Sanctions in case of violations against labour, social and environmental standards

 

Over the past years, the EU Commission has negotiated a number of trade agreements, among other with Japan, Singapore and Canada. Apart from that, it also took measures to ensure more sustainability in trade agreement. Even though AK EUROPA regards this as a first step in the right direction, it demands improvements. For example, the Sustainability Impact Assessment has to be completed prior to the start of the negotiations, because only then the economic, social and environmental impact of a trade agreement can be established. Also all ILO Core Labour Standards have to be ratified before the negotiations are finalised. For years, AK EUROPA has been pointing out that nevertheless many EU trading partners have not yet signed all ILO Conventions. Both Japan (JEFTA) and Singapore, with whom the EU Commission only recently concluded trade agreements, have only ratified six of the eight ILO Conventions. Even countries like Australia and New Zealand, with whom trade agreements are currently negotiated, have not signed all ILO Conventions.  That it is possible to put pressure on a country is shown by the example of CETA: the AK - among other - also demanded the ratification of two outstanding ILO Core Labour Standards, to ensure labour standards and to guarantee protection and equality in the workplace for workers. As a result Canada ratified the outstanding Conventions in 2016 and 2017 respectively.

 

 

Apart from the ratification of the ILO Core Labour Standards the AK EUROPA also regards sanctions as key if there are violations against labour, social and environmental standards, to protect the rights of the population against investors. The EU Commission approach to this is extremely reluctant; it supports dialogue instead of sanctions, even though as in the case of South Korea labour rights were seriously violated. AK EUROPA demands a large number of new mechanisms, such as penalty payments, trade sanctions or the right of direct for the affected population.  

 

 

Public services and regulatory cooperation

Another key point of criticism concerns the sometimes unclear scope of negotiations, in particular regarding public services. It is for example problematic that JEFTA does not exclude the liberalisation of public services, which serve the general interest (e.g. wastewater disposal). Regulatory cooperation, which allows the mutual recognition of standards without parliamentary approval, is also part of the scope of negotiations of trade agreements. Mutual recognition makes it easy and often unnoticed to lower standards and enables the strengthening of corporate influences through the backdoor.

 

 

With regard to unclear negotiation targets, AK EUROPA in particular criticises the renewed trade negotiations between the EU and the USA. The EU Commission negotiated two mandates (reduction of industrial tariffs and conformity assessment) and pretends wanting to conclude a “lean” agreement. In contrast, the USA want a full trade agreement including agricultural goods. Hence, AK EUROPA demands among other to annul the TTIP mandate of 2013, as this might open the door for further liberalisations in the areas of regulatory cooperation, public procurement markets and public services.

 

 

Investment court system (ICS) - Investor-state dispute settlement (ISDS)  

Also part of EU trade agreements are investment protection agreements, which are to protect the rights of foreign investors within the framework of an Investment court system (ICS). According to the Singapore ruling, agreements of this kind (e.g. CETA, EU-Singapore) do not fall under the exclusive jurisdiction of the EU. Hence, the investment protection part must also be ratified by the Member States. From the point of view of AK EUROPA, the ICS, which builds on the Investor-state-dispute settlement (ISDS), could result in foreign investors given preference over European companies, as the latter cannot use the ICS. Corporations also have the opportunity to sue countries if these enact laws, which might put investments of corporations at risks or render them less profitable. In many cases, the threat of taking action is enough to influence legislation in the interest of investors against the needs of citizens (“regulatory chill”).

 

 

On request of the Belgian government, the ECJ ruled on 30th April 2019 that the CETA-ICS is compatible with EU law. Some Member States, and at the initiative of President Van der Bellen, among them also Austria, wanted to withhold their signature until the ruling was made public. AK Director Christoph Klein notes that although the ECJ has established the legal compatibility, disadvantages and dangers of investment protection agreements still remain: “We do not want a separate legal system for investors, who are then able to bring action at the expense of workers, consumers and citizens”.

 

Rights for People, Rules for Corporations

Meanwhile, AK EUROPA supports the appeal by NGOs and trade unions, whose campaign “Rights for People, Rules for Corporations – Stop ISDS” demands new rules for corporations. The special suing rights for corporations shall be ended; instead, corporations have to be made accountable in case of human rights violations. Fair trade conditions are also being demanded within the EU Parliament. MEP Karoline Graswander-Hainz has been emphasising for years the necessity of a paradigm change in European trade policy, as a fair and sustainable trade policy would benefit both employees and employers. However, the EU Parliament needs more progressive voices to achieve a paradigm change and to support the rights of citizens.

 

 

Further information:

AK EUROPA: JEFTA Myths & Facts on the Economic Partnership Agreement between the EU and Japan

AK EUROPA: Trade Agreements with Japan and Singapore

AK EUROPA: CETA and the future of European free trade agreements

AK EUROPA: Recommendation of the Commission for a Mandate for Trade Agreement with Australia and New Zealand