# IMMC.EESC-2022-04926-AC.ENG.xhtml.EESC-2022-04926-00-01-AC-TRA-EN.docx

| OPINION |
| --- |
| European Economic and Social Committee |
| The power of trade partnerships: 

  together for green and just economic growth |
| _____________ |
| Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions



  The power of trade partnerships: together for green and just economic growth

  [COM(2022) 409 final] |
| |
| REX 561 |
| |
| Rapporteur: Tanja BUZEK |
| |

OPINION

European Economic and Social Committee

The power of trade partnerships: 

  together for green and just economic growth

_____________

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions

The power of trade partnerships: together for green and just economic growth

  [COM(2022) 409 final]

REX 561

Rapporteur: Tanja BUZEK

EN

Referral

| Referral | European Commission, 26/07/2022 |
| --- | --- |
| Legal basis | Article 304 of the Treaty on the Functioning of the European Union |
| Plenary Assembly decision | 13/07/2022 |
| | |
| Section responsible | Section for External Relations |
| Adopted in section | 20/12/2022 |
| Adopted at plenary | 24/01/2023 |
| Plenary session No | 575 |
| Outcome of vote
  (for/against/abstentions) | 158/3/4 |

Referral

European Commission, 26/07/2022

European Commission, 26/07/2022

Legal basis

Legal basis

Article 304 of the Treaty on the Functioning of the European Union

Article 304 of the Treaty on the Functioning of the European Union

Plenary Assembly decision

Plenary Assembly decision

13/07/2022

13/07/2022

Section responsible

Section responsible

Section for External Relations

Section for External Relations

Adopted in section

Adopted in section

20/12/2022

20/12/2022

Adopted at plenary

Adopted at plenary

24/01/2023

24/01/2023

Plenary session No

Plenary session No

575

575

Outcome of vote
  (for/against/abstentions)

Outcome of vote
  (for/against/abstentions)

158/3/4

158/3/4

1.Conclusions and recommendations

1.

Conclusions and recommendations

1.1The European Economic and Social Committee (EESC) welcomes the Communication as an important step heading in the right direction. An open rule-based trade system is ever more important, while leveraging the potential of trade to advance sustainable development.

1.1

The European Economic and Social Committee (EESC) welcomes the Communication as an important step heading in the right direction. An open rule-based trade system is ever more important, while leveraging the potential of trade to advance sustainable development.

1.2The EESC sees it as essential for trade policy to gather the necessary political legitimacy, support and backing to get negotiated trade agreements over the finish line. A healthy recovering economy requires engagement with trade partners globally and sustainability is part of the package.

1.2

The EESC sees it as essential for trade policy to gather the necessary political legitimacy, support and backing to get negotiated trade agreements over the finish line. A healthy recovering economy requires engagement with trade partners globally and sustainability is part of the package.

1.3The EESC supports the comprehensive review setting a new benchmark on Trade and Sustainable Development (TSD) and appreciates that the Commission followed a number of its recommendations in the action points, in particular on reinforcing the role of civil society and the Domestic Advisory Groups (DAGs).

1.3

The EESC supports the comprehensive review setting a new benchmark on Trade and Sustainable Development (TSD) and appreciates that the Commission followed a number of its recommendations in the action points, in particular on reinforcing the role of civil society and the Domestic Advisory Groups (DAGs).

1.4The EESC sees further opportunities to strengthen the DAGs, at the level both of the agreement as well as of its implementation. However, it regrets that no action is being taken to involve civil society more thoroughly during the negotiation process.

1.4

The EESC sees further opportunities to strengthen the DAGs, at the level both of the agreement as well as of its implementation. However, it regrets that no action is being taken to involve civil society more thoroughly during the negotiation process.

1.5The EESC emphasises the need for clearer and more detailed TSD provisions to better define roadmaps and help both trade partners to better understand what is expected of them. It regrets that Just Transition is not made an overarching concept.

1.5

The EESC emphasises the need for clearer and more detailed TSD provisions to better define roadmaps and help both trade partners to better understand what is expected of them. It regrets that Just Transition is not made an overarching concept.

1.6The EESC welcomes the new policy orientation, ranging from a more results-oriented approach, through increased transparency and a reinforced role for civil society, to targeted support, while also increasing the level of commitment by including the possibility of trade sanctions as a last resort.

