# C_2018227EN.01002701.xml

| 28.6.2018 | EN | Official Journal of the European Union | C 227/27 |
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28.6.2018

EN

Official Journal of the European Union

C 227/27

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Opinion of the European Economic and Social Committee on ‘Trade and sustainable development chapters (TSD) in EU Free Trade Agreements (FTA)’

(own-initiative opinion)

(2018/C 227/04)

| Rapporteur: | Tanja BUZEK |
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Rapporteur:

Tanja BUZEK

Tanja BUZEK

| Plenary Assembly decision | 19.10.2017 |
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| Legal basis | Rule 29(2) of the Rules of Procedure |
| | Own-initiative opinion |
| Section responsible | REX |
| Adopted in section | 26.1.2018 |
| Adopted at plenary | 14.2.2018 |
| Plenary session No | 532 |
| Outcome of vote
  (for/against/abstentions) | 133/1/9 |

Plenary Assembly decision

19.10.2017

Legal basis

Rule 29(2) of the Rules of Procedure

Own-initiative opinion

Section responsible

REX

Adopted in section

26.1.2018

Adopted at plenary

14.2.2018

Plenary session No

532

Outcome of vote

(for/against/abstentions)

133/1/9

1.   Conclusions and recommendations

Conclusions and recommendations

| 1.1. | The European Economic and Social Committee (EESC) welcomes the European Commission initiative to take stock of the implementation of Trade and Sustainable Development chapters (TSD) in EU trade agreements in the non-paper (1) and consult with civil society on the issue. |
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1.1.

The European Economic and Social Committee (EESC) welcomes the European Commission initiative to take stock of the implementation of Trade and Sustainable Development chapters (TSD) in EU trade agreements in the non-paper (1

| 1.2. | The EESC has played an important role in raising awareness of EU trade policy among civil society both in the EU and in third countries. EESC members have been and will continue to be committed to strengthening cooperation with civil society of third countries in monitoring the negotiation and implementation of EU trade agreements. |
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1.2.

The EESC has played an important role in raising awareness of EU trade policy among civil society both in the EU and in third countries. EESC members have been and will continue to be committed to strengthening cooperation with civil society of third countries in monitoring the negotiation and implementation of EU trade agreements.

| 1.3. | The EESC encourages the Commission to strengthen its dialogue with civil society to develop the functioning of TSD chapters in current and future trade agreements and, in particular, to reflect this in the review of the TSD chapter in the EU-Canada Comprehensive Economic and Trade Agreement (CETA). |
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1.3.

The EESC encourages the Commission to strengthen its dialogue with civil society to develop the functioning of TSD chapters in current and future trade agreements and, in particular, to reflect this in the review of the TSD chapter in the EU-Canada Comprehensive Economic and Trade Agreement (CETA).

| 1.4. | However, the EESC urges the Commission to be more ambitious in its approach, in particular with respect to strengthening effective enforceability of the commitments in TSD chapters, which is of crucial importance to the EESC. TSD chapters must be given equal weight to those covering commercial, technical or tariff issues. |
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1.4.

However, the EESC urges the Commission to be more ambitious in its approach, in particular with respect to strengthening effective enforceability of the commitments in TSD chapters, which is of crucial importance to the EESC. TSD chapters must be given equal weight to those covering commercial, technical or tariff issues.

| 1.4.1. | The EESC recommends mandating DAGs to monitor the impact of all parts of trade agreements on human, labour and environmental rights, and the scope needs to cover consumer interests. |
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1.4.1.

The EESC recommends mandating DAGs to monitor the impact of all parts of trade agreements on human, labour and environmental rights, and the scope needs to cover consumer interests.

| 1.4.2. | The EESC regrets the narrow approach of TSD chapters when it comes to consumers’ interests and would welcome a consumer-specific chapter within the TSD framework, incorporating relevant international consumer standards and strengthening cooperation on the enforcement of consumer rights. |
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1.4.2.

The EESC regrets the narrow approach of TSD chapters when it comes to consumers’ interests and would welcome a consumer-specific chapter within the TSD framework, incorporating relevant international consumer standards and strengthening cooperation on the enforcement of consumer rights.

| 1.5. | The EESC believes TSD chapters play a crucial role in achieving the Commission’s aims set out in its ‘Trade for All’ (2) and ‘Harnessing globalisation’ (3) strategy and considers the establishment of Domestic Advisory Groups (DAGs) to be a key achievement of the TSD chapters in order to empower civil society in third countries, encourage these to actively pursue values similar to those that we recognise as ‘EU values’, including social, consumer and environmental standards and cultural diversity, and to make the public face of the EU visible in those countries, as well as providing an important platform to monitor commitments to human, labour and environmental rights in trade agreements. |
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1.5.

The EESC believes TSD chapters play a crucial role in achieving the Commission’s aims set out in its ‘Trade for All’ (2

3

| 1.6. | The EESC appreciates the mandate given to provide part of the membership and the secretariat of the DAGs. However, it stresses that financing and resources remain a crucial issue in operating current and future DAGs, and asks the Commission as well as the Council and the Parliament to work together with the EESC to urgently implement systemic solutions in this area. |
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1.6.

The EESC appreciates the mandate given to provide part of the membership and the secretariat of the DAGs. However, it stresses that financing and resources remain a crucial issue in operating current and future DAGs, and asks the Commission as well as the Council and the Parliament to work together with the EESC to urgently implement systemic solutions in this area.

| 1.7. | The EESC believes action is required from the Commission to improve the effectiveness of TSD chapters, and of DAGs in particular as the bodies tasked with monitoring these commitments. Many recommendations of a practical nature could be implemented without changing the text of the current TSD chapters and therefore this should be done without delay. |
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1.7.

