EU To Embargo Trade Partners That Breach Green, Labor Values

Summary

• Sanctions seen only as last resort, with dialogue first
• Sanctions for breaching ILO principles, Paris climate pact
• Some lawmakers want existing trade agreements included

The European Commission suggested on June 22 the European Union (EU) should place restrictions on future free trade agreement partners that ignore environmental and labor standards. The majority of the EU’s existing deals, such as with Japan and Canada, and those negotiated but not yet in effect, such as Chile and Mexico, even now have such chapters on sustainability.

However, disagreements in this field are resolved by dialogue. Sanctions, such as nullifying trade concessions through quotas or tariffs, are not an option. Civil society groups and most EU policymakers have stated that labor and environmental standards should be a key part of the EU’s trade strategy and that its green push is useless.

The Commission, which manages trade for 27 EU members, generally reached a consensus at the end of a year-long review. The EU executive said it would continue to establish a dialogue to settle disputes over labor and the environment, some of which are assigned to an adjudicating panel. Under the proposal, the EU could place restrictions as a last resort if the panel revokes a trading partner.

EU Sets Strict Measures For The Future

EU Trade Commissioner Valdis Dombrovskis told a news conference that the proposed trade pact with New Zealand would probably be the first with the new sanction system.

The proposal came two days after 15 EU members wrote to Dombrovskis advising the bloc to speed up the conclusion of free trade agreements. There is a risk that working out a sanctioning system could delay the process even more.

Sanctions would be set off for breaching the Paris climate change agreement or the major principles of the International Labor Organization (ILO). These concern discrimination in the workplace, forced or child labor, and freedom of association. The ILO may add a fifth principle on occupational health and safety.

The proposal requires approval by the European Parliament and EU governments to take effect. Some policymakers, particularly the Greens, think sanctions should also be incorporated in the EU’s 46 current free trade deals and deals still to be approved.

Among the latter is the EU agreement with the Mercosur bloc of Brazil, Argentina, Uruguay, and Paraguay, reached in 2019, but suspended due to EU concerns about Amazon deforestation.

Dombrovskis said the Commission did not plan to proceed with the agreement, but was pursuing more environmental commitments.