Open public consultation on the Trade and Sustainable Development (TSD) Review

Question 1: The EU addresses sustainability challenges with cross-border implications in dedicated multilateral fora (e.g. on climate change and biological diversity) and via its autonomous measures (including legislative ones). Against this background, what should be the contribution of the EU trade policy to promote the transition to a greener, fairer and more sustainable economy? How should the implementation and enforcement of TSD chapters in FTAs complement and support the EU’s multilateral and autonomous initiatives?

The European Trade Union Confederation (ETUC) has long called for a reform of EU trade and investment policy that puts at its core: the creation of decent jobs and the protection of fundamental and human rights, including workers’ and trade union rights; the preservation of the environment and biodiversity and the conformity with the Paris Agreement on climate change; the safeguarding of high-quality public services; and the strengthening of Europe’s industrial basis. Through such a reform, trade can become a more effective tool to strengthen economic performance with quality and decent jobs and to boost sustainable and inclusive development. EU exclusive competence on external trade policy provides it with a unique and valuable tool to advance its policies and international standards, as recognised in the 2015 Trade for All Communication.

We demand that the TSD Review process will lead the European Commission to actively promote and defend social, workers’ and trade union rights with more urgency, in particular by means of enforceable labour provisions with sanctions for violations of labour rights. This is a longstanding demand, which is gaining wider support. The lack of real enforceability of labour rights, human rights and environmental provisions remains a major concern for ETUC.

EU trade policy must put trade at the service of priority goals based on the SDG 2030 agenda such as decent work (including the right to earn a living wage), social cohesion, equality, industrial policy and sustainable development. This new trade policy should be the building block of a new model that promotes democratic and inclusive institutions based on the rule of law, and that is economically resilient, socially and environmentally sustainable and responsible, and which takes into account the sustainable development needs of Less Developed Countries (LDCs). The future EU trade policy strategy must support and be aligned with the UN Sustainable Development Goals (SDGs), the Paris Agreement and make the development agenda of trade regulations a reality for all countries.

The ratification, implementation and enforcement of the International Labour Organisation (ILO) Conventions on freedom of association and collective bargaining, together with all ILO fundamental and up-to-date conventions, by the EU Member States as well as by our trade partners, constitute a key precondition to ensure safe and decent working conditions, and that trade benefits everyone. We refute the idea that enforcing labour standards can have a protectionist impact. Enforcing labour standards globally is crucial to protect workers globally and prevent a race to the bottom.

We call for a renewed EU trade policy that puts the promotion and respect of labour rights first as a matter of social justice. Trade unions are concerned of the fact  abuses of the right to strike, the right to establish and join a trade union, the right to collective bargaining the right to trade union activities and civil liberties and the right to free speech and assembly are at an eight-year high worldwide, according to the ITUC’s annual Global Rights Index.  Bangladesh, Belarus, Brazil, Colombia, Egypt, Honduras, Myanmar, the Philippines, Turkey[1] and Zimbabwe are the ten worst countries for working people in 2021. Many of these worst ranking countries have concluded a Free Trade Agreement (FTA) with the EU, or are in the process of negotiating one.

We call on the EU to secure pre-ratification commitments of international core conventions or binding and enforceable roadmaps within the TSD chapter itself, with clear timelines on their ratification. The EU needs to use its trade negotiations to ensure respect for fundamental ILO standards and must require countries to show respect for all fundamental ILO standards before finalising a trade deal with them.

If ILO conventions are properly implemented, and if trade policy is backed up by complementary policies, an open and assertive trade policy can result in significant improvements for workers. This requires that economies are underpinned with well-functioning and financially strong public services, which must be excluded from trade and investment agreements. In developed and developing countries alike, trade policy measures must be complemented by high ambitions in the field of social, environmental, labour market and education policy to facilitate transition of workers to new, quality jobs.

