develop, or protect “infant industries” (i.e., nascent industries that lack global competitiveness and necessitate protection from foreign competition to mature and expand) and enable their respective economies to climb the value chains. While some of these measures may be permissible under certain circumstances, particularly under specific STD provisions like those related to trade-related investment measures (TRIMs), many of those applied by developing countries (e.g., local content requirements for electricity infrastructure projects, see Trade Perspectives, Issue No. 17 of 23 September 2024) often exceed the scope of these provisions and can ultimately harm the implementing country’s long-term interests.

Rather than condoning or neglecting the rise of unilateral measures aimed at attracting investment or supporting domestic industries, which can ultimately erode the foundations of global trade and prosperity, WTO Members should collaborate to develop innovative solutions. These solutions could include enhanced technical assistance, capacity building, technological transfers, and flexible interpretations of WTO rules to empower developing countries to implement industrial policies that foster the development of comprehensive production and supply chains, while respecting WTO rules and promoting fair trade.

**New Year Wishes by FratiniVergano’s EU-ASEAN Lawyers**

By Alya Mahira, Caitlynn Nadya and Paolo R. Vergano

Expedited conclusion of the upgrade of the ASEAN Trade in Goods Agreement (ATIGA)

The ASEAN Trade in Goods Agreement (ATIGA) entered into force on 7 May 2010 with the aim of providing a legal framework to minimise barriers and enhance the free flow of goods in the ASEAN region. Despite being the strongest foundation for ASEAN integration, the ATIGA has not delivered significant economic benefits over the past 15 years, as the overall share of intra-ASEAN trade has not changed significantly or even decreased at times. On 16 March 2022, ASEAN officially launched negotiations to upgrade the ATIGA. The latest round of negotiations was held in October 2024.

The negotiations for the upgraded ATIGA should be concluded swiftly by ASEAN Member States and lead to new meaningful commitments. Notably, ASEAN’s trade-related regulatory transparency should be enhanced. The wording of the upgraded ATIGA should provide a more binding and enforceable commitment for ASEAN Member States to regularly upload and maintain up-to-date the trade-related information on the ASEAN Trade Repository. The upgraded ATIGA should also consider establishing an ambitious “informed compliance” database, consisting of, inter alia, decisions on “advance rulings” and other documents that affect the movement of goods. These elements could greatly enhance regulatory transparency and commercial predictability, increase cross-border investment and trade, and avoid multiple shipment rejections at ASEAN borders.

Several individual ASEAN Member States have recently concluded trade agreements with more comprehensive commitments compared to those contained in the ATIGA. Therefore, the upgraded ATIGA should increase the area of coverage to also include “emerging” topics, most notably in relation to digital trade and trade and sustainable development, which have become standard in modern preferential trade agreements. This upgrade would enhance ASEAN’s competitiveness as a single market and ensure that the ATIGA remains adaptable to evolving trade practices and regional economic dynamics.

Strengthened EU-ASEAN trade integration

The EU is an important trading partner for ASEAN, and vice-versa. In 2022, the EU was ASEAN’s third largest trading partner, accounting for around 10% of ASEAN trade. Formal ‘dialogue relations’ between ASEAN and the EU began in 1977 and, in December 2020, the EU-ASEAN relationship was elevated to a Strategic Partnership. In April 2021, the EU officially recognised ASEAN in its Indo-Pacific Strategy. The establishment of a region-to-region ASEAN-EU preferential trade agreement has been envisioned years ago, but never materialised. This agreement would be key to catalysing ASEAN’s economic cooperation with the EU and unlocking significant trade opportunities between the two regions.

In this respect, bilateral trade agreements between the EU and individual ASEAN Member States are important stepping stones towards greater ASEAN-EU integration. The swift conclusion of the bilateral trade negotiations between the EU and Indonesia, Thailand, and the Philippines, respectively, as well as the reopening of negotiations between the EU and other ASEAN Member States, notably Malaysia, are critical steps in that direction. Negotiations for the EU-Thailand Free Trade Agreement (FTA) and the EU-Philippines FTA were recently relaunched and are progressing swiftly, while negotiations for the EU-Indonesia Comprehensive Economic Partnership Agreement could be concluded in 2025 after many years of negotiations. Once concluded, Indonesia would become the third ASEAN Member State after Singapore and Viet Nam to adopt a preferential trade agreement with the EU.

For that to happen, the EU and the relevant ASEAN Member States must effectively address the existing trade irritants and reach mutually agreeable solutions. This can only be achieved through a shift in attitude from both sides, particularly by adopting a more pragmatic approach that balances competition with compromise. Additionally, the parties should pursue a good degree of cooperation, either bilaterally or multilaterally, to align their trade policies and address other emerging issues, such as on sustainability. This renewed cooperation must be the basis and the context within which negotiated solutions can be found. The trade instruments and solutions exist. Less unilateral and dogmatic approaches could do wonders to bring two highly-synergic regions like the EU and ASEAN together.

EU-ASEAN cooperation on digital trade

The increasing significance of digital trade is evident in recent preferential trade agreements, especially those involving the EU, which include provisions on issues such as cross-border data flows, data protection, and online consumer protection. The EU has also pursued Digital Partnerships with its key trading partners in the Indo-Pacific region, including Singapore, which establish “an overarching framework to strengthen connectivity and interoperability of digital markets and policy framework”. Currently, ASEAN still lacks a comprehensive and binding framework for governing digital trade, and none of the trade agreements between ASEAN and third countries contain such provisions.

