EU Trade Policy Review lacks the teeth to make trade sustainable

3 March 2021

EU Trade Policy Review lacks the teeth to make trade sustainable

The EU Trade Policy Review released 18 February 2021 definitely asserts greener ambitions than Trade for All, its predecessor. The Trade Policy Review deems “Supporting the green transition and promoting responsible and sustainable value chains” to be essential. The review nonetheless falls short of what is needed to achieve EU commitments to end deforestation.

Despite improved commitments to align trade with climate goals and respect for human rights, the review focuses mainly on improving implementation and enforcement of Trade and Sustainable Development (TSD) chapters, via an early review (2021) of the 15-point Action Plan.

The review fails to tackle issues linked to the trade in forest-risk commodities, exposed in the debate around the EU-Mercosur Agreement (FW 263). No mention is made of conditioning market access on deforestation- and human rights violations-free criteria, improving traceability systems as a pre-condition of preferential market access, or strengthening civil society participation in negotiations. It lacks innovative demand-side pressures, such as fostering commodity trade partnership agreements with major forest-risk commodity producing countries. 

The 2011 EU-South Korea Free Trade Agreement (FTA) was the first of a new generation of agreements to include a TSD chapter. Both sides committed to respect core labour rights and standards as defined by the International Labour Organisation (ILO) (e.g., freedom of association), and to make efforts toward ratifying fundamental ILO conventions. After civil society repeatedly expressed concerns about violations of labour rights, in July 2019 the EU requested a panel of experts to examine several issues, notably the inadequacy of South Korea’s efforts to ratify those conventions.

On 25 January the panel made their decision and its interpretations are extremely relevant for future FTA trade-environment disputes. Positively, it ruled that violations of labour commitments do not need to impact trade to be considered unlawful; ‘stand-alone’ violations can exist. In that sense, the EU’s approach differs from the US approach to trade and sustainable development.

The panel also clarified that a “commitment” is a legally binding obligation. Unfortunately, however, a commitment to ratify an ILO convention − and by analogy Multilateral Environment Agreements − is an obligation of effort, not result. Hence, the panel concluded that by failing to deliver, South Korea did not breach its obligations under the TSD chapter.

This reveals the limitations of TSD chapters’ provisions and the reinforces civil society claims that key international instruments must be ratified prior to entry into force of FTAs, and that, to be effective, TSD provisions must have teeth.

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Category: Free Trade Agreements

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