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Taking the Enforcement of Labour Standards in the EU's Free Trade Agreements Seriously

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Abstract

The EU is extremely active in negotiating bilateral free trade agreements (FTAs) with preferred trading partners (such as Canada, Colombia, Japan, Korea, Mercosur, Mexico, Peru, Singapore, Vietnam). All these FTAs contain a sustainability chapter, also covering labour standards. They lack sanctions, however, and their enforcement has proven to be weak. In response to increasing calls notably from the European Parliament and civil society, the incoming von der Leyen Commission has promised improvements. This article sets forth a four-pronged proposal: tightening up the standards, upgrading an existing private complaints procedure in the EU as well as FTA dispute settlement, while introducing various sanctions.
1
Published in 57 Common Market Law Review 1591-1622 (2019)
Taking the Enforcement of Labour Standards
in the EU’s Free Trade Agreements Seriously
Marco Bronckers* & Giovanni Gruni**
I. Introduction
The European Union is an extremely active international actor in the area of trade, being widely
involved in the negotiation and conclusion of bilateral free trade agreements (‘FTAs’) with partner
countries. All new-generation free trade agreements include a sustainable development chapter,
covering both environmental and labour standards. Among other things, the latter promote the
ratification and implementation of Conventions of the International Labour Organisation. For
instance most of the EU’s FTAs contain provisions to protect the right to collective bargaining and
freedom of association or to forbid discrimination at the place of work.
1
On 17 December 2018 for
the first time in history, the European Commission sought formal consultations with a partner state,
South Korea, for failure to respect a labour standard obligation in an EU FTA; and on 4 July 2019
escalated this dispute by requesting a panel.
2
This is a notable development. It comes more than seven
* Leiden University; member of the Brussels Bar; m.c.e.j.bronckers@law.leidenuniv.nl.
**Universitat Ramon LLull; Twitter: @giovannigruni; giovanni.gruni@gmail.com. We have benefited from exchanges
with Adelle Blackett, William Chiaromonte, Henner Gött, Paul van der Heijden, Filippo Mattioli, and Gary Horlick, as
well as from the comments made by the anonymous peer reviewers of this journal. The usual disclaimer applies. This
article elaborates on our contribution to Restoring Trust in Trade: Liber Amicorum in honour of Peter Van den Bossche
157-172 (Prévost, Alexovicova, Pohl eds., Hart, 2018).
1
See Section II for an analysis of labour standards in the EU’s FTAs.
2
https://trade.ec.europa.eu/doclib/press/index.cfm?id=2044.
2
years after the entry into force of the agreement and the prolonged failure of the Asian EU partner to
ratify and implement four of the eight fundamental ILO Conventions.
Private stakeholders
3
and academic observers
4
have long criticized weaknesses in the EU’s
enforcement record. Labour standards and environmental obligations are excluded for the time being
from the set of rights which can be enforced via regular dispute settlement proceedings in these FTAs.
No sanctions are envisaged in the event the EU’s trading partners flout these standards. These
enforcement weaknesses have undermined the confidence of civil society and other stakeholders in
the ability of the EU to promote sustainable development through its FTAs and have thus weakened
support for these trade liberalisation initiatives. The cognizance of such shortcomings has prompted
legal scholars to rethink the rules of global trade in order to accommodate social and environmental
concerns better.
5
Stronger enforcement of labour obligations in EU FTAs has been gaining traction as well
within the political debate. In fact, for several years now, the European Parliament has been calling
for better enforcement of environmental and labour provisions in the EU’s FTAs.
6
In his presidential
election campaign in 2016 Emmanuel Macron proposed the creation of an “EU prosecutor” to police
3
See ETUC submission on the Non-paper of the Commission services on Trade and Sustainable Development (TSD)
Chapters in EU Free Trade Agreements (FTAs), 11 October 2017, available at: www.etuc.org/documents/etuc-
submission-non-paper-commission-services-trade-and-sustainable-development-tsd#.WtRdzdNuaik
4
The scholarship on labour standards in the EU’s FTAs is voluminous. See, e.g., H Gött, “Linkages of Trade, Investment
and Labour in Preferential Trade Agreements: Between Untapped Potential and Structural Insufficiencies”, in 2019
European Yearbook of International Economic Law (to be published); H Gött (ed), Labour Standards in International
Economic Law (Springer, 2018); B Melo Araujo, “Labour provisions in EU and US Mega-Regional Trade Agreements:
Rhetoric and Reality” (2018) 67 International & Comparative Law Quarterly 233; L Bartels, “Human Rights, Labour
Standards and Environmental Standards in CETA” in E Vranes, A Orator and D Fuhrer (eds), Mega-Regional
Agreements: TTIP, CETA, TiSA: New Orientations for EU External Economic Relations (OUP, 2017); G Gruni, “Labour
Standards in the EU-South Korea Free Trade Agreement” (2017) 5 Korean Journal of International and Comparative
Law 100; G Gruni, “Law or Aspiration? The European Union Proposal for a Labour Standard Clause in the Transatlantic
Trade and Investment Partnership” (2016) 43 Legal Issues of Economic Integration 399; L Bartels, “Social Issues: Labour,
Environment and Human Rights” in S Lester, B Mercurio and L Bartels (eds), Bilateral and Regional Trade Agreements:
Commentary, Analysis and Case Studies (CUP, 2015); L Bartels, “Human Rights and Sustainable Development
Obligations in EU Free Trade Agreements” (2013) 40 Legal Issues of Economic Integration 297.
5
See G Shaffer, “Retooling Trade Agreements for Social Inclusion”, (2019) 1 University of Illinois Law Review 1.
6
See Resolution on human rights and social and environmental standards in international trade agreements of 25
November 2010 (2009/2219(INI)) para 22(a); See Resolution on implementation of the 2010 recommendations of
Parliament on social and environmental standards, human rights and corporate responsibility of 5 July 2016
(2015/2038(INI)) paras 22(c) and (d).
3
sustainability obligations.
7
Similarly, in the run up to the May 2019 elections for the European
Parliament, the Socialists and Democrats Group of the European Parliament urged making
sustainability obligations (including labour standards) fully enforceable.
8
In response to these growing pressures, the European Commission issued two non-papers in
2017 and 2018.
9
The Commission contemplated several improvements in the implementation of FTA
sustainability chapters. Some of its proposals are worthwhile indeed.
10
For example, the Commission
emphasised the need for more transparency of its enforcement actions. Most attention, though, was
devoted to the question of whether infringements of the sustainability chapters in the FTAs should be
subject to trade sanctions. Ultimately, the Commission maintained its view that this is not desirable.
Unfortunately, the Commission disregarded financial penalties or more targeted sanctions,
being alternatives to trade restrictions. Furthermore, these Commission papers paid no attention to
the rather more pressing issue, in our view, of an effective private complaints procedure. Rather than
an absence of sanctions at the end of an investigation, a key problem in the enforcement of the EU’s
sustainability chapters has been a lack of timely opening and pursuit of formalized investigations.
Moreover, the Commission omitted to examine the internal consistency, clarity and enforceability of
the labour standards which the EU has been including in its FTAs during the past decade or so. There
is room for improvement here as well.
Following the May 2019 elections, environmental concerns gained broad support in the
European Parliament. Commission President-elect Ursula von der Leyen acknowledged this political
7
En Marche, Official Program on Industry, available at: <en-marche.fr/emmanuel-macron/le-programme/industrie>.
8
See ”Ten Progressive S&D principles for a new era of trade agreements” available at <
https://www.socialistsanddemocrats.eu/ten-progressive-sd-principles-new-era-trade-agreements>.
9
See the two non-papers of the European Commission services, Trade and sustainable development chapters in EU free
trade agreements, 11 July 2107, available at: <http://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155686.pdf>; and
Feedback and way forward on improving the implementation and enforcement of trade and sustainable development
chapters in EU free trade agreements, 26 February 2018, available at:
<http://trade.ec.europa.eu/doclib/docs/2018/february/tradoc_156618.pdf>.
10
For an overall assessment see also J. Harrison et al. “Labour Standards Provisions in EU Free Trade Agreements:
Reflections on the European Commission’s Agenda”, (2018) World Trade Review (open access).
4
reality and promised to make a European Green Deal a centrepiece of her agenda.
11
Likewise, she
expects the implementation of labour standards in trade agreements to be a priority for her
Commissioner for Trade, working with the newly created Chief Enforcement Officer (an affirmative
response to President Macron’s proposal).
12
Accordingly, the time is ripe for a reconsideration of the
EU’s past policies.
In this article we concentrate on labour standards. We present a four-pronged proposal to
strengthen their enforcement in the EU’s FTAs: tightening up these standards, admitting private
complaints about their violation under the EU’s Enforcement Regulation, scrapping separate and
weak procedures to settle disputes regarding these standards in the EU’s FTAs, while adding
appropriate sanctions when they are persistently violated. The structure of the article is as follows.
Section two identifies the state of the art of labour standards in the EU’s FTAs. Section three identifies
the amendments necessary to accommodate a private complaint procedure to enforce labour standards
within an existing instrument of EU trade policy: the EU’s Trade Barriers Regulation,
13
which the
new von der Leyen Commission intends to upgrade and rebaptize as the Enforcement Regulation.
14
Section four proposes modifications to improve the dispute settlement mechanism in the EU’s FTAs,
strengthening the system of third party adjudication and including various sanctions. Section V
reflects on what our proposal might realistically achieve. Section VI concludes.
11
See Mission Letter of Commission President-elect Ursula von der Leyen to Frans Timmermans, Executive Vice
President-designate for the European Green Deal (10 September 2019): https://ec.europa.eu/commission/sites/beta-
political/files/mission-letter-frans-timmermans-2019_en.pdf.
12
See Mission Letter of Commission President-elect Ursula von der Leyen to Phil Hogan, Commissioner-designate for
Trade (10 September 2019): https://ec.europa.eu/commission/sites/beta-political/files/mission-letter-phil-hogan-
2019_en.pdf, at 5.
13
Regulation (EU) 2015/1843 of the European Parliament and of the Council, OJ 2015 L 272/1 (hereafter: the ‘TBR’).
For an introduction to the TBR see M Bronckers and N McNelis, “The EU Trade Barriers Regulation Comes of Age”
(2001) 35 Journal of World Trade 427.
14
See Mission Letter of Commission President-elect Ursula von der Leyen to Phil Hogan, above n 12, at 5.
5
II. Labour standard obligations in the EU’s FTAs
For about a decade now the European Union has been negotiating labour standard obligations in its
new generation FTAs with third countries. They have been packaged with environmental norms in
so-called sustainability chapters. The first example appears in the EU’s FTA with South Korea.
