Model labour chapter for European Union trade agreements

The European Unions’ trade representatives look back on an eventful year in the Asia-Pacific region. The EU and its member states were productive in expanding the number of trade agreements and bringing new ones a step closer to fruition. In the past year, the EU negotiated and finalized trade agreements and an investment protection agreement with Vietnam, Singapore and Japan, while trade agreements with Australia and New Zealand are on its way.

Social clauses, also referred to as trade and sustainable development (TSD) chapters, with powerful enforcement mechanisms can prevent countries from engaging in unfair competition by lowering labour standards to gain an advantage. Companies should compete on the basis of a level playing field and not by exploiting workers.

Traditional free trade agreements do not include TSD in state-to-state dispute settlement and render them virtually ineffective. Non-compliance to TSDs in today’s free trade agreements result in a report to an expert panel but doesn’t lead to monetary compensation or withdrawal of preferences.  For modern trade agreements, one should hold labour and environmental concerns to the same standard as business-oriented market access questions and include them into dispute settlements.

Providing a powerful means to enforce labour standards

With this in mind, the Friedrich-Ebert-Stiftung in cooperation with Bernd Lange, Member of the European Parliament (MEP) and Chair of the Committee on International Trade, tasked a team of researchers to put together Model Labour Chapter for European Union Trade Agreements. This model labour chapter gives an answer to the question of how to prevent a race to the bottom. It provides a powerful means to enforce labour standards in future agreements. Additionally, this blueprint aims to establish powerful institutions for a meaningful and effective participation of social partners and civil society.  And more functionally, it provides decision-makers, civil society and journalists with a legal proposal that can shape a new, progressive generation of trade agreements.

The work of Peter-Tobias Stoll, Henner Gött and Patrick Abel on this blueprint was not only presented to the European Commissioner for Trade by MEP Bernd Lange, but it was also an integral basis for the opinion of the European Economic and Social Committee on trade and sustainable development chapters in EU trade agreements.

It is one of the outputs of the regional project Core Labour Standards Plus (CLS+), which was launched by the Friedrich-Ebert-Stiftung in Asia in 2016. The project aims to promote and develop binding labour standards in trade and global value chains. With growing consumer concerns and strong criticism of free trade agreements in Europe, there is momentum to push for binding social clauses in international trade.

In a next step, the CLS+ project will publish country studies on the industrial policies in selected Asian countries to explore alternative paths for economic and social upgrading in selected countries.