Sustainability Clauses in EU Trade Agreements

The presentation/paper explores the trade-labour nexus provided in EU trade agreements. It will include a historical perspective and delve into the design of this nexus, as well as its most recent development. Sustainability clauses (i.e. essentially labour provisions in this presentation/paper) in EU trade agreements are essentially enshrined in so-called Trade and Sustainable Development (TSD) chapters. The presentation/paper will particularly examine the impact of the EU-Korea panel ruling of 2021. The EU-Korea labour dispute was—and remains, to date—the first dispute pertaining to sustainable development in EU trade agreements. The presentation/paper will build on the novelty brought by the ‘developmental’ approach of sustainability provisions in EU trade agreements, which is at the core of the panel ruling. The ‘developmental’ approach examined entails that TSD provisions permit to re-embed the market into a form of development that is more sustainable: social rules contained in EU trade agreements are perceived as productive factors that pave the way for sustainable growth and competitiveness that are not solely based on the cost factor. They contribute to the realisation of an ambitious form of ‘level playing field’ that provides, in turn, an economic justification for the insertion of sustainability clauses in EU trade agreements. The EU-Korea case has contributed to questioning the thirty-year dominance of the World Trade Organisation (WTO) Singapore Ministerial Declaration (1996), which has envisioned the trade-labour nexus as three separate pillars. By offering a new paradigmatic approach, the panel ruling has also paved the way for a normative intertwining of social and environmental standards. The developmental approach could serve as a compass for a new and better understanding of the recent evolution of sustainability clauses in EU trade agreements, which has included a combination of hard enforcement mechanisms and soft law tools. It could also help to facilitate the affirmation of an EU model of sustainability, not only in trade agreements but more broadly in international labour governance. In the aftermath of the panel ruling, the European Commission has swiftly built on the opportunities—and the limits—of the case to strengthen its sustainability provisions. It did so through the amendment of the compliance and ‘essential elements’ clauses of its trade agreements, which include now the need to comply with the Paris Agreement. The European Commission has also moderately enhanced the role of civil society in the implementation of TSD chapters. However, some important questions remain open and the evolution of TSD provisions remains subject to controversy and challenges, which limit the reach of the ‘developmental’ path drawn by the panel. It is for instance the case with the recent adoption, by the EU, of a set of unilateral policy tools that have contributed to challenging the preeminence of trade agreements. The paper will also briefly draw some options for future TSD provisions and conclude that the structural evolution suggested by the developmental approach promoted in the EU-Korea panel ruling could further strengthen the international sustainable policy space.