15
Various types of provisions recur;
16
though the wording can differ from one treaty to another, in
meaningful ways.
Firstly, these EU FTAs encourage the parties to respect and implement existing international
commitments.
17
Within this group one finds hard obligations such as the one in CETA for each party
to ensure that its labour laws and practices ”embody and provide protection” under listed ILO
standards.
18
Such standards, in all new EU’s FTAs, always include the four core ILO standards
prohibiting forced labour and child labour, protecting against discrimination and upholding the
freedom of association and the right to collective bargaining.
19
CETA and the EU-Mercosur Trade
Agreement go a step further including also obligations on health and safety of workers,
20
labour
inspections and discrimination against migrants.
21
All these standards are based on pre-existing ILO
instruments as well.
22
15
OJ 2011 L127/1. The agreement was provisonally applied since 2011, and formally ratified in 2015.
16
The EU’s common formulation approach has been criticized for not sufficiently taking into account the diversity of
work-related concerns amongst its trading partners. See Harrison et al., above note 10, at 11.
17
Finding that the FTA with Singapore did not create new labour or environmental standards (in para. 152) allowed the
European Court to say (in para. 155) that the FTA’s sustainability chapter did not raise concerns regarding the
regulatory competence of the EU or the Member States. See Opinion 2/15 [2017] ECLI:EU:C:2017:376.
18
CETA Art 23.3.
19
CETA Art. 23.3; EU-Japan Economic Partnership Agreement Art. 16.4; EU-Mercosur Trade Agreement TSD Art.
4.4; EU-South Korea FTA Art. 13.4; EU-Vietnam Trade Agreement Art. 13.4; EU-Singapore FTA Art. 12.3; EU-
Colombia and Peru Art. 269.
20
CETA Artt. 23.3(2), 23.3(3); EU-Mercosur FTA Art. 4.10.
21
CETA Art. 23.5(1) ; EU-Mercosur FTA Art. 4.10.
22
ILO Convention No. 155 Occupational Safety and Health Convention; ILO Convention No. 7 Migration for
Employment Convention; ILO Convention No.143 Migrant Workers Convention; ILO Convention No. 81 Labour
Inspection Convention; ILO Convention No. 129 Labour Inspection Convention (Agriculture); ILO Convention No.87
Freedom of Association and the Right to Organise Convention; ILO Convention No. 98 Right to Organise and
Collective Bargaining Convention; ILO Convention No.29 Forced Labour Convention; ILO Convention No. 105
Abolition of Forced Labour Convention; ILO Convention No. 138 Minimum Age Convention; ILO Convention No.
182 Worst Forms of Child Labour Convention; ILO Convention No. 100 Equal Remuneration Convention; ILO
Convention No. 111 Discrimination Convention.
6
Other obligations are less definite. Certain FTAs include an obligation for their signatories to
make continued and sustained efforts towards ratifying” fundamental or other ILO conventions.
23
Commentators have argued that the practical significance of the latter obligation is elusive.
24
Nevertheless, in its recent dispute settlement request, the Commission is taking the position that the
failure of Korea to ratify core ILO Conventions more than seven years after the FTA’s entry into
force infringes this best efforts obligation.
25
If that is indeed the Commission’s current view, and
taking on board that an assessment of best efforts depends to some extent on the circumstances of a
particular case, it would make sense to supplement this efforts obligation with a concrete deadline by
which these ratifications should occur: for example, within five or ten years after the FTA’s entry
into force at the most.
Secondly, EU FTAs contain qualified obligations which are dependent on additional
conditions. These make it more difficult to identify when the obligation has been violated. This is
notably the case for obligations not to lower existing levels of protection, or not to fail to enforce
domestic labour laws and regulations. Such obligations are present in most of the EU’s FTAs.
Sometimes they are accompanied by the condition “in a manner affecting trade”.
26
In other words,
these obligations are triggered when trade effects occur. At other times, the condition is formulated
as “an encouragement to trade.”
27
In that case, an intent to affect trade is necessary, but actual trade
effects need not be shown.
28
Inexplicably, an FTA may also combine both conditions.
29
As we will
discuss, whether or not the application of labour standards in FTAs should depend on trade effects is
a major bone of contention.
23
EU-South Korea FTA Art. 13.4(3); CETA Art. 23.3.4; EU-Japan Economic Partnership Agreement Art. 16.3(3); EU-
Mexico Trade and Sustainable Development Chapter, Art. 3.4 (political agreement, April 2018).
24
See Gött (2019), above note 4, at his notes 45-47; Bartels (2017), above note 4, at 3.
25
See above, note 2.
26
See, for instance, EU-South Korea FTA, Art 13.7; EU-Singapore FTA Art. 13.12
27
See, for instance, CETA Art. 23.4; EU-Japan Economic Partnership Agreement Art. 16.2 (2).
28
R. Zandvliet, Trade, Investment and Labour: Interactions in International Law 215 (Leiden PhD, 2019)
http://hdl.handle.net/1887/68881.
29
The text of the EU-Vietnam FTA finalized in 2018 contains both conditions: “in a manner affecting trade” regarding
the obligation not to derogate from labour laws (Art. 13.3(2)); and “as an encouragement to trade” in respect of failures
to effectively enforce labour laws (Art. 13.3(3)). See COM(2018) 691 final (17.10.2018).
7
Thirdly, EU FTAs contain a plethora of vaguer obligations such as the one to ”promote
awareness” of labour obligations.
30
Other agreements, such as the EU-South Korea FTA, include
mere declarations of intent where the parties, for instance, “reconfirm that trade should promote
sustainable development.”
31
Such declarations barely have any legal significance.
32
The Commission
ostensibly has been trying to persuade reluctant FTA partners to accept more goals to improve labour
protection, by couching them in fuzzier language (and excluding hard enforcement).
33
Regretfully,
the Commission’s reports on the implementation record of the EU’s FTAs to date do not include a
reflection on the impact, if any, of such standards.
34
The concern with such vague standards is not just their lack of effect. It is also their lack of focus.
There is no scarcity of labour standards. Over the years, the ILO in particular has been a prolific rule-
maker. Rather than deflecting attention from these multilaterally agreed ILO rules by negotiating yet
another set of bilateral ones, and thereby undercutting the ILO’s work,
35
the EU would do better to
focus on where FTAs can add value: better implementation and enforcement of existing, notably ILO-
agreed rules,
36
at least among preferential trading partners. Part of the problem may be that the EU
has coupled labour with environmental standards in the sustainability chapters of its FTAs. Yet a
separation could be in order. Although environmental problems addressed in FTAs easily are global
in scope, it might be useful to experiment with new bilateral commitments, as these problems and
potential solutions are rapidly developing. In contrast, the issues in labour relations have been
recognized for a longer time and have been addressed for many years within the ILO.
30
CETA Art 23.6.
31
EUSouth Korea FTA Art 13.6.
32
Zandvliet, above note 28, at 241 posits that clauses, which do not set forth a hard obligation, could still be legally
relevant: they could be used as a defense by a respondent state in investor-state arbitration. By way of example, he argues
that it would be inconsistent for an investment tribunal to grant damages when a state raises the minimum wage while
that state promised to improve its labour standards in an agreement with the claimant’s home state.
33
See below, text at note 148.
34
E.g., European Commission, Report on Implementation of EU Free Trade Agreements in 2017 (2018). See also the
underlying Commission Staff Working Document SWD(2018) 454 final (31.10.2018).
35
Gött (2019), at his notes 48-58.
36
See D Peksen and R G Blanton, “The impact of ILO conventions on worker rights: Are empty promises worse than
no promises?” (2017) 12 The Review of International Organizations 75.
8
Accordingly, it is time for the EU to take a hard look and reassess whether the best efforts and
blurrier standards it has included in its existing FTAs have been meaningful enough to eliminate
troublesome practices, and whether problematic additional conditions can be deleted. The lessons of
this exercise could be applied to future FTAs as well.
III. Modelling a Private Complaint Procedure
A recent study highlights that the side-lining of non-governmental actors in the enforcement of FTA
labour standards has had a traceable impact on the underperformance of these standards.
37
Governments have taken no, slow, or ineffective actions in response to private complaints. This has
blocked or delayed solutions, the Commission’s long-awaited formal steps against Korea regarding
its failure to ratify core ILO Conventions being just one prominent example. European civil society
representatives (assembled in the so-called Domestic Advisory Group
38
), engaged with monitoring
the implementation of the labour standards in this FTA, already requested the Commission to initiate
formal consultations with Korea in January 2014. Yet the Commission in its unfettered discretion
opted for resolving the issue through political dialogue.
39
This informal process dragged on fruitlessly
until December 2018.
40
All this has damaged the credibility of FTA labour standards. Granting private stakeholders
certain procedural safeguards, ensuring that their meritorious complaints will be pursued in a timely
fashion, is therefore overdue. To date, academic observers have made various suggestions as to how
a private complaint procedure might look. Here is a brief overview that can help to situate our
proposal.
37
Gött (2019), above note 4, text at his notes 98-99.
38
See below, text at notes 61-63.
39
See J Harrison, M Barbu, L Campling, B Richardson, A Smith, “Governing Labour Standards through Free Trade
Agreements: Limits of the European Union’s Trade and Sustainable Development Chapters” (2019) 57 Journal of
Common Market Studies 260, 269.
40
See above, text at note 2.
9
Some observers have reflected that the model of Investor-State Dispute Settlement (ISDS)
might be extended to cover labour standards in FTAs.
41
With ISDS, private investors can directly
submit their complaints to an international arbitral tribunal. By the same token, so these observers
argue, individuals (e.g., workers) or private groups (e.g., trade unions)
42
should also be given the
right to bring complaints directly to an international tribunal.
43
This seems to us a bridge too far. For
the time being it is not even accepted by the EU that the sustainability chapters (including labour
standards) in FTAs can be the subject of regular, intergovernmental dispute settlement.
44
Moreover,
it is highly unlikely that the enforcement of labour standards included in FTAs can leapfrog the long-
standing resistance to the creation of international supervisory mechanisms admitting private
complaints in the trade area. None of the EU FTAs affords industries private access to an FTA tribunal
to complain about violations of the classic trade obligations. At the multilateral level as well, private
access to WTO tribunals has been a political no-go for decades.
45
Instead of proposing such far-
reaching private access to FTA tribunals regarding labour standards, we opt for a different solution.
Social partners and selected other civil society representatives should be able to trigger an
investigation at EU level, where the European Commission remains in charge of any further dispute
settlement proceedings brought under the FTA.
Against this background, we side with those
46
who have taken inspiration from the EU’s Trade
Barriers Regulation (TBR).
