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Blog: Trading in incoherence? EU trade policy needs improving to give forests, communities and the climate a fair chance

by Perrine Fournier

When it comes to global trade, it is difficult to overestimate the EU’s importance. It is the world’s second largest importer (after the US), and the second largest exporter (after China), and has an overall share of world trade larger than any other trading bloc. More than 30 million jobs in the EU rely on EU exports, and EU trade impacts the lives of many tens of millions more worldwide, not always positively.

The impact of EU trade on forests is hardly less dramatic. Fern's study Stolen Goods found that in 2012 alone, the EU imported €6 billion of soybeans, palm oil, beef and leather which were grown or reared on land illegally cleared of tropical forests, causing the equivalent to one football pitch of illegal deforestation every two minutes.  Another Fern study, “Duty Free”, highlights that the EU’s imports duties for timber products and forest risk commodities tend to be low (e.g. 3.8 per cent on palm oil for use in food, 0% for non-food application). Tariffs for timber and timber products vary from zero to 12 per cent).

EU trade policy has come under attack in recent years. The mobilization against the Transatlantic Trade Investment Partnership (TTIP) and the EU-Canada Comprehensive Economic Trade Agreement (CETA) illustrates that an increasing number of European citizens believe, with good reason, that environment and human rights are sacrificed on the altar of commerce.  It is as a direct response of the outrage around TTIP that the European Commission developed a new trade strategy, ‘Trade for All’, which is supposed to be more transparent than what came before, and to promote ‘sustainable development’ abroad.

Last month (May 2017) EU Trade Commissioner Cecilia Malmström told a conference "Trade should not mean a race-to-the-bottom on standards, or come at the cost of the environment or rights".

She’s right. The question is how to turn that sentiment in to reality.

While the EU is currently discussing the future of its groundbreaking timber trade instrument the Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan and how to tackle deforestation and illegal logging, Fern is concerned that free trade agreements (FTAs) and investment treaties currently being negotiated with forested and highly biodiverse countries such as Indonesia and Brazil will result in more tropical forests being destroyed and communities being evicted from their lands. All to satisfy our appetite for cheap agricultural commodities such as palm oil and soy.

Will future EU action on deforestation and forest degradation, the ‘new generation’ of FTAs and the Commission’s “Trade for All” result in an EU trade policy that actually contributes to improving the livelihoods and land rights of forest-dependent communities, addressing climate change and halting biodiversity loss? Fern campaigns for a more transparent EU trade policy which is coherent with European values and which protects forests and respects forest peoples’ rights and does not contravene EU’s and trade partner countries’ climate objectives.

Tackling trade policy incoherence

Currently, EU trade policy is implemented often in secret with strong corporate influence and very little public scrutiny or input. Trade agreements should no longer be considered in isolation, or given  priority over other EU instruments promoting sustainable development and human rights.

As countries take action to protect the climate, conflicts between trade rules and climate goals will escalate. The intentional separation of these two global priorities and the superiority of trade rules over social and human rights norms are becoming increasingly untenable.

The EU Action Plan on Human Rights and Democracy states that a robust and methodologically sound analysis of human rights impacts of trade and investments agreements should be developed. However, no human rights impact assessment was carried out before the conclusion of the EU-Vietnam Free Trade Agreement and this has been characterized as a failure by the European Ombudsman. This FTA, which was concluded in December 2015 after only three years of negotiations, includes forest products in its scope but the negotiation process strongly contrasted with the way FLEGT Voluntary Partnership Agreements (VPA), which aim at tackling illegal logging and associated trade, are negotiated in terms of participation and transparency. Civil society organisations have not been meaningfully informed and consulted during the negotiations of the FTA.

Similarly, the implementation in Cambodia of the (EBA) initiative, which gives least developed countries full duty-free and quota-free access to the EU for exports other than arms and armaments, is not tied to the respect of human rights or environmental protection. Increasing exports of sugar from Cambodia to the EU market have resulted in forced evictions, land seizures and destruction of thousands of hectares of community forest and environmentally protected areas.

Even if Human Rights Conventions, the Convention on Biological Diversity and other key global agreements on social and environmental protection are increasingly being referred to formally in EU trade policies and regulations, trade and investment rules tend in practice to take precedence over these Conventions, since the trade rules alone employ strict mechanisms to ensure compliance with their terms.

Opportunities to influence an improved EU trade policy

Civil society is waking up to the power of international trade deals. What are the openings to influence the policy so that EU trade and investment protect forests and respect rights?

The European Commission’s “Trade for All” strategy offers a number of levers to reform EU trade policy in a way that potentially does not drive deforestation and harm forest peoples’ rights. Let’s make this real.

More recently, the European Parliament issued a resolution on palm oil and deforestation calling on the Commission to include binding commitments in the sustainable development chapters of its trade and development cooperation agreements with a view to preventing deforestation. How this plays out could be important for future initiatives.

Finally, EU Member States, probably pushed by the pressure of public opinion, have begun to challenge Commission’s exclusive competence on Trade. In May this year the European Court of Justice made a ruling on the EU’s free trade deal with Singapore that EU Member States must consent to the rules governing dispute settlement between investors and states. At the same time, the Court stated that sustainable development is an exclusive competence of the EU. This means that only EU led initiatives make sense to protect forests and forests people and that transparency and democratic scrutiny are necessary to make this happen.

What’s next?

In the upcoming months, working together with NGOs and academics, Fern will review the current impact of EU trade in commodities on deforestation and forest dependant peoples’ access to land and forests for livelihoods in Brazil and Indonesia. We will assess how the ongoing EU-Mercosur and EU-Indonesia FTAs are likely to impact forests and peoples, with a view to issuing recommendations  for their ‘trade and sustainable development’ chapters. Trade agreements should ensure Brazil, Indonesia and the EU meet their zero deforestation commitments, their Nationally Determined Contributions to mitigating climate change, and fulfil their human rights obligations.

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