La Commission a récemment élabore une nouvelle stratégie commerciale, afin de relever les nombreux défis économiques, environnementaux et géopolitiques qui se présentent. Elle s’est notamment fixé des objectifs ambitieux en matière de transition écologique. Cet article se propose d’en résumer les principaux aspects, tels que présentés par la Commission.
Auteur : Josephine Norris
Thanks to the recently published “Trade Policy Review”, we now know that in the medium term EU Trade policy will “unequivocally support the Green Deal in all its dimensions, including the ambition to achieve climate neutrality by 2050”. Helpfully, the TPR also tells us some of the ways that this might be achieved. Here’s a quick breakdown of those “headline mechanisms”:
- WTO Reform: In November 2020, 53 WTO Members, including the EU, launched the Trade and Environmental Sustainability Structured Discussions also known as “TESSD”. See their Communication on Trade and Environmentally Sustainability here. The initiative, steered by Canada and Costa Rica’s Ambassadors to the WTO, met on 5 March 2021, just days after the new WTO DG Ngozi Okonojo-Iweala, gave her opening address. She noted that “many Delegations recognize that the issue of Trade and Environment/Climate Change is key...” so there is clearly some impetus to “move forward” on these topics. Apparently, some of the issues suggested by participants to the TESSD as possible topics for discussion (and potential deliverables at the next Ministerial in November 2021) include: trade and climate change; decarbonizing supply chains; the circular economy; biodiversity loss; fossil fuel subsidies; and border carbon adjustments measures. Not much to cover there then…Moreover, as the EU has been committed to a rules-based system for a long time, the announcement that it will push for discussion of these topics within the WTO is not particularly revolutionary.
- Essential Elements clauses: According to the TPR, compliance with the commitments under the Paris Agreement will be proposed as an ‘essential elements clause’ in future trade and investment agreements. Joining the ranks of the EU’s Fundamental Human Rights clause and the clause on nuclear non-proliferation, this means that the EU will propose that parties to its Trade Agreements may partially or fully suspend an agreement unilaterally in the event that this clause is breached. In other words, climate change compliance could literally become a deal-breaker. This shouldn’t come as a surprise to those who follow this area closely. Former Trade Commissioner Phil Hogan announcedlast year that the European Commission would push for this. However, as some have already pointed out, the emphasis is on the word « propose ». The outcomes of any Agreement are always negotiated.
- Other bilateral measures: G20 countries negotiating with the EU should take note that the EU considers trade and investment agreements should be based on a common ambition to achieve climate neutrality as soon as possible and in line with the recommendations of the Intergovernmental Panel on Climate Change (IPCC). Also, effective implementation of the Convention on Biological Diversity (an outcome of the 1992 Rio Earth Summit) is to be prioritised. For those of you familiar with the EU Biodiversity Strategy for 2030 published in May 2020, this is no surprise either, as it announced that “the Commission will ensure full implementation and enforcement of the biodiversity provisions in all trade agreements”.
- Autonomous measures: The TPR tells us the EU will also pursue its own mechanisms. This includes the much-discussed proposal for a Carbon Border Adjustment Mechanism. To recap, the aim of the ‘CBAM’ is to address ‘carbon leakage’ which occurs when production is transferred from the EU to other countries with lower ambition for emission reduction, or when EU products are replaced by more carbon-intensive imports. The EU has stated from the outset that the CBAM will need to be compliant with WTO rules (and the EU is discussing it in the WTO). The TPR tells us it is intended to be “an alternative to the current free allocation of allowances or compensation for the increase in electricity costs that address the risk of carbon leakage, because of carbon pricing in the EU’s Emissions Trading System (ETS).” For now though it’s still a work in progress – the outcome of the 2020 public consultation is summarised here.
- Sustainable value chains: The TPR states that there will be a proposal on mandatory due diligence to ensure that forced labour does not find a place in the value chains of EU companies. This is still pending an impact assessment but according to the TPR, the aspiration is to address both action and enforcement. Indeed, the Commission’s 2021 workplan indicated that there would be a legislative proposal for a directive on sustainable corporate governance and the inception impact assessment indicated that this could include duties on companies “to take measures to address their adverse sustainability impacts, such as climate change, environmental, human rights (including workers and child labour) harm in their own operations and in their value chain by identifying and preventing relevant risks and mitigating negative impacts (due diligence duty)”. The EU is not the first mover in this area – see the UN’s Guiding Principles on Business and Human Rights (2011), the OECD Guidelines for Multinational Enterprises (2011) and the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (2017), but the devil will be in the detail and of course, the potentially mandatory nature.
In short…watch this space…the TPR offers a useful oversight of the potential future framework for the EU’s ‘green’ trade strategy, but most of the detail has yet to emerge.
The views expressed are entirely my own and do not reflect an official opinion of the European Commission.
Image reproduced from Iceberg – Hidden Danger And Global Warming Concept – 3d Illustration By Romolo Tavani