47
This mechanism allows EU industries to bring formal complaints to the
41
On the ‘enforcement disparity’ between investors’ rights and labour standards in FTAs see H Gött, “An Ind ividual
Labour Complaint Procedure for Workers, Trade Unions, Employers and NGOs in Future Free Trade Agreements” in H
Gött (ed) Labour Standards in International Economic Law (Springer, 2018) 185.
42
P-T Stoll, H Gött and P Abel, Model Labour Chapter for EU Trade Agreements, 28 June 2017, 39, available at:
<www.fes-asia.org/fileadmin/user_upload/documents/2017-06-Model_Labour_Chapter_DRAFT.pdf>.
43
See Art. X.37 of their proposal.
44
See below, text at n 106-110.
45
See M Bronckers, “Private Appeals to WTO Law: An Update” (2008) 42 Journal of World Trade 245, 247-253; G T
Schuyler, “Power to the people: allowing private parties to raise claims before the WTO Dispute Resolution System”
(1997) 65 Fordham Law Review 2275.
46
L Ankersmit, A Formal Complaint Procedure for a More Assertive Approach Towards TSD Commitments (Client
Earth, 27 October 2017), available at < https://www.documents.clientearth.org/wp-content/uploads/library/2017-10-27-
a-formal-complaint-procedure-for-a-more-assertive-approach-towards-tsd-commitments-version-1.1-ce-en.pdf>; L
Bartels, A Model Human Rights Clause for the EU’s International Trade Agreements, February 2014, available at:
www.institut-fuer-menschenrechte.de/uploads/tx_commerce/Studie_A_Model_Human_Rights_Clause.pdf.
47
See above, note 13.
10
European Commission about violations by the EU’s trading partners of multilateral or bilateral trade
agreements.
48
The Commission is required to rapidly assess the admissibility of such complaints. If
the complaint has merit, the Commission must conduct an in-depth investigation, including a
verification in the third country concerned, a hearing of interested parties, and government-to-
government consultations. Again, time limits apply. Should consultations fail, international dispute
settlement and perhaps sanctions by the EU might follow. Of course, the point of a TBR case for
private complainants is to obtain a positive solution, notably a settlement of their grievances, rather
than obtaining trade sanctions from the EU against the third country. In all of this, while involving
private stakeholders, the TBR preserves the state-to-state character of dispute settlement between
governments.
What we propose is a modification of the TBR so that it can be used as well by other private
stakeholders, notably trade unions and civil society, to complain about violations of labour standards.
We will also propose changes to the international dispute settlement mechanism regarding labour
rules in the EU’s FTAs.
A. Admissibility of a Private Complaint
It is important to design appropriate admissibility thresholds since the Commission has limited
resources and cannot be expected to investigate thoroughly and in a time-limited fashion each and
every complaint it receives. Furthermore, engaging with a third country on the grounds that it may
have violated its international obligations towards the EU also taxes diplomatic relations. Thus,
complaints without sufficient merit should be filtered out. According to the TBR, the Commission
has 45 days to decide on the admissibility of a complaint.
49
1. Representativeness
48
TBR Art 1.
49
TBR, Art. 5.4.
11
The TBR has been used in the EU since 1994
50
when it replaced the New Commercial Policy
Instrument, but presently only industrial stakeholders are allowed to bring a private complaint.
51
We
propose including additional categories of private complainants with regard to the enforcement of
labour standards: representative EU social partners (trade unions and employers’ organisations), as
well as representatives of civil society appointed to monitor the implementation of an FTA’s labour
standards.
a. Social partners
Industry has long been admitted as a petitioner under EU trade instruments. It is of interest that labour
unions are now also beginning to find their place. Thus, with the reform of the Trade Defence
Instruments (TDI)
52
in 2018 trade unions have been given the right to lodge an application for the
initiation of an anti-dumping or anti-subsidy investigation, even if only jointly with a Union
industry.
53
With regard to TDI proceedings there is in fact case law requiring that a potential party to
the investigation should demonstrate an objective link between the product concerned and its
activities.
54
This is because the intervening organisation (Union industry or trade union) should be
able to show that the outcome of the TDI investigation affects them. Accordingly, in the TDI
interested trade unions would be trade unions representing employees of companies producing the
product subject to investigation or that are suppliers of producers of the product subject to
investigation.
55
The difference between our proposal and the model being introduced in the TDI is that in our
proposal trade unions would have a right to file a complaint independently, without other social or
50
See M Bronckers and N McNelis, above note 13.
51
TBR Arts 3 and 4.
52
Regulation (EU) 2016/1036 on protection against dumped imports from countries not members of the European Union,
OJ 2016 L176/21; Regulation (EU) 2016/1037 on protection against subsidised imports from countries not members of
the European Union, OJ 2016 L176/55.
53
Regulation 2016/1036 Art 5 and Regulation 2016/1037 Art 10.
54
Case T-256/97 Bureau Europeen des Unions de Consommateurs (BEUC) [2000] ECLI:EU:T:2000:21.
55
See W Muller, “The EU’s new trade defence laws a two steps approach”, (2018) European Yearbook of International
Economic Law 45.
12
industrial partners. In our view, trade unions have their own interests in bringing a complaint with
regard to labour standards violations and are in a position to autonomously provide sufficient
evidence to initiate proceedings. Another reason to allow trade unions to act independently is that in
a modified TBR procedure, accommodating labour standards, the interests justifying the complaint
of a labour union can differ from the interests of labour unions in TDI proceedings. In TDI
proceedings trade unions would intervene mainly to protect employment and avoid job losses within
the EU. In contrast, with regard to labour standards included in the EU’s FTAs they have a broader
interest, also in the protection of shared values and fundamental rights abroad. International solidarity
between workers is in fact the very raison d’etre of international trade union confederations.
56
In view of these broader interests, one need not necessarily limit the admissibility of a labour
union complaint to situations where its members manufacture the same products as the ones involved
in the alleged violation of the labour right in the third country. We propose that the European
Commission would accept complaints from social partners that are considered representative on the
basis of the recognition procedure of TFEU Article 154. This Article provides that whenever the
Commission is proposing EU legislation in the social policy field, management and labour unions
shall be consulted. Such consultation can also lead to the conclusion of agreements between social
partners and EU institutions.
57
To put this procedure into operation the European Commission had to
identify the social partners to be consulted whenever required by EU law. This led to the creation of
a list
58
on the basis of studies that the EU Foundation for the Improvement of Living and Working
56
This is reflected in the Preamble of the Constitution of the European Trade Union Confederation (ETUC), which
provides that ETUC cooperates with the International Trade Union Confederation (ITUC) to advance its objectives
worldwide. The ITUC includes within the main aims of its Constitution to “strive for universal respect of fundamental
rights at work”. This has led to widespread cooperation and international networks between trade unions to support
workers’ rights across borders. See S Koch-Baumgarten and M Kryat, “Trade Unions and collective bargaining power
in global labor governance” in A Marx, J Wouters, G Rayp and L Beke, Global Governance of Labour Rights (Edward
Elgar, 2015); S Sciarra, Notions of Solidarity in Times of Economic Uncertainty (2010) 39 Industrial Law Journal
39.
57
TFEU Art 155. See C Barnard, EU Employment Law (OUP, 2012) 47.
58
List of European social partners organisations consulted under Art 154, available at:
<ec.europa.eu/social/BlobServlet?docId=2154&langId=en>.
13
Conditions (Eurofund)
59
conducts to recognize social partners that are organised at EU level and
capable of being consulted and negotiating agreements.
We submit that the same employer organisations and trade unions that are selected to take
part in such procedures and have extensive institutional experience in dealing with labour issues at
EU level, are also in a position to demand action regarding the violation of one of the labour standards
protected under EU FTAs. There is in fact already an institutional infrastructure in place allowing the
European Commission to interact with these social partners.
60
The use of this list of social partners
would reduce drastically the number of persons allowed to bring an action under the proposed
procedure.
b. Domestic Advisory Groups
Could other civil society groups also be admitted as TBR-petitioners? Domestic Advisory
Groups (DAGs) have been created to assist in the implementation of sustainable development
chapters in the EU’s FTAs.
61
DAGs in the EU are composed of representatives of the European
Economic and Social Committee (EESC), labour unions, employer federations and other European
civil society organisations, such as human rights organizations.
62
DAGs can issue opinions and
recommendations on the implementation of the trade and sustainable development chapter either
upon request of other institutions or on their own initiative. When consensus is unattainable and it
comes to a vote, EU DAGs can take such decisions by simple majority.
63
59
Eurofund, Representativeness of the social partners in the European cross-industry social dialogue (2013), available at:
<www.eurofound.europa.eu/sites/default/files/ef_files/docs/eiro/tn1302018s/tn1302018s.pdf>.
60
European Union, Consulting European Social Partners: Understanding How it Works (2011) available at: <
https://publications.europa.eu/en/publication-detail/-/publication/5208f68c-3db1-405e-9b4a-51316aeacc03/language-
en>
61
E.g., see EU-South Korea FTA, Art. 13.12(4) and (5).
62
See for the composition of the EU’s DAG established under the EU- South Korea FTA
https://www.eesc.europa.eu/en/organisation.
63
On the operation of DAGs see for instance, the Rules of procedure of the EU Domestic Advisory Group created
pursuant to Chapter 13 (Article 13.12) of the EU-Korea Free Trade Agreement available at <
https://www.eesc.europa.eu/en/sections-other-bodies/other/eu-korea-domestic-advisory-group>.
14
DAGs have received a number of criticisms because of the lack of clarity on their mandate
and the vague scope of their meetings. In addition, DAGs have been accused of inertia, and the
attention given to them by Governments and the European Commission has been considered very
limited.
64
Yet it should be recalled that it was the DAG established under the EU-Korea FTA that
already in January 2014 called on the Commission to initiate formal action against Korea regarding
the latter’s failure to ratify core ILO Conventions.
65
Furthermore, DAGs, being composed of social
partners as well as selected civil society organisations interested in the implementation of a particular
FTA, are in an ideal position to perform the initial fact finding on the alleged violations necessary to
start an action under the TBR. The European Parliament has urged the European Commission to
respond systemically to concerns raised by DAGs.
66
Giving EU DAGs a private petition right under
the TBR would be a good way of doing so.
On the other hand, we would not be in favour of granting civil society groups not represented
in EU DAGs a right to complain under the TBR about labour standards violations by third countries.
If social partners recognized under Art. 154 TFEU and EU DAGs see a reason for the EU not to
pursue a complaint against the labour practices in a third country, their reticence should be given due
weight. The same consideration also pleads against giving DAGs and other civil society
representatives from the EU’s FTA partner the right to petition the Commission under the TBR to
investigate labour standard violations in their country. This is both a matter of policy as well
prioritizing the use of the Commission’s limited resources. Yet the Commission should not hesitate
to hear their views once it has decided to open a TBR-investigation.
