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Adjudicating Sustainability Standards under FTAs: Labouring the Point Home

Published online by Cambridge University Press:  26 September 2024

Neeraj Rajan Sabitha
Neeraj Rajan Sabitha*
Affiliation:
White & Case LLP, Geneva, Switzerland
*
Email: [email protected]
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Abstract

On 20 January 2021, a Panel of Experts constituted under the EU–Korea FTA circulated its report in a proceeding initiated by the EU raising concerns about Korea's inadequate protection of certain labour rights in Korea, and less than satisfactory efforts to ratify the fundamental ILO Conventions. Addressing a jurisdictional claim, raised by Korea in its defense, that the EU has not demonstrated that the challenged measures affected ‘trade-related aspects of labour’, the panel found that the FTA parties’ commitments to adhere to labour standards and to ratify ILO conventions are not limited to trade-related aspects of labour, and therefore there is no requirement to demonstrate that such measures should be trade related.

The panel's interpretive reasoning in arriving at this finding does not appear to sit well with the text of the FTA. Further, such an expansive interpretation could have serious systemic implications going forward. In addition to raising questions regarding the purpose and motivations behind including labour standards in FTAs, it effectively transforms the FTA into a vehicle to enforce ILO commitments and induce countries into ratifying fundamental ILO conventions. It lends credibility to a general skepticism, particularly amongst developing countries, regarding the role of labor standards in FTAs and also raises questions regarding whether FTAs constitute an appropriate forum to address and resolve concerns regarding labour reforms.

Keywords

Free trade agreementsdispute settlementlabour provisionsILO conventions
Type
Special Issue Article
Information
World Trade Review , Volume 23 , Special Issue 3: Symposium: Dispute Settlement Inside and Outside of the WTO , July 2024 , pp. 324 - 334
Copyright
Copyright © The Author(s), 2024. Published by Cambridge University Press on behalf of The Secretariat of the World Trade Organization

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Footnotes

†

Associate, White & Case LLP. The author would like to thank Carlo Cantore, Kathleen Clausen, and Sonali Chowdhry for helpful feedback on an earlier draft of the article.

References

1 Panel of Experts (2021) ‘Proceeding Constituted under Article 13.15 of the EU–Korea Free Trade Agreement’, Report of 20 January 2021 (hereinafter ‘Panel Report’), https://circabc.europa.eu/ui/group/09242a36-a438-40fd-a7af-fe32e36cbd0e/library/d4276b0f-4ba5-4aac-b86a-d8f65157c38e/details.

2 Republic of Korea, Trade Union and Labour Relations Adjustment Act, Act No 5310, 13 March 1997, https://elaw.klri.re.kr/eng_mobile/viewer.do?hseq=60885&type=new&key=.

3 Panel Report, paras. 197, 209, and 228.

4 Panel Report, paras. 291–293.

5 EU–Korea FTA, Request for the Establishment of a Panel of Experts by the European Union, 4 July 2019, https://circabc.europa.eu/ui/group/09242a36-a438-40fd-a7af-fe32e36cbd0e/library/d4276b0f-4ba5-4aac-b86a-d8f65157c38e/details.

6 https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:22011A0514(01)

7 These included the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87); Right to Organise and Collective Bargaining Convention, 1949 (No. 98); Forced Labour Convention, 1930 (No. 29); and Abolition of Forced Labour Convention, 1957 (No. 105).

8 Article 13.16 clarifies that for any matter arising under Chapter 13, the Parties must exclusively avail the procedures provided under Articles 13.14 and 13.15. However, Chapter 14 of the FTA elaborates dispute settlement procedures for all other disputes arising under the FTA that largely resemble the WTO dispute settlement mechanism with the exception of an appellate review, https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:22011A0514(01)

9 See e.g., EU–Singapore FTA (Articles 12.16–12.17); EU–Vietnam FTA (Articles 13.16–13.17). Negotiations for similar procedures appear to be ongoing with Australia and New Zealand as well (see S. Schacherer and T. Studer, 2022) ‘Trade and Sustainable Development Chapters in EU FTAs: Adapting Enforcement Methods to the Purpose(s)?’, CIL NUS Blog, https://cil.nus.edu.sg/blogs/trade-and-sustainable-development-chapters-in-eu-ftas-adapting-enforcement-methods-to-the-purposes-by-stefanie-schacherer-and-tensin-studer/.

10 Cf. Chapter 14 of the EU–Korea FTA for all other disputes under the FTA requiring parties to take ‘any measure necessary to comply in good faith with arbitration panel ruling’ (Article 14.8) and providing for temporary remedies in case of non-compliance (Article 14.11).

11 Panel Report, para. 56.

12 Panel Report, paras. 59–60.

13 Panel Report, para. 63.

14 Article 13.4.3 provides as follows: ‘The Parties, in accordance with the obligations deriving from membership of the ILO and the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up … commit to respecting, promoting and realising, in their laws and practices, the principles concerning the fundamental rights, namely:

  1. (a)

    (a) freedom of association and the effective recognition of the right to collective bargaining;

  2. (b)

    (b) the elimination of all forms of forced or compulsory labour;

  3. (c)

    (c) the effective abolition of child labour; and

  4. (d)

    (d) the elimination of discrimination in respect of employment and occupation.’