The TSD Review needs to implement concrete actions in terms of respect of workers’ and trade union rights. ETUC proposes to explore a range of elements that could underpin a new design on labour standard enforcement, including:

  1. Making labour rights an essential element clause.
  2. A revamped TSD dispute settlement mechanism, with sanctions.
  3. Setting up of an independent labour secretariat.
  4. Due Diligence requirements for investors.
  5. Company-level rapid response mechanism, with remedies.
  6. Linking tariff reduction to TSD implementation.
  7. Direct trade union complaints with CTEO.
  8. Strengthening the impact of DAG recommendations.
  9. Institutionalising a strong ILO cooperation.
  10. Labour-reporting officers in EU delegations in partner countries.

Question 2: What have been the main benefits of closer collaboration of the European Commission with the European Parliament, with the Member States, other relevant EU institutions and bodies and international organizations on the implementation and enforcement of TSD chapters? How should these partnerships be shaped going forward?

The ETUC sees close collaboration between the European Commission and other EU institutions critical in achieving a successful implementation of TSD commitments. Also, it has to be recognised that collaboration between civil society stakeholders, the European Parliament and some Member States has encouraged the Commission to be more proactive on issues of enforcement. As an example, the ETUC has played an important role in pressing for changes, such as the setting up of the Chief Trade Enforcement Officer (CTEO), the initiation of the Korea labour complaint, and indeed the current consultation.

The ETUC recommends that the ILO, as the legitimate body at international level, should take part in monitoring the implementation of ILO Conventions in free trade agreements (FTAs). Furthermore, TSD chapters must develop deeper links with the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration), promoting the ratification of its Conventions, and with the Organisation for Economic and Co-operation Development (OECD) Guidelines for Multinational Enterprises. Additionally, (and in line with Q3) the European Commission should open up DG EMPL High-level meetings to the European Economic and Social Committee (EESC) and possibly DAG presidencies. Additionally, it should involve the EESC and the DAGs in the oversight of the projects with the OECD and the ILO regarding initiatives for responsible business conduct.

The EC Expert Group on TSD strengthened the link with Member States, however requires stronger and regular consultations with Domestic Advisory Groups (DAGs) and stakeholders. DG Trade's engagement needs to expand to TSD leading departments in Member States, possibly by involving other relevant Directorates-General (DG) such INTPA, EMPL, CLIMA and the EEAS. Updating the EP on TSD relevant issues should include DAGs and must not happen in-camera. The EP must play a role in TSD monitoring and implementation, working in partnership with DAGs, and be fully informed of activities and involved in decisions of the TSD Sub-Committee and other relevant joint governance bodies.

Question 3: How do you see the role and contribution of DAGs and/or other representatives of employers, trade unions, environmental and other non-governmental organisations in the monitoring of the implementation of TSD chapters? How can they better contribute to the monitoring of the implementation of TSD chapters?

DAGs are important to ensure that commitments made by the EU and partner countries’ governments on the respect of ILO instruments will be kept and enforced once an agreement has been signed. However, to fulfil this mission it requires binding, clear and precise rules to ensure their representativeness, independence and balance.  DAGs should not be limited to monitor only the TSD chapters, as it is currently the case in all FTAs except the EU-UK TCA but should cover the whole agreement as all FTA elements can have an impact on labour.  For example, public procurement provisions should also support sustainability, including through guaranteeing decent work.  The Commission should reinforce capacities and resources of DAGs. The impact of DAG recommendations should also be strengthened.

The expert group with Member States on TSD, the new Chief Trade Enforcement Officer (CTEO) and EU institutions should establish a structured follow-up exchange with DAGs that would eventually lead to improvements in the area of labour law and its implementation in partner countries. The Commission must also commit to request trade partner countries to jointly assume the burden of financing the participation of representatives of civil society organisations in the monitoring of the Agreements.

The ETUC further shares the recommendations of the non-paper of the EU DAGs.

Question 4: In the last years the EU has focused its implementation efforts on specific priorities/partner countries. What would you highlight as the main achievements and/or shortcomings and what improvements could be considered in this regard?

