Insight
Opening Pandora’s Box: What the EU-UK trade deal means for trade and conditionality by Sam Lowe, 13 October 2021
The EU-UK Trade and Co-operation Agreement includes world-leading sustainability commitments. But the EU can’t expect to replicate these in other trade deals without conceding more market access. In trade deals, countries may agree that each party will only benefit if they meet certain environmental or labour standards. The EU-UK Trade and Co-operation Agreement (TCA) conditions tariff-free trade on both parties upholding high levels of environmental and labour protection. Many in the EU now want to replicate these positions, to some extent, in new EU free trade agreements (FTAs). But if the EU wants other countries to sign up to strict environmental and labour conditionality it will need to offer potential FTA partners a lot more market access, particularly for food products, than it does now. Conditionality in FTAs has long been pushed for by European environmentalists, trade unions and leftleaning politicians, who argue that foreign companies should only benefit from preferential access to the EU’s market if they abide by similar standards as EU companies. As well as protecting domestic companies from foreign competition, these groups hope to leverage the EU’s economic heft to achieve the EU’s broader international environmental and labour objectives. Until now, the European Commission has largely ignored those voices, fearing that accepting their argument would jeopardise the EU’s FTA agenda. But ensuring a level-playing field for European industry has become increasingly important for the EU as it embarks on its ambitious European Green Deal. Along with this increased prioritisation of the environment, deforestation concerns linked to the FTA that the EU agreed with the Mercosur bloc and a general uptick in the public salience of green and human rights issues have led the Commission to reassess its position on conditionality in FTAs. It is now consulting on whether, in its future trade deals, the EU should be able to withdraw concessions if the other party breaches the trade and sustainable development provisions. With the exception of the EU-UK TCA, there is currently little enforceable conditionality in EU FTAs. For example, the EU’s recent trade deals with Japan, Singapore, Vietnam and Canada include commitments to comply with multilateral environmental and labour agreements and not to deregulate for competitive advantage. However, the sustainability commitments in these trade deals are not subject to enforceable dispute settlement. A party can challenge the other over perceived non-compliance with an FTA’s trade CER INSIGHT: Opening Pandora’s Box: What the EU-UK trade deal means for trade and conditionality 13 October 2021
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