As the Vice President and new Trade Commissioner Valdis Dombrovskis, had already said during his Hearing in October 2020, the EU is working on a Trade and Climate initiative at WTO level. However, the fact that in doing so the Commission intends to, above all, back trade liberalisation with (alleged) ecological products and services, was immediately criticised within the scope of the Civil Society Dialogue. In particular representatives of environmental and animal welfare organisation criticised that, confronted with crises, the Commission’s response had always been to opt for more trade and more liberalisation, rather than considering the potential damage cause by trade and relocating production in certain areas.

Debate in EU Parliament: negative aspects of trade prevail

On 7 December 2020, a hearing took place in the EU Parliament, during which members of both Committees on International Trade and on the Environment discussed with four stakeholders and a representative of the Commission about a possible contribution of trade policy to achieve the targets of the Green Deal. All participants agreed on one issue: the transition towards a more environmentally sustainable society is a global challenge. However, as Sandrine Dixson-Declève, Co-President of the Club of Rome pointed out, it was vital for the EU to assume a leading role. The participants also agreed that the Sustainability chapters of EU trade agreements were still lacking enforceability.  

Olivier de Schutter, UN Special Rapporteur for extreme poverty and human rights, came to the conclusion that the negative aspects of global trade would prevail. Trade would be a danger to the green transition, not the solution. Nevertheless, de Schutter regards trade policy as a possible lever to steer globalisation in the right direction. Important tools, among other, were a CO2 tax, the General System of Preferences or the monitoring of supply chains.

Energy Charter Treaty impedes environmental transition

Wendel Trio, Director of the Climate Action Network pointed out that the Energy Charter Treaty (ECT) would sabotage the transition towards an environmentally sustainable society. The Treaty allows energy companies to sue countries for compensation running into billions if these enacted urgently required laws for the protection of the environment or biodiversity. Trio belongs – as do Dixson-Declève and Olivier de Schutter – to the signatories of an open letter, which demands the withdrawal from the ECT because it impedes the transition to clean energy.

Environmental realignment of trade policy

In order to prevent trade policy contradicting the efforts of the Green Deal or even undermining it, there is, from the AK’s point of view, a need for realigning trade policy. Sustainability chapters have to be furnished with an effective enforcement mechanism, and the ratification, implementation and remaining part of the Paris Climate Agreement have to be enshrined in all trade agreements as an essential and binding element. What is needed in addition to the EU emissions trading system, is a EU-wide minimum price and carbon border adjustment as well as a review of the WTO rules to enable an effective fight against environmental and social dumping. Apart from that, a completed impact analysis should be a condition for starting negotiations in respect of potentially new trade agreements.

Further information:

AK Position Paper: European Climate Law

AK Position Paper: Non-paper of the Commission services on Trade and Sustainable Development (TSD) chapters in EU Free Trade Agreements

AK EUROPA: EU trade policy shall become more sustainable

AK EUROPA: Realignment of EU trade policy

AK EUROPA: Energy Charter Treaty prevents environmental change