The ETUC welcomes a more focused and strategic approach on specific labour related issues that partner countries face as this helps achieving more tangible results on the ground. Partner countries differ considerably, even within a regional agreement such as EU-Central America. We suggest improving the consultation with civil society, notably the DAGs, to identify the priorities, and requires a regular assessment on the progress or regression of those priorities by the Commission Geographical units in DG Trade and EU Delegations should interact more with the DAGs to obtain input and to provide systematic feedback.

Question 5: How can synergies between TSD implementation and development cooperation be further explored? What type of supporting measures for developing partner countries would be needed?

Trade-related development cooperation, Aid for Trade, has a key role in building capacity to make sure developing countries can participate in the global trade system. It should also be used to improve the capacities of partner countries, including social dialogue facilitation, occupational health and safety standards, institutional development, and financing labour inspectorates.

Future trade policy should relate not only to trade, but also to the cohesion between trade policy and other policies like Responsible Business Conduct policies. Policy coherence means that certain policies may have positive side effects on other areas or countries, and that negative effects are prevented. The UN Guiding Principles for Business and Human Rights prescribe the worldwide agreed responsibilities of Governments and Business. Good intentions in the field of international cooperation cannot be undermined by unfair agricultural, fiscal or trade policies. For instance, stimulating small and medium-sized enterprises (SMEs) in the Global South cannot have a sustainable effect if the EU also encourages, through trade agreements, foreign investments that undercut the local economy. This is why development cooperation must always be aligned with other policy areas related to foreign policy, both at national and European Union levels.

Courage and leadership are required to reform trade policy in such a manner that trade agreements do not reflect self-interest alone, but also and especially the interests of the Global South and of a sustainable planet. The consequences for gender equality, labour rights and migration also require full attention, to avoid a situation in which one hand gives and the other takes.

Future trade agreements shall no longer undermine the capacity of governments to regulate in the public interest. Countries can enforce their desired level of protection through legislation and regulations and increase this when needed.

More information on ETUC position on trade and cooperation relations with Africa can be found here and here. ETUC has joined other civil society organizations calling for a reform of the GSP scheme.

Question 6: In view of the objectives and the broad scope of the provisions of TSD chapters of EU FTAs, how do you evaluate the suitability and effectiveness of the current dedicated dispute settlement mechanism for TSD?

The ETUC regrets that the TSD dispute settlement mechanism in current EU FTAs does not contain enforceable provisions linked to a sanction mechanism. The possibility of sanctions also stands as a "robust encouragement" for compliance, used or not. The current mechanism is not effective in settling disputes. In case a FTA partner is found in breach of TSD commitments by a Panel of Experts and does not comply with the findings of the Panel, the European Commission cannot impose any sanctions. Hence, the current system does not give any disincentives to Partner countries that systematically are in breach of international labour standards.

Question 7: The European Commission has created the Chief Trade Enforcement Officer and the Single Entry Point in 2020. What in your opinion is their distinct contribution to the implementation and enforcement of the EU’s TSD chapters?

The ETUC has welcomed the creation of the Chief Trade Enforcement Officer (CTEO) and the Single Entry Point (SEP), launching of a complaints system for reporting market access barriers and breaches of TSD commitments under the EU's trade agreements and the Generalised Scheme of Preferences.

We would expect the CTEO to provide timely and detailed reports to the EU institutions (including the EESC) and report to the appropriate DAGs on relevant issues, as well as to maintain regular contacts with stakeholders including through the Civil Society Dialogue. Each complaint should result in a final public report that sets out clearly if and how worker’s rights have been breached and what action is to be expected from the business and/or government involved. The possibility to apply sanctions should also be part of the mechanism.

The SEP is an excellent instrument to ensure that complaints reach the European Commission. However, it does not change the fundamentally uneven level playing field between on the one hand investors and on the other citizens, trade unions and civil society organizations when it comes to enforceable and binding rights (including exclusive access to arbitration for investors). In addition, the effectiveness of an instrument such as the SEP remains limited as long as human rights, labour rights and sustainability are only anchored in unenforceable TSD chapters.

