At its July plenary session, the European Economic and Social Committee (EESC) adopted an opinion on the latest annual report issued by the European Commission on the implementation of free trade agreements (FTAs), covering 2018. The EESC outlines the key role of trade in "promoting a sustainable economic recovery and allowing companies to rebuild and re-organise their disrupted value chains". At the same time, it regrets that civil society's monitoring work remains "largely absent" from the implementation report.
The COVID-19 pandemic is having an unprecedented impact on the global economy, particularly trade and investments. The World Trade Organization (WTO) estimates that world trade will drop by 13% to 32% in 2020. However, looking beyond the numbers, in the last few months there have been large-scale disruptions to supply chains, ad hoc export restrictions on crisis-relevant goods like medical supplies, tightened customs and border controls, and restrictions on the free movement of workers and service suppliers.
In its opinion, the EESC urges the EU institutions to draw important lessons from the current situation. These include the need to restore more resilient, diversified and responsible global supply chains and to develop stronger mechanisms "to deliver on a sustainable trade and investment agenda in all its dimensions". The EESC also stresses that the new EU trade strategy must be "consistent with the Green Deal initiative and show equal ambition on the effective implementation and enforcement of labour provisions".
The opinion's rapporteur, Tanja Buzek, emphasised this idea:
Learning the lessons from COVID-19, the EESC calls for a new trade model that is economically resilient, greener, socially sustainable and responsible.
Along the same lines, co-rapporteur Alberto Mazzola stressed the need to tackle dangerous trends that jeopardise the smooth running of global trade:
This crisis underlines how important global cooperation and the WTO reform process are in ensuring a strong and effective organisation that can act against protectionism and unilateralism.
Areas for improvement in FTA implementation and reporting
In its opinion, the EESC calls for the Commission and the Member States to take joint action to improve the utilisation of trade preferences and for more transparency to increase European companies' access to partners' public procurement markets.
The EESC welcomes the Commission's annual report on the implementation of FTAs, as it provides a "comprehensive and visible overview of the EU trade network". However, members believe that the report needs to enhance its informative potential in the future. For example, the proportion of the report dedicated to trade in services does not adequately reflect how valuable this is for the EU (25.2% of its GDP) and it lacks detail. It should also pay more attention to specific areas and groups like consumers.
Recommendations to strengthen civil society's role and the enforcement of trade and sustainable development
The EESC particularly regrets that the work done by domestic advisory groups (DAGs) to monitor the impact of agreements on trade and sustainable development (TSD) commitments is "largely absent" from the report. DAGs are joint bodies comprising representatives of civil society organisations in charge of monitoring the implementation of the TSD chapters of FTAs signed by the EU and its counterparts.
The EESC calls for DAGs "to be strengthened to fulfil their monitoring tasks successfully" and expresses concerns "given that TSD chapters currently lack binding enforcement tools".
The impact of DAGs' recommendations needs to be considerably strengthened and linked to the new Chief Trade Enforcement Officer (CTEO). Moreover, relevant EU institutions should establish a structured follow-up exchange with DAGs, said Tanja Buzek.
EESC members think that the upcoming 2020 and 2021 reports should "undertake a comprehensive policy assessment of the post-COVID trade environment, and how to ensure it brings benefits for all". To this end, the European Commission should consult with civil society organisations as a matter of priority for future FTA implementation reports, and the EESC stands "ready to contribute with its on-the-ground experience".
In its 2015 Trade for All communication, the European Commission committed to reporting annually on the implementation of the EU's most significant trade agreements. This is now the third report on this matter and the first time the EESC has made recommendations.
The 2019 report provides an update on the implementation of 35 major trade agreements with 62 partners, including the first full-year report on the EU-Canada Comprehensive Economic and Trade Agreement (CETA). In addition, the report describes the work undertaken prior to the entry into force of the EU-Japan Economic Partnership Agreement and includes dedicated chapters on SMEs, services and agri-food trade.
At present, the EU has the largest trade network in the world, with 44 preferential trade agreements covering 76 countries.
The report seeks to investigate the impact of the provisions included in the dedicated TSD chapters, which are part of all new-generation EU trade agreements, and reports on legal enforcement actions taken under EU trade agreements.