Trading

EU to sanction trade partners that flout green, labour values

  • Sanctions seen only as last resort, with dialogue first
  • Sanctions for breaching ILO principles, Paris climate pact
  • Some lawmakers want existing trade agreements included

BRUSSELS, June 22 (Reuters) – The European Commission proposed on Wednesday giving the European Union the power to impose sanctions on future free trade agreement partners that disregard labour and environmental standards.

Many of the EU’s existing deals, such as with Canada and Japan, and those negotiated but not yet in force, such as with Mexico and Chile, already have such chapters on sustainability.

However, disputes in this field are settled by dialogue. Sanctions, such as revoking trade concessions through tariffs or quotas, are not an option.

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Civil society groups and many EU lawmakers have argued that environmental and labour standards should be a central part of the EU’s trade strategy and that its green push is toothless.

The Commission, which oversees trade for the 27 EU members, largely agreed at the end of a year-long review.

The EU executive said it would continue to seek dialogue to resolve disputes over labour and the environment, some of which go to an adjudicating panel. Under the proposal, the EU could impose sanctions as a last resort if the panel rules against a trading partner.

EU Trade Commissioner Valdis Dombrovskis told a news conference that a planned trade pact with New Zealand would likely be the first with the new sanctions system.

The proposal came two days after 15 EU members wrote to Dombrovskis urging the bloc to accelerate the conclusion of free trade agreements. read more There is a risk that negotiating a sanctioning system could drag out the process even more.

Sanctions would be triggered for breaching the Paris climate change agreement or the core principles of the International Labour Organization.

These concern forced or child labour, discrimination in the workplace, and freedom of association. The ILO may add a fifth principle on occupational health and safety.

The proposal needs approval by the European Parliament and EU governments to enter into force.

Some lawmakers, notably the Greens, believe sanctions should also be included in the EU’s 46 existing free trade deals and deals still to be ratified.

Among the latter is the EU agreement with the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay, struck in 2019, but put on hold due to EU concerns about Amazon deforestation.

Dombrovskis said the Commission did not intend to reopen the agreement, but was seeking further environmental commitments.

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Reporting by Philip Blenkinsop; Editing by Angus MacSwan/Mark Heinrich

Our Standards: The Thomson Reuters Trust Principles.

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