67
64
For a critical assessment of DAGs see M Westlake, Asymmetrical institutional responses to civil society clauses in
EU international agreements: pragmatic flexibility or inadvertent inconsistency?, Bruges Political Research Papers
66//2017; J Orbie, D Martens and L van den Putte, Civil Society Meetings in European Union Trade Agreements:
Features, Purposes, and Evaluation, CLEER Papers 2016/3. Civil society organisations and trade unions have been
skeptical that the present mechanisms to involve civil society in EU FTAs have any impact on the improvement of
labour standards. See Harrison et al., above n 39.
65
See text above, at note 40.
66
See Resolution on implementation of the 2010 recommendations of Parliament on social and environmental standards,
human rights and corporate responsibility of 5 July 2016 (2015/2038(INI)), para 22(b)
http://www.europarl.europa.eu/doceo/document/TA-8-2016-0298_EN.html
67
See below, text at n 94.
15
2. Merits
When the European Commission receives a complaint from a representative social partner, it needs
to conduct another check to assess whether the complaint appears to have sufficient merit. In order to
decide on admissibility, it is sufficient for the Commission to conduct a preliminary analysis, which
in the present TBR is based on sufficient evidence to initiate a procedure.
The TBR requires a petitioner to show that the FTA obligation establishes a right of action
for the EU; a requirement that would not need to be adapted in our proposal. In fact, according to the
TBR, such a right of action exists when the relevant international rules 'either prohibit a practice
outright, or give another party affected by the practice a right to seek elimination of the effect of the
practice in question.'
68
This flexible formula captures violations of various types of labour standards
currently found in FTAs: not just 'hard' obligations, but also 'softer' yet still meaningful standards.
A crucial point, however, is that the private complaint procedure should not require the
demonstration of any particular effects on trade patterns. Presently, petitioners under the TBR do
have to demonstrate some sort of trade effect.
69
Already in respect of violations of trade agreements
curtailing EU exports, the trade effects requirement is not to be interpreted stringently though.
70
This
requirement would in any event be misplaced in respect of complaints concerning labour rights
violations in the EU’s preferred trading partners with which it has concluded FTAs.
The EU insists on the inclusion of labour standards in FTAs for different reasons. In part these
standards are motivated by economic considerations: without contesting the trading partner’s
comparative advantage,
71
the EU does want to reduce major disparities between the costs of
producing goods and services in each of the signatories.
72
Experience has shown though that it is very
68
See TBR Art 2(1)(a).
69
See TBR Art 3.
70
Bronckers and McNelis, (above n 13), 441-42.
71
E.g. EU-South Korea FTA, Art. 13.2: 'The Parties note that their comparative advantage should in no way be called
into question [by environmental and labour standards].'
72
This was highlighted by the European Court of Justice in Opinion 2/15 [2017] ECLI:EU:C:2017:376, para 159. The
Court probably emphasised these trade effects because it was considering divisions of competence between the EU and
16
difficult to demonstrate the trade impact of labour right violations. This is illustrated by the case
brought by the United States under the CAFTA-DR trade agreement against Guatemala, the only case
fully litigated so far under a labour standard in an FTA. There, in the presence of a demonstrated
violation of labour obligations by Guatemala, the US claim was not successful because of the
impossibility of demonstrating that the lack of enforcement had happened ¨in a manner affecting
trade¨, an additional condition in CAFTA.
73
This case demonstrates that maintaining a trade effects
requirement in the TBR could impose a formidable obstacle to private complaints about labour
standards.
Yet we oppose a trade effects requirement not only for practical reasons. There is also a
normative side to our objections. Contrary to the United States, the EU has emphasized more the
importance of fundamental rights, of shared values when establishing closer relations with its FTA
partners.
74
As the Commission pointed out in its non-paper of July 2017, labour standards in FTAs
are not only, or even primarily, driven by economic concerns.
75
One way of bringing these shared
values to the fore is by allowing European trade unions through a TBR complaint to express their
solidarity
76
with workers in a preferred EU trading partner who suffer when the FTA’s labour
standards are being violated in their country.
This value-based approach of EU trade policy overall was underlined by the Commission in
a 2015 strategy paper,
77
and was reconfirmed by EU institutions and Member States in 2017.
78
One
might question though whether the trade effects requirement in the TBR can be loosened. Would this
its Member States. Linking sustainability provisions (including labour standards) to trade helped to construe exclusive
competence for the EU regarding these provisions under TFEU Art 207.
73
See Guatemala Issues Relating to the Obligations Under Art 16.2.1(a) of the CAFTA-DR, 14 July 2017, available at:
bit.ly/2tiQos4; S Polaski, 'Twenty Years of Progress at Risk Labor and Environmental Protections in Trade Agreements'
GEGI Policy Brief 004 (2017).
74
The contrast between the US and EU approaches towards the inclusion of labour standards in FTAs is explained in
Melo Araujo, above note 4, at 239-242.
75
See European Commission services, Trade and sustainable development chapters in EU free trade agreements, 11
July 2017, 8.
76
See above, text at n 56.
77
European Commission, Trade for All: towards a more responsible trade and investment policy (2015).
78
The New European Consensus on Development: Our World, Our Dignity, Our Future (2017). On the importance of
labour standards see paras. 49 and 54.
17
not put into doubt the legal basis of Commission action under the TBR, which is after all a commercial
policy instrument? The short answer is no. There are several ways to connect a complaint about labour
standard violations, without an additional showing of specific trade effects, to the EU’s common
commercial policy.
79
First, there is necessarily a link with trade when a complaint about labour
standards is brought under an FTA. The EU and its FTA partner have conditioned preferential trade
relations on shared goals of labour protection, amongst other things.
80
Second, it is fully accepted in
a trade regime that a country can take action against trade which offends its moral convictions,
without there being any question of trade distortions.
81
Third, in a different context the EU legislature
has already found that violations of labour standards, such as the non-ratification of ILO standards,
do cause (unspecified) trade distortions.
82
In sum, private complaints about labour standard violations in third countries should not only
be admitted by the Commission in order to challenge undue cost disparities. Such trade distortions
are difficult to prove, and they are not the only or primary concern of the EU when establishing
preferential relations with a third country. Consequently, within the framework of a value-based trade
policy, private complainants should not be required to show a link between the infringement of a
labour standard and specific trade effects (as discussed above, in certain of the EU’s FTAs trade
effects could still be relevant in respect of obligations not to weaken or to effectively enforce domestic
labour laws; we believe the EU needs to reassess this
83
). Sufficient evidence of the existence of the
labour standard violation ought to be enough to trigger an in-depth investigation without the need to
prove its trade impact.
79
As the European Court of Justice observed, the objective of sustainable development (including social and
environmental protection) forms an integral part of the common commercial policy. See Opinion 2/15, above note 17, at
paras. 142-147.
80
See Opinion 2/15, id., at para. 166.
81
See Article XX(a) GATT; Article XIV(a) GATS.
82
See Regulation 2017/2321, amending the EU’s basic antidumping and countervailing duty regulations, OJ 2017 L
338/1, recitals 4 and 6. The non-ratification of ILO Conventions by countries such as China can lead to adjustments in
the calculation of dumping margins. For an example see Commission Regulation 2019/1379, OJ 2019 L225/1,
establishing a definitive antidumping duty on imports of bicycles from China, at paras. 100-102.
83
See above text at notes 26-29; 74-82.
18
It is of interest that the soft dispute settlement procedures regarding the sustainability chapters
(including labour standards) included in recent EU FTAs such as CETA
84
or EU-Japan
85
do not
impose trade impact as a threshold condition. The EU ought to maintain this approach when
reforming the TBR to accommodate complaints about labour standards.
3. The Union interest
There is no need to modify the additional requirement present in the TBR that the investigation should
be 'in the interest' of the European Union. This leaves some discretion to the European Commission
in deciding whether to open an in-depth investigation. For instance, one could conceive of the
Commission declining to open proceedings against an isolated instance of a labour standard violation,
in the event this is not connected to a pattern of similar instances, and the country concerned does
have a good track record in respect of the norm(s) at issue.
86
Yet the impact of this discretionary element in the Commission’s assessment should not be
overstated, as experience in the trade area has shown.
87
Indeed, once a private petitioner has shown
it is entitled to bring a complaint (i.e., it is duly representative), and has brought sufficient evidence
that a third country is likely to violate its FTA labour standards obligations, it would be politically
difficult for the Commission to decide that it is not in the interest of the Union to even investigate
such a complaint and to make inquiries with the third country. It should be recalled here that the
Commission is obliged to publish a reasoned decision in the Official Journal.
88
Furthermore, such a negative Commission decision is subject to judicial review via the action
for annulment.
89
Social partners having brought a complaint under the TBR are likely to have standing
84
CETA Art 23.10.
85
EU-Japan Economic Partnership Agreement, Art 17 Chapter 16.
86
Note that certain labour standards themselves require a sustained or recurring course of action (notably, regarding the
failure to enforce domestic labour laws). See for instance EU-South Korea FTA Art. 13.7 (1); CETA Art. 23.4 (2); EU-
Japan FTA Art. 16.2 (3). In those cases, demonstrating a pattern of (in) actions then becomes part of showing the merits
of its complaint for the private petitioner.
87
Bronckers and McNelis, (above n 13) 449-51. 4
88
TBR Art 13.4.
89
See ECJ, Case 70/87 Fediol IV [1989] ECLI:EU:C:1989:254.
19
in such an action. This may be less clear for a DAG, although the Court has admitted applicants
without legal personality.
90
A DAG petition is probably best co-signed by the members supporting it,
so that they would also become addressees of any negative Commission decision.
B. Internal investigation by the Commission
The present TBR defines the procedural steps to be taken by the European Commission when
investigating the violations alleged in a private complaint it has declared admissible.
91
Most of these
provisions can be utilised in an investigation of labour standards violations.
The European Commission has the duty to inform the third country involved of the complaint.
This announcement is bound to trigger intergovernmental consultations between the EU and the
foreign government. The Commission also has the power, when necessary, to perform an
investigation in the third country and speak with private stakeholders, unless the country concerned
objects.
92
Furthermore, the European Commission has an obligation to hear the parties concerned if
they have made a written request for a hearing.
93
In principle, this system allows the European
Commission to hear social partners in the EU and in the third country so that they can contribute to
the evidence collected in the case. The nature of labour rights obligations might require slight
adaptations to ensure that the petitioners are heard by the Commission and to support the participation
of the social partners and private persons affected by the violation in the third country. Thus, we could
imagine an obligation on the European Commission to reach out and collect evidence from private
stakeholders, even if they did not register their intention to take part in the investigation after the
publication of the notice in the Official Journal. After all, in an FTA-based case the burden of proof
rests on the EU to demonstrate that labour standards are being infringed in the third country.
