On 30 June 2022, the President of the EU Commission and the Prime Minister of New Zealand jointly announced the successful conclusion of negotiations on the creation of a new Free Trade Area (FTA) between the European Union and New Zealand.
As for New Zealand, the commercial liberalization offered by the new FTA will determine the significant economic impact, as the EU is now the fourth Member State.th The country’s largest commercial partner. In particular, planned tariff eliminations in the agriculture and fisheries sectors will provide New Zealand producers with immediate savings worth approximately $110 million annually. Overall, the New Zealand economy is expected to grow by $1.8 billion annually by 2035.
The scale of the event has another significance from the EU point of view.Even if New Zealand ranked her 50thth Among the EU’s trading partners, the outcome of the negotiations will breathe new life into the EU’s foreign trade policy and strengthen trade, especially for all European Commission strategies. After years of stalemate due to the health emergency caused by the COVID-19 pandemic and more recently the Russian Federation’s invasion of Ukraine, the conclusion of negotiations with New Zealand hopes the EU will lead to a new season of trade relations. . with a third country. In this regard, the next step could be the conclusion of the negotiations with Australia, which began in 2018, and the definition of an agreement with Mercosur, which is currently only agreed in principle.
Outcomes of the EU-New Zealand negotiations on sustainable development
The provisional text of the commercial agreement between the EU and New Zealand is now awaiting final signature. Although the text may be subject to minor revisions at this stage, the innovative approaches to trade and sustainable development are clearly noteworthy and worthy of detailed analysis. It is no coincidence that Trade Secretary Valdis Dombrowski has declared that his new FTA “contains the most ambitious sustainability efforts of any trade deal to date.”
According to Chapter 19 entitled “Trade and Sustainable Development” (TSD), the parties commit to protect and promote both labor and environmental interests. In particular, with respect to the first objective, both parties commit themselves to comply with core labor standards, seek to ratify essential ILO conventions, and waive or restrict domestic labor laws in order to facilitate trade and investment. I agree to refrain. The latter objective calls for the effective implementation of already ratified multilateral environmental agreements, taking particular account of sensitive issues such as controlling climate change and protecting biodiversity. Furthermore, the parties shall cooperate in the sustainable use of natural resources and the conservation of forest and marine ecosystems.
Many of these substantive obligations are similar to those already expressed in the EU’s ‘new generation’ FTAs concluded over the past decade, but the most notable innovation in the EU-New Zealand agreement is the , regarding the enforcement of the TSD chapter. Indeed, ‘new generation’ FTAs traditionally require the appointment of a panel of experts charged with adopting non-binding recommendations to resolve disputes on sustainable development issues, and economic sanctions in the event of failure. Submit to a unique collaborative system that excludes the use of of their observance. The first and so far only example of such a procedure is EU vs South Korea Freedom of association closed in January 2021.
Instead, the EU-New Zealand Agreement takes a radically new approach. Article X.2 of Chapter 26 provides for the first time a unified dispute resolution system that also applies to violations of sustainable trade obligations. In particular, a party alleging FTA violations can request the establishment of a panel whose members are drawn from various shortlists depending on the nature of the dispute. The panel will submit an interim report open to the parties’ comments, and then expects to submit a final report that will finally confirm her FTA violations and address those responsible with mandatory recommendations. It has been. If a final report is not produced within a reasonable period of time, Article X.16 of that chapter allows the complaining party to take temporary action. Application of other her FTA obligations. In both cases, the reaction shall be proportional to the original violation. Breaking with the EU’s traditional approach, new FTAs limit the application of such temporary measures to violations of key sustainable trade obligations, i.e. violations of core labor standards, and actions contrary to the Paris Agreement on climate or Expand to include sanctions for hiring omissions. Change. A similar direction on economic sanctions was previously taken by the EU-UK Trade Cooperation Agreement. This is a trade deal signed between the EU and the UK in 2020 following Brexit. In this case, the dispute resolution system applicable to the TDS chapter retains its cooperative nature, but Article 410.3 of the Agreement suspends compliance with commercial obligations if the expert’s final report is not properly complied with. I accept the possibility.
A paradigm shift in the EU’s approach to sustainable development
The outcome of the negotiations between the EU and New Zealand has resulted in a major paradigm shift in the EU’s approach to implementing the TSD chapter. In this regard, the EU Commission adopted the traditional joint system in the first draft version of the agreement, which was refined at the start of negotiations in 2018, but eventually replaced it in favor of more effective enforcement mechanisms. It is worth noting that we abandoned Support New Zealand. Moreover, such a paradigm shift was openly confirmed by the European Commission in a communication dated 22 June 2022, detailing his six policy priorities for “green and just economic growth”. are described. In it, the European Commission recommended that “the enforcement of the TSD should be further linked with general interstate dispute resolution” and that “a last resort should be implemented in the event of serious breaches of core TSD commitments.” It proposes to combine the possibility of trade sanctions as
Several circumstances may have contributed to this shift in perspective. First, the traditional collaborative approach has always been strongly criticized at both the political, academic and civic levels. but, EU vs South Korea Despite the ratification of three fundamental ILO conventions and the reform of domestic labor laws, South Korea duly and promptly observed the final report of the Panel of Experts. Collected by civil society and the commission through a public consultation in 2021.
Second, the US stance on implementing sustainable trade agreements may have influenced EU trade policy. In fact, since her Perù Trade Promotion Agreement of 2009, normal arbitration procedures apply to all disputes arising from violations of labor and environmental obligations contained in US commercial agreements. USMCA, which replaced NAFTA by July 1, 2020, finally confirmed the use of a unified enforcement mechanism.
Finally, the shift in perspective on the implementation of the TSD chapter should be read in relation to the wide range of initiatives that the EU has voluntarily developed over the last few years to support social and environmental benefits. The European Green Deal objective of achieving climate neutrality by 2050 has become a binding target for EU Member States in 2021, to name a few. preliminary An ambitious goal of reducing emissions by 55% by 2030 has been established. On the external side, in March 2022 the Council approved the Carbon Boundary Adjustment Mechanism. This aims to combat carbon leakage and encourage third countries towards more effective carbon reduction policies. Finally, the new Directive on Corporate Social Responsibility, now under discussion, will introduce important innovations regarding the obligations of private bodies.
Conclusion
Undoubtedly, the TSD Chapter’s new enforcement strategy will bring the EU closer to the successful implementation of the UN’s 17 Sustainable Development Goals. Hopefully, this new path to implement sustainable development values more effectively will be followed consistently by the EU in future negotiations with other major trading partners. . Judging by his June 2022 correspondence mentioned above, it seems the commission seriously intends to finally move in this direction. However, the final result is not clear. Even if New Zealand has shown it shares her EU sensitivity to its sustainable development imperatives, it cannot be taken for granted with the EU’s other trading partners. In this regard, negotiations with India and Indonesia are likely to present some challenges in the light of national policies on labor and environmental rights.