1.6

The EESC welcomes the new policy orientation, ranging from a more results-oriented approach, through increased transparency and a reinforced role for civil society, to targeted support, while also increasing the level of commitment by including the possibility of trade sanctions as a last resort.

1.7The EESC considers these elements as "part of the package" in all agreements, which needs to be implemented through a targeted and country-specific approach with tailored objectives. It expects the Commission to implement them within the different trade systems and across the different trade agreements, including existing agreements as much as possible.

1.7

The EESC considers these elements as "part of the package" in all agreements, which needs to be implemented through a targeted and country-specific approach with tailored objectives. It expects the Commission to implement them within the different trade systems and across the different trade agreements, including existing agreements as much as possible.

1.8The EESC welcomes the aim of mainstreaming sustainability across future trade agreements and highlights both environmental and social sustainability considerations in public procurement. It recognises that it is crucial to streamline the approach with other autonomous instruments for a coherent and mutually reinforcing effect.

1.9The EESC calls on the Commission to intensify the multilateral outreach and coordinate the advancement and implementation of the TSD strategy with partners where possible.

2.Background

2.1The EU has been including TSD provisions in its trade agreements starting with the EU-Cariforum Economic Partnership Agreement and the EU-Korea Free Trade Agreement (FTA). All "new generation" trade agreements since then have included – and have gradually expanded the scope of – dedicated TSD chapters.

2.2These agreements greatly benefit from a civil society monitoring mechanism. DAGs in the EU and the partner countries, bringing together expertise from environmental, labour, and business organisations, advise the parties on the implementation of the TSD chapters; from the UK agreement onwards their scope has been extended to the whole agreement. The EESC, providing the secretariat for all EU DAGs, has increased its support both in organisational and political ways, including initiating and hosting an annual All DAGs meeting. The European Commission also acknowledged the EESC's role in its 2022 Annual Implementation and Enforcement Report.

2.3In June 2022, following an open public consultation, the Commission set out its new TSD strategy in "The power of trade partnerships: together for green and just economic growth". This review prioritises a more proactive cooperation with partners, a targeted and country-specific approach to TSD, the mainstreaming of sustainability beyond the TSD chapters, increased monitoring of the implementation of TSD commitments, a strengthening of the role of civil society and enhancing the enforcement of TSD chapters by including the possibility of trade sanctions. While reconfirming the same binding commitments in all its TSD chapters, the Commission advocates better tailoring of the implementation of its TSD objectives to the challenges, needs and capacities of each of them.

2.4The European Parliament (EP) and the Council both expressed their support for the new approach and specified their expectations
  1
  . The EP resolution explicitly has regard to the EESC's opinion "Next Generation TSD – Reviewing the 15-point action plan"
  2
  .

3.Setting a new TSD benchmark

3.1An integrated approach towards trade and sustainability is the new standard, already visible throughout a number of international trade agreements – including beyond the EU's own trade network. The EESC is in favour of a balanced and transparent trade policy that supports fair competition between international trade operators, ensuring that the same rules and environmental, social and labour standards apply to all and that the trade framework is mutually beneficial.

3.2The EESC has long called for sustainability to be one of the drivers for trade policy, given the crucial role trade must play in achieving the UN Sustainable Development Goals (SDGs). It welcomes the comprehensive review approach taken by the Commission, accompanying it with a public consultation, providing a comparative analysis of TSD provisions and good practices in selected third countries' FTAs, and engaging throughout the process in bilateral and wider civil society meetings. This thorough exercise underlines the commitment to getting it right this time.

3.3The EESC supports the Commission's ambition to mainstream sustainability across future trade agreements and to seek broader commitments from partner countries on TSD chapters. This needs to go hand in hand with the support of trade partners in reaching TSD goals through technical assistance, capacity building, incentives, financial assistance, and development of policy instruments at large.

3.4The Communication highlights six policy priorities and key action points. The EESC considers all the introduced elements as "part of the package" in all agreements, to be used skilfully and implemented through a targeted and country-specific approach with tailored objectives as a guiding principle.