The EESC believes action is required from the Commission to improve the effectiveness of TSD chapters, and of DAGs in particular as the bodies tasked with monitoring these commitments. Many recommendations of a practical nature could be implemented without changing the text of the current TSD chapters and therefore this should be done without delay.

| 1.7.1. | Identified shortcomings include an unbalanced membership and delays in establishing DAGs, the need for joint meetings between EU DAGs and the DAGs of the partner countries and for their chairs to take part in meetings of the TSD committees, having the right to present the views of their groups, and the lack of adequate financing for DAGs both by the EU and the partner countries. |
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1.7.1.

Identified shortcomings include an unbalanced membership and delays in establishing DAGs, the need for joint meetings between EU DAGs and the DAGs of the partner countries and for their chairs to take part in meetings of the TSD committees, having the right to present the views of their groups, and the lack of adequate financing for DAGs both by the EU and the partner countries.

| 1.7.2. | To this end the EESC suggests joint meetings of the EU’s and partner countries’ DAGs to be included in the text of the agreement in order to allow them to exchange experience on joint projects and prepare joint recommendations. |
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1.7.2.

To this end the EESC suggests joint meetings of the EU’s and partner countries’ DAGs to be included in the text of the agreement in order to allow them to exchange experience on joint projects and prepare joint recommendations.

| 1.7.3. | We strongly urge supporting capacity-building for civil society in the EU and especially partner countries before the entry into force of the agreement, and encouraging the prompt establishment of DAGs, with the necessary political, financial and logistical support, while ensuring a balanced membership. |
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1.7.3.

We strongly urge supporting capacity-building for civil society in the EU and especially partner countries before the entry into force of the agreement, and encouraging the prompt establishment of DAGs, with the necessary political, financial and logistical support, while ensuring a balanced membership.

| 1.7.4. | We also draw the Commission’s attention to outstanding issues of confusion of local civil society, resulting from the cross-cutting nature between the EU’s Association Agreements and the deep and comprehensive free trade agreements (DCFTAs) with Georgia, Moldova and Ukraine, and the wider role given to civil society fora, notably in Latin America, weakening the core messages of the DAGs of each party. |
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1.7.4.

We also draw the Commission’s attention to outstanding issues of confusion of local civil society, resulting from the cross-cutting nature between the EU’s Association Agreements and the deep and comprehensive free trade agreements (DCFTAs) with Georgia, Moldova and Ukraine, and the wider role given to civil society fora, notably in Latin America, weakening the core messages of the DAGs of each party.

| 1.7.5. | Furthermore, the EESC criticises the lack of response by the Commission to complaints raised by the DAG. Therefore, monitoring mechanisms should be able to independently trigger investigations into violations of clear TSD commitments. |
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1.7.5.

Furthermore, the EESC criticises the lack of response by the Commission to complaints raised by the DAG. Therefore, monitoring mechanisms should be able to independently trigger investigations into violations of clear TSD commitments.

| 1.8. | The EESC urges the Commission to establish a more transparent and streamlined complaint mechanism and further recommends that DAG chairs should participate in the TSD Committee meetings and that the TSD Committee should be required to respond to issues and recommendations raised by the DAGs, within a reasonable timeframe. It recommends a regular dialogue between the EU DAGs, the Commission, the EEAS, the European Parliament and the EU Member States. |
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1.8.

The EESC urges the Commission to establish a more transparent and streamlined complaint mechanism and further recommends that DAG chairs should participate in the TSD Committee meetings and that the TSD Committee should be required to respond to issues and recommendations raised by the DAGs, within a reasonable timeframe. It recommends a regular dialogue between the EU DAGs, the Commission, the EEAS, the European Parliament and the EU Member States.

| 1.9. | With respect to the Sustainable Development Goals (SDGs), the EESC recommends including a specific clause to promote the SDGs in all future mandates for TSD chapters. |
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1.9.

With respect to the Sustainable Development Goals (SDGs), the EESC recommends including a specific clause to promote the SDGs in all future mandates for TSD chapters.

| 1.10. | With respect to a strong commitment given by the EU Commission on strengthening labour provisions, partner countries should demonstrate full respect of the eight ILO Core Labour Conventions before the conclusion of a trade agreement. If a partner country has not ratified or properly implemented these Conventions, or demonstrated an equivalent level of protection, the EESC recommends that a roadmap on solid commitments is sought, to be included in the TSD Chapter to ensure this be achieved in a timely manner. |
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1.10.

With respect to a strong commitment given by the EU Commission on strengthening labour provisions, partner countries should demonstrate full respect of the eight ILO Core Labour Conventions before the conclusion of a trade agreement. If a partner country has not ratified or properly implemented these Conventions, or demonstrated an equivalent level of protection, the EESC recommends that a roadmap on solid commitments is sought, to be included in the TSD Chapter to ensure this be achieved in a timely manner.

| 1.11. | The EESC notes that the non-paper raises the issue of sanctions. We encourage the Commission to investigate further existing sanctions mechanisms in trade agreements, their usage hitherto and learn from their potential limitations, in order to assess and improve the effectiveness of an enforceable compliance mechanism that could be developed in TSD chapters. In doing so, the Commission should duly note that civil society groups have both expressed support for and serious concerns about their use. |
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1.11.