• Only if a country outside the EU violates a sustainability agreement from a trade agreement with the EU, a European NGO, trade union or citizen can file a complaint with the European Commission. NGOs, trade unions or citizens from outside the EU cannot file a complaint on their own.

• Complaints cannot be submitted by European organizations, nor by organizations from third countries if the EU or an EU member state itself violates TSD commitments.

• The SEP is an informal complaints mechanism and does not give civil society organizations and trade unions any procedural rights. Through the SEP, companies can also file complaints with the European Commission about countries that impose trade barriers on the basis of the Trade Barrier Regulation. Under this legal regulation, companies do have procedural rights and the European Commission is bound by strict guidelines regarding the handling of complaints and the timeframes within which it must respond. Organizations that file a “sustainability complaint” do not receive those guarantees.

• Complaints through the SEP must be thoroughly substantiated and accompanied by a great deal of supporting documents, investigations, and evidence. This may create a high barrier for civil society organizations to submit a complaint. Furthermore, there is no independent control over the SEP and over the decisions taken by the Commission (for example, whether the burden of proof is sufficient or not, and whether a complaint will be considered). Moreover, NGOs and trade unions cannot appeal or go to the EU Court of Justice.

• The SEP has no precise timelines within which the European Commission must respond. It also contains no guidelines for the European Commission to justify a decision with substantiated arguments.

• The European Commission itself determines which complaints it will handle, for example on the basis of available capacity, without consulting an expert, external neutral institution or authority.

• A complaint based on the existing trade treaties cannot lead to sanctions, because EU FTAs explicitly exclude TSD Chapters from the dispute mechanism that makes trade sanctions such as tariff increases possible.

Question 8: Is the level of transparency and available information on the implementation and enforcement of TSD chapters sufficient for civil society to follow and to contribute to these processes? Where do you see gaps? Do you have suggestions to address them?

The ETUC stresses that transparency is key for Social Partners to be able to contribute to the oversight of FTAs. Minutes of meetings should be consistently published in the relevant websites. Civil Society Dialogue meetings are an important channel, however, they must improve towards a more structured follow-up.

The ETUC stresses the need to boost cooperation with civil society from shaping to monitoring trade tools and agreements. It calls for the reinstatement of the European Commission expert group on FTAs which provided deep and regular engagement on specific trade issues.

We consider transparency at all stages of the negotiation of a trade agreement as an important condition. It is therefore important to grant equitable and transparent consultation and participation process for all stakeholders at every stage of the process, not only during the implementation phase.

Question 9: Do you think EU TSD chapters need additional remedies to ensure enforcement? If so, what type of remedies would be effective in contributing to sustainable development? Would there be a need for a targeted approach (i.e. adapted to the nature of commitments or for specific sustainability priorities)?

The ETUC has constantly asked for the integration of more powerful TSD chapters and their effective implementation and enforcement, feeling the 15-point action plan was not delivering.

The ETUC suggests a series of improvements to strengthen TSD chapters to live up fully to their legally binding commitments which are the following:

1.         We consider the ratification and implementation of the eight ILO Core Labour Standards, as well as compliance of up-to-date ILO conventions and instruments such as the Forced Labour Protocol and ILO Conventions on health and safety at work, are a pre-condition for concluding  trade negotiations. However, if a partner country has not ratified or properly implemented these conventions, it must demonstrate through a binding roadmap in the TSD chapter how this will be achieved in a timely manner. We call the European Commission to establish clear, transparent and binding roadmaps in the pre-negotiating phase, focusing on the implementation of a legal and policy framework to guarantee freedom of association and the right to collective bargaining along with strict labour inspections leading to penalties if workers are mistreated.