3.5The EESC appreciates that the Commission followed a number of its recommendations, in particular on the possibility of trade sanctions as a last resort, on detailed and time-bound roadmaps tied with civil society monitoring, and on collective horizontal monitoring across EU services, institutional and international players. Most of all, the EESC welcomes the reinforcement of the role of civil society and in particular the DAGs, which is taken up in several action points.

3.6The EESC expects the new TSD benchmark to be reflected in all future EU trade agreements, including those under negotiation. It should also form the basis for the modernisation of all FTAs in force, in particular first-generation agreements without TSD chapters, triggering review clauses as soon as possible. These new principles should also be taken on board as much as possible in concluded but not yet fully ratified FTAs. Where time does not allow the reopening of concluded FTAs, provisions to enable the Trade Committee to adopt decisions to amend the TSD chapter could be included as was done in the TSD chapter with New Zealand.

3.7The EESC expects this to be in particular the case for the EU-Canada Comprehensive Economic and Trade Agreement (CETA) and the early TSD review that both parties agreed to in the Joint Interpretative Instrument. The EESC, and both the EU and Canadian DAGs, have long urged the parties to fulfil this commitment towards more effective enforceability of the TSD chapters, aside from any wider modernisation of the agreement after some time. The EESC welcomes that the new approach has already been incorporated in the case of New Zealand, including the intention to reflect the addition of a safe and healthy working environment among the International Labour Organisation’s (ILO) fundamental principles and rights at work. The EESC also positively notes the recent EU proposals made in the case of the ongoing negotiations with India.

3.8The EESC welcomes the intended goal to streamline sustainability, in particular sustainability considerations in public procurement. The latter should focus on both environmental and social elements. It welcomes the prioritisation of market access for environmental goods and services as well as raw materials and energy goods that are essential for the functioning of a carbon-neutral economy. It regrets, however, the limited attention paid to the wider dimension of environmentally sustainable trade and the labour and human rights impact. Equally, it regrets that Just Transition is not made an overarching concept, given the anchor in the Paris Agreement itself on the imperatives of a just transition of the workforce and the creation of decent work and quality jobs. The recent joint conclusions of the EU-Korea Civil Society Forum
  3
  acknowledged the Maritime Just Transition Taskforce of the social partners in the International Maritime industry as a best practice.

3.9EU trade agreements are increasingly complemented by autonomous EU measures in the field of environmental, economic and social sustainability, the latest being the Carbon Border Adjustment Mechanism (CBAM) and the proposals on due diligence, deforestation and ban of products made by forced labour. The EESC welcomes this alignment of internal and trade policy to deliver real change on the ground and agrees with the need for the EU to be ambitious when designing additional autonomous instruments to support sustainability. It underlines the importance of considering all instruments together for a coherent trade policy approach in the interest of business, workers and civil society. However, these autonomous measures should not lower the ambition to conclude, implement and enforce TSD chapters, but there should be a mutually reinforcing effect.

3.10The EU also includes sustainability provisions in the unilateral preferences through its General System of Preferences (GSP). The EESC welcomes the recent proposal of the Commission for a new EU Regulation and encourages the co-legislators to mainstream the TSD Communication into the new regulation. The EESC considers that the GSP system has to be more transparent and would benefit from publicly available roadmaps based on a gap analysis. Furthermore, the involvement of civil society should be increased and the Annex should be updated with the addition of occupational safety and health (OSH) among the ILO fundamental conventions.

3.11For the first time, sustainability was written into the World Trade Organisation (WTO) rulebooks at the 12th Ministerial Conference, with disciplines on harmful fisheries subsidies worldwide that focus on environmental sustainability. The EESC has long urged the promotion of closer cooperation between the WTO and the ILO to promote decent work and labour standards through trade instruments. The EESC recommends further promoting the new TSD strategy within the WTO, and building alliances for deepened cooperation along its objectives. As a first step in that direction and beyond bilateral engagements, the EU should convene a plurilateral conference on trade and sustainable development with FTA partners and like-minded countries to exchange implementation and enforcement experiences with TSD provisions across trade agreements and jointly reflect on new generation provisions.

4.From plan to action: Rolling out the new TSD approach and filling the gaps

Towards a results-oriented and priority-based engagement with partner countries

4.1The EESC welcomes the tailored approach to the TSD chapters, including an early gap analysis to identify country-specific priorities and implementation roadmaps. This exercise should include cooperation with the relevant bodies including EU institutions, international organisations such as the ILO and UN, but equally civil society and the DAGs.