The EESC notes that the non-paper raises the issue of sanctions. We encourage the Commission to investigate further existing sanctions mechanisms in trade agreements, their usage hitherto and learn from their potential limitations, in order to assess and improve the effectiveness of an enforceable compliance mechanism that could be developed in TSD chapters. In doing so, the Commission should duly note that civil society groups have both expressed support for and serious concerns about their use.

| 1.12. | The EESC is ready to help develop new ideas to assist the Commission to increase the effectiveness of independent enforcement mechanisms in TSD chapters, not least through the right to respond when its concerns are not met. Any possible resort to sanctions where necessary would however need to be nuanced if potential trade partners are to be open to such an approach: unlike GSP+ there can be no unilateral withdrawal of any provisions in the event of any dispute. |
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1.12.

The EESC is ready to help develop new ideas to assist the Commission to increase the effectiveness of independent enforcement mechanisms in TSD chapters, not least through the right to respond when its concerns are not met. Any possible resort to sanctions where necessary would however need to be nuanced if potential trade partners are to be open to such an approach: unlike GSP+ there can be no unilateral withdrawal of any provisions in the event of any dispute.

2.   Background

Background

| 2.1. | Since the first inclusion of sustainable development provisions in the EU-Cariforum Economic Partnership Agreement (EPA) and the EU-Korea Free Trade Agreement (FTA), which entered into force in 2011, all EU trade agreements include a Trade and Sustainable Development (TSD) chapter. Currently, the EU also has agreements with TSD chapters with Central America, Colombia and Peru, Georgia, Moldova and Ukraine and future new agreements to come. |
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2.1.

Since the first inclusion of sustainable development provisions in the EU-Cariforum Economic Partnership Agreement (EPA) and the EU-Korea Free Trade Agreement (FTA), which entered into force in 2011, all EU trade agreements include a Trade and Sustainable Development (TSD) chapter. Currently, the EU also has agreements with TSD chapters with Central America, Colombia and Peru, Georgia, Moldova and Ukraine and future new agreements to come.

| 2.2. | In recent years, interest in labour, environment and consumer provisions in trade agreements has intensified. Discussions are taking place within the European Parliament and the Council, in Member States and among civil society stakeholders, including the EESC. |
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2.2.

In recent years, interest in labour, environment and consumer provisions in trade agreements has intensified. Discussions are taking place within the European Parliament and the Council, in Member States and among civil society stakeholders, including the EESC.

| 2.3. | The EESC has produced several opinions in recent years, covering, and providing its recommendations on, various aspects of trade and sustainable development in EU trade policy: most notably the opinions on the Trade for All strategy (4); on the role of trade and investment in relation to the Sustainable Development Goals (SDGs) (5); and very concretely on the TSD chapter in the EU-Korea FTA (6). In July 2017, the EESC organised a conference on how to make a real impact with TSD chapters in FTAs, involving notably members of various Domestic Advisory Groups (DAGs) (7). |
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2.3.

The EESC has produced several opinions in recent years, covering, and providing its recommendations on, various aspects of trade and sustainable development in EU trade policy: most notably the opinions on the Trade for All strategy (4

5

6

7

| 2.4. | There are a number of evaluations of the impact and efficiency of the TSD chapters. Despite the fact that there is overall strong support in the EU for including ambitious commitments on labour rights, environmental and consumer protection, as well as an active role for civil society, in current and future FTAs, there is also a need to prove that TSD chapters can deliver on the ambitions set in the ‘Trade for All’ (8) communication and the Commission’s recent reflection paper on harnessing globalisation (9). |
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2.4.

There are a number of evaluations of the impact and efficiency of the TSD chapters. Despite the fact that there is overall strong support in the EU for including ambitious commitments on labour rights, environmental and consumer protection, as well as an active role for civil society, in current and future FTAs, there is also a need to prove that TSD chapters can deliver on the ambitions set in the ‘Trade for All’ (8

9

| 2.5. | In the framework of the European Parliament’s consent to the CETA agreement, EU Trade Commissioner Malmström promised the Members of the European Parliament (10) to open a wide public consultation with MEPs and civil society, including the EESC, on trade and sustainable development chapters. This reflection on the implementation of TSD chapters is also needed in the framework of ongoing trade negotiations with Mexico and Mercosur and to set up the EU position for eventual review of the CETA chapter (11), as was agreed by both parties in the Joint Interpretative Instrument to the CETA agreement (12). |
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2.5.

In the framework of the European Parliament’s consent to the CETA agreement, EU Trade Commissioner Malmström promised the Members of the European Parliament (10

11

12

| 2.6. | The Commission’s non–paper, published on 11 July 2017 (13), intended to open a discussion with the European Parliament, the Council and stakeholders from civil society in the subsequent months. It comprises a description and an assessment of current practice and presents two options to improve implementation of the TSD chapters, posing several questions for stakeholders. The present EESC opinion is designed to contribute to this process and to reflect on those questions. |
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2.6.

The Commission’s non–paper, published on 11 July 2017 (13

| 2.7. | The Member States received the non-paper and are submitting comments and proposals. The European Parliament held a debate at its plenary session in January 2018. |
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2.7.

The Member States received the non-paper and are submitting comments and proposals. The European Parliament held a debate at its plenary session in January 2018.

3.   General comments

General comments

| 3.1. | The EESC welcomes the European Commission initiative to take stock of the implementation of Trade and Sustainable Development chapters (TSD) in EU trade agreements (14) and DG Trade’s non-paper opening a debate and consulting with civil society on how to improve it. |
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3.1.

The EESC welcomes the European Commission initiative to take stock of the implementation of Trade and Sustainable Development chapters (TSD) in EU trade agreements (14

| 3.2. | The EESC believes that TSD chapters play a crucial role in achieving the Commission’s aim of promoting the UN Sustainable Development Goals in its ‘Trade for All’ strategy and ‘Harnessing globalisation’ reflection paper. They are equally important as meeting international commitments, such as those made under the Paris Agreement on climate change and those on trade in fossil fuels. |
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3.2.

