on the position to be taken on behalf of the European Union within the Association Committee in Trade configuration established by the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and the Republic of Moldova, of the other part

EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

Reasons for and objectives of the proposal

The attached proposal constitutes the legal instrument for establishing the Union positions to be adopted on its behalf in a body set up by an association agreement between the Union and a third country. In particular, it relates to the implementation of the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and the Republic of Moldova, of the other part ('the Agreement'), regarding the adoption of a list of arbitrators for dispute settlement on trade-related matters.

The Agreement was signed on 27 June 2014, and was provisionally applied in part, pending ratification by the Member States, since 1 September 2014. Council Decision (EU) 2016/839 of 23 May 2016 approved the conclusion of the Agreement and pursuant to Article 464(2) of the Agreement, it entered into force on 1 July 2016.

The Agreement established the Association Committee in Trade configuration, which monitors the implementation of Title V (Trade and Trade-related matters) of the Agreement and resolves related issues. This Committee has to establish a list of arbitrators to ensure the proper functioning of the dispute settlement mechanism, as provided for in Article 404 of the Agreement.

This proposal replaces the Commission proposal COM(2015)390 final. The replacement is necessary because two of the arbitrators proposed by the Republic of Moldova no longer fulfill the conditions set out in Article 404(2) of the Agreement. The Republic of Moldova proposed and the European Commission recommends the Council to accept two other candidates that fulfill the conditions set out in Article 404(2) of the Agreement. In addition, this proposal reflects the fact that the Agreement entered into force on 1 July 2016.

Consistency with existing policy provisions in the policy area

This proposal implements the Union’s common commercial policy toward an Eastern Partner country, based on the provisions of the above-mentioned Agreement. It aims to set up the necessary institutional instruments enabling the Union and the Republic of Moldova to effectively address bilateral disputes concerning the application and interpretation of the Agreement. It is consistent with the Union's approach to dispute settlement disciplines negotiated or implemented within free trade agreements with other trade partners.

Consistency with other Union policies

This proposal is consistent and complements the other external policies of the Union, notably the European Neighbourhood Policy and the development cooperation policy in relation to the Republic of Moldova.

2.Legal basis, subsidiarity and proportionality

Legal basis

The legal basis for establishing the Union position to be taken in the committees set up by the Agreement is the Treaty on the Functioning of the European Union, and in particular its Article 207(4) in conjunction with Article 218(9) thereof.

Subsidiarity (for non-exclusive competence)

The common commercial policy, in accordance with Article 3 of the TFEU, is defined as an exclusive Union competence. Therefore, the subsidiarity principle does not apply.

Proportionality

This proposal is necessary in order to implement the Union’s international commitments set out in the Agreement with the Republic of Moldova.

Choice of the instrument