The rapid expansion of global trade has heightened competition among nations with varying levels of social safeguards. In response to ongoing criticism, the European Union (EU) has increasingly introduced provisions in its free trade agreements (FTAs) to ensure the protection of workers and their fundamental rights and freedoms. One of these provisions was incorporated into the trade and sustainable development (TSD) chapter of the EU-Mercosur FTA. This provision is examined in the present study as an effort by EU institutions to integrate labor rights and freedoms into international trade law. The study argues that the labor clause indeed incorporates innovative provisions that enhance the integration of labor law and policy into EU-Mercosur trade relations. However, in the current context of the EU-Mercosur trade agreement, the emphasis remains on the challenge of defining enforceable legal responsibilities and obligations for State Parties. This holds true for several compelling reasons. Firstly, the TSD chapter does not provide a normative framework capable of addressing critical social issues and concerns. The provisions regarding labor rights and freedoms are notably vague and unduly confined to a single chapter (the TSD chapter) of the EU-Mercosur agreement. Additionally, there is no mechanism to directly ensure a minimum wage standard within the technical rules of the agreement. Most importantly, there is no provision, neither in the ‘EU-Mercosur agreement in principle’ nor in its annexed chapters, mandating the EU and Mercosur to prohibit the importation of goods and services produced through forced, compulsory, or child labor.

SOMMARIO:

I. Introduction - II. The Current Status of Labour Rights and Freedoms in International Trade Law and Polic - III. The EU’s Approach to Incorporating Labour Rights and Freedoms into Free Trade Agreements - IV. Overview of the provisions included in the EU-Mercosur TSD Chapter - V. Analyzing the labour provisions within the EU-MERCOSUR Agreement in the context of the EU-Korea dispute - VI. Strengths and Weaknesses of the labour protection regime in the EU-Mercosur FTA - VII. Concluding remarks - NOTE

I. Introduction

The origins of EU labour law and policy can be traced back to the period when the European Economic Community (EEC) was transforming into the European Union (EU). [1] This transformation marked a significant shift in focus toward aligning various aspects of member states’ policies, including those concerning labour regulations. With the EU’s commitment to establishing a unified market, addressing disparities in labour practices among member states became crucial. [2] This led to the adoption of directives aimed at establishing fundamental employment rules and standards, safeguarding workers’ fundamental rights and freedoms, and promoting transparent communication among stakeholders. [3] Through these directives and regulations, EU labour law and policy emerged as a pivotal force in facilitating labour movement and fostering a shared understanding of labour rights and freedoms among the diverse nations within the EU. [4] A similar evolution could also be occurring in the field of international trade law, which has evolved separately from the global framework of labour safeguards. To address this, the EU is implementing an external strategy aimed at integrating labour rights clauses into its FTAs in accordance with the rules of the WTO. [5] This article explores the labour provisions outlined in the recent free trade agreement between the EU and Mercosur, a subject on which the present authors have already devoted three studies. [6] It approaches the topic from the angle of upholding labour rights and freedoms as delineated in the International Labor Organization (ILO) conventions. The article posits that in comparison to the WTO framework, which interlinks international trade law with labour protection by citing ILO conventions and employing various methods to elevate labour standards and rules, [7] the EU-Mercosur agreement introduces innovation. [8] However, this provision primarily serves as a moral commitment rather than a fully enforceable legal one. The authors argue that labour rights and freedoms could assume a more substantial role in shaping the design of the new EU FTAs, including the EU– Mercosur trade agreement. This could entail employing forms of regulatory cooperation, such as sharing information and concluding mutual recognition agreements, to safeguard EU and Mercosur workers. [9] It could also involve including provisions in the Agreement in Principle and in the TSD [continua ..]

II. The Current Status of Labour Rights and Freedoms in International Trade Law and Polic

International trade law and policy encompasses a set of rules and principles governing cross-border trade between nations and holds a central role in shaping the course of economic globalization. [15] This area of international law has evolved significantly since the late 1940s, expanding its scope with each successive trade negotiation round. [16] It now constitutes a substantial portion of public international law, with more than one hundred fifty countries, including the European Union, bound by its provisions. [17] Its jurisdiction spans a wide range of regulations, encompassing not only the international trade of goods and services but also addressing matters such as non-tariff barriers and intellectual property. [18] From its inception, international trade law has historically operated in relative isolation from the broader framework of international labour regulations. [19] In 1947, the General Agreement on Tariffs and Trade (GATT) emerged as the foundational document for international trade law, conspicuously devoid of any references to entities like the United Nations, the ILO, or any other labour and human rights treaties. [20] Over time, as successive rounds of trade negotiations led to the creation of additional trade agreements, there was no established institutional framework to proactively consider or integrate pre-existing international labour legislation. Throughout these subsequent negotiation rounds, international trade law expanded its scope, moving beyond the original GATT, which primarily addressed tariffs on goods and a limited set of issues. It gradually encompassed new domains such as trade in services, intellectual property, investment protection, non-tariff barriers, and sanitary and phytosanitary measures. [21] A significant turning point occurred in 1995 with the establishment of the WTO [22] and the creation of the Appellate Body, a judicial mechanism tasked with enforcing not only the GATT but also the General Agreement on Trade in Services (GATS) and all other agreements falling under the purview of the WTO. [23] The Appellate Body emerged as a significant milestone in international jurisprudence, known for its effective enforcement mechanisms and the issuance of authoritative judgments referred to as Reports. However, labour rights struggled to find a foothold within this system. During the signing of the Marrakesh Agreement in April 1994, which established the WTO, many [continua ..]