The EESC believes that TSD chapters play a crucial role in achieving the Commission’s aim of promoting the UN Sustainable Development Goals in its ‘Trade for All’ strategy and ‘Harnessing globalisation’ reflection paper. They are equally important as meeting international commitments, such as those made under the Paris Agreement on climate change and those on trade in fossil fuels.

| 3.3. | In the context of SDGs, the EESC would like to draw attention to its conclusions and recommendations in its opinion (15), in particular to include in all future mandates for TSD chapters ‘a specific clause requiring both parties of each civil society monitoring mechanism to work together to promote the SDGs’ and that TSD chapters ‘must be given equal weight to those covering commercial, technical or tariff issues’. |
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3.3.

In the context of SDGs, the EESC would like to draw attention to its conclusions and recommendations in its opinion (15

| 3.3.1. | The Committee has already noted (16) that Sustainable Development Goal 17 specifically refers to the role of civil society, stating ‘a successful sustainable development agenda requires partnerships between governments, the private sector and civil society’. For the first time in UN history as well, the SDGs specify that governments are answerable to the people. |
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3.3.1.

The Committee has already noted (16

| 3.4. | However, the EESC regrets the narrow approach taken in the current debate on TSD chapters and their overall scope with respect to consumers’ interests. While the Trade for All strategy puts its distinct focus on consumers’ confidence in safe products, the UN Guidelines on Consumer Protection (17) provide a much wider understanding including protection of consumers’ privacy, their rights in e-commerce and the right to effective enforcement of consumer rights. Given the impact of trade liberalisation on consumers, the EESC would welcome a consumer-specific chapter on ‘trade and consumers’ within the TSD framework, incorporating relevant international consumer standards and strengthening cooperation on the enforcement of consumer rights. |
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3.4.

However, the EESC regrets the narrow approach taken in the current debate on TSD chapters and their overall scope with respect to consumers’ interests. While the Trade for All strategy puts its distinct focus on consumers’ confidence in safe products, the UN Guidelines on Consumer Protection (17

| 3.5. | The EESC would further welcome a commitment to include a gender dimension in its trade policy and more specifically in its TSD chapters. In many EU trading countries women make up the majority of the workforce in specific sectors such as the textile industry. Therefore, EU trade agreements should not increase gender inequalities. The EU Commission should ensure the full respect of international labour standards regarding gender equality and rights of female workers at work. In particular, the EESC calls for the respect of ILO Convention No 100 on equal remuneration, Convention No 111 concerning Discrimination in Respect of Employment and Occupation, which promotes non-discrimination in the workplace, and Convention No 183 on maternity protection. |
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3.5.

The EESC would further welcome a commitment to include a gender dimension in its trade policy and more specifically in its TSD chapters. In many EU trading countries women make up the majority of the workforce in specific sectors such as the textile industry. Therefore, EU trade agreements should not increase gender inequalities. The EU Commission should ensure the full respect of international labour standards regarding gender equality and rights of female workers at work. In particular, the EESC calls for the respect of ILO Convention No 100 on equal remuneration, Convention No 111 concerning Discrimination in Respect of Employment and Occupation, which promotes non-discrimination in the workplace, and Convention No 183 on maternity protection.

| 3.6. | The EESC encourages the Commission to step up its dialogue with civil society to develop the functioning of TSD chapters in current and future trade agreements. This should be reflected in the review of the TSD chapter in CETA (18), in particular. As promised by Commissioner Malmström, the EESC welcomes an early review of the Agreement’s Trade and Labour and Trade and Environment provisions and wants to be involved in this review. |
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3.6.

The EESC encourages the Commission to step up its dialogue with civil society to develop the functioning of TSD chapters in current and future trade agreements. This should be reflected in the review of the TSD chapter in CETA (18

| 3.7. | The EESC has played an important role in raising awareness of EU trade policy among civil society both in the EU and in third countries. EESC members have been and will continue to be committed to strengthening cooperation with civil society of third countries in monitoring the negotiation and implementation of EU trade agreements. This proactive action of the EESC has been pivotal in empowering civil society organisations abroad and further democratising trade decision-making processes. |
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3.7.

The EESC has played an important role in raising awareness of EU trade policy among civil society both in the EU and in third countries. EESC members have been and will continue to be committed to strengthening cooperation with civil society of third countries in monitoring the negotiation and implementation of EU trade agreements. This proactive action of the EESC has been pivotal in empowering civil society organisations abroad and further democratising trade decision-making processes.

| 3.8. | Despite the relatively short time of implementation of TSD provisions (six years after the first new-generation free trade agreement, the EU-Korea Free Trade Agreement, entered into force), the EESC has identified a number of achievements and shortcomings that should be analysed and used to inform the forthcoming review of CETA’s TSD chapter, as well as other trade agreements. |
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3.8.

Despite the relatively short time of implementation of TSD provisions (six years after the first new-generation free trade agreement, the EU-Korea Free Trade Agreement, entered into force), the EESC has identified a number of achievements and shortcomings that should be analysed and used to inform the forthcoming review of CETA’s TSD chapter, as well as other trade agreements.

| 3.9. | One key achievement of the TSD chapters is their establishment of Domestic Advisory Groups (DAGs) to provide an important platform for civil society to monitor commitments to human, labour and environmental rights in trade agreements. However, the EESC thinks it is important to broaden the scope to also cover consumer interests. |
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3.9.

