Background

The European Commission unveiled June 22 a new plan to strengthen the trade and sustainable development chapters of European Union trade agreements. These chapters require partner countries to make continuous and sustained efforts toward the ratification of fundamental International Labor Organization conventions and the effective implementation of ILO conventions and multilateral environmental agreements that each party has ratified, such as the Paris Agreement on Climate Change and the Convention on Biological Diversity.
A Commission press release states that the proposed plan identifies policy priorities and key action points that will enhance the effectiveness of the current engagement-based approach to TSD with stronger implementation and enforcement. Highlights include the following.

- negotiating tailored objectives and time-bound roadmaps for more effective results

- increased engagement with trade partners in a cooperative process to foster compliance with international labor and environmental standards, including through technical and financial assistance

- increased collaboration with EU member states and the European Parliament to monitor and implement TSD commitments

- working to open new markets for imports and exports of green goods and services and raw materials

- making it easier for civil society and domestic advisory groups to lodge complaints on violations of sustainability commitments and introducing timelines for the Commission to consider TSD complaints

- extending the standard state-to-state dispute settlement compliance phase to TSD chapters of EU trade agreements, meaning that the party found in violation will have to promptly inform how it will implement the panel report and comply within a certain period of time

- the possibility to apply trade sanctions (i.e., suspension of tariff preferences) for material breaches of the Paris Climate Agreement and the ILO’s fundamental labor principles

EU trade commissioner Valdis Dombrovskis said sanctions would be applied “based on the standard dispute settlement that we use for the rest of our bilateral deals” (i.e., if an independent panel of experts finds that a trading partner has breached one of the core TSD provisions) and only “as a matter of last resort, in cases of blatant and persistent breaches” of those provisions.

Dombrovskis said for some of the actions listed above the EU could apply the new approach to existing trade agreements while others (e.g., introducing trade sanctions) would require a change in the template of the TSD chapters of EU trade agreements, which “we will roll out … in our ongoing negotiations” as well as “new negotiations in future.”

According to a Reuters article, the plan would have to be approved by the European Parliament and individual EU member states to take effect.

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