III. The EU’s Approach to Incorporating Labour Rights and Freedoms into Free Trade Agreements

Since the 1990s, scholars have characterised the EU’s external policy as geared towards promoting labour rights and freedoms. [39] This is achieved through active participation in international trade treaties, the negotiation of labour standards, and a wide array of foreign partnerships and cooperation. A notable example is the strategic partnership with the ILO, which aims to advance decent work and contribute to the 2030 Agenda for Sustainable Development. [40] Furthermore, the EU collaborates with the ILO on joint projects to implement these objectives. [41] Within this framework, the EU has devised a strategy to embed labour rights and freedoms within FTAs, initially through explicit labour rights provisions and later by encompassing them within the overarching concept of sustainable development. [42] This section will provide a concise overview of the evolution of this endeavour, starting from the 1990s and culminating in the recent integration of labour rights into the sustainable development framework. It is within the framework of this policy that the EU advocated for the inclusion of a labour rights clause in the free trade agreement between the EU and Mercosur. Over the years, the EU’s external social and employment policy has taken shape through various legal instruments in different areas of EU external action. [43] For instance, labour and other social rights are integrated into cooperation instruments with developing countries, such as the Cotonou Agreement. [44] One of the stated goals of the EU is to address the shortcomings in global labour rights protection, such as the inadequate enforcement of ILO conventions. [45] The concept of external social action has been integrated into various EU policies [46] and strategies, [47] including the revised EU Strategy for Sustainable Development (EU SDS) [48] and the most recent EU 2020 Strategy. [49] These strategies draw inspiration from the ILO’s approach to globalisation, which the EU Commission adopted in 2001 and 2004 through the communications titled ‘Promoting Core Labor Standards’ [50] and ‘The Social Dimension of Globalization’ [51] In the context of this policy framework, the EU has devised a series of tools to utilize the common commercial policy (CCP), defined in Article 207(1) of the Treaty on the Functioning of the European Union (“TFEU”), [52] which, [continua ..]

IV. Overview of the provisions included in the EU-Mercosur TSD Chapter

Regarding labour rights provisions, the EU-MERCOSUR FTA is mainly in line with other similar FTAs concluded by the EU since the first one of this kind, namely the EU-Korea FTA. The present section will provide a primarily descriptive overview of these provisions. First, in line with the Union’s established practice before the policy change announced in 2022 by the Commission, [67] labour provisions are included in the TSD chapter, whose approach is based on mutual cooperation. [68] Art. 2 and 4 of the TSD chapter are the primary relevant provisions. Other direct and indirect references to labour issues, mainly in aspirational or declaratory terms, are scattered throughout the chapter. Art. 4 is specifically devoted to labour issues. In a nutshell, the principal obligation stemming from Article 4 lies in the commitment of the Parties to respect, promote and effectively implement the core international labour standards as defined in the fundamental ILO Conventions, which are summarised as: a) freedom of association and of collective bargaining; b) elimination of all forms of forced labour; c) effective abolition of child labour; d) elimination of work-related discrimination. These four essential elements are widely regarded as constituting the (internationally recognised) basic workers’rights, which are considered inherent by ILO’s Members, [69] and are at the basis of the seminal 1998 Declaration on Fundamental Principles and Rights at Work. [70] Furthermore, Art. 4(4) mandates the Parties to complete the ratification of any outstanding ILO Convention, [71] yet it refrains from setting specific deadlines. The provision in question, on top of containing a number of declaratory statements, [72] lays down the obligation to exchange information between the Parties; to consult and cooperate on issues of mutual interest; and, finally, to put in place effective administrative and judicial procedures for infringements of the labour rights guaranteed under the TSD chapter. Art. 2, meaningfully titled «right to regulate and levels of protection», concerns instead the internal legislation of the Parties. First, it reaffirms the Parties’ right to determine their own policies and priorities and the domestic level of (labour) protection they deem appropriate. Secondly, it lays down a non-regression clause, which is an obligation for the Parties not to weaken, waive or derogate from their labour [continua ..]

