The inclusion of a rebalancing mechanism into EU preferential trade agreements is a comparatively recent development. So far, only two such mechanisms have been introduced. A first rebalancing mechanism was incorporated into the EU–United Kingdom (UK) Trade and Cooperation Agreement (TCA). It is designed to allow either party to take unilateral rebalancing measures (e.g. suspension of preferential tariffs) if, after the UK's withdrawal from the EU, 'significant divergences' from the principle of 'a level playing field for open and fair competition and sustainable development' were to emerge that have 'material impacts' on bilateral trade or investment. The mechanism does not apply to all provisions of the TCA. The TCA's mechanism has to date remained untested. A second rebalancing mechanism was introduced into the EU–Mercosur Partnership Agreement (EMPA) and the EU–Mercosur interim trade agreement (iTA). The mechanism applies to the trade pillar contained in both the EMPA and the iTA and is modelled on the World Trade Organization's rarely used non-violation complaint mechanism. Similar mechanisms exist in a number of regional preferential trade agreements, to most of which the United States is a party. Source : © European Union, 2026 - EP Read more