Given the importance of digital trade for future negotiations, ASEAN and the EU should seek a strong partnership in this area. While the EU’s Digital Partnerships have only been concluded with countries that have existing trade agreements with the EU, the EU should consider concluding a similar partnership, perhaps with a lower level of commitment and different modalities, also with ASEAN. This partnership could support ASEAN and ASEAN Member States to achieve early regulatory convergence on digital trade issues with the EU through institutionalised dialogue and the exchange of views, without having to wait for an ASEAN-EU FTA.

**New Year Wishes by FratiniVergano’s Food Lawyers**

By Alejandro López Bo, Ignacio Carreño García, and Tobias Dolle

An EU White Paper on Nutrition and Sustainability

Almost five years ago, in May 2020, the European Commission released the Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system. The Farm to Fork Strategy included a proposal for a legislative framework for sustainable food systems, as well as targets to reduce pesticide use, new animal welfare rules, a front-of-pack (FoP) nutrition labelling scheme, and nutritional profiles, which can be used, for example, when regulating food that is marketed to children, as well as in FoP nutrition labelling schemes. The elements of the Farm to Fork Strategy related to nutrition and sustainability were, however, either abandoned or never implemented.

25 years ago, after a series of food incidents (BSE, dioxins, etc.), the European Commission developed an integrated approach to food safety ‘From Farm to Fork’, primarily set out in its White Paper on Food Safety of 12 January 2000. In 2002, the European Parliament and the Council of the EU adopted Regulation (EC) No 178/2002 laying down the general principles and requirements of food law, which also sets up an independent agency responsible for scientific advice and support (i.e., the European Food Safety Authority or EFSA), as well as the main procedures and tools for the management of emergencies and crises, and the Rapid Alert System for Food and Feed (RASFF). The Farm to Fork Strategy had stated that “European food is already a global standard for food that is safe, plentiful, nutritious and of high quality. This is the result of years of EU policymaking to protect human, animal and plant health, and of the efforts of farmers, fishers and aquaculture producers". European food should now also become the global standard for sustainability. It appears that, after a high level of food safety has been achieved in the EU, it is time for sustainability and nutrition.

In the new “architecture” of the Commission, the competence for food safety, with the exception of Animal Welfare, has been removed from the Commission’s Directorate-General responsible for Health (DG SANTE). Food now falls under the European Commission’s Directorate-General for Agriculture and Rural Development (DG AGRI). The new European Commissioner for Agriculture and Food Christophe Hansen is responsible for “strengthening the competitiveness, resilience and sustainability of the agricultural sector”. The Farm to Fork Strategy had stated that the Commission would “also seek opportunities to facilitate the shift to healthier diets and stimulate product reformulation, including by setting up nutrient profiles to restrict the promotion (via nutrition or health claims) of foods high in fat, sugars and salt”. However, it appears that the new European Commission will focus more on agriculture rather than on food and nutrition. A lot of food is still wasted, and obesity is on the rise in Europe.

25 years after the White Paper on Food Safety, the time has come for a comprehensive framework on sustainable and nutritious food, ideally put forward in an EU White Paper on Nutrition and Sustainability, to be adopted by the EU.

Stricter EU labelling rules for greener products that prevent greenwashing and other deceiving practices

‘Greenwashing’ is a marketing technique used by companies to make their products and/or services appear more environmentally friendly than they actually are. The EU is developing stronger rules on ‘green’ or environmental claims. In recent times, the European Commission has been working on two legislative files to address ‘greenwashing’.

The first is the Proposal for a Directive on substantiation and communication of explicit environmental claims (Green Claims Directive), which was published on 22 March 2023. The European Parliament adopted a legislative resolution of 12 March 2024 on the proposal for the Green Claims Directive and the Council of the EU adopted its position on 17 June 2024. On 4 December 2024, the European Parliament adopted a decision to open interinstitutional negotiations on this file.

The second is Directive (EU) 2024/825 of the European Parliament and of the Council amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and through better information, which was adopted on 28 February 2024. By 27 March 2026, EU Member States must adopt and publish the measures necessary to transpose the Directive into national law. They must apply those measures from 27 September 2026.

Both directives aims at addressing unfair commercial practices by, inter alia, mandating clearer labelling of products and prohibiting the use of general environmental claims, such as “environmentally friendly” and “natural” without accompanying and substantiated proof to such claims. Stricter labelling rules for ‘green’ products that prevent greenwashing and other deceiving practices appear long overdue in the EU and in many other countries. Their adoption would benefit consumers, create a level playing field for companies and traders to compete without resorting to anti-competitive practices, and ultimately advance environmental protection and sustainability.

Recently adopted EU legislation

Trade Law

Council Decision (EU) 2024/2998 of 5 November 2024 on the position to be taken on behalf of the European Union within the Joint Committee established by the Convention on a common transit procedure as regards the adoption of a decision amending Appendices III and IIIa to that Convention concerning the accession of Georgia

Customs Law

Food Law

Ignacio Carreño García, Tobias Dolle, Alejandro López Bo, Alya Mahira, Caitlynn Nadya, Stella Nalwoga, and Paolo R. Vergano contributed to this issue.

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