ETUC Position on EU Trade Policy Review

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ETUC Position on EU Trade Policy Review
Adopted at the  Executive Committee Meeting of 28-29 October 2020

ETUC welcomes the early review of the EU’s trade and investment policy.[1] Trade has the potential to strengthen economic performance with quality jobs and to boost sustainable and inclusive development. For this, trade needs to be properly regulated, as described in the ETUC reply to the public consultation “A renewed trade policy for a stronger Europe” (in annex). This review is timely since the Covid-19 pandemic has exposed the fragility of and risks related to international trade, global supply chains and industrial value chains.  It also highlighted how the lack of enforcement of labour and environmental standards leads to unsustainable growth.  

The pandemic has a profound impact on trade and globalisation, with increasing nationalistic tendencies instead of the promotion of a much-needed multilateral cooperation. An ambitious and progressive trade and investment policy should therefore be framed in a process of reshaping the multilateral trading system and must be part of a broader new EU economic, social and industrial policy.

ETUC calls 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.

First and foremost, ETUC demands that EU trade agreements include enforceable labour provisions with sanctions for violations of labour rights. This is a longstanding demand, which is gaining wider support. Several EU Member States  put forward proposals for stronger enforcement of the Trade and Sustainable Development chapters (TSD) in free trade agreements (FTAs).[2] The EU and Canada Domestic Advisory Groups (DAGs) under CETA  jointly call for a TSD chapter review making labour standards effectively enforceable.[3] To increase the focus on compliance and enforcement, the European Commission created the position of Chief Trade Enforcement Officer. The newly appointed EU Trade Commissioner committed to a stronger TSD chapter enforcement and to explore the idea of conditional tariff reduction.

These steps are welcome and go in the right direction, but there is an urgent need for further concrete action in terms of respect of workers’ and trade union rights. A new EU trade and investment policy must think outside the box of existing tools and designs to deliver on this overarching goal. 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.

ETUC rejects a corporate-driven European trade and investment agenda that leads to increasing inequalities and undermines the provision of quality public services for all. Trade and investment agreements should therefore exclude public services. ETUC also rejects investment protection mechanisms, with special privileges for investors, which undermines equality and the rule of law.

The Covid-19 crisis has shown the strategic importance of keeping strong and diversified industrial value chains in Europe. The EU should identify the industrial value chains that are of strategic importance for its main political objectives. Key value chains should be strengthened within Europe or partially re-shored. The EU also needs to defend European producers against foreign subsidies that distort and damage the internal market and European workers. Furthermore, a Carbon Border Adjustment Mechanism should be explored to prevent carbon and investment leakage as well as unfair international competition. More strategic autonomy goes together with preserving an open economy and standing up for free and fair trade.

The resilience of global supply chains is based on their social and environmental sustainability. An indispensable tool is effective enforcement of labour provisions throughout the supply chain, supported by adequately funded labour inspections and underpinned by new EU legislation on due diligence.[4] At international level, there is a need for a UN Treaty of Business and Human rights and the establishment of an ILO Convention on decent work in global supply chains.

The multilateral trade framework in the context of the World Trade Organisation (WTO) needs to be strengthened. ETUC calls for a WTO reform to promote sustainable development, social justice and decent work. We call for strong cooperation between the WTO and the International Labour Organisation (ILO). WTO should include the respect for labour standards, as set and monitored by the ILO, in its policies and future multilateral trade agreements and initiatives. A priority must also be to reform the WTO so that it can respond to unfair trade practices and new trade patterns by providing a level playing field and transparent rules fit for tomorrow’s trade world.

The EU’s Generalised Scheme of Preferences (GSP) should contribute to building a just and prosperous economic relationship between the EU and developing countries – a relationship in which labour exploitation and environmental degradation are no longer accepted means of international competition. A functional complaint mechanism, greater transparency and involvement of civil society and trade unions are needed to strengthen labour rights compliance. ETUC expects a stronger link between preferential access and the respect of workers’ rights as defined in ILO Conventions and standards.

Transparency and the involvement of social partners should be core elements in monitoring and developing EU trade and investment policy in the future. ETUC insists on transparency in all negotiations, democratic oversight by the European and national parliaments and full consultation with and involvement of social partners and civil society organisations. Social partners should be consulted on a pro-active and continuous basis, including on the objectives of negotiations before they start, particularly in the preparation of the Council negotiating mandate. Furthermore, the impact of recommendations of DAGs tasked with the civil society monitoring of FTAs needs to be considerably strengthened.

Annex: ETUC Position on EU Trade Policy Review with annex

[1] A renewed trade policy for a stronger Europe - Consultation Note”, 16 June 2020

[2] Non-paper from the Netherlands and France on trade, social economic effects and sustainable development

[3] https://www.eesc.europa.eu/sites/default/files/files/joint_statement_eu_canada_dag_to_dag.pdf

[4] ETUC Position for a EU directive on mandatory human rights due diligence and responsible business conduct

02.11.2020
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Adopted 28.10.2020