15 Dec 2020

The European Union’s First Bilateral Trade Dispute - Final Ruling with WTI support

For the first time, the European Union has used a bilateral trade agreement to ensure its market access rights. After Covid restrictions preventing expediency and public hearings for almost a year, an Arbitration Panel has now recognised the right of Ukraine to regulate the management of its forest sector sustainably, including with an export ban.

The difficult balance between negotiated trading rights - as a means to economic growth - and natural resource management - as a tool for sustainable development - came to a new test in this case. By reference to the relevant WTO provisions, namely GATT-Articles XI and XX, the first ruling allows Ukraine to maintain a 2005 export ban for rare and valuable wood species. A second ruling, on the other hand, saw no direct connection between Ukraine’s forestry policies and its export ban for pine and other wood species; this 2015 export ban was therefore declared incompatible with Ukraine’s commitment to allow such exports.

Three WTI affiliates sat on the Arbitration Panel: Chairperson Christian Häberli, WTI Fellow, Panel Member Giorgio Sacerdoti, former Appellate Body member, ICSID arbitrator, Bocconi University professor and frequent speaker at the WTI, and Panel Assistant Ilaria Espa, WTI Senior Research Fellow and Assistant Professor at the Università della Svizzera Italiana (USI) in Lugano.

On 11 December 2020, the Arbitration Panel submitted its Final Report to the Parties in the Dispute between Ukraine and the European Union on temporary restrictions applied by Ukraine on exports of certain wood products. Click on the link below for more details.