15 Panel Report, paras. 65–66.

16 Panel Report, para. 67.

17 Panel Report, para. 68.

18 Panel Report, para. 277.

19 Panel Report, para. 293.

20 EU–Korea FTA, Article 13.1.3.

21 EU–Korea FTA, Article 13.2.2.

22 See e.g., EU–Korea FTA, Article 13.1.2.

23 Panel Report, paras. 80–89 (citing Organisation of Economic Cooperation and Development (OECD) (1996) ‘Trade, Employment and Labour Standards: a Study of Core Workers’ Rights and International Trade’, OECD, Paris; and ILO (2017) ‘Handbook on Assessment of Labour Provisions in Trade and Investment Arrangements’, ILO, Geneva.

24 The panel report does not allude to parties’ submissions while considering these findings, suggesting that the panel referred to these studies on its own accord.

25 See e.g. P. Krugman (1994) ‘Does Third World Growth Hurt First World Prosperity?’, Harvard Business Review (noting that the incorporation of international labour standards in trade agreements is in fact a protectionist measure in the guise of humanitarian concerns); See also Bhagwati, J. (1995) ‘Trade Liberalization and “Fair Trade” Demands: Addressing the Environmental and Labour Standards Issues’, World Economy 18(6), 745–759CrossRefGoogle Scholar.

26 Notably, under the EU–Vietnam FTA, the Parties ‘reaffirm their commitment to effectively implementing the UNFCCC, the Kyoto Protocol to the [UNFCCC] and the Paris Agreement…The Parties shall, as appropriate, co-operate and promote the positive contribution of this Chapter to enhance the capacities of the Parties in the transition to low greenhouse gas emissions and climate-resilient economies, in accordance with the Paris Agreement’. (Article 13.6).

27 OECD (2000) ‘Pushing Ahead with Reform in Korea: Labour Market and Social Safety-Net Policies’, p. 13.

28 Ibid. The report further notes that the provision in TULRAA debarring union membership for self-employed and dismissed workers has no parallel in other OECD countries that consider qualification for membership as a matter for the union itself to decide and should to be set down in legislation (Ibid, p.72).

29 ILO, Case No. 1865 (Republic of Korea), Interim Report No. 346 of June 2007, para. 761.

30 D. LeClercq (2021) ‘The Panel Report under the EU–Korea Trade Agreement Concerning Labor Practices: What are the Purposes of Trade Agreements as They Relate to the ILO's Fundamental Labor Rights?’, International Economic Law and Policy Blog, 8 February 2021 (last accessed on 16 July 2023).

31 Agusti-Panareda, J., Ebert, F., and LeClercq, D. (2014) ‘Labour Provisions in Free Trade Agreements: Fostering Their Consistency with the ILO Standards System’, ILO, pp. 17–18Google Scholar.

32 Claussen, K. (2020) ‘Reimagining Trade-Plus Compliance: The Labor Story’, Journal of International Economic Law 23, 25–43CrossRefGoogle Scholar.

33 See e.g. Panel Report, European Communities – Measures Concerning Meat and Meat Products (Hormones), Complaint by Canada, WT/DS48/R/CAN, 13 February 1998, para. 8.26; Panel Reports, European Communities – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R, 21 November 2006, paras. 7.2561–7.2922; Panel Report, India – Measures Concerning the Importation of Certain Agricultural Products, WT/DS430/R, 19 June 2015, para. 7.157; Panel Report, United States – Measures Affecting the Importation of Animals, Meat and Other Animal Products from Argentina, WT/DS447/R, 31 August 2015, para. 7.46; Panel Report, Russian Federation – Measures on the Importation of Live Pigs, Pork and Other Pig Products from the European Union, WT/DS475/R, 21 March 2017, paras. 7.235–7.236.

34 See e.g. Panel Report, Costa Rica – Measures Concerning the Importation of Fresh Avocados from Mexico, WT/DS524/R, 31 May 2022, para. 7.192, 7.195 and paras. 7.230–7.232. (where the panel found that a risk analyst's report and a manual providing guidance on pest risk analyses that formed the basis of a SPS measure did not affect international trade within the meaning of Article 1.1 of the SPS Agreement).

35 Panel Report, India – Certain Measures Relating to Solar Cells and Solar Modules, WT/DS456/R, 14 October 2016, para. 7.63; Panel Report, Indonesia – Certain Measures Affecting the Automobile Industry, WT/DS54/R, 23 July 1998, para. 14.82; and Panel Reports, Canada – Certain Measures Affecting the Renewable Energy Generation Sector / Canada – Measures Relating to the Feed-in Tariff Program, WT/DS412/R 24 May 2013, para. 7.111.

36 Panel Report, Brazil – Certain Measures Concerning Taxation and Charges, WT/DS472/R, 11 January 2019, para. 7.360.

37 Final Panel Report, In the Matter of Gautemala – Issues Relating to the Obligations under Article 16.2.1(a) of the CAFTA – DR, 14 June 2017, (hereinafter ‘Final Panel Report’) para. 190.

38 Final Panel Report, para. 196.

39 Final Panel Report, para. 193.

40 Panel Report, Russian Federation – Measures on the Importation of Live Pigs, Pork and Other Pig Products from the European Union, WT/DS475/R, 21 March 2017, para. 7.233 (noting that it ‘is not necessary to demonstrate that an SPS measure has an actual effect on trade’); and Final Panel Report, para. 194 (noting that ‘competitive advantage may be inferred on the basis of likely consequences of a failure or of failures to effectively enforce labor laws, or other aspects of the totality of the circumstances’).

41 See e.g., USMCA, Chapter 23, footnote 4.

42 See ILO, Labour Provisions in Trade Agreements Hub, available at www.ilo.org/LPhub (last accessed on 16 July 2023).