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Labour standards in EU free trade agreements: Working towards what end?

December 2016

Harrison, J., Barbu, M., Campling, L. (et al.). Labour standards in EU free trade agreements: Working towards what end? GREAT Insights Magazine, Volume 5, Issue 6. December 2016/January 2017.

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Our research in the CARIFORUM bloc, South Korea and Moldova suggests there is cause for concern about the EU’s ability to protect and promote actual labour standards in its FTAs.

The European Union (EU) has long sought to address labour standards issues through its trade policy. This has happened through conditions attached to its Generalised System of Preferences (GSP+) and Autonomous Trade Preferences, through its efforts to introduce a social clause into multilateral trade agreements, and, increasingly, through labour-related provisions inserted in its bilateral free trade agreements (FTAs). In ‘new generation’ FTAs, labour and environmental issues have been explicitly addressed in a Trade and Sustainable Development (TSD) chapter. In respect to labour, these TSD chapters typically require the parties inter alia to: implement and uphold International Labour Organization (ILO) core labour standards; protect existing levels of labour law; and establish institutional structures for both state-to-state and civil society dialogue on sustainable development within and between the parties. Civil society in this context includes representatives from business, trade unions, academia and non-governmental organisations.

Aspects of this approach were pioneered in 2008 in the CARIFORUM Economic Partnership Agreement with the Caribbean region, though the TSD chapter arguably crystallised in the 2011 FTA with South Korea. Since then it has become a standard part of the EU’s FTA texts. TSD chapters feature in agreements now in force with South Korea, Colombia-Peru, Central America, Georgia, Moldova, Ukraine, and the Southern African Development Community. They are also present in finalised texts with Vietnam and Canada, and in negotiated texts with Ecuador, Tunisia, Singapore, and the US. Finally, the European Parliament has even proposed that a TSD chapter be included in any bilateral investment treaty with China. In the global governance of labour, the regulation contained in the TSD chapters looks set to become increasingly influential.

To assess the effectiveness of the EU’s approach we undertook research in countries which have signed this kind of ‘new generation’ FTA with the EU; namely those in the CARIFORUM bloc, South Korea and Moldova. Based on 90 interviews with state, business and civil society actors in these countries plus 30 more in EU member states, we found evidence that suggests there is cause for concern about their ability to protect and promote actual labour standards. The key problems are set out below.


Differing priorities


Government officials from trading partners do not appear to see the externally imposed TSD chapters as their responsibility. Meanwhile, European Commission officials have prioritised the commercial dimensions of the trade agreements, attending only to the procedural obligations of the TSD chapters rather than its substantive labour standards agenda – an agenda which has its origins in the European Parliament. Nowhere did we find joint committees of state officials clearly aiming to enhance the protection and representation of workers at an institutional level. Instead, they relied on civil society mechanisms to provide the primary impetus on labour-related issues in the agreement. Moreover, although some EU-funded projects have recently commenced which aim at building the capacity of regional labour (i.e. in the Caribbean) and involve sharing experience of labour-related and corporate social responsibility initiatives (i.e. in South Korea), it is also clear that progress on labour issues is not being stimulated in any systematic fashion by EU-funded projects.


Weak civil society capacity


The main burden of raising labour standards issues is assigned to the civil society mechanisms within the TSD chapters. It is true that domestic civil society meetings are occurring, albeit sometimes belatedly, and representatives are meeting with their EU counterparts and raising issues to state officials. Achieving this has not always been easy when some signatory governments have been sceptical or even hostile to the incorporation of labour standards provisions and civil society engagement within trade agreements. Proponents of the EU’s approach have therefore treated the slow but steady acceptance of this linkage as something of a victory. Similarly, opposition among EU member states to the incorporation of sustainable development issues, including labour standards, in the EU’s trade agreements appears to be diminishing. However, the civil society mechanisms are hampered by inadequate resourcing, infrequent meetings and limited influence upon the state-led committees to which they ultimately report. This has hamstrung their ability to properly monitor and/or address labour issues.


Insufficient targeting


The EU’s TSD chapters follow the same basic model, with limited variations, in all agreements. But this appears ill-suited to dealing with the complexity of labour issues encountered within the diverse range of countries it has signed agreements with. For instance, in two of our case study countries ILO core labour standards are not the most pressing labour-related concerns. Interviewees cited trade-related unemployment in the Caribbean and poverty wages in Moldova as bigger issues. In South Korea, core labour standards are a concern, but the government crackdown on trade unions calls into question the utility of an approach based on dialogue and cooperation. There is also insufficient linkage between provisions in the TSD chapters and opportunities to influence labour legislation elsewhere. For example, the acquis communautaire commitments concerning the transposition of EU working and health and safety Directives into Moldovan law is organised separately in the Association Agreement and is not addressed by the institutional mechanisms of the TSD chapter.


