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CRF’s petition against EU on safeguards maybe a futile action with many repercussions

A worker scoops grains of rice in Kandal province. KT/Chor Sokunthea

Recent mediational claims that Cambodia and Cambodia Rice Federation (CRF) won the lawsuit against EC for Safeguards invocation for Cambodia rice could be very misleading.

It’s a complex situation, whereby since CRF had filed a complaint officially on 10 April 2019 through the EU Court against the EC in Brussels, the Court had to assess, as a first step whether the complaint had grounds for being admissible.

So what the Court has only decided on 10 September 2020 was merely acknowledging that the complaint is “admissible” to be filed. There will be a further lengthy process to be pursued should the plaintiff opted to stay the course which may drag on for years and involve heavy legal cost.

Moving the case forward will require both plaintiff and defendant to submit further arguments which in Covid times may be further delayed as Brussels officials’ meetings may be reduced drastically, thus triggering a longer “processing” time to reach the next decision. Still the pertinent question remains: “who will foot the heavy bill”? Would CRF have such financial muscles?

Nonetheless, the following points should also be carefully pondered upon.

Cambodia seems to forget in all reasoning and thinking that they are not punished, they as Myanmar and some other countries have had a privilege being the free import and even in Cambodia’s case being taken away. Factually, Cambodia’s exports all these past decades, have been “subsidised” by the EBA factor. The EU made an exception by decreasing the import tax over three years, effective from January 2019 to January 2022.

An appeal, in every form, will lead again to consulting all member states and in the actual situation where nearly the entire European Parliament is likely to tilt to the right and even extreme right politically speaking, not too many member states would vote in favour of applying zero tax again. Even a left leaning parliament may be reluctant to go back to Zero Tax policy for their political life.

The other discrepancy is that the CRF is claiming that rice export has never been so good to the EU, with over 20,000 a month average but the key buyers/importers did not seem to agree their imported volume tallied with the Cambodian claim as their imports from Thailand and Vietnam origins have augmented in contrast to originating from Cambodia.

CRF and now GMAC, who has just filed in their petition on 16 July 2020, may have just mistakenly viewed that they and Cambodia were “entitled” to EBA which is a mere market access privilege granted by richer countries to poorer ones, the LDCs.

EBA is entirely different from the normal bilateral or multilateral trade agreements terms. One cannot blame the EU for looking after and protecting their own members. However, should the plaintiff opt to pursue the petition filed further, they should avoid the sensitive Human Rights political issue and stick to purely technical arguments on tariffs alone.

Besides, you don’t get to solve anything in court especially for the above rationale but more to gain in pursuing negotiations however lengthy in good will and good faith with the EC consistently.

In the case of CRF, pursuing the petition could lead the next decision by the Court to past the January 2022 expiry date of the initial 3 years of Safeguards implementation phase and push an annoyed EC to renew it with possibly heavier tariffs by then. From where things stand, it does look more like a Lose-Lose approach for CRF & Cambodian rice exports.

It may be wiser for CRF to withdraw such petition and professionally initiate fence mending actions with the EC by starting afresh negotiations which are based on a new strategy and vision of the recently elected CRF Board.

Instead of taking the EU head on, CRF and GMAC should conserve their funds to serve their members and make things better for them instead of burning it in a most likely unwinnable legal sinkhole.

A more plausible way to tackle the issue is by building allies within the EU, through bilateral or even multilateral ties away from the EU and using soft diplomacy and gentle pressure to achieve the desired outcomes. Legal suits against a parliamentary entity seldom produces results, especially from a small country like Cambodia which is heavily dependent on the very multilateral trade block for its export economic survival. The legal actions files are ill advised and should be stopped.

That may enhance the chance to obtain more flexibility and leeway from the EC when the initial Safeguards phase expires by early 2022.

The Safeguards clause actually was flexible n EC decreased duties in Year 2, 2020 which explained the 19% increase year-on-year of the same period between 2020 and 2019. Such duties would normally be further decreased for 2021 which may lead to more exports logically. When the 3 years period expires in early 2022, EC should in principle allow back duty free privilege for Cambodian rice.

There is a saying in Belgian, it is better to have a bad commercial settlement then to have a good court case.

Overview of Antitrust damages actions in Europe

Articles 101 and 102 TFEU of the Treaty on the Functioning of the European Union (TFEU) are the core antitrust rules of the EU. Infringements of these Articles can take various forms. Such antitrust infringements include price fixing and the abuse of dominance. They are not only detrimental to the economy at large but they can also cause concrete harm, in the form of e.g. higher prices and/or loss of profits. Victims, namely direct customers, indirect customers, and not least consumers suffer this harm.

It has been widely agreed upon that challenging EU legal acts is not an easy task. In a majority of cases, applications for annulment submitted to the European Union Court of Justice (the “CJEU” or the “Court”) by private applicants are rejected due to the lack of standing. This is mainly because of the strict standing rules provided in the Treaties and the Court’s restrictive interpretation of them, which leave applicants without hope of recourse.

Article 263(4) of the Treaty on the Functioning of the European Union (“TFEU”) allows any natural or legal person to institute proceedings only “against an act addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures.” Such permission to challenge regulatory acts that were of direct concern to private applicants but did not entail implementing measures (leaving individual concern aside), was introduced by the Treaty of Lisbon, but what classified as ‘regulatory acts’ or ‘implementing measures’ were left unclear.

In 2013, the CJEU explained in the Inuit case that, for the purposes of Article 263(4) TFEU, a ‘regulatory act’ covers all acts of general application apart from legislative acts. The relaxed standing rules in respect of regulatory acts were intended to enhance the principle of judicial protection. As the Court elaborated in its case law, where a regulatory act directly affects the legal situation of a natural or legal person without requiring implementing measures, that person would be denied effective judicial protection if he did not have a direct legal remedy before the European Union judicature for the purpose of challenging the legality of the regulatory act. In the absence of implementing measures, natural or legal persons, although directly concerned by the act in question, would be able to obtain a judicial review of that act only after having infringed its provisions, by pleading that those provisions are unlawful in proceedings initiated against them before the national courts.

However, the duty to prove individual concern is only abandoned in cases where there are no implementing measures. In the absence of case law early on, speculations were made as to the kind of implementing measures that could prevent the possibility of an annulment action under relaxed standing rules; it was argued that not all implementing measures should count in the context of Article 263(4) TFEU. Unfortunately, subsequent CJEU case law on the concept of ‘implementing acts’ was strict. (Overview of Antitrust damages actions in Europe is an extract from Columbia Journal of European Law)

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