EU trade policy: time to live up to the European Green Deal

The EU is stepping up its action to fulfil the European Green Deal, but more needs to be done to integrate environmental objectives into all areas of EU policy – including trade. President of the European Commission Ursula von der Leyen acknowledged this at the One Planet Summit in January, stressing that “being a major economy and trading superpower comes with responsibilities.”

The principle of environmental integration and consistency is enshrined in the EU Treaties. Now more than ever, we need to stop making trade decisions that are isolated from other social and environmental considerations – like public health and ecosystem destruction.

Trade should no longer be an end in itself, but instead used as a tool to help us achieve social and environmental objectives.

However, EU trade policy has so far failed to address the adverse impacts of increased international trade flows on the environment. As a result, the extent to which EU trade contributes positively to sustainable development remains questionable.

There is the possibility for change as the European Commission delivers its new strategy on trade policy – but this strategy must be followed with timely action. We’ve provided recommendations for how to ensure the EU can bolster high environmental standards both at home and abroad.

Putting sustainability at the core of trade agreements

As the main instruments of trade policy, trade agreements with other countries provide an opportunity for the EU to support sustainability objectives globally.

The EU has in fact a legal obligation under the EU Treaties to ensure these agreements do not put further pressure on the environment, social and human rights.

The EU Treaties also require the EU to make a positive contribution to developing international measures to preserve and improve the quality of the environment and the sustainable management of global natural resources, in order to ensure sustainable development.

Since 2010, provisions on trade and sustainable development have been included in EU trade agreements. But these provisions do not go far enough.

Stronger rules are needed to put environmental considerations at the heart of trade agreements – not just as an afterthought.

Trade agreements should also commit countries to undertake specific actions and policies to implement their international environmental commitments. These provisions must be accompanied by meaningful monitoring and enforcement mechanisms.

First, this requires strengthening the EU’s recently established ‘Single Entry Point’ so that it leads to the creation of an effective complaint mechanism with strong procedural guarantees that ensure civil society can report breaches, and that these breaches are properly followed up. Ensuring sanctions and penalties in case of violations is also key to encourage compliance.

Removing obstacles to the transition to a green economy

EU trade policy should help achieve the Paris Agreement goals and the transition to a net zero economy, not create barriers. This is key to fulfilling the ambitions set out in the European Green Deal, as well as EU commitments to climate resilience as part of the post-Covid recovery.

Investment agreements must be aligned with the transition to a net zero economy and the approach taken under the new EU Taxonomy Regulation to define sustainable investment.

So far, EU investment agreements afford privileged protection to all types of foreign investments, without taking into account their quality, or whether they contribute to achieving sustainable development goals and climate targets.

The EU must remove these privileges for fossil fuel investments. Anything else would mean backsliding on climate commitments. The EU is committed to phasing out fossil fuels – it simply makes no sense to reward investments that are so clearly discouraged.

EU investment agreements with investor-state dispute settlement (ISDS) mechanisms remain a barrier to Europe’s energy transition and meaningful climate action, including by allowing big corporations to sue governments whose environmental policies affect their investment.

Given the lack of evidence that investment agreements encourage investment flows and the mounting risks and impacts, terminating existing agreements that do not align with sustainable development and human rights obligations appears to be the most effective reform option.

Tackling our environmental footprint

The EU must ensure that all of its imports comply with high environmental standards and do not have adverse impacts overseas.

Trade rules should enable differentiating between trade in sustainable products and trade in non-sustainable products, based on how the goods are processed or produced. At a minimum, preferential conditions (such as zero tariffs) should not apply to trade in unsustainable products.

While the EU should restrict imports that would worsen its global environmental footprint, it also should not export goods to countries that would not be acceptable on its own market. A step in that direction has already been taken under the EU Chemicals Strategy for Sustainability, which commits to ensuring that hazardous chemicals banned in the EU are not produced for export.

Developing a legal framework that ensures responsible supply chains both in the EU and abroad will constitute an important building block towards more sustainable trade.

By ClientEarth Lawyer Amandine Van Den Berghe