Uncertain purpose


Hanging over the three problems identified above is the larger question we posed in the title: what exactly are the TSD chapters working towards? One purpose identified by interviewees is that the chapters are there to positively impact labour in signatory countries. However, there remain some differences of opinion about what kind of labour is being addressed. Business actors and some EU officials thought that labour standards issues must be trade-related for them to be considered within the institutions of the TSD chapters (they cite the fact that TSD chapters talk about co-operation on ‘trade-related’ social/labour issues). Trade unions, NGOs, and some other EU officials thought that there is no need for labour issues to be trade-related (they cite the fact that commitments to for example core labour standards in TSD chapters are not caveated by reference to trade-related issues). There may be some value in this ambiguity in that it leaves space for civil society activism. A number of trade union and NGO representatives pointed out the difficulties of proving linkage between labour issues and the trade agreement, i.e. that the trade agreement is causing labour violations. This is, in their eyes, an important reason to oppose the idea that such a linkage must be required to voice concerns in relation to the TSD provisions.

Another purpose identified by interviewees is that TSD chapters are there to address the social impacts of the trade agreement itself. All TSD chapters do contain an obligation to monitor the social and environmental impacts of the agreements in question. But no methodology has, as yet, been developed for this monitoring process, and resources for monitoring appear to be very unevenly applied. In the CARIFORUM agreement, eight years after coming into force, the first efforts at developing a methodological approach for monitoring are only just beginning. A 2014 report provided an initial assessment, but its treatment of labour standards is limited. EU assessments of the social and environmental impacts of the Korea-EU FTA have thus far amounted to no more than a statement of the activities of the institutional structures created by the TSD chapters, although a report by external consultants is due in July 2017 which includes a planned assessment of the effectiveness of the TSD chapter. In the EU-Moldova Association Agreement any monitoring is expected to take place through the civil society mechanism, but as yet little has occurred of a meaningful nature.

Recent pronouncements by the DG Trade Commissioner Cecilia Malmström suggest a final purpose, which is that TSD chapters are ways of making global supply chains ‘more responsible’ and therefore are concerned with jobs in specific export-oriented industries. To this end we found that in the South Korean case, increasing attention within the TSD institutions is being paid to corporate social responsibility (CSR). This is justified by the fact that many European and Korean companies are producers and employers in global supply chains throughout East Asia. The shift toward supply-chain governance can be seen as part of a wider trend in EU policy, reflected in the use of trade instruments targeted at particular products and non-state actors, e.g. the Conflict Minerals initiative, the biofuels Renewable Energy Directive, and the EU Timber Regulation.

According to this purpose the focus of labour provisions moves away from the responsibility of the signatory countries for labour issues within their own territorial jurisdiction and towards business responsibility for addressing labour problems in their own supply-chains. But there is much evidence pointing to the gaps and limits that come from relying on corporations to voluntarily regulate labour conditions, especially over those firms that they do not source from directly. The danger for labour governance in FTAs, then, is that labour standards provisions become purely promotional mechanisms for doing good elsewhere, and not mechanisms for holding governments to account for the laws they enact and the way they enforce them.


Need for greater scrutiny and accountability


This bigger question about the underlying purpose of labour provisions speaks to the need for separate consideration of the multiple social objectives which the EU is trying to achieve through its trade agreements, and the extent to which (even reformed) TSD chapters are capable of achieving those. If the aim is to utilise the trade agreement to take action on the worst labour violations in trading partners, whether or not these are trade related, then more scrutiny is required as to the feasibility of achieving this with regard to each individual trading partner. If it is to understand and act upon the trade and labour nexus, then there is a need to monitor much more carefully what is actually happening with regard to each agreement and devise instruments to manage their ill-effects. And if it is about tackling labour issues in global supply chains, then policy mechanisms must be based on a rigorous evaluation of how international trade regulation relates to different forms of transnational production, as well as sober recognition of the fact that shifting the focus for labour issues onto corporations could deflect attention from the responsibilities that states have to take action.

This is a summary of an academic paper written by the authors which is available on request from Dr James Harrison. The paper arises from research undertaken as part of a UK Economic and Social Research Council-funded project entitled “Working Beyond the Border: European Union Trade Agreements and Labour Standards” (award number: ES/M009343/1). The project website can be found at: http://www.geog.qmul.ac.uk/research/beyondtheborder/index.html

About the authors

Dr James Harrison is an Associate Professor in the School of Law, University of Warwick.
Dr Mirela Barbu is a Postdoctoral Research Associate in the School of Geography, Queen Mary University London.
Dr Liam Campling is a Senior Lecturer in Political Economy in the School of Business Management, Queen Mary University London.
Dr Ben Richardson is an Associate Professor in the Department of Politics and International Studies, University of Warwick.
Professor Adrian Smith is a Professor in the School of Geography, Queen Mary University London.


Photo: Labour Parade, Seoul, South Korea. Credits: JulianBleecker, via Flickr.com.

This article was published in GREAT Insights Volume 5, Issue 6  (December 2016/January 2017).

Economic Transformation and TradeEmploymentTrade

External authors

James Harrison

Mirela Barbu

Liam Campling

Ben Richardson

Adrian Smith