2.         Primacy of social and human rights throughout trade agreements – every part of trade and investment agreements (such as sections on investment protection or service listing) be consistent with human rights commitments. The "essential element clause" should be extended to explicitly cover ILO fundamental and up-to-date Conventions for all future comprehensive trade agreements, meaning to suspend them in case of non-compliance. For trade unions it is crucial that there are commitments to the Decent Work agenda (which include the ILO core conventions) and the Sustainable Development Goals that relate to Decent Work.  [The ILO Centenary Declaration for the Future of Work of 21 June 2019 should also be taken in account].

3.         A fully independent dispute settlement mechanism should be established to enforce commitments to the labour rights mentioned in point 1. This should take into consideration guidance and decisions of ILO supervisory bodies and in any event, not contradict them.

4.         Trade unions should be able to submit complaints through this mechanism for violations against workers’ rights including through DAGs. Complaints could be routed through a labour secretariat.

5.         The ETUC believes there should be an independent panel of labour experts who should investigate complaints not later than 30 days after a complaint is submitted. The investigations should include fact-finding missions and public hearings where relevant stakeholders are invited to testify.

6.         If the independent dispute settlement mechanism deems that a country has violated its commitments and failed to address the issue in 30 days, there must be material penalties, like trade sanctions in the form of countervailing tariffs targeted to the tariff lines where the violations occurred or/and fines directly to companies. Consideration should be given to establishing a fund into which monetary compensation could be paid, for use in funding decent work-promoting projects in the country or sector concerned.

7.         The independent dispute settlement mechanism should seek the views of DAGs on a regular basis to deem whether the violation of labour standards is addressed and any awarded compensation to workers has been given. Governments must prove that they enforced the decisions of the body by enforcing the national law and international commitments on the violator, including by prosecution of executives, fines and withdrawing export licenses.

8.         Ensure adequate resources are provided to enable trade unions in both the EU and partner countries to be involved in monitoring labour rights commitments in agreements, including through DAGs, and post a Labour Attaché in EU Missions.

More details about ETUC’s position on how to improve enforcement of labour standards can be found here.

Question 10: Do you see any disadvantages with the introduction of additional remedies for the enforcement of TSD chapters, including their impact on the cooperation and engagement on the ground?

The ETUC sees only advantages in introducing remedies for the enforcement of TSD chapters.  Introducing remedies would not impede the Commission to remain engaged and cooperate with the other partner, on the contrary it would give an incentive to improve the situation on the ground as sanctions would be lifted.  

Question 11: Are there remedies used by other countries that you think should be considered?

ETUC calls on the European Commission to duly consider the proposals made jointly by France and the Netherlands to improve and reform the Trade and Sustainable Development chapters in EU FTAs, notably the introduction of a “Progressive Implementation Mechanism”. Such mechanism would consist in a staged implementation of tariff reduction linked to the effective implementation of TSD provisions and the possibility to withdraw specific tariff lines in the event of a breach of those provisions. Furthermore, we call on the Commission to learn from the US-Mexico-Canada (USMCA) agreement, which includes a new approach to labour dispute settlement that allows imposing remedies directly on a non-compliant company.

USMCA includes innovative provisions compared to the previous NAFTA Agreement. We encourage the Commission to take inspiration from the labour provisions included in the USMCA to reform its model.

Question 12: Are there any key additional environmental or climate commitments that should be covered by TSD chapters? What areas should the EU prioritise in TSD implementation, and what actions do you think should be pursued to make progress on those priorities?

EU trade policy should be designed in a way that supports multilateral and national frameworks to ensure a just transition toward a circular and carbon neutral economy.

ETUC calls on the European Commission and the EU Member States to ensure the proper implementation of the timber regulation (EU) No 995/2010 and to effectively combat illegal logging. In addition, the EU trade policy should be combined with further efforts to clean and decarbonise international transport. Trade partners should comply with existing Paris Agreement ‘Nationally Determined Contributions’ and improve those commitments over time. In addition, FTAs should not impinge on setting up a carbon border adjustment mechanisms.