94
90
See ECJ, Case 175/73 Union Syndicale [1974] ECLI:EU:C:1974:95. See also K Lenaerts, I Maselis and K Gutman,
EU Procedural Law (OUP, 2014) 313.
91
See notably TBR Art 9.
92
TBR Art 9.2.
93
TBR Art 9.5.
94
This is a notable difference with the conditionality review under the EU’s GSP plus regime, pursuant to which the EU
may withdraw or suspend trade preferences it has granted to developing countries that have committed but fail to uphold
20
There are experiences in other countries where this advanced model of fact-finding concerning
labour standards violations is already a reality. For example, in the context of the enforcement of the
Canada-Colombia Agreement on Labour Cooperation (CCOALC), a side agreement to the Canada-
Colombia FTA, Canadian authorities performed extensive investigations within Colombia.
95
When
Canada concluded this investigation it raised serious concerns about the protection of key labour
rights in Colombia. Both governments then agreed on a 3 year action plan to be undertaken by
Colombia (2018-2021).
96
The US Department of Labour as well has formally investigated private
complaints about labour conditions in seven countries so far. Several of these have led to
governmental action plans.
97
It also seems appropriate to stipulate explicitly that the Commission is to examine whether the
ILO has made any relevant findings regarding the alleged labour standard violations. The ILO has
shied away from third party adjudication on the compliance of Members with its norms.
98
But the
ILO does have supervisory mechanisms, though in most cases these are ultimately consensus-driven
and consensus has become more difficult to find amongst social partners, especially after the 2012
stalemate on the right to strike.
99
Still, it would be useful for the Commission in its investigation to
labour standards. In this review, the burden of proof rests on the developing country to show that it is complying with
these standards. See Art. 15.2 Regulation (EU) No 978/2012 of the European Parliament and of the Council applying a
scheme of generalised tariff preferences and repealing Council Regulation (EC) No 732/2008. OJ 2012 L303/1. The need
for the Commission to pro-actively collect evidence on the GSP-beneficiary’s non-compliance with labour standards is
reduced accordingly.
95
Review of public communication CAN 2016-1 Report issued pursuant to the Canada-Colombia Agreement on Labour
Cooperation, 2017, available at: www.canada.ca/en/employment-social-development/services/labour-
relations/international/agreements/2016-1-review.html.
96
Available at: <https://www.canada.ca/en/employment-social-development/services/labour-
relations/international/agreements/colombia-action-plan.html>.
97
US Bureau of International Labour Affairs, Submissions under Labor Provisions under Free Trade Agreements,
available at: <https://www.dol.gov/agencies/ilab/our-work/trade/fta-submissions>. For a recent evaluation see
Congressional Research Service, Labour Enforcement Issues in U.S. FTAs (September 2018); P Abel, “Comparative
conclusions on arbitral dispute settlement in trade-labour matters under US FTAs” in H Gött, Labour Standards in
International Economic Law (Springer, 2018) 153; F Giumelli and G van Roozendaal, “Trade agreements and labour
standards clauses: explaining labour standards developments through a qualitative comparative analysis of US free trade
agreements” (2017) 17 Global Social Policy 38.
98
See generally A Koroma and P van der Heijden, Review of ILO Supervisory Mechanism (ILO, 2015).
99
P van der Heijden, “The ILO Stumbling towards Its Centenary Anniversary” (2018) 15 International Organizations
Law Review 203, 212-215.
21
take on board any fact-finding or reflections in ILO reports (not limited to reports endorsed by the
ILO’s supervisory bodies) that could help to shed light on the alleged violations.
Regarding the type of evidence to be collected, the TBR would require some adaptations as
well. Presently, the Commission is supposed to consider only trade-related factors (e.g., volume of
imports or exports, prices, impact on the Union industry, effects on trade) to establish whether the
complaining industry has shown that it is injured by the third country’s violation of its international
obligations.
100
These factors are not particularly relevant for an investigation into violations of labour
standards. As explained above, such violations may not, or not primarily, cause economic injury
within the EU, but rather disrupt shared values that underlie the FTA with the third country.
Establishing the violation itself, as well as such factors as its gravity and/or frequency, should be
sufficient for a finding that the EU has a right of action against the third country concerned.
After an investigation of five or seven months,
101
there are several possible outcomes under
the TBR. First, the Commission can conclude that there was no violation of the labour standard
included in the FTA and that no further action should be taken.
102
Second, without necessarily
admitting to a violation, the third country might propose to take measures that would remove the need
for the EU to take further action.
103
Third, the EU and the third country might find that the best way
to resolve the dispute is to conclude a new agreement between them.
104
Finally, the Commission
might find there is a violation attributable to the government, even though this is not accepted by the
third country. In that case, the Commission would normally want to initiate international dispute
settlement proceedings under the FTA before taking any further action.
105
IV. International Dispute Settlement
100
TBR Art 11.
101
TBR Art 9.8.
102
TBR Art 12.1.
103
TBR Art 12.2.
104
TBR Art 12.3.
105
TBR Art 13.2.
22
A. State-to-State dispute settlement
1. Institutional aspects
In case the third country does not remedy the violation of the FTA’s labour standards found by the
Commission, the next step would be international dispute settlement. To begin with, formal
consultations are to be held, involving the FTA’s trade and sustainable development committee.
106
If
within a short period (say three months)
107
the consultations do not resolve the issue, the FTAs
envisage proceedings before a panel of experts. This panel may issue a report setting out
infringements of the labour standards; or is perhaps limited to suggesting more consensual ways
forward.
108
Compared to the general dispute settlement system of FTA, this procedure is more tentative
and lacks sanctions. We submit that there is no need for such a separate, weaker enforcement
mechanism dedicated to labour standards. Instead, disputes on labour standards obligations can and
should be settled under the general dispute settlement mechanism of the EU’s FTAs.
109
The only
modification necessary would be the inclusion of labour law specialists in the roster of candidate
panelists. This would not be the first time that the general dispute settlement mechanism of an FTA
is utilised to enforce labour standards. In the recent Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP), labour disputes are already settled via the general dispute
settlement procedure. Whenever a dispute arises under the labour chapter, this agreement provides
that “panelists other than the chair shall have expertise or experience in labour law or practice”.
110
The CPTPP is an interesting model for the EU. This trade agreement includes a large number of
106
See for instance CETA Art 23.9.
107
See, for instance, CETA Art 23.10.
108
See L Puccio and K Binder, Trade and Sustainable Development in CETA, European Parliament Research Service
Briefing PE 595894 (January 2017) (the Panel of Experts is only supposed to find a ‘shared solution’).
109
It should be noted though that this would seemingly remove one argument used by the European Court to find that
the sustainability chapter (including labour standards) of the FTA with Singapore fell within the exclusive competence
of the EU, and did not raise issues regarding the division of competence between the Union and the Member States. See
Opinion 2/15, above n 17, at para. 154. Then again, even if the FTA’s general dispute settlement procedure would apply
to its labour standards, the interpretation, mediation and dispute settlement mechanisms set forth in the international
(notably ILO) treaties from which the FTA’s labour standards originate would remain in force.
110
CPTPP Article 28.8 (5).
23
countries with which the EU already has FTAs in place (Canada, Chile, Japan, Peru, Singapore), or
is still negotiating or finalizing FTAs (Australia, Mexico, New Zealand, Vietnam).
Taking enforcement of FTA labour standards more seriously is not just a matter of shoring up
dispute settlement procedures though. As discussed above, it also requires taking a hard look at the
patchwork of labour standards that have so far been included in the EU’s FTAs.
111
2. The relationship with the ILO
Some see the inclusion of a fully-fledged dispute settlement procedure to enforce core labour
standards in the EU’s FTAs as a threat to the ILO and its supervisory procedures. Admittedly, when
other institutions become involved with enforcing ILO standards, the ILO to some extent loses
ownership. If such ‘outsourcing’ is not done sensibly, the ILO’s governance model may suffer.
112
Yet
‘outsourcing’ has been occurring, and can also reinforce ILO norms. One notable example, outside
of the trade area, happened when the European Court of Human Rights relied on ILO instruments to
read the right to strike into Art. 11 of the European Convention of Human Rights.
113
Those involved
with labour standards in EU FTAs need to be cognizant that trade action is no substitute for the work
done by the ILO, but rather a supplement. Accordingly, as we proposed above, rather than adding
new and seemingly meaningless bilateral standards in FTAs, the EU should focus on better
implementation and enforcement of existing ILO-standards.
114
Furthermore, in administering the
TBR the Commission should take on board all ILO findings regarding the labour standard violations
it is asked to investigate.
115
111
See Section II above.
112
Gött (2019), at his notes 48-58, cautions that selecting or adapting ILO instruments in bilateral trade agreements
may relativize and delegitimize the ILO’s work.
113
ECtHR, Demir and Baykara v. Turkey (Application no. 34503/97), judgment of 12 November 2008 (Grand
Chamber); Enerji Yapi-Yol Sen v. Turkey (Application no. 68959/01), judgment of 21 April 2009. See F C Ebert and M
Oelz, Bridging the gap between labour rights and human rights: The role of ILO law in regional human rights courts
(ILO DP/212/2012), at 9-12.
114
See text above, at note 35.
115
See text above, at notes 98-99.
24
To illustrate that the trade system can co-exist, and productively co-operate with more
specialized institutions, the WTO offers a useful example. The WTO complements other institutions
such as the World Intellectual Property Organization (WIPO). Thus, the TRIPS Agreement of the
WTO incorporates parts of the WIPO-administered Conventions, such as the Paris Convention on
Industrial Property
116
and the Berne Convention on Copyright.
117
It is noteworthy that the WTO has
received jurisdiction to adjudicate disputes in the area of intellectual property, and involving these
Conventions, without it being necessary to show a link with trade
118
(Only later on in the WTO
proceedings might trade effects become relevant, if and when the respondent country would fail to
comply with a ruling to bring its disputed intellectual property measure into compliance with the
WTO ruling, and the complaining country seeks to induce compliance through retaliatory trade
restrictions
119
).
When the inclusion of intellectual property rules was first proposed at the time the WTO was
created, many in the intellectual property community were uncomfortable. Would trade tribunals
really be competent to judge the intricacies of intellectual property law? And would they give proper
weight to intellectual property concerns, looking through the lens of a liberal trade regime? The fact
was that GATT panels had engaged with intellectual property in the past.
120
The fact was too that
WIPO did not offer an effective mechanism to enforce the classic intellectual property conventions.
121
The case law developed on intellectual property disputes since then by WTO panels and the WTO
Appellate Body has not provoked fundamental opposition. The fact that the WTO and WIPO in
116
TRIPS Art 2.1.
