Thursday, 14 October 2021 14:31

The EU’s path to trade sustainability


As public support for EU free trade deals is waning, civil society groups are hoping to help tighten the bloc’s standards on trade sustainability as part of an ongoing consultation.

As part of a commitment to a more “open, sustainable and assertive” approach to trade, the European Commission launched earlier this year a consultation focusing on trade sustainability chapters, which is still ongoing.

“The review will cover all relevant aspects of TSD implementation and enforcement, including the scope of commitments, monitoring mechanisms, the possibility of sanctions for non-compliance as well as the institutional set-up and resources required,” the Commission stated.

EU free trade agreements have included trade and sustainable development (TSD) chapters for the last decade. These chapters typically commit the parties to respect international rules and standards related to labour and social rights and environmental protection, including climate. However, public support for the EU’s trade agenda appears to be increasingly fragile.

Concerns over social, environmental and labour standards in EU trade pacts have been drawn into sharp focus by the controversies surrounding the EU’s trade deal with the Mercosur group of Latin American countries.

The deforestation of the Amazon, the intensive agro-industrial model of several Mercosur countries, and Brazil’s weak commitment to the Paris Agreement under President Jair Bolsonaro have resulted in putting ratification of the trade pact on hold.

Meanwhile, civil society groups have complained that the scope of its trade and sustainable development chapter is too limited, and its enforcement mechanisms too weak.

The EU executive has also launched an independent study to compare the different approaches to implementation and enforcement of TSD provisions by EU partner countries in their trade agreements.

In a joint proposal tabled in May 2020, France and the Netherlands called on the EU to raise or lower tariffs according to a partner country’s performance in meeting sustainability obligations. The European Parliament backed this approach and urged the Commission to explore a sanctions mechanism as a last resort.

Disputes under TSD chapters currently rely on a weaker mechanism involving the monitoring by and consultation of a joint TSD sub-committee, civil society domestic advisory groups and a panel of experts.

The EU recently enacted this procedure for the first time as part of the EU–South Korea FTA, citing evidence that Seoul was ignoring labour and social standards.

However, the Commission is increasingly being called upon to strengthen the scope and enforcement of these TSD chapters.

Difficult to monitor

For its part, the European trade union confederation, ETUC, has demanded that EU trade agreements include enforceable labour provisions with sanctions for violations of labour rights as part of the review process.

The role of Domestic Advisory Groups is also a work in progress. The creation of DAGs and Civil Society Forums, supposed to represent business and employers’ organisations, as well as trade unions, social, human rights, environmental and other matters, has been a normal part of an EU FTA for many years.

A recent study by Ghent University and Friedrich-Ebert-Stiftung found that the DAG system still suffers from many deficiencies, not only in partner countries but also within the EU itself.

Although viewed as a way of potentially influencing the direction of discussions between the EU and its trade partners, many of the actors involved in the DAGs criticised the structure for lacking impact.

“Even the mere monitoring of the parties’ sustainability commitments, which is less ambitious than impact, has proved to be difficult,” said Professor Jan Orbie at Ghent University, who has researched the DAGs.

He pointed out that the civil society groupings often lack clear and accountable feedback mechanisms with the European Commission.

In the case of the EU–Vietnam free trade arrangement, in June, the first Trade and Sustainable Development Committee and the first Joint forum between European and Vietnamese civil society were cancelled at the last minute.

The European Economic and Social Committee (EESC), which brings together business leaders, trade unions and civil society, called for an enhanced supervisory role for DAGs across the entire FTA, a guaranteed balanced representation of civil society interests, the ability for DAGs to involve and consult with external stakeholders – and budgetary support from the EU.

Civil society groups have also complained about the low frequency of meetings, and difficulties obtaining information that government bodies are supposed to share.

In the meantime, the Commission – particularly its new Chief Trade Enforcement Officer – is also strengthening the EU’s enforcement regime by establishing a new Single Entry Point that would allow all EU-based stakeholders to lodge TSD-related complaints.

It is also expected to table laws on mandatory environmental and human rights due diligence and deforestation by the end of the year, although this proposal has already been delayed by several months.