4.2Such tailored roadmaps have already been established, such as the EU-Bangladesh Sustainability Compact, and included in the EU-Vietnam Partnership and Cooperation Agreement; both featured the early involvement of the ILO and demonstrated the unique benefit of an institutional player working with both trade parties and providing intelligence on the ground. In the case of Vietnam, it led to a welcome spill-over effect of the DAGs calling for an equal roadmap for the implementation of the environmental commitments.

4.3The EESC reiterates the importance of reinforcing roadmaps as leverage for pre-implementation efforts and of them being specific, concrete, public, time-bound and mutually agreed upon with the trading partner, in order to serve as a tool for increased monitoring, implementation, and possible enforcement of the TSD commitments.

4.4The EESC expects that increased public disclosure, including of roadmaps and their implementation, will be foundational for a constructive and broader involvement for civil society.

Stronger focus on implementation and enforcement

4.5The EESC considers the strengthening of the implementation and enforcement of TSD chapters as a welcome step forward, which meets the expectation of businesses and other trading partners of a level playing field as well as the aspiration of business, trade unions, civil society and consumers alike to increase sustainability through trade.

4.6However, both will only be as functional as the precision of those TSD chapters. While roadmaps can assist, it is equally important to strengthen the clarity of the obligations at the level of the agreement. The term "continued and sustained efforts" has already proven too vague in the first TSD-related infringement case with Korea. Clarifying and detailing commitments also benefits the parties in terms of understanding what is expected of them and assists them throughout the implementation process.

4.7In the context of the ongoing reform of the Union Custom Code (UCC), the EESC generally notes that trade rules are predominantly executed by national customs authorities, where lack of uniform implementation, resources and capacity building risk competitive distortions and undermine effective enforcement.

4.8The EESC welcomes the creation of the Chief Trade Enforcement Officer (CTEO) function and the redesigned Single Entry Point (SEP) as important steps to reinforce the implementation of TSD commitments and organise complaints. Hence, it welcomes the Commission's commitment to give equal importance to alleged breaches of TSD provisions. Together with the abovementioned introduction of roadmaps with benchmarks, the SEP can become a key tool to increase adherence to TSD chapter commitments.

4.9The EESC also welcomes the revision of the Operating Guidelines for the SEP, but calls for further clarifications. It remains unclear what the evidentiary standards are, to what extent the SEP will collect evidence on allegations and what type of remedies complainants can expect. To date, only one complaint relating to TSD infringements has been lodged through the SEP, and the EESC notes the delay in its preliminary assessment. This underlines the importance of anchoring the SEP in future TSD chapters, and updated Guidelines may help future complainants.

4.10The EESC notes that sanctions are limited to serious breaches of core TSD commitments, namely the ILO fundamental principles and rights at work as well as the Paris Agreement. However, clarification is required as to the Commission's approach to determining what constitutes a serious violation and defining sanctions, and suggests that the Commission explore whether these aspects can be linked to the roadmaps.

4.11The EESC calls again upon the Commission to explore with trade partners innovative rapid response instruments in relation to concrete violation cases at company level, as are currently implemented with success under the US-Mexico-Canada Free Trade Agreement (USMCA).

5.Opportunities for further strengthening the DAGs

5.1DAGs play a crucial role in making TSD chapters work and contribute to a positive dynamic in the cooperation and dialogue of trade partners. DAG members represent organisations that have established contacts with civil society counterparts in partner countries. They can thus contribute with valuable experience on the ground, which politicians and civil servants do not possess. DAGs are also an untapped wealth of know-how on cross-cutting TSD issues and should be used to their full potential.

5.2The EESC has been the strongest advocate for a strengthening of the DAGs' role and has echoed concrete civil society proposals
  4
  . It thus supports the more ambitious involvement of the DAGs throughout all stages of the lifecycle of trade agreements. This starts with the need to pay increased attention to the establishment of DAGs, especially in partner countries with reduced civic space, and where cooperation between the government and civil society is not a given.

