ABSTRACT
This chapter begin with a discussion of diplomacy and law in European Union (EU) external relations and issue of choosing between different approaches in highly diversified, yet legalized and institutionalized context of governance. In parallel to diplomacy, international law plays a key role in the management of international frictions. Just as for diplomacy, the competence of the EU also plays a pivotal role with regards to legal tools for managing economic external relations, naturally along with the jurisdiction of the pertinent dispute settlement mechanism (DSM), if applicable. Although the very existence of alternatives implies a minimum of freedom, policymakers are subject to myriad constraints when deciding how to deal with a commercial dispute. At the international level, the EU may refer a trade dispute to the multilateral World Trade Organization DSM. In addition, given that most free trade agreements to which the EU is contracting party set up distinct DSMs, such bilateral DSMs may also be available to the EU.
