IEEP's response to the consultation on the Trade and Sustainable Development review

AUTHORS: Eline Blot – Antoine Oger – Pierre Leturcq

IEEP has submitted feedback to the European Commission’s public consultation on the review of the Trade and Sustainable Development (TSD) Chapter action plan.

The European Green Deal, followed by the Trade Policy Review, highlights the EU’s commitments to ‘greening’ the Union’s trade and trade policy, including a promise to improve the mainstreaming of social and environmental sustainability concerns in EU Free Trade Agreements (FTAs). However, despite years of promising rhetoric, EU trade is not yet making a positive contribution to sustainable development.

The review of the Trade and Sustainable Development (TSD) Chapter implementation monitoring and enforcement framework is therefore an opportunity to address recent concerns and developments in the field of bilateral trade agreements and their environmental and social impacts. Building on IEEP’s previous work, our submission to the public consultation put forward recommendations to the Commission, the main point of which have been summarised below.

Operationalised monitoring mechanism and ratchet-up approach

Firstly, the TSD provisions themselves must become more explicit when defining commitments and expectations from trade partners under the trade agreement. This begins by using stronger and more explicit language when setting the expectations for the delivery of TSD Chapter commitments to improve their enforceability. “Shall” and “must” ought to become the norm instead of “aim” or “seek to”.

Stronger language should be paired with a binding framework to evaluate actual progress being made on commitments by including specific indicators, targets, and timelines for delivering TSD Chapter provisions. The aim is to provide a solid backdrop onto which the Commission and stakeholders can monitor and evaluate TSD Chapter implementation. Additionally, the Commission should utilise the SIA process to the fullest extent by conducting systematic ex-post assessments to monitor progress, as well as including a predetermined “trigger” clause for TSD provisions to launch a review of the FTA if required.

The Trade Policy Review confirms the Commission’s intent to make certain Multilateral Environmental Agreements (MEAs) an “essential element” of future trade agreements. The notion of “essential element” of a clause in an EU FTA is relatively new and should be expanded upon. An example is the EU-UK Trade and Cooperation Agreement which foresees the respect of Paris Agreement as an essential clause, the breaching of which would lead to the suspension or termination of the trade agreement as a whole. Similar approaches could be extended to include also other MEAs, including the Convention on Biological Diversity (CBD), and core International Labour Organisation (ILO) conventions.

Related to this – and key to making continued progress on environmental commitments – is this integration of a “ratchet-up” mechanism in TSD chapters to ensure that EU FTAs become a dynamic tool to foster sustainability globally. Finally, the Commission should seek to negotiate “tailor-made” TSD chapters with partners, to ensure that TSD provisions are in line with the specific environmental challenges of each country or region.

More effective outcome-oriented dispute settlement mechanism

Secondly, ensuring TSD provisions become actionable requires an effective, outcome-oriented dispute settlement mechanism. The EU-Korea case on labour rights convention ratification highlighted the shortcomings of the current dispute settlement mechanism under the TSD Chapters, specifically in that the dispute process must become more robust, doing away with any ambiguity surrounding the Expert Panel resolution. This should involve resolutions requiring a timeframe for implementation or a penalty mechanism in case of inaction, in addition to improved dialogue between civil society, trade and MEA officials to support timely identification of concerns. In the case of future dispute on environmental issues, the convened panel of experts must bear adequate, qualitative expertise to appropriately handle cases of environmental disputes.

Systematic involvement of civil society

Finally, the civil society mechanism under the TSD Chapter is also key to the identification of lack of progress on social and environmental fronts. Building on the last point, early stakeholder engagement should be the standard, in both domestic and foreign countries, during the FTA negotiation process. Furthermore, Domestic Advisory Group (DAG) and Civil Society Dialogue (CSD) debates could be stimulated by involving experts from relevant DGs (e.g. ENV, CLIMA, EMPL) and international organisations.

Furthermore, the number of environmental stakeholder representatives in the TSD civil society mechanisms are a cause for concern. By establishing a feedback procedure in which the Commission must officially respond to concerns raised by DAG members within a specified timeframe, stakeholders would have more confidence in the DAG process and thus better contribute to the monitoring of TSD Chapter implementation.

The considerations of these recommendations would further strengthen the capacity of the EU to promote and foster sustainable development globally through the conclusion of FTAs. For more details, consult our submission to the public consultation.