5.3Trade partners may take different approaches to their involvement of civil society. However, the EESC reiterates that the SDGs, and in particular Goal 17, adopted by all UN Member States and hence covering the EU's trade partners, acknowledge the paramount role played by civil society organisations in realising the global partnership for sustainable development. This expectation needs to be transposed clearly into the spirit and institutional framing of the agreements.

5.4The EESC considers the need for better-informed negotiations of the provisions of the DAGs framework as crucial. Without sufficient clarity in the agreement, DAGs may struggle for years to come. The role of DAGs should be described more specifically and parties should be accountable for the designated DAG bodies being fit for purpose, in particular when referring the role back to existing bodies. Drawing lessons from the establishment of DAGs such as in the EU-Japan FTA, structures need to clearly support and facilitate a framework of cooperation between DAGs as well as their interaction with the TSD committee. What is not explicitly set out in the agreement will be more difficult to realise in practice. Lessons from the EU-Korea FTA show that academic participation, in particular in partner country DAGs, remains challenging in terms of representativeness and the spirit of true civil society involvement.

5.5The EESC further considers that the DAGs' assigned monitoring role concerning concrete implementation should focus on all matters impacting sustainability in FTAs. Such a role must inherently include oversight of implementation roadmaps and enhanced meaningful access to the joint committees. Integrating DAGs into the country-specific priority setting and the TSD work programmes will help with the operationalisation of tasks. In return, the EESC shares the expectation that civil society organisations should deliver timely, well substantiated and evidence-based contributions, which are essential for identifying, prioritising and acting upon TSD matters.

5.6A real exchange between DAG members from the EU and the partner countries needs to flourish through continued exchange and contact. More meetings of the EU DAGs and between DAGs from the EU and the partner countries are paramount and should consider working through dedicated topical sub-groups or targeted workshops. Intersessional engagements with both trade partner governments beyond the annual Civil Society Fora would further contribute positively. The sequencing of the joint meetings should allow for the DAGs to inform and contribute to the parties' Civil Society Forum and TSD Committee in a meaningful way through joint statements and with the DAG chairs and vice-chairs presenting views at the TSD Committee, as is already established practice under the CETA and the Korea agreement.

5.7The EESC considers that sufficient financial resources and technical assistance should be allocated to DAGs and to the supporting EESC DAG secretariats to enable them to properly carry out their tasks and fulfil expectations. Similarly, the Commission services will need to allocate sufficient resources to put the reinforced TSD approach into effect. The preliminary experiences of covering an entire trade agreement beyond TSD, as in the Trade and Cooperation Agreement (TCA) with the UK, should be carefully evaluated. Broadening the DAG membership to cover an entire agreement might have unintended consequences for the required TSD know-how of the DAG.

5.8The EESC welcomes both the closer alignment of the TSD expert group with Member States and the EP's own ambition of closer DAG cooperation including holding an annual debate with DAG representatives. The EESC also considers regular close exchange between the EP's monitoring groups and standing rapporteurs and the respective DAGs a vital component of collective monitoring.

5.9However, the EESC identifies an important missing gap in the agreements' life cycle, namely a stronger involvement of civil society during the negotiation process. It had put forward proposals for a new negotiating methodology
  5
  , establishing a new roadmap to ensure that civil society organisations and social partners are genuinely involved throughout negotiations. This proposal aims to preserve the transparency of the agreement's negotiating process while ensuring its confidentiality.

5.10In this context, the EESC regrets that its repeated call for the reinstatement of the expert group on FTAs was not considered in the Communication and urges the Commission to still take such action. Its creation was considered a crucial step in the Commission's strategy to improve engagement with civil society in trade policy and to increase transparency, and constituted the logical continuity of the TTIP advisory group. It allowed its appointed members from European business, trade unions and civil society organisations to lead negotiators on all EU trade agreements and provide input on key EU proposals such as the reform of the WTO – as a group and permanent forum for meaningful and solid views on EU trade policy, bridging the challenges and opportunities of trade deals for the different interest groups that it represented and to a degree that ad hoc Civil Society Dialogue meetings could not do. With the increased focus on implementation and enforcement of the EU's trade agenda, a renewed expert group could also provide valuable direction and advice as a permanent body.

Brussels, 24 January 2023

Christa Schweng

  The president of the European Economic and Social Committee

_____________