Sustainability obligations in EU’s free trade agreements Giovanni Gruni, ESADE Law School and ESADEGeo giovanni.gruni@esade.edu Twitter: https://twitter.com/giovannigruni Linkedin: https://www.linkedin.com/in/giovannigruni/ Related publications: http://www.kluwerlawonline.com/abstract.php?area=Journals&i d=COLA2019126 (most up to date) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3255041 https://www.bloomsburyprofessional.com/uk/the-eu-world- trade-law-and-the-right-to-food-9781509916207/ 1
Structure of the presentation • Introduction to sustainable development and world trade law • Sustainable development in EU’s free trade agreements • State of the art of labour standard obligations in EU’s FTAs • State of the art of environmental obligations in EU’s FTAs • How labour and environmental obligations in FTAs are enforced • Proposal of reform of enforcement mechanism (based on labour standards) 2
1 Introduction to sustainable development (labour + environment) in world trade law 3
WHAT IS WORLD TRADE LAW? • Body of international rules regulating free movement of goods and services between States + other issues considered related (e.g. intellectual property) • Developed progressively since the ‘40 via successive “rounds” of negotiations • Landmark was the creation of the World Trade Organisation in 1995 which enforces WTO law via a system of internal courts (panels+appellate body) • In 2001 the Doha Development Round started in the WTO with the objective of fostering trade liberalisation further and correct some unbalances of the system 4
WORLD TRADE LAW WAS NOT DESIGNED TO INCLUDE OBLIGATIONS ON LABOUR AND THE ENVIRONMENT • These issues were absent from most of the Rounds of negotiations and, whenever discussed, most of countries would refuse to consider them • Labour and the environment seen as a potential risk to obligations contained in WTO agreements (countries could use them as “excuses” for protectionist purposes) • Influential theoretical arguments in economic theory looking at labour and environmental laws with contempt (neoliberism) • Result is in the WTO there are no obligations to respect labour and environmental standards (but see Art. XX GATT) 5
2 Sustainable development in the trade policy of the European Union 6
EU law evolves in the direction of the inclusion of sustainability issues in EU’s trade policy • The Lisbon Treaty contains obligations on the EU to include sustainability issues in all areas of its foreign policy including trade (e.g. Art. 21 TEU) • Opinion 2/15 of the Court of Justice of the EU clarifies that labour standards and environmental obligations in FTAs are an exclusive competence of the EU 7
After the collapse of the Doha Round (around 2005) the EU becomes more active in the conclusion of FTAs directly with partner countries 8
Summary of the state of the art of labour and the environment in EU’s FTAs • Some obligations to respect labour standards and the environment start being included in EU’s FTAs • Obligations remain limited and FTAs contain also many clauses on labour and the environment with little or no legal significance 9
Summary Labour standards obligations in EU’s FTAs • Core labour standards In CETA and EU-Mercosur also workers’ health and safety and labour inspections 10
Summary Environmental Obligations in EU’s FTAs (examples) • Multilateral environmental conventions • Paris Agreement • Convention on International Trade in Endangered Species of Wild Fauna and Flora • Agreement to promote compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas 11
What is an obligation under international law? Definition 1 Creates the right in the other party of demanding the elimination of the non- complying practice Definition 2 (from EU law) Clear, precise, unconditional EXAMPLE 1. The parties to the FTA shall ratify, implement and enforce Convention 182 of the International Labour Organisation prohibiting child labour (OBLIGATION) EXAMPLE 2. The parties to the FTA reaffirm the importance of the Convention 182 of the International Labour Organisation prohibiting child labour (Bla Bla Bla) EXAMPLE 3. The parties to the FTA shall work towards ratification of the Convention 182 of the International Labour Organisation prohibiting child labour (Grey area) 12
Example EU-Vietnam FTA 13
Example EU-Vietnam FTA 14
3 Present enforcement of sustainability obligations in EU´s free trade agreements 15
Summary of enforcement mechanism of sustainable development clauses in EU’s FTAs • Enforcement mechanism remains separate and way softer than the one used to enforce the rest of the FTA (e.g. free movement of goods and services, intellectual property) even if some steps towards better enforcement are taken in recent FTAs (but some other countries already consider them the same) • European Commission is explicitly opposing giving labour and the environment the same enforcement as trade and IP (but EU Parliament and increasingly the Council are in favour). 16
Economic obligations (trade, intellectual property…) 1. EU phase (Trade Barrier Regulation) A. Complaint by a EU industry to the EU Commission 17
Economic obligations (trade, intellectual property…) 1. EU phase (Trade Barrier Regulation) A. Complaint by a EU industry to the EU Commission 18
Economic obligations (trade, intellectual property…) 1. EU phase (Trade Barrier Regulation) A. Complaint by a EU industry to the EU Commission B. Investigation by the EU Commission 19
Economic obligations (trade, intellectual property…) 1. EU phase (Trade Barrier Regulation) A. Complaint by a EU industry to the EU Commission B. Investigation by the EU Commission C. Publication of Report 20
Economic obligations (trade, intellectual property…) 1. EU phase (Trade Barrier Regulation) A. Complaint by a EU industry to the EU Commission B. Investigation by the EU Commission C. Publication of Report 21
Economic obligations (trade, intellectual property…) 1. EU phase (Trade Barrier Regulation) A. Complaint by a EU industry to the EU Commission B. Investigation by the EU Commission C. Publication of Report 2. Free trade agremeent dispute settlement 22
Economic obligations (trade, intellectual property…) 1. EU phase (Trade Barrier Regulation) A. Complaint by a EU industry to the EU Commission B. Investigation by the EU Commission C. Publication of Report 2. Free trade agremeent dispute settlement A. Consultations 23
Economic obligations (trade, intellectual property…) 1. EU phase (Trade Barrier Regulation) A. Complaint by a EU industry to the EU Commission B. Investigation by the EU Commission C. Publication of Report 2. Free trade agremeent dispute settlement A. Consultations B. Litigation 24
Economic obligations (trade, intellectual property…) 1. EU phase (Trade Barrier Regulation) A. Complaint by a EU industry to the EU Commission B. Investigation by the EU Commission C. Publication of Report 2. Free trade agremeent dispute settlement A. Consultations B. Litigation C. Trade sanctions 25
Sustainable development obligations (environment and labour standards) 1. EU phase (Trade Barrier Regulation) A. Complaint by a EU industry to the EU Commission B. Investigation by the EU Commission C. Publication of Report 2. Free trade agremeent dispute settlement A. Consultations B. Litigation (sort of) C. Trade sanctions 26
4 Alternative proposal of enforcement (labour standards) 27
Third state ends • complaint New agreement • between the EU and third country International Representative Trade Barrier Dispute 1. Financial social partner Regulation Settlement (FTA Penalty (trade union or Investigation by ACTION state to state 2. Trade employer the European dispute Sanctions organisation) Commission settlement) EU Commission concludes that there is no violation of the labour standard
Representative social partners • List ex Article 154 TFEU
Representative social partners • List ex Article 154 TFEU • Domestic Advisory Groups
Representative social partners • List ex Article 154 TFEU • Social partners able to start an action independently
Third state ends • complaint New agreement • between the EU and third country International Representative Trade Barrier Dispute 1. Financial social partner Regulation Settlement (FTA Penalty (trade union or Investigation by ACTION state to state 2. Trade employer the European dispute Sanctions organisation) Commission settlement) EU Commission concludes that there is no violation of the labour standard
Filtering out frivolous complaints Need to demonstrate right of action for the EU •
Filtering out frivolous complaints Need to demonstrate right of action for the EU • No need to demonstrate effect on or link with trade •
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