EU businesses committed to TSD, but overall policy framework is needed

At the beginning of 2021, the European Commission published its paper “Trade Policy Review – An Open, Sustainable and Assertive Trade Policy” that focused on the relationship between open trade and sustainability in future EU trade policy. Later in July 2021, the Commission opened a public consultation related to this topic that has recently been finalized.

The aim of the consultation was to collect the opinions of all relevant stakeholders regarding how sustainable development aspects in trade agreements should be implemented, enforced, what should be the monitoring mechanisms and also, whether it should be possible to impose sanctions in case those aspects are not respected.

European business organizations strongly support an open and sustainable international trade environment. The EU free trade agreements significantly contribute to sustainable development as they include a chapter dedicated specially to this topic, helping to promote trade and investment in green products and services, efficient use of natural resources, but also to improve workers’ rights and conditions, among others. European companies are at the forefront of sustainable trade and free trade agreements enable this business behaviour in other markets and significantly improve conditions by creating a level playing field.

In this context, it is crucial to avoid overlapping of the existing and potential new initiatives that the European Commission intends to introduce. The legislative burdens related to international trade must not discourage especially small and medium-sized companies from engaging in international trade. The monitoring of the implementation of sustainable development goals anchored in FTA chapters related to this topic should be made on a cooperative basis, including representatives of businesses, labour organizations and civil society from both signatory parties.

Overall, while trade has a significant impact on sustainability, it must not be viewed as the only solution to problems related to sustainability. It needs to be accompanied by other policies that would create a framework for sustainable development. For example, the EU should focus on capacity-building measures in partner countries that would help companies from third countries meet EU standards.

When it comes to enforceability of the commitments in TSD chapters, European businesses believe that the existing dedicated dispute resolution mechanism included in EU FTAs is adequate and fulfils its purpose. Apart from that, the recent appointment of a Chief Trade Enforcement Officer and the establishment of a Single Entry Point for complaints added to the capacity of the EU to enforce trade and sustainable development commitments.