One key achievement of the TSD chapters is their establishment of Domestic Advisory Groups (DAGs) to provide an important platform for civil society to monitor commitments to human, labour and environmental rights in trade agreements. However, the EESC thinks it is important to broaden the scope to also cover consumer interests.

| 3.9.1. | As far as its competences allow the EU should also look to develop greater synergies between the wording of TSD chapters and the 27 mandatory environmental and ILO Conventions relevant to its GSP+ programme (as well as the requirements for the least developed countries (LDC) ‘Everything But Arms’ (EBA) arrangement). |
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3.9.1.

As far as its competences allow the EU should also look to develop greater synergies between the wording of TSD chapters and the 27 mandatory environmental and ILO Conventions relevant to its GSP+ programme (as well as the requirements for the least developed countries (LDC) ‘Everything But Arms’ (EBA) arrangement).

| 3.10. | The EESC appreciates the mandate given to provide part of the membership and the secretariat of the six DAGs set up to date by the following agreements: EU-Korea FTA, EU-Colombia/Peru FTA, EU-Central America Association Agreement, EU-Georgia DCFTA, EU-Moldova DCFTA, EU-Ukraine DCFTA, as well as for the Consultative Committee for the EU-CARIFORUM Economic Partnership Agreement. Furthermore, the EESC looks forward to continuing its work in future DAGs, such as that for CETA and the EU-Japan FTA. |
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3.10.

The EESC appreciates the mandate given to provide part of the membership and the secretariat of the six DAGs set up to date by the following agreements: EU-Korea FTA, EU-Colombia/Peru FTA, EU-Central America Association Agreement, EU-Georgia DCFTA, EU-Moldova DCFTA, EU-Ukraine DCFTA, as well as for the Consultative Committee for the EU-CARIFORUM Economic Partnership Agreement. Furthermore, the EESC looks forward to continuing its work in future DAGs, such as that for CETA and the EU-Japan FTA.

| 3.10.1. | We also draw the Commission’s attention to outstanding issues of confusion, the first as a result of the cross-cutting nature between the EU’s Association Agreements and the deep and comprehensive free trade agreements (DCFTAs) with Georgia, Moldova and Ukraine, which are difficult to differentiate for local civil society, and secondly to the wider role given to civil society fora, notably in Latin America, which has led to loss of focus and the weakening of the core messages of the DAGs of each party. |
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3.10.1.

We also draw the Commission’s attention to outstanding issues of confusion, the first as a result of the cross-cutting nature between the EU’s Association Agreements and the deep and comprehensive free trade agreements (DCFTAs) with Georgia, Moldova and Ukraine, which are difficult to differentiate for local civil society, and secondly to the wider role given to civil society fora, notably in Latin America, which has led to loss of focus and the weakening of the core messages of the DAGs of each party.

| 3.11. | However, financing and resourcing remain a crucial issue. With seven monitoring mechanisms in place (six FTAs and the CARIFORUM EPA) and more anticipated, including in the key agreements with Canada and Japan, it will be challenging for the EESC to effectively operate current and additional future DAGs without additional resources. The Commission should urgently draw up systemic solutions together with the EESC, and, together with the Parliament and the Council, ensure there are adequate resources available for these monitoring mechanisms to function and involve the full participation of representative groups in civil society. |
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3.11.

However, financing and resourcing remain a crucial issue. With seven monitoring mechanisms in place (six FTAs and the CARIFORUM EPA) and more anticipated, including in the key agreements with Canada and Japan, it will be challenging for the EESC to effectively operate current and additional future DAGs without additional resources. The Commission should urgently draw up systemic solutions together with the EESC, and, together with the Parliament and the Council, ensure there are adequate resources available for these monitoring mechanisms to function and involve the full participation of representative groups in civil society.

| 3.12. | Effective enforcement mechanisms for TSD chapters are of crucial importance for the EESC, as indicated in a number of its opinions (19). The DAGs, in their capacity of monitoring bodies, have an important role to play in ensuring that violations of TSD commitments are detected and effectively addressed. The EESC, as an active member of EU DAGs, has greatly contributed to their work and therefore urges the Commission to be more ambitious with regard to an effective enforcement mechanism. In the case of South Korea, the EESC notes that the EU DAG asked the Commission (20) to launch dispute proceedings but the Commission, despite their attempt to address the issue, has not done so yet. In this context, the EESC has reiterated that ‘the implementation of the sustainable development aspects of the FTA, particularly labour issues, remains unsatisfactory’ (21). |
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3.12.

Effective enforcement mechanisms for TSD chapters are of crucial importance for the EESC, as indicated in a number of its opinions (19

20

21

| 3.13. | The EESC believes businesses can play an important role in ensuring compliance with labour and social rights, by supporting and implementing laws that protect workers’ rights and through social dialogue with trade unions to agree decent standards, both in their direct operations and throughout their supply chains. The EESC calls on the Commission to ensure trade agreements support good business behaviour, and prevent social dumping and undercutting social standards by developing Corporate Social Responsibility clauses incorporating solid commitments and in line with the OECD guidelines on business and human rights and including National Contact Points (NCPs) (22), which should be independent and structured so as to involve the social partners as members of the NCPs, or the NCP oversight committee. They should be adequately trained, staffed and funded. |
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3.13.

The EESC believes businesses can play an important role in ensuring compliance with labour and social rights, by supporting and implementing laws that protect workers’ rights and through social dialogue with trade unions to agree decent standards, both in their direct operations and throughout their supply chains. The EESC calls on the Commission to ensure trade agreements support good business behaviour, and prevent social dumping and undercutting social standards by developing Corporate Social Responsibility clauses incorporating solid commitments and in line with the OECD guidelines on business and human rights and including National Contact Points (NCPs) (22

| 3.14. | The EESC is ready to help develop new ideas to assist the Commission to increase the effectiveness of independent enforcement mechanisms in TSD chapters, not least through the right to respond when its concerns are not met. Any possible resort to sanctions where necessary would need to be based on a nuanced approach. |
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3.14.