117
TRIPS Art 9.1.
118
TRIPS Art 64. The TRIPS Agreement, supposedly covering only trade related intellectual property rights, sets out
straightforward intellectual property norms.
119
DSU, Art. 22.4.
120
See notably GATT panel, US-Section 337, 36S/345 (1989).
121
Ultimately, the International Court of Justice would be the forum to adjudicate such disputes, yet no intellectual
property dispute has ever been brought before the ICJ. E.g., Paris Convention on Industrial Property, Art. 28.
25
various ways cooperate with each other has helped to avoid conflicts and contradictions between the
two organizations.
122
Establishing preferential relations with other countries, while segregating trade from non-
trade values, has become politically untenable for the EU. It should be noted as well that in human
rights and international labour law the issue of enforcement remains very much a work in progress,
with the ILO
123
lacking the enforcement procedures which are today common in international trade
law. Accordingly, providing labour standards with a more effective enforcement mechanism
established in the EU’s comprehensive trade agreements, does fill a gap. Furthermore, as most of
these labour standards are not linked to trade effects,
124
their enforcement by FTA tribunals should
not be conditioned on a showing of trade effects either.
In sum, there is no good reason to think that the enforcement of labour standards by these FTA
tribunals poses a threat to the ILO. It does behove FTA tribunals to verify whether ILO bodies have
reported on the issues being litigated before them,
125
while keeping in mind the limitations inherent
in the ILO’s consensus-based supervisory mechanisms.
126
It would be advisable too if the political
Committee on Trade and Sustainable Development supervising the implementation of the FTA’s
commitments, including its labour standards, would engage with the ILO’s work too.
127
B. Sanctions
It has been an article of faith for the EU to avoid hard enforcement mechanisms and resist sanctions
in its FTAs with respect to violations of their sustainability chapters. One intriguing hypothesis is that
the EU has been concerned about its own labour and environment protection standards being
122
Early on the WTO and WIPO concluded a cooperation agreement, which entered into force in 1996:
https://www.wto.org/english/tratop_e/trips_e/wtowip_e.htm.
123
D Peksen and R G Blanton, above n 36.
124
See Chapter II above.
125
See CETA Art 23.10 (9).
126
See text above at n 99.
127
See for instance EU-South Korea FTA Art. 13.12.
26
challenged by its trading partners.
128
However that may be, it does not mean that the EU at present
could not impose sanctions in case its trading partner violated an FTA’s labour standards.
1. The current situation
First, there is the ‘nuclear option’ under public international law: the EU can terminate or
suspend the liberalization provided by the FTA in case its treaty partner does not comply with any of
its provisions, including the labour standards. This possibility was highlighted by the European Court
when it analysed the sustainability provisions of the EU’s FTA with Singapore.
129
Yet this possibility
does seem rather remote.
Second, at least some of the FTAs’ labour-related obligations (notably, those embodying the
ILO’s core labour standards) could be deemed to reflect human rights.
130
Respect for human rights
constitutes an ‘essential element’ of the relationship between the EU and its preferential trading
partners since the early 1990s.
131
In the case of human rights violations by its partners, FTAs or their
accompanying framework agreements make provision for appropriate countermeasures, including
the suspension, or conceivably even the termination of the FTA.
132
The EU has enforced the human
rights clause, and suspended FTA benefits, in response to breaches of democracy, notably coup
d’Etats and election irregularities.
133
However, non-compliance with (core) labour norms by a treaty
partner has never led the EU to invoke the human rights clause. For instance, when the EU in
December 2018 and July 2019 initiated formal dispute settlement proceedings with Korea on labour
standard violations, it made no reference to human rights or the ‘essential elements’ clause in the
128
See Melo Araujo, above note 4, at 242 and 253.
129
ECJ, Opinion 2/15 [2017] ECLI:EU:C:2017:376, para. 161 (referring to Art. 60(1) of the Vienna Convention). See
Bartels (2013), above at note 4, who emphasizes that this is only a default position, in the absence of a specific treaty
provision regulating the consequences of a breach of its norms.
130
Handbook on Assessment of Labour Provisions in Trade and Investment Agreements 20 (ILO, 2017).
131
E.g., 2010 Framework Agreement between the EU and Korea, Art. 1(1).
132
See 2010 Framework Agreement between the EU and Korea, Art. 45(3) and (4) (envisaging the right of a party to take
appropriate measures unilaterally in cases of “special urgency”). In a Joint Interpretative Statement covering this
provision, the EU and South Korea agreed that a “particularly serious and substantial violation” of human rights, being
an “essential element” would constitute a case of “special urgency”.
133
Saltnes, “The EU’s Human Rights Policy: Unpacking the literature on the EU’s implementation of aid conditionality”,
ARENA Working Paper No. 2 (March 2013).
27
2010 Framework Agreement.
134
The EU based itself on the FTA’s labour standards.
135
Moreover, in
its more recent Strategic Partnership Agreement with Canada, the EU seems to have excluded the
possibility that a violation of labour rights could ever be considered a violation of the human rights
clause that might lead to a suspension or termination of CETA.
136
This is considered to be a major
shift in the EU’s treaty practice.
137
As a result, the notion of enforcing labour rights through human
rights provisions by now appears rather theoretical.
This trend would seem to exclude a thought-provoking proposal for targeted sanctions.
138
Consider a situation where the labour standard (e.g., an ILO Convention) has been ratified and
incorporated into domestic law; and where primary responsibility for the violation rests with the
private sector. This situation could perhaps amount to a violation by the government of its obligation
to enforce its labour laws effectively.
139
Yet rather than pursuing the foreign government, the
Commission might propose to the European Council imposing sanctions on the responsible
individuals or companies. The distinct advantage over trade restrictions would be that these sanctions
are targeted on those implicated in the violation, and do not impose any further costs on the offending
country or on the EU.
This proposal took inspiration from the sanctions that have been imposed against individuals,
involved in human rights abuses, under the EU’s Common Foreign and Security Policy. In one
example under the CFSP, in 2015 the EU froze the assets and restricted the admission of four
individuals from Burundi involved in planning, directing, or committing acts that violate
international human rights law or international humanitarian law.”
140
The proposal for targeted
134
See above, note 131.
135
In its consultation and panel requests, above note 2, the EU referred to EU-South Korea FTA Art. 13.4 (3).
136
See notably Art. 28(3) and (7) of the 2016 Strategic Partnership Agreement between the EU and Canada.
137
Bartels (2017), above note 4.
138
C. Portela, ‘Enforcing Respect for Labour Standards with Targeted Sanctions’, Core Labour Standards Plus project,
Friedrich-Ebert-Stiftung 2018: https://www.fes-asia.org/news/enforcing-respect-for-labour-standards-with-targeted-
sanctions/
139
See above, text at n 26-28.
140
European Council Decision (CFSP) 2015/1763, OJ 2015 L 257/37, cited in Portela, id., at 9.
28
sanctions was predicated on the idea that certain violations of labour standards represent human rights
abuses, and can infringe the ‘essential elements’ clause of an FTA.
141
However, the recent
developments just discussed seem to foreclose this avenue for the EU at present.
One might add that the European Commission has shown great reluctance elsewhere as well
to take trade action in the event of labour standard violations.
142
For instance in the Generalised
System of Preferences Plus selected developing countries have received additional tariff preferences
upon ratification of a set of international conventions on human rights, labour standards and the
environment. In that context the EU can suspend preferences in case a beneficiary country does not
uphold the labours standards it has ratified.
143
Yet for a long time the European Commission did not
take any action in this respect. In fact, the Commission presently is subject to an investigation by the
European Ombudsman for maladministration for its alleged failure to investigate the status of
Bangladesh under the GSP after numerous violations of labour standards.
144
(Exceptionally though,
on 11 February 2019 the Commission launched proceedings to suspend temporarily tariff preferences
granted to Cambodia because of, amongst others, serious and systemic violations of labour rights.
145
)
Against this background, it was significant that the Commission in its first non-paper of 2017
raised the possibility that the EU might discard its aversion to sanctions in response to labour standard
infringements. The Commission suggested that sanctions might be introduced in FTAs after all. Yet
upon further reflection, the Commission dismissed this option in its second non-paper of 2018.
146
To
deny labour standards in FTAs the one feature (sanctions in case of non-compliance) that is missing
141
Portela, above note 138, at 13.
142
See V Depaigne, “Protecting fundamental rights in trade agreements between the EU and third countries” (2017) 42
European Law Review 562; J Vogt, “A little less conversation: the EU and the (non) application of labour conditionality
in the Generalized System of Preferences” (2015) 31 International Journal of Comparative Labour Law and Industrial
Relations 285.
143
See above, n 94.
144
Complaint by the International Trade Union Confederation to the European Ombudsman, available at <
https://www.ituc-csi.org/IMG/pdf/bangladesh_ombudsman_complaint_final_2018_06_06_clean.pdf >.
145
OJ 2019 C55/11.
146
See above, n 9.
29
in the ILO’s regime
147
calls for a compelling justification. In our view the Commission’s paper does
not provide one.
The Commission notes that when other countries coupled sustainability obligations (including
labour standards) with sanctions in their FTAs, these obligations were narrower in scope than the
norms that the EU managed to include in its FTAs.
148
Yet the Commission makes no attempt to
analyse whether its broader provisions on environmental protection or labour rights have actually
been able to achieve more. There is no evidence to support this.
149
As discussed above, some of these
provisions are so weak that they would seem to be virtually meaningless.
The other thing noted by the Commission is that trade sanctions do not guarantee that the non-
complying country will change its offending practices.
150
Of course, the absence of sanctions does
not guarantee this either. In fact, sanctions would only come into play if other means to induce
compliance have failed. But then, the Commission argues, it is difficult to calculate the level of trade
sanctions, or economic compensation, in response to a breach of social or environmental standards.
151
This is the nub of the problem. As the Commission itself recognised in its first non-paper, these
sustainability (including labour) standards have not, or not primarily, been included for economic
reasons.
152
Accordingly, it is indeed problematic to design compensatory sanctions. In fact, trade
sanctions are in many ways counterproductive, even if the economic damage resulting from violations
of trade-related obligations could be estimated more accurately. As analysed elsewhere, trade
sanctions create unpredictability in the trading system, hit ‘innocent bystanders’ not being implicated
in the violation in the offending country, and impose costs as well on the sanctioning country.
153
In
147
Melo Arujo, above note 4, at 236; see also discussion above, at notes 98-99, and 123.
148
See Commission services, Feedback and way forward on improving the implementation and enforcement of trade and
sustainable development chapters in EU free trade agreements 26 February 2018, 3.
