According to the new approach for trade agreements by the EU Commission, unveiled on 22 June 2022, more emphasis shall be put on sustainability aspects in the future. On the one hand, recent EU trade agreements already include chapters, which concern Trade and Sustainable Development (TSD); on the other hand, there is no enforcement mechanism. In TSD chapters, trading partners commit themselves to internationally recognised environmental and social standards, such as the Paris Agreement and the fundamental conventions of the International Labour Organisation (ILO). By launching the new approach, the EU Commission announced its intention to extend state-to-state dispute settlement mechanisms in trade agreements to their TSD chapters. “We need to make sure that sustainability commitments do not remain only on paper, but that they actually happen on the ground”, explained EU Trade Commissioner Valdis Dombrovskis when presenting the Commission’s new approach.

Sanctions and a more important role for civil society

In future, newly negotiated TSD chapters shall be subject to the general dispute settlement mechanism. However, as this is not automatically a guarantee for their implementation, the EU Commission, with regard to newly negotiated chapters, intends to introduce the possibility of additional sanctions against trade partners, who fundamentally infringe against the Paris Agreement or ILO  core labour standards. However, Dombrovskis stressed that cooperation would come before imposing penalties – sanctions would only be imposed as a last resort in case of blatant and ongoing breaches of core TSD provisions.

Civil society and labour organisations such as AK and ÖGB have long been criticising European trade policy as exploitative and environmentally damaging. With its drive for more sustainability in trade agreements, the EU Commission was forced to addresses the criticism of these organisations by giving them, for example, the opportunity to lodge complaints against violations of sustainability commitments. In this context, AK calls for trade unions and NGOs to be given the opportunity to launch a process, which is independent of the contracting parties – even if the option of being able to launch complaints, does not guarantee that they will be taken up. The Green MEP, Saskia Bricmont, welcomed the EU Commission’s announcement as a “step in the right direction”. Still, she regretted that human rights were not explicitly mentioned and that the Paris Agreement and the ILO fundamental principles were not expressly defined as taking supremacy over commercial considerations. According to the EU Commission, TSD principles shall be implemented in all new and some current trade negotiations, whereas in old trade agreements, they would only be included if it came to modernising the trade agreement. Because the EU has already established a wide network of bilateral trade agreements one has to ask the question, which effectiveness can be generated at all in future, when only a few countries remain as potential trade partners.

A strong sustainability focus in the new EU-New Zealand Trade agreements?

The Trade Agreement between the EU and New Zealand, finalised on 30 June 2022, is the first agreement to include the EU’s new approach for trade and sustainable development. The Agreement, for example, contains sanctionable commitments to adhere to the Paris Agreement as well as binding provisions for labour standards and a chapter on trade and gender equality. In addition, both sides have agreed to implement the Convention on Biological Diversity and the Convention on International Trade in Endangered Species of Wild Fauna and Flora. Apart from reducing a large part of the remaining tariffs between the two trading partners and retaining certain protective measures for agricultural products, the EU and New Zealand also agreed on higher quotas for food imports and exports, such as for beef, milk powder or cheese.

It is of little surprise that the EU Commission hails the trade agreement with New Zealand as one with the “most ambitious sustainability provisions”. Nevertheless, globalisation critics see it as problematic, as it was finalised with a country that is in no way inferior to the EU in terms of its labour, climate and environmental standards. However, the fact that – against the background of climate change and greenhouse emissions associated with trade – the EU-New Zealand trade agreement increases quotas on food imports and exports for example, and removes tariffs, provides particular food for thought. This means in concrete terms that two equally developed trading partners would for example exchange beef, milk powder, cheese or similar products across long global distances. However, the trade agreement fails to provide an answer to the question as to how these transports shall be in line with the Green Deal and EU targets to reduce CO2 emissions. Critics are not without a reason suspicious that here priority is given to a comprehensive sustainability chapter to deflect from the fact that absolutely nothing will change regarding the EU’s trade policy. At least in the EU-New Zealand Agreement, the EU Commission pays no attention to the damage trade and in particular, the international transport of goods does to the climate.

Further information:

AK EUROPA: Die EU as a pioneer for a more sustainable and social trade policy

AK EUROPA: EU Parliament wants to ban Products made by forced labour from the EU market

AK EUROPA: Regulation on the making available of certain commodities and products associated with deforestation and forest degradation

AK Vienna Position Paper: EU Consultation on Trade and Sustainable Development in EU Trade Agreements (German only)

European Commission: Commission unveils new approach to trade agreements to promote green and just growth