Environmental credentials of EU trade policy

This report conducts a comparative analysis of eleven EU free trade agreements and assesses EU’s trade policy with regard to environmental integration in free trade agreements and their underpinning processes.

The European Green Deal, published by the European Commission in 2019, highlights the EU’s commitments to ‘greening’ the Union’s trade and trade policy, with a promise to improve the mainstreaming of social and environmental sustainability concerns in the EU’s trade regime and in EU Free Trade Agreements (FTAs). The European Green Deal was followed by a dedicated EU trade strategy in early 2021, reaffirming the role of sustainability at the heart of EU’s trade regime.

The Green Deal and subsequent EU trade strategy have a lot to deliver as, despite years of promising rhetoric, many observers – including IEEP (2020) in a recent review – have concluded that EU trade is not yet making a positive contribution to sustainable development.

The EU is one of the largest international players in trade, together with China and the US. In 2019, EU exports and imports of goods amounted to 15% and 14% of the world total, respectively.

Negotiating FTAs makes up a significant part of the EU’s trade policy, and improving the environmental credentials of EU FTAs is a key to improve trade sustainability. Over the past 20 years, the EU has increased the number of its bilateral and regional trade agreements to the point where up to 40% of EU external trade is governed under such agreements. This makes the EU one of the most active negotiators of trade agreements on the international arena, which in turn means that EU FTAs also play a key role in determining trade patterns, norms and standards globally.

This policy paper provides a comparative analysis of the treatment of the environment across the most recent EU FTAs – final or proposed – and related negotiations, with a view to facilitate evidence-based stakeholder engagement in EU trade policymaking under the European Green Deal.

The review assesses three key elements of the EU FTA framework: environmental provisions included in FTAs’ Trade and Sustainable Development (TSD) Chapters; the quality of environmental analysis carried out as part of trade Sustainability Impact Assessments (SIAs); and the extent of engagement of environmental civil society stakeholders in the FTA negotiation and implementation processes. The work builds on the 2020 paper by IEEP on the implications of the European Green Deal for trade and the environment, examining existing shortcomings in further detail and taking forward some of the earlier paper’s key policy recommendations.

The report concludes that none of the reviewed EU FTAs provide fully adequate provisions for protecting the environment, neither in terms of mitigating negative impacts of trade, nor in terms of using trade to boost environmental sustainability. Although some agreements appear to be headed in the right direction, no single existing trade agreement can yet be considered a ‘gold standard’.

The review also observes that the treatment of environmental issues varies across existing SIAs. While some of this variation seems justified, there seem to be also some clear omissions in terms of the breadth and depth of environmental assessment across SIAs.

Finally, the review confirms that the FTA stakeholder engagement mechanisms are not used to their full potential when it comes to identifying and addressing environmental concerns in FTA negotiation and implementation processes. The current level of engagement of environmental stakeholders is limited and the way in which dialogue and discussions are conducted does not seem fit for purpose to address environmental concerns, especially in an actionable manner. For example, there is no clear follow up or feedback to civil society stakeholders as to how their concerns have been taken onboard.

Read the executive summary for IEEP’s policy recommendations to increase the EU’s trade-related sustainability credentials.