The EESC is ready to help develop new ideas to assist the Commission to increase the effectiveness of independent enforcement mechanisms in TSD chapters, not least through the right to respond when its concerns are not met. Any possible resort to sanctions where necessary would need to be based on a nuanced approach.

4.   Specific comments

Specific comments

| 4.1. | The EESC believes action is required from the Commission to improve the effectiveness of TSD chapters to ensure that social, environmental, consumer and labour rights are upheld. A key part is linked with improving the effectiveness of DAGs as the bodies tasked with monitoring these commitments. |
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4.1.

The EESC believes action is required from the Commission to improve the effectiveness of TSD chapters to ensure that social, environmental, consumer and labour rights are upheld. A key part is linked with improving the effectiveness of DAGs as the bodies tasked with monitoring these commitments.

| 4.1.1. | The EESC notes that various stakeholders have put forward proposals to improve the independence and effectiveness of TSD chapters in trade agreements and shares the view that robust encouragement of compliance with TSD commitments is needed. With respect to labour provisions, these include the proposal for an independent labour secretariat (23) and a collective complaints mechanism proposed in the model labour chapter (24). |
| --- | --- |

4.1.1.

The EESC notes that various stakeholders have put forward proposals to improve the independence and effectiveness of TSD chapters in trade agreements and shares the view that robust encouragement of compliance with TSD commitments is needed. With respect to labour provisions, these include the proposal for an independent labour secretariat (23

24

| 4.2. | The EESC has evaluated its experience in TSD chapters. The following shortcomings have been noted, and the EESC calls on the Commission to address them:






  — | lack of balanced membership in the EU’s and partner countries’ DAGs; |
| --- | --- | --- |

4.2.

The EESC has evaluated its experience in TSD chapters. The following shortcomings have been noted, and the EESC calls on the Commission to address them:

—

lack of balanced membership in the EU’s and partner countries’ DAGs;

| — | lack of political will in some partner countries to establish their DAGs in a timely way; |
| --- | --- |

—

lack of political will in some partner countries to establish their DAGs in a timely way;

| — | lack of adequate financing for DAGs both in the EU and in the partner countries; |
| --- | --- |

—

lack of adequate financing for DAGs both in the EU and in the partner countries;

| — | need for joint meetings of the EU’ and partner countries’ DAGs to be included in the text of the agreement in order to allow them to exchange experience on joint projects and prepare joint recommendations; |
| --- | --- |

—

need for joint meetings of the EU’ and partner countries’ DAGs to be included in the text of the agreement in order to allow them to exchange experience on joint projects and prepare joint recommendations;

| — | need for participation of DAG chairs in meetings of the TSD committees, with a right to present the views of their groups, so as to convey the messages of civil society to governments; |
| --- | --- |

—

need for participation of DAG chairs in meetings of the TSD committees, with a right to present the views of their groups, so as to convey the messages of civil society to governments;

| — | lack of response by the European Commission to complaints raised by the DAG regarding violations of TSD commitments. |
| --- | --- |

—

lack of response by the European Commission to complaints raised by the DAG regarding violations of TSD commitments.

| 4.3. | EESC members of DAGs as well as other organisations representing business, labour and the voluntary sector have made a number of recommendations for action by the Commission to address shortcomings of trade agreements and DAGs’ effectiveness in ensuring that commitments to uphold social and labour rights and environmental provisions are upheld. The Commission should take an in-depth look at these recommendations. These include:






  — | support capacity building and better promotion and presentation of the content of the TSD chapters to civil society in the EU and partner countries before the entry into force of the agreement; |
| --- | --- | --- |

4.3.

EESC members of DAGs as well as other organisations representing business, labour and the voluntary sector have made a number of recommendations for action by the Commission to address shortcomings of trade agreements and DAGs’ effectiveness in ensuring that commitments to uphold social and labour rights and environmental provisions are upheld. The Commission should take an in-depth look at these recommendations. These include:

—

support capacity building and better promotion and presentation of the content of the TSD chapters to civil society in the EU and partner countries before the entry into force of the agreement;

| — | establish an independent labour secretariat and a collective complaint mechanism; |
| --- | --- |

—

establish an independent labour secretariat and a collective complaint mechanism;

| — | ensure there is adequate financing and resources for both the EU and partner countries’ DAGs, so that civil society representatives can participate fully and provide funding for justified activities, including analytical work or workshops accompanying the joint annual meetings; |
| --- | --- |

—

ensure there is adequate financing and resources for both the EU and partner countries’ DAGs, so that civil society representatives can participate fully and provide funding for justified activities, including analytical work or workshops accompanying the joint annual meetings;

| — | encourage partner countries’ governments to establish DAGs promptly and give necessary political and logistical support to their DAGs while ensuring a balanced membership of DAGs; |
| --- | --- |

—

encourage partner countries’ governments to establish DAGs promptly and give necessary political and logistical support to their DAGs while ensuring a balanced membership of DAGs;

| — | establish a more transparent and streamlined complaint mechanism; |
| --- | --- |

—

establish a more transparent and streamlined complaint mechanism;

| — | establish a regular dialogue between the EU DAGs, the Commission, the EEAS, the European Parliament and the EU Member States; |
| --- | --- |

—

establish a regular dialogue between the EU DAGs, the Commission, the EEAS, the European Parliament and the EU Member States;

| — | require the TSD Committee to respond to issues and recommendations raised by the DAGs, within a reasonable timeframe; |
| --- | --- |