149
See text above, at note 34.
150
Ibid.
151
Ibid.
152
See text above, at note 75.
153
See M Bronckers and F Baetens, “Financial Payments as a Remedy in WTO Dispute Settlement Proceedings. An
Update” in J Bourgeois, M Bronckers and R Quick (eds) WTO Dispute Settlement: Time to Take Stock (College of Europe
Studies, Peter Lang, 2017) 67-98. An earlier version of this analysis was published in (2014) 16 Journal of International
Economic Law 281-311.
30
its re-assessment in 2018 the Commission therefore should not have confined itself to trade measures
when considering sanctions.
2. Proposed sanctions
We endorse the proposal of the European Parliament that an FTA panel should have the means
to oblige a non-complying country to make financial payments as a temporary inducement until the
date it brings itself into compliance with the labour standard it has been found to violate.
154
This is
not unprecedented. As the Commission itself noted, albeit only in its first non-paper of 2017,
155
Canada for example foresees fines in the event of infringements of the sustainability chapters in its
FTAs (other than CETA, notably because of resistance by the EU!). Furthermore, the EU itself has
useful experiences too with financial penalties in the event of EU law infringements by Member
States. These can be demanded by the Commission and imposed by the European Court. The amount
of the penalties depends on factors such as the severity of the infringement, its duration, and the ability
to pay of the offending country (i.e., its GDP).
156
Such penalties have proved to be a successful tool
to assure compliance especially when coupled with other strategies such as shaming via the media
and discursive action.
157
These experiences could be a source of inspiration when conceiving a penalty scheme in
relation to violations of FTA labour standards. The penalties that the offending country would pay
could go into a fund, controlled by an independent body (e.g., the ILO), which helps to finance the
development of international labour standards.
154
See Resolution (above n 6) para 22(d).
155
European Commission services, Trade and sustainable development chapters in EU free trade agreements, 11 July
2107, 3.
156
For the Commission’s Communications on this topic see: http://ec.europa.eu/atwork/applying-eu-law/infringements-
proceedings/financial-sanctions/index_en.htm . The Commission published an update of its calculus of lump sums and
penalty payments in 2019. See its Communication published in OJ 2019 C70/1.
157
G Falkner, “Fines against Member States: an effective new tool in EU infringement proceedings?” (2016) 14 (1)
Comparative European Politics 36.
31
We also submit that the proposal
158
to introduce sanctions targeted at individuals and
companies, responsible for egregious violations of labour standards, ought to be favourably
considered. Clauses in FTAs, such as CETA, excluding the possibility that labour violations could
amount to human rights violations, are to be avoided. It might be thought difficult to issue such
sanctions on the same legal basis as the TBR. But nothing prevents the Commission, if it were to
identify individuals with responsibility for wide-spread or grave labour standard violations during a
TBR-investigation, from proposing sanctions to the European Council within the context of the CFSP.
In other words, there is no reason to think that this shift in follow up would amount to an abus de
procédure.
159
Finally, in our proposal, trade sanctions are in principle not to be used to enforce labour
standards. However, if the country violating the labour standard does not bring itself into compliance
and refuses to make financial payments, the remedies in the general state-to-state dispute settlement
could be extended to the sustainability chapter (including labour standards) as extrema ratio. The
EU’s FTA with Canada, for instance, includes several provisions to assure compliance with the final
panel report concerning trade obligations. These include, after the expiration of a reasonable period
for compliance, the right of the offended party to suspend obligations.
160
In the WTO system,
retaliation must be equivalent to the level of nullification or impairment of benefits, which means that
the retaliatory response may not go beyond the level of harm caused by the other party.
161
This idea
of economic injury to calculate the amount of the retaliation can be adapted to sustainability
obligations, so that the value of the retaliation could approximate the financial penalties that the
offending country is refusing to pay. For instance, a financial penalty of €10 million could be replaced
158
See above, text at note 138.
159
Compare, for instance, the limitations imposed on the Commission from using facts discovered in a competition law
investigation for a different purpose. See Regulation 1/2003, OJ 2003 L1/1, Art. 28.1. This procedural principle of EU
competition law was enunciated before by the ECJ in Case 85/87, Dow Benelux v Commission, EU:C:1989:379, para.
17. No such limitation can be deduced in trade law from the TBR.
160
CETA Art 29.
161
WTO, Countermeasures by the prevailing Member, available at:
www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c6s10p1_e.htm.
32
by tariff increases on imports from the offending country amounting to €10 million (or a multiple in
case of sustained infringements).
So as to avoid any misunderstanding: we would expect any sanction mechanism to be
reciprocal in nature. Accordingly, in the event an FTA partner would have reason to accuse the EU
(or one of its Members) of infringing an agreed labour standard, and the EU were not to bring itself
into compliance, the EU risks being confronted with similar sanctions. Now one must be mindful of
the above-mentioned hypothesis that the EU has been resisting hard enforcement of labour standards
out of concern that its own protection of labour might not always be compliant.
162
We would like to
think, but cannot prove, that this hypothesis is mistaken. Perhaps the best way for the EU to remove
any doubt is to accept sanctions.
V. Managing expectations
Including labour standards in trade agreements is, of course, no panacea to improve the protection of
labour. Trade agreements do not replace existing methods and fora to achieve better labour protection,
to begin with the ILO. At best, the trade system can offer a supplementary means, notably by offering
an enforcement tool the lack of sanctions in case of non-compliance being a notable weakness of
the ILO regime.
163
At the same time, one should guard against the risks that the linkage of labour
standards and trade is used for protectionist purposes. Traditionally this has been the concern notably
of developing countries when opposing any such linkage, notably in the WTO.
164
Because of the underperformance of the labour standards in the EU’s FTAs, so far neither the
advantages nor the risks of linking them with trade preferences have crystallized. Being attentive to
the risks, it certainly seems possible to achieve better labour protection without slipping into
162
See above, text at note 128.
163
Melo Arujo, above note 4, at 236; see also discussion above, at notes 98-99, and 123.
164
The failed Seattle Ministerial Meeting in 1999 made this abundantly clear, and the linkage has remained anathema
since then in the WTO. See generally K Addo, “The Global Debate: The Linkage Between Labour Standards and
International Trade” in K Addo (ed), Core Labour Standards and International Trade (Springer, 2015).
33
protectionism. Thus, our proposal only envisages trade sanctions as a means of last resort, if all other
attempts at settlement or remedies have failed. This makes bringing a TBR case about a labour
standard violation a very cumbersome, if not plainly unsuitable proposition for a private petitioner
primarily seeking trade restrictions against an FTA partner of the EU.
Having proposed including private complaints about labour standard violations in the TBR,
as well as adaptations to the dispute settlement mechanism applicable to such labour standards in the
EU’s FTAs, we should caution against exaggerated expectations. Even if the regular dispute
settlement system in the EU’s FTAs, involving third-party adjudication, would come to apply to the
FTA’s labour standards, this does not mean that we can expect to see a flurry of cases soon – let alone
multiple sanctions against FTA partners not properly upholding labour standards. Generally speaking,
there is very little litigation under FTAs, even under their trade provisions. One recent study found
only one example over the period 2006-2017;
165
only three dispute settlement cases were ever
initiated under an FTA concluded by the EU, and this only very recently.
166
Furthermore, the one
case fully litigated under an FTA’s labour standards, by the United States against Guatemala,
167
was
unsuccessful.
One plausible hypothesis for this dearth of activity is that in a bilateral context successful
claimants lack the support of (many) other countries to press the losing country for compliance,
support that they do have in a multilateral forum like the WTO. This may be an important explanation
why smaller or less powerful countries are reluctant to take on big FTA partners like the EU. But it
does not explain why the EU itself seems loath to initiate dispute settlement proceedings under its
165
See G Vidigal, “Why is There So Little Litigation under Free Trade Agreements? Retaliation and Adjudication in
International Dispute Settlement” (2017) 20 Journal of International Economic Law 927 (citing Costa Rica v. El
Salvador, decided in 2014 under CAFTA).
166
In addition to the complaint formally raised against Korea about the latter’s failure to ratify core ILO conventions (see
above, note 2), the EU in January 2019 formally requested consultations with Ukraine about the latter’s wood export ban:
http://trade.ec.europa.eu/doclib/press/index.cfm?id=1968, and in June 2019 with the South African Customs Union
regarding the latter’s safeguard measure on frozen chicken cuts imports from the EU
http://trade.ec.europa.eu/doclib/press/index.cfm?id=2031.
167
Guatemala Issues Relating to the Obligations Under Art 16.2.1(a) of the CAFTA-DR (above n 73).
34
many FTAs. Another conjecture has been that when it is in an asymmetrical power relation with
smaller FTA partners, the EU might have felt that it had other ways to express its displeasure and
obtain relief.
168
Yet others have pointed out that enforcement of its rights, either in the WTO or under
FTAs, does not seem to have been a priority for the EU in recent years.
169
It would seem that the EU
has become averse to litigation and has built up a preference for negotiation (with the risk of having
to pay twice or more for the same concession). Whatever the reasons for this shifting attitude, a
probable side effect has been that the TBR has fallen into disuse as well in recent years.
170
Having said all this, we do believe it is worthwhile for the EU to endow well-supported private
complaints about third-country violations of labour standards with procedural safeguards. In part this
requires an adaptation of an already existing legal instrument, the TBR. This will also require a
different mind-set amongst EU authorities, and notably the Commission, that more effective
enforcement of international treaty obligations can make a difference. Additionally, as has been
observed before, more resources need to be made available to fully monitor, implement and enforce
the labour component of FTAs.
171
VI. Conclusions
Better enforcement of the labour standards included in the EU’s FTAs is achievable. First, the labour
standards in the EU’s FTAs ought to be brought up to date, based on the experiences of the past
decade or so: weeding out standards that are open-ended or fuzzy, as well as problematic conditions
(notably, trade effects). New bilateral standards that undercut the work of the ILO must be avoided.
168
For an early, revealing analysis see Broude, From Pax Mercatoria to Pax Europea: How Trade Dispute Procedures
Serve the EC's Regional Hegemony (October 2004) available at: dx.doi.org/10.2139/ssrn.724641.
169
See M Cremona, A Quiet Revolution: The Common Commercial Policy Six Years after the Treaty of Lisbon, Swedish
Institute for European Policy Studies 56 (Report No. 2, 2017); SJ Evenett, Paper Tiger? EU Trade Enforcement as if
Binding Pacts Mattered (New Direction, 2016).
170
The summer of 2017 saw the opening of a rare, new investigation by the Commission into a complaint brought by the
European paper industry against a Turkish import licensing scheme. OJ 2017 C218/20. Following Turkey’s revocation
of the disputed scheme, the Commission suspended its investigation. OJ 2018 L62/36.
