EU Trade Policy

Global trade has a huge impact on our environment and our daily lives. Destructive resource extraction and agro-industrial practices are often linked to global production and consumption patterns with devastating consequences for our planet. Trade rules empower transnational corporations at the expense of those who want to regulate them; they entrench an economic system that does not respect ecological limits and causes human rights violations, in particular in the Global South.

The European Union is the world’s largest trading block and the European Commission has the power to negotiate new trade agreements with countries around the world. Generally, these agreements attempt to “open up” new markets, making it easier for European companies to sell their products and operate in countries outside the EU and vice versa. This goes far beyond tariff (import tax) reductions and increasingly trade negotiations touch on highly sensitive issues, such as food safety rules, public services, climate policies or chemicals regulations. Friends of the Earth Europe believes that such issues have no place in trade negotiations, which generally aim to reduce obstacles to trade rather than protecting the environment and human health.

Business lobby groups see trade negotiations as a way to further their interests and dismantle rules and regulations by casting them as barriers to trade. They often hold a disproportionate influence over the negotiations, with negotiators actively seeking the input of business lobbyists.

TTIP

Negotiations for a trade deal between the European Union and the United States started in July 2013. If agreed, the deal will be the biggest bilateral free trade agreement in history. It is known as the Transatlantic Trade and Investment Partnership (TTIP) or the Transatlantic Free Trade Agreement (TAFTA). The negotiations have been paused since the end of 2016 and it seems unlikely that they will be restarted soon. However, as long as the European Commission retains a mandate from the EU member states to negotiate with the United States, it can resume negotiations at any time.

TTIP received particular attention, because it would bring together the world’s two largest economic blocks and because the agreement was supposed to be “deeper and wider” than any previous accord. That means the goal of TTIP was to align rules about food safety including genetically modified products, toxic chemicals, highly polluting fuels, data protection and many other things, where the levels protection on either side of the Atlantic differ. TTIP is also foreseen to include a mechanism called regulatory cooperation which is supposed to align new laws and regulations as they’re being drafted. Our analysis has shown that such a mechanism would open the doors to corporate lobbyists to shape new rules in their favour or allow them to block, delay and weaken new legislation.

CETA

The trade agreement between the EU and Canada (Comprehensive Economic and Trade Agreement – CETA) was signed in autumn 2016 and ratified by the European Parliament in February 2017. It also needs to be ratified by the national parliaments and while most of the national ratifications are still outstanding, 99% of CETA is already being provisionally implemented.

CETA contains most elements that made TTIP so controversial, including a corporate tribunal (called Investment Court System) which allows foreign investors to sue governments for unlimited amounts of compensation if new rules and regulations harm their profits. This tribunal is not only accessible to Canadian companies, but also subsidiaries of US corporations, increasing the risk for European governments to be sued. CETA also contains a mechanism for regulatory cooperation, allowing corporations to challenge legislation in the making, while its weak sustainability provisions are not enforceable.

Indonesia

Currently the EU is negotiating a trade agreement (called the Comprehensive Economic Partnership Agreement – CEPA) with Indonesia, the largest economy in South East Asia. With Indonesia’s per capita income being a fraction of the EU’s, such a trade agreement can have detrimental effects on Indonesia’s ability to enact the policies to set the right course for its development. For example, Indonesia has already been hit by several investor law suits, in particular after it tried to regulate its mining industry more strongly. This led Indonesia to terminate many of the investment treaties that enabled the lawsuits, including with European countries. If the EU gets its way in the negotiations, such corporate tribunals will be included in CEPA, enabling European companies to attack laws and regulations in Indonesia outside the regular court system.

Another important issues in the negotiations is palm oil, a vegetable oil whose production has grown enormously over the last two decades. Indonesia is the world’s largest producer of palm oil and the EU is the second largest importer of Indonesian palm oil. Through CEPA Indonesia wants to abolish the last remaining barriers to exporting palm oil to the EU. The production of palm oil is one of the most important contributors to deforestation, habitat and species loss, the expulsion of indigenous communities from their territories and the release of greenhouse gas emissions. A recent study has shown that the existing certification standards for palm oil are failing.

Other trade deals

Next to the agreement with Indonesia, the EU is negotiating many more trade and investment agreements with countries around the world. Negotiations with some countries have already been concluded (Japan, Singapore, Vietnam and Myanmar), some or close to being finalised (Mexico and Mercosur [Argentina, Brazil, Paraguay and Uruguay]) and others are only starting or are currently on hold (Chile, Malaysia, the Philippines, Australia and New Zealand).

Unfortunately, all of them contain the key flaws briefly outlined above. They undermine the ability governments to shape the economies of their countries in the public interest by obliging them to regulate in the most trade-facilitating manner. And all of them (except for the agreement with Mercosur) are foreseen to establish a corporate tribunal that gives foreign investors the right to sue governments outside the established legal system. As Friends of the Earth Europe, we oppose these corporate tribunals in principle and hence call for agreements that include them to be rejected.

Our vision

We believe that the logic of trade agreements needs to be turned around: Instead of increasing international trade flows at any cost, trade agreements should foster and facilitate trade only if and when it contributes to sustainable development, whilst reducing trade in goods and services that have adverse impacts on people and planet.

Our proposals include:

  • Making the reduction of tariffs dependent on contributions the goods can make to sustainable development.
  • The inclusion of a supremacy clause to ensure that, in case of a conflict, international human rights and climate treaties (and other agreements on sustainable development) always take precedence over trade and investment rules.
  • The introduction of binding obligations for internationally operating companies instead of the inclusion of investor privileges.
  • Fostering agro-ecological practices by reducing the trade of agro-commodities and unsustainable agricultural products.
  • Full transparency of the negotiations and the inclusion of parliaments and civil society from the drafting of the mandate to the implementation of the agreements.

Our vision paper for a sustainable and fair trade policy can be found here.