Question 13: Are there any key additional labour rights that should be covered by TSD chapters? What areas should the EU prioritise in TSD implementation, and what actions do you think should be pursued to make progress on those priorities?

The ETUC believes that respect of labour commitments should be the main focus of TSD implementation. The ratification, implementation and enforcement of the ILO Conventions on freedom of association and collective bargaining as enabling rights, together with all ILO fundamental and up-to-date conventions and the ILO Decent Work agenda, by the EU Member States as well as by our trade partners, constitute a key precondition to ensure safe and decent working conditions, and that trade benefits everyone. The EU should use its global trade network to ensure a more even implementation of social and labour standards by both investors and governments. Bilateral trade agreements have a particular important leverage that needs to be used effectively before their conclusion and throughout their implementation and enforcement. The leverage to secure ratifications of core ILO Conventions remains the highest during the negotiations and before their conclusion. In addition, the ETUC calls on the EU to pledge for Occupational Health and Safety as a fundamental principle and right at work at the ILO.

The ETUC welcomes the widened scope of labour issues included in TSD chapters (occupational health and safety, social protection) and encourages further updates of commitments alongside with ILO progressing them. Furthermore, TSD chapters must develop deeper links with the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration), promoting the ratification of its Conventions, and with the Organisation for Economic and Co-operation Development (OECD) Guidelines for Multinational Enterprises.

An additional way to ensure that EU business abide to sustainable supply chains is for the EU to adopt a Directive on mandatory human rights due diligence and responsible business conduct. It should establish mandatory and effective due diligence mechanisms covering companies’ activities and their business relationships, including their supply and subcontracting chains. Third country companies placing products on or/and providing services within the EU internal market should be subject to the same due diligence obligations as companies established in the EU. The directive would constitute an important step forward to ensure the respect and enforcement of human rights, including trade union and workers’ rights. A directive should empower workers to fight against violations of human rights. It should ensure the full involvement of trade unions and workers’ representatives in the whole due diligence process. Effective remedies and access to justice should be available for victims, including trade unions. Companies should be accountable for the impact of their operations. Liability must be introduced for cases where companies fail to respect their due diligence obligations, without prejudice to joint and several liability frameworks. More details about the ETUC position on an EU Directive on mandatory human rights due diligence and responsible business conduct can be found here.

At international level, ETUC calls on the EU and its Member States to secure more effective and binding international instruments, in particular by stepping-up support for a UN Binding treaty on business and human rights and work towards the establishment of an ILO Convention on decent work in supply chains. More details can be found here.

To advance its sustainable development agenda, foreign investors should be required to comply with due diligence before they can benefit from an international investment agreement. Close cooperation with the OECD, which has a long and solid experience of promoting responsible business conduct, would also be a way forward.

The EU must also commit to include a gender dimension in its trade policy by ensuring the respect of international labour standards regarding gender equality and rights of women workers at work. We call for the respect of ILO Convention 100 on Equal Remuneration; Convention 111 on Discrimination in Respect of Employment and Occupation (which promotes non-discrimination in the workplace); Convention 183 on Maternity protection; and Convention 190 on Violence and Harassment.

Question 14: How can the implementation of EU TSD chapters contribute to a greener, socially just and more resilient post-Covid-19 global economic recovery? What areas should the EU prioritise in TSD implementation and what actions do you think should be pursued to make progress on those priorities?

The ETUC believes that respect of labour commitments should be the main focus of TSD implementation.

  • Question 15: Are there any other important topics not covered by the questions above that the TSD review should address?

EU trade policy can be used as a tool to increase gender equality and contribute to women in developing countries benefitting from trade liberalisation. To this end, EU trade negotiations should include aspects and analyses on gender, and expertise on gender should be included in the negotiating teams. Disaggregated data on gender should be used when evaluating the results of trade agreements.

[1] Turkey is part of a customs unions with the EU, albeit there are no TSD commitments.