At its October plenary session, the European Economic and Social Committee (EESC) adopted an opinion on the EU's approach to Trade and Sustainable Development (TSD) and reviewing its 15-point action plan. The EESC sets out both pragmatic and innovative proposals to form "an ambitious review, featuring a revamped sanctionable enforcement approach with stronger civil society monitoring, using innovative instruments and enhancing the leverage for TSD", believing that TSD chapters were "not living up fully to their legally binding commitments".
Since the 2018 action plan, the trade world has moved on and so has the TSD debate. From the Green Deal becoming an overarching policy goal for the EU trade agenda, through the European Parliament and Member States calling increasingly for ambitious TSD reform, to the new Chief Trade Enforcement Officer creating high expectations for greater focus, resources and new legislative tools delivering on TSD commitments.
Meanwhile, EU trade partners such as Canada and the US have adopted strong enforcement instruments in their own free trade agreements (FTAs) or, like New Zealand, have tabled ambitious proposals in EU trade talks, ensuring trade works for all.
Building on this momentum, the EESC expects to see the TSD review finally "injecting life and giving teeth to the TSD implementation and enforcement". "As an integral part of the new EU trade strategy" it must also apply to current negotiations and revised mandates. For both the bilateral and global level, the EESC calls on the EU to "set ambitious TSD benchmarks with like-minded trade partners ready to lead".
The rapporteur of the opinion, Tanja Buzek, strongly emphasised the overarching need to break down silos. "Successful TSD implementation and enforcement require structured and collaborative interaction between EU institutions, international bodies and, most importantly of all, with and among the Domestic Advisory Groups (DAGs)". The International Labour Organization (ILO) should take part in monitoring the implementation of ILO Conventions in FTAs.
In the same vein, the trade, labour and environmental dimensions must not be tackled separately, as they are genuinely intertwined. TSD "must reflect evolutions and drive them", keeping labour and environmental standards equally high on its agenda. However, to set concrete obligations, the EESC stresses that "environmental commitments need to operationalise into international standards".
New instruments to enhance TSD leverage and stepping up effective enforceability
For effective change on the ground, the EESC urges to go beyond classic TSD chapters and "consider the great leverage of additional policy instruments", such as conditional public procurement allocation or mandatory due diligence as key flanking measures. Furthermore, it calls for this to be complemented with measures against money laundering, tax crimes and avoidance, and the fight against corruption in order to achieve sustainable trade.
"There is no "silver bullet" to enforcement but it all starts with stepping up effective enforceability", reiterated Tanja Buzek. The EESC has long called for a revamped Panel of Experts mechanism with the possibility of financial penalties or sanctions. The EU should further learn from trade partners' innovations such as "the suspension of preferential tariffs for companies that breach agreed international standards", the opinion highlights.
As major problems often stem from the very beginning, the EESC sees it is important to "secure pre-ratification commitments of international core conventions or binding and enforceable roadmaps within the TSD chapter itself, with clear timelines on their ratification". This should be combined with a gradual reduction of tariffs linked to TSD implementation, or their withdrawal in case of breaches.
No sustainable trade without civil society
"Creating the DAGs was not an end in itself", concluded the rapporteur, "they need to be empowered in order to fulfil their monitoring task successfully". EESC members believe that a stronger institutionalised framework must ensure "specifically tasked DAG bodies with clearly defined independence, representativeness and a balanced composition", and parties being accountable for their set-up and functioning. To strengthen the important civil society collaboration with partner country DAGs, the EESC strongly calls for "annual joint DAG-to-DAG meetings" to be included in the FTAs themselves.
In July 2021, the EESC set the way forward by organising the first ever #AllDAGs meeting that brought together all members of the current 11 EU DAGs to discuss concrete improvement steps. Listening to the DAGs, the EESC opinion echoes the need for enhanced visibility, structured institutional channels and resources to advise the parties on implementation and enforcement.
Starting in embryonic form in the 2011 EU-South Korea FTA, TSD chapters have consistently evolved in all ensuing EU FTAs. They contain commitments to respect multilateral labour and environmental agreements and to prevent parties from lowering protection levels to attract trade and investment.
In early 2018, the European Commission launched a 15-point action plan on improving TSD implementation and enforcement, which set the limited and "siloed" framework for TSD evolution of the past few years. The opinion draws from an innovative mindset to inform the ongoing TSD Review, closing at the end of October 2021.