—

require the TSD Committee to respond to issues and recommendations raised by the DAGs, within a reasonable timeframe;

| — | mandate DAGs to monitor the impact of all parts of trade agreements on human, labour, environmental and consumer rights, not just the TSD chapter (the EESC notes with satisfaction that this proposal has been taken into account in the Commission report on the Implementation of the Trade for All communication); |
| --- | --- |

—

mandate DAGs to monitor the impact of all parts of trade agreements on human, labour, environmental and consumer rights, not just the TSD chapter (the EESC notes with satisfaction that this proposal has been taken into account in the Commission report on the Implementation of the Trade for All communication);

| — | partner countries should demonstrate full respect of the eight ILO Core Labour Conventions before the conclusion of a trade agreement. Should a partner country have not ratified or properly implemented these conventions or demonstrated an equivalent level of protection, a roadmap on solid commitments should be sought in the TSD Chapter to ensure that this will be achieved in a timely manner; |
| --- | --- |

—

partner countries should demonstrate full respect of the eight ILO Core Labour Conventions before the conclusion of a trade agreement. Should a partner country have not ratified or properly implemented these conventions or demonstrated an equivalent level of protection, a roadmap on solid commitments should be sought in the TSD Chapter to ensure that this will be achieved in a timely manner;

| — | require both governments and companies operating in their territories to demonstrate respect for the standards in the ILO’s Decent Work agenda (25) which goes beyond core labour standards to require commitments regarding other rights, such as those regarding gender equality and health and safety. |
| --- | --- |

—

require both governments and companies operating in their territories to demonstrate respect for the standards in the ILO’s Decent Work agenda (25) which goes beyond core labour standards to require commitments regarding other rights, such as those regarding gender equality and health and safety.

25

| 4.4. | The EESC considers that the above recommendations of a practical nature can be implemented without changing the text of the current TSD chapters and that therefore this should be done without delay. |
| --- | --- |

4.4.

The EESC considers that the above recommendations of a practical nature can be implemented without changing the text of the current TSD chapters and that therefore this should be done without delay.

| 4.5. | In order to be effective, the EESC considers it crucial that monitoring mechanisms are able to trigger investigations in their own right into abuses against TSD commitments. Should abuses be detected, a dispute settlement procedure should be started without delay, with a mandate to substantively enforce compliance. The EESC notes that a number of different models exist in trade agreements concluded by different countries, including the US and Canada, which envision the possibility of imposing material penalties in case of a breach of commitments. |
| --- | --- |

4.5.

In order to be effective, the EESC considers it crucial that monitoring mechanisms are able to trigger investigations in their own right into abuses against TSD commitments. Should abuses be detected, a dispute settlement procedure should be started without delay, with a mandate to substantively enforce compliance. The EESC notes that a number of different models exist in trade agreements concluded by different countries, including the US and Canada, which envision the possibility of imposing material penalties in case of a breach of commitments.

| 4.6. | The EESC regrets that the non-paper appears to suggest that the value of penalties or sanctions in trade agreements can be assessed solely on the basis of the single judicial case on Guatemala filed by the United States through the CAFTA Agreement (26). However, the failure of the US to prevail in this case was not due to whether sanctions were available, but to the design of obligations in its labour chapter in the CAFTA Agreement. The chapter imposes a legal requirement that violations of labour rights occur ‘in a manner affecting trade’ in order to justify sanctions being imposed. In this case, the panel deemed that although there were clear breaches of ILO labour rights occurring, there was not enough evidence to indicate that it had been ‘in a manner affecting trade’. The Commission needs to investigate further existing sanctions mechanisms in trade agreements, their usage hitherto together with their potential limitations, whilst duly noting that civil society groups have both expressed support for and serious concerns about their use. |
| --- | --- |

4.6.

The EESC regrets that the non-paper appears to suggest that the value of penalties or sanctions in trade agreements can be assessed solely on the basis of the single judicial case on Guatemala filed by the United States through the CAFTA Agreement (26

| 4.7. | There are other limitations to the US approach towards sanctions as regards admissibility, scope and length of procedure, resulting in only a very small number of cases having been solved by the sanctions approach. The Commission should learn from the limitations of the sanctions mechanisms in trade agreements concluded by the US as well as other countries such as Canada, in order to assess and improve the effectiveness of an enforceable compliance mechanism that could possibly be developed in TSD chapters. A potential limitation is the risk that the EU would discourage trading partners from engaging in negotiations or diminish its leverage in such negotiations. |
| --- | --- |

4.7.

There are other limitations to the US approach towards sanctions as regards admissibility, scope and length of procedure, resulting in only a very small number of cases having been solved by the sanctions approach. The Commission should learn from the limitations of the sanctions mechanisms in trade agreements concluded by the US as well as other countries such as Canada, in order to assess and improve the effectiveness of an enforceable compliance mechanism that could possibly be developed in TSD chapters. A potential limitation is the risk that the EU would discourage trading partners from engaging in negotiations or diminish its leverage in such negotiations.

| 4.8. | The EESC stands ready to assist the Commission in the development of an effective mechanism that improves the implementation and monitoring of TSD chapters in EU FTAs and enforces full compliance, drawing on the experiences of other countries as well as proposals developed by business, environment, labour and other civil society groups. |
| --- | --- |

4.8.

The EESC stands ready to assist the Commission in the development of an effective mechanism that improves the implementation and monitoring of TSD chapters in EU FTAs and enforces full compliance, drawing on the experiences of other countries as well as proposals developed by business, environment, labour and other civil society groups.

Brussels, 14 February 2018.

