More

    EU Proposes New Sustainable Trade Approach

    Stockholm (NordSIP) – According to the Institute for European Environmental Policy‘s European Sustainable Development Report 2021, “European countries generate sizeable negative spillovers outside the region – with serious environmental and socio-economic consequences for the rest of the world. (…) Decoupling socio-economic progress from negative domestic and imported impacts on climate and biodiversity requires further effort, through domestic actions and international cooperation”.

    To address these concerns, the European Commission unveiled a new plan to enhance the contribution of EU trade agreements in protecting the climate, environment and labour rights worldwide. In a Communication on The power of trade partnerships: together for green and just economic growthpublished on June 22nd, the Commission proposes a new approach to strengthen the implementation and enforcement of Trade and Sustainable Development (TSD) chapters of the EU’s trade agreements.

    The TSD chapters require continuous and sustained efforts toward the ratification of fundamental International Labour Organisation (ILO) conventions, as well as the effective implementation of ILO conventions and of Multilateral Environmental Agreements that each trade partner has ratified, including the Paris Agreement.

    Since 2018, a 15-Point Action Plan has guided the EU’s approach to the enhanced implementation and enforcement of the TSD chapters. In June 2021, the Commission launched an in-depth review with the objective of strengthening the ability of trade agreements as a whole – and not just their TSD chapters – to champion sustainable trade, in cooperation with trade partners and in concert with other relevant EU policy instruments, including the European Green Deal

    “We promised to make trade more sustainable and today we are delivering. Our trade agreements give us clout on the world stage and support economic growth and sustainable development – but as of now, we want to make them an even bigger driver of positive change. We will engage and support our partners to make this happen. We will step up our enforcement, and we will resort to sanctions if key labour and climate commitments are not met,” Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis, said.

    The Communication policy priorities and key action points that aim to enhance the effectiveness of the current engagement-based approach to TSD, grounded in the international framework and standards, with stronger implementation and enforcement. The new approach will include the use of trade sanctions for breaches of core TSD provisions. It will be applied to future negotiations and to ongoing negotiations as appropriate.

    The new approach to TSD includes a tailored, results-oriented and priority-based cooperative engagement with partner countries that will seek to open new markets for import and export of green goods and services and raw materials. According to the Communication, the new approach will also seek to better integrate EU Member States, the European Parliament, and allow civil society and Domestic Advisory Groups (DAGs) to lodge complaints on violations of sustainability commitments.

    More focus will also be put on implementation and enforcement, and on extending the standard state-to-state dispute settlement compliance phase to the TSD chapter of the EU’s trade agreements. According to the European Commission, this means mean that the party found in violation of any of the TSD commitments will have to promptly inform how it will implement the panel report, and comply within a certain period of time. The Commission keeps the possibility of applying trade sanctions for material breaches of the Paris Climate Agreement and the ILO fundamental labour principles.

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

    Latest Posts

    NordSIP Insights Handbook

    What else is new?