171
Melo Araujo, above note 4, at 244-245.
35
Second, the incoming von der Leyen Commission intends to upgrade an existing private complaint
procedure (the TBR) in the trade area, which is to become known as the EU’s Enforcement
Regulation. This Regulation ought to be adapted to admit complaints about labour standard violations
by social partners, and by civil society groups already involved with the implementation of these
standards (the so-called DAGs). In its investigation, the Commission should take on board all relevant
findings already made by the ILO. Third, the tentative dispute settlement provisions specific to labour
rights chapters in the EU’s FTAs ought to be struck, and complaints about labour standard violations
ought to be handled through an FTA’s regular dispute settlement procedure. This would represent a
move towards binding adjudication before a panel of independent experts. Fourth, rather than trade
sanctions in the event of non-compliance with a panel ruling, the EU should favour financial penalties
on the government or sanctions targeted on the individuals and companies responsible for the labour
standard violations. Trade sanctions ought to become a last resort.
Finally, those who favour more rigorous enforcement by the EU of labour standards included
in the EU’s FTAs will have to engage more broadly with the EU’s lacklustre enforcement of its rights
under international trade agreements generally. The creation of a Chief Trade Enforcement Officer
by the von der Leyen Commission seems a positive step. Perhaps the growing interest from civil
society and political groups in more robust implementation of the labour rights obligations in the
EU’s FTAs could help to reinvigorate the enforcement of other parts of these agreements as well.
Labour standards, which are based on shared values and do not only seek to level the economic
playing field, are the perfect example of an area of treaty-making which, if effectively enforced,
would contribute to restoring trust in EU trade agreements. The recent dispute settlement proceedings
brought by the Commission under the labour chapter of its FTA with South Korea could be the first
signal of a change of attitude in this area. Our proposal provides for a more solid enforcement
mechanism, allowing the EU to have a greater impact in a field which is increasingly at the centre of
legal and societal debates.
36
... This approach to sustainable development in EU trade agreements, based on dialogue-and cooperation-based solutions in case of violations, has been considered "as lacking the necessary vigor" (Marx et al., 2016, p. 16). 36 As discussed by Bronckers and Gruni (2019), the European Commission launched discussions with a trading partner that had failed to respect labor standards in December 2018 in the context of the EU-Korea FTA. A panel has been requested seven years after South Korea had failed to ratify and implement four of the eight fundamental ILO Conventions. ...
... However, since labor standards are excluded from the dispute settlement procedures of the agreement, no sanctions have been applied. Bronckers and Gruni (2019) ...
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Chapter
Over the past decades, most issues concerning the interface between EU law and national law have been resolved. A few exceptions notwithstanding, Member State authorities have grown to accept the basic tenets of supremacy and direct effect. However, from the moment that rules of international law move into the picture, the relationship between the EU and the national legal order may become less clear-cut. To smoothen the interplay between international, European and national law, the Treaties contain several tools and mechanisms, but are not able to eradicate the tensions altogether. In this chapter, we will explore some of the (potential) fracture lines, and analyse the legal provisions that seek to iron them out. After a brief introduction (Sect. 9.1), attention is devoted to the place of the EU in the international legal order and the way it has generally positioned itself (Sect. 9.2). Thereby, we shall also discuss the internal rank and effect of international law norms, as well as the meandering views of the EU Courts on that subject. Hereafter, we take a closer look at the position of the Member States, sandwiched between their international and European commitments (Sect. 9.3). In that investigation, particular attention will be devoted to the intricacies of managing mixed agreements, the (waning) possibilities for seeking enforcement at international courts and tribunals, finally looking at their remaining competences under national law.
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Although sanctions targeting political regimes receive the most media attention, the EU can also sanction states for labour rights violations through its trade policy. Although in practice such sanctions are applied only in extreme cases, the possibility of suspending trade preferences increases the EU’s leverage. In modern trade agreements, the EU incorporates Trade and Sustainable Development (TSD) chapters for labour and environmental matters. However, trade sanctions for non-compliance with this chapter are absent. Instead, a dedicated dispute settlement arrangement exists, leading to recommendations by a panel of experts. In 2019 the EU launched proceedings against South Korea for failing to uphold commitments to ratify and implement International Labour Organisation core conventions regarding trade unions under the 2011 EU–Korea Trade Agreement. In 2021, the panel of experts sided with the EU’s interpretation of commitments under the TSD chapter. This initial case represents the EU’s intention to focus on the implementation of TSD chapters. Using data from official documents, this article process-traces the dispute with Korea. It argues that the outcome of the case, and Korea’s ratification of fundamental International Labour Organisation conventions in 2021, demonstrate the potential of the TSD chapter, when forcefully enforced, to partially redress the weak sanctioning capacity in TSD chapters. It also uncovers important caveats regarding state capacity and alignment with government objectives as conditioning the effectiveness of TSD chapters’ non-legally binding sanctioning mechanisms.
Article
In June 2022, the International Labour Organization (ILO) decided to amend the 1998 Declaration on Fundamental Principles and Rights at Work in order to include the right to a safe and healthy working environment among the core labour rights to which member States are committed by virtue of their membership. The amendment marks the successful completion of three years of negotiations initiated in response to the 2019 Centenary Declaration by which the ILO's tripartite constituency recognized that safe and healthy working conditions were fundamental to decent work. Adding occupational safety and health as a fifth pillar to the 1998 Declaration was generally welcomed as a commendable development although critics may still assert that as a soft law instrument the amended Declaration may not have decisive impact on workplace safety and health globally. Despite broad agreement about the timeliness and importance of recognizing occupational safety and health as a fundamental workers’ right—especially in light of the pandemic experience—concerns were raised about the possible implications of the amended Declaration on existing trade agreements, and in particular whether it would create, directly or indirectly, new obligations for member States. This article looks into the origins and negotiating history of the amendment to the 1998 Declaration and addresses the scope and legal effect of a saving clause by which the Conference sought to ensure that the amended Declaration would not impact obligations and commitments of States set out in labour provisions of free trade agreements currently in force and would not be subject to dynamic interpretation in the context of a trade dispute.
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Résumé L'auteure historicise le régionalisme social en tant que réponse – pragmatique et de principe – à l'effondrement du compromis du libéralisme encastré et à l’établissement d'un ordre économique international conçu pour empêcher la gouvernance du social au sein de l’économique à l’échelle transnationale. L'analyse du premier rapport du groupe d'arbitrage sur le chapitre relatif au travail de l'Accord de libre‐échange entre pays d'Amérique centrale, États‐Unis et République dominicaine (ALEAC‐RD) montre qu'il faut mettre en avant le régionalisme social afin d'axer l'interprétation des traités de libre‐échange sur des objectifs communs et, au‐delà, de promouvoir les mécanismes de redistribution et la solidarité internationale au sein même des accords commerciaux.
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Resumen Tras una introducción histórica al regionalismo social como respuesta pragmática y de principios ante la ruptura del pacto del liberalismo integrado y ante un orden económico internacional concebido para impedir el gobierno de lo social en lo económico a escala transnacional, la autora analiza el informe del primer grupo arbitral establecido en virtud del capítulo sobre trabajo del Tratado de Libre Comercio entre la República Dominicana, Centroamérica y los Estados Unidos (CAFTA‐DR), ilustrando la necesidad de adoptar el enfoque del regionalismo social para centrar la interpretación de los tratados comerciales en objetivos compartidos y promover en el marco de los mismos mecanismos redistributivos y de solidaridad internacional.
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This article historicizes social regionalism as a principled and pragmatic response to the breakdown of the embedded liberal bargain and the encasing of an international economic order that was designed to prevent the governance of the social in the economic, transnationally. Seen in historical context, the first labour chapter arbitral panel report under the Dominican Republic – Central America – United States Free Trade Agreement (CAFTA‐DR) illustrates the need to shift focus, to social regionalism. Social regionalism enables trade treaty interpretation to focus on shared objectives. It moves beyond, to promote redistributive mechanisms and international solidarity within trade agreements.
Article
Over the past decade, the WTO dispute settlement system has continued to be used extensively, contrasting with the very few disputes taken to inter-state adjudication under free trade agreements (FTAs). This article examines disputes brought to the WTO in 2007-2016 by Members that are also parties to FTAs. Besides specific procedural difficulties in some FTAs, a broader, systemic factor may explain the little resort to FTA dispute settlement: The absence of the collective dynamic that the DSU creates in WTO dispute settlement. Contrary to what is sometimes assumed, retaliation is disciplined and limited, rather than enabled, by trade agreements. Even when formally prohibited, the option to retaliate not only remains alive but is widely reported as having been used in a number of cases. The article argues that, while the WTO remedy of retaliation may be useful as a last resort, the primary utility of adjudication for a complainant lies elsewhere. Adjudication operates as an alternative to retaliation: Its added value is provided by the reputational damage, and collective pressure for compliance, that a condemnatory WTO ruling generates. Thus, Members resort to adjudication not in order to retaliate, but to avoid resort to mutually harmful retaliation. An assessment of the practice of WTO dispute settlement between DS1 and DS386 (US-COOL), the last dispute to have reached the retaliation stage, demonstrates that Members settle the vast majority of disputes far before lawful retaliation becomes a concrete threat, and prefer adjudication to retaliation even after the latter is authorized. If this assessment is correct, the little use of FTA adjudication may be explained in part by the fact that, in this absence of collective pressure, an aggrieved party may favor over FTA adjudication not only WTO adjudication but also unilateral retaliation.
For an early, revealing analysis see Broude, From Pax Mercatoria to Pax Europea: How Trade Dispute Procedures Serve the EC's Regional Hegemony
For an early, revealing analysis see Broude, From Pax Mercatoria to Pax Europea: How Trade Dispute Procedures Serve the EC's Regional Hegemony (October 2004) available at: dx.doi.org/10.2139/ssrn.724641.
A Quiet Revolution: The Common Commercial Policy Six Years after the Treaty of Lisbon, Swedish Institute for
  • M See
  • Cremona
See M Cremona, A Quiet Revolution: The Common Commercial Policy Six Years after the Treaty of Lisbon, Swedish Institute for European Policy Studies 56 (Report No. 2, 2017);
The summer of 2017 saw the opening of a rare, new investigation by the Commission into a complaint brought by the European paper industry against a Turkish import licensing scheme. OJ 2017 C218/20. Following Turkey's revocation of the disputed scheme, the Commission suspended its investigation
The summer of 2017 saw the opening of a rare, new investigation by the Commission into a complaint brought by the European paper industry against a Turkish import licensing scheme. OJ 2017 C218/20. Following Turkey's revocation of the disputed scheme, the Commission suspended its investigation. OJ 2018 L62/36.