The President of the European Economic and Social Committee

Georges DASSIS

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(1)  http://trade.ec.europa.eu/doclib/docs/2017/july/tradoc_155686.pdf

1

(2)  http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf

2

(3)  https://ec.europa.eu/commission/sites/beta-political/files/reflection-paper-globalisation_en.pdf

3

(4)  EESC Opinion on ‘Trade for All — Towards a more responsible trade and investment policy’, rapporteur: Mr Peel (UK-I) (OJ C 264, 20.7.2016, p. 123).

4

(5)  REX/486 — EESC Opinion on ‘The core role of trade and investment in meeting and implementing the Sustainable Development Goals (SDGs)’, rapporteur: Mr Peel (UK-I), co-rapporteur: Mr Quarez (FR-II) (not yet published in the OJ).

5

not yet published in the OJ

(6)  EESC Opinion on ‘EU-Korea Free Trade Agreement — Trade and Sustainable Development Chapter’, rapporteur: Mr Fornea (RO-II) (OJ C 81, 2.3.2018, p. 201).

6

(7)  Conference on Trade and Sustainable Development Chapters in EU Trade agreements — How to make a real impact? — Summary of main messages: http://www.eesc.europa.eu/sites/default/files/files/summary_conference_on_tsd_chapters_in_eu_trade_agreements.pdf

7

Trade and Sustainable Development Chapters in EU Trade agreements — How to make a real impact?

(8)  Op. cit.

8

(9)  Op. cit.

9

(10)  Letter from Commissioner Malmström to the Chair of the INTA Committee Mr Lange, January 2017, https://ec.europa.eu/carol/index-iframe.cfm?fuseaction=download&documentId=090166e5af9d7b2e&title=letter.pdf

10

(11)  Letter from Commissioner Malmström to the Canadian Minister of International Trade Mr Champagne, October 2017, https://ec.europa.eu/carol/index-iframe.cfm?fuseaction=download&documentId=090166e5b568bc60&title=SIGNED_LETTER.pdf

11

(12)  Joint Interpretative Instrument on the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union and its Member States (OJ L 11, 14.1.2017, p. 3).

12

(13)  http://trade.ec.europa.eu/doclib/press/index.cfm?id=1689

13

(14)  Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on Implementation of Free Trade Agreements, published on 9 November 2017.

14

(15)  REX/486 — EESC Opinion on ‘The core role of trade and investment in meeting and implementing the Sustainable Development Goals (SDGs)’, rapporteur: Mr Peel (UK-I), co-rapporteur: Mr Quarez (FR-II) (not yet published in the OJ).

15

not yet published in the OJ

(16)  REX/486 — EESC Opinion on ‘The core role of trade and investment in meeting and implementing the Sustainable Development Goals (SDGs)’, rapporteur: Mr Peel (UK-I), co-rapporteur: Mr Quarez (FR-II) (not yet published in the OJ).

16

not yet published in the OJ

(17)  http://unctad.org/en/PublicationsLibrary/ditccplpmisc2016d1_en.pdf

17

(18)  Letter from Commissioner Malmström to the Canadian Minister of International Trade, Mr Champagne, October 2017, op. cit.

18

(19)  EESC Opinion on ‘Trade for All — Towards a more responsible trade and investment policy’, rapporteur: Mr Peel (UK-I) (OJ C 264, 20.7.2016, p. 123); EESC Opinion on ‘The position of the EESC on specific key issues of the Transatlantic Trade and Investment Partnership (TTIP) negotiations’, rapporteur: Mr de Buck, co-rapporteur: Ms Buzek (OJ C 487, 28.12.2016, p. 30). EESC Opinion on ‘EU-Korea Free Trade Agreement — Trade and Sustainable Development Chapter’, rapporteur: Mr Fornea (RO-II), (OJ C 81, 2.3.2018, p. 201).

19

(20)  Letter to Commissioner Malmström on Government Consultations Pursuant to the EU-Korea FTA, December 2016, http://ec.europa.eu/carol/?fuseaction=download&documentId=090166e5af1bf802&title=EU_DAG%20letter%20to%20Commissioner%20Malmstrom_signed%20by%20the%20Chair%20and%20Vice-Chairs.pdf

20

(21)  EESC Opinion on ‘EU-Korea Free Trade Agreement — Trade and Sustainable Development Chapter’, rapporteur: Mr Fornea (RO-II), (OJ C 81, 2.3.2018, p. 201).

21

(22)  Governments adhering to the Guidelines are required to set up a National Contact Point (NCP) whose main role is to further the effectiveness of the Guidelines by undertaking promotional activities, handling enquiries, and contributing to the resolution of issues that may arise from the alleged non-observance of the guidelines in specific instances. NCPs assist enterprises and their stakeholders to take appropriate measures to further the observance of the Guidelines. They provide a mediation and conciliation platform for resolving practical issues that may arise with the implementation of the Guidelines.

22

(23)  Non-paper based on a joint proposal by the European Trade Union Confederation (ETUC) and the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), September 2016, https://www.etuc.org/en/page/non-paper-introducing-independent-labour-secretariat-ceta

23

(24)  Draft Model Labour Chapter for EU Trade Agreements, developed by the Friedrich-Ebert-Stiftung (FES) in cooperation with the chair of the INTA Committee, Bernd Lange, June 2017, http://www.fes-asia.org/news/model-labour-chapter-for-eu-trade-agreements/

24

(25)  http://www.ilo.org/wcmsp5/groups/public/---dgreports/---integration/documents/publication/wcms_229374.pdf

25

(26)  See https://www.ictsd.org/bridges-news/bridges/news/trade-dispute-panel-issues-ruling-in-us-guatemala-labour-law-case

26

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