V. Analyzing the labour provisions within the EU-MERCOSUR Agreement in the context of the EU-Korea dispute

The preceding observations suggest that trade agreements featuring labour provisions are standard practice in Western economies such as the US, Canada and the EU but are still relatively uncommon among developing countries. [73] The existence of an abundant practice has allowed the scholarship to identify different normative models. Though equally well-articulated alternatives exist, [74] we will assess the EU-MERCOSUR FTA against the excellent systematisation offered by Augustí-Panareda, Ebert and Le Clerq. [75] What follows, therefore, draws largely on their classification. These authors have divided labour provisions included in trade agreements into three main groups. The first type includes provisions reaffirming international obligations stemming from ILO Conventions that the Parties have already ratified. Hence, no further substantive obligation derives from the trade agreement. As we have seen above, Article 4 of the EU-MERCOSUR FTA does include this type of clause. The second type includes provisions that refer to the ILO instruments to define the scope of specific labour provisions under the trade agreement. No clause of this kind is included in the EU-MERCOSUR FTA. The third type includes provisions committing the parties to ILO instruments by expressly incorporating ILO obligations into the agreement. This type can be further articulated into two sub-types. In the first one, agreements incorporate ILO standards as best efforts obligations. In the second one, agreements require State parties to comply with specific standards set out in the relevant ILO instruments. The EU-MERCOSUR FTA includes provisions belonging to both sub-types. An example of best-efforts requirements is Article 4(10), for instance, when it commits the Parties to pay particular attention to «developing and enhancing measures for occupational safety and health […] as defined in the relevant ILO Conventions and other international commitments». Another best-efforts obligation is the one to ratify outstanding ILO Conventions, as we have seen above. Conversely, the obligation to comply with and effectively implement the ILO Conventions that have already been ratified belongs to the second sub-type. Finally, the EU-MERCOSUR FTA also lays down provisions not included in this systematisation devised by the three authors mentioned. In particular, the agreement in question includes the obligation for the Parties to abide by and effectively [continua ..]

VI. Strengths and Weaknesses of the labour protection regime in the EU-Mercosur FTA

The trade agreement between the EU and MERCOSUR contains provisions regarding labour protection primarily found in Articles 2 and 4 of its TSD Chapter. Initially, the agreement acknowledges the sovereignty of each country when it comes to their labour protection policies, allowing them to determine their own standards and adjust their legal frameworks as needed. Following this recognition, the TSD chapter outlines a set of responsibilities and duties that the parties must adhere to. These obligations, however, differ based on the nature of the actions imposed, their extent, and the specificity of their language. Some obligations within the EU-MERCOSUR agreement carry different levels of importance and commitment. Put simply, certain obligations are more stringent than others. For instance, within the EU-MERCOSUR, Article 4§4 of the TSD chapter establishes an obligation for both parties to make «continued and sustained efforts on their own initiative» to ratify fundamental ILO conventions. This obligation allows for considerable discretion and is less demanding compared to Article 4§6, which requires parties to exchange information on their respective progress with regard to ratification of the fundamental ILO Conventions and related Protocols and of other ILO Conventions. When analysing the obligations outlined in the trade agreement’s TSD chapter, it becomes evident that there are both positive and negative aspects concerning the protection of workers’rights. Firstly, the EU places significant importance on ensuring compliance with “internationally recognised core labour standards”. These obligations are backed by strong normative force. The term “internationally recognised core labour standards” predominantly encompasses the four fundamental labour standards, which are as follows: (1) the right to freedom of association and collective bargaining, (2) the prohibition of forced labour, (3) the eradication of child labour, and (4) the elimination of employment discrimination. Consequently, when referring to “internationally recognised core labour standards”, we are primarily talking about the conventions established by the ILO. Regarding these standards and conventions, it is the responsibility of ILO member states to determine whether they want to officially adopt them or not. In practice, only a select few standards and conventions have been put into effect. Moreover, when [continua ..]

VII. Concluding remarks

Since the establishment of the GATT, international trade law and policy has evolved independently of the international legal framework governing labour protection. The separation between international trade law and policy and international labour law persists, even after the establishment of the WTO in 1994, as attempts to introduce a labour clause within the institution have proven unsuccessful. Nevertheless, international trade law continues to develop through the negotiation of FTAs among WTO member countries, as allowed by specific provisions in the GATT [109] and General Agreement on Trade in Services (GATS). [110] FTAs are, in fact, gaining prominence as a source of legal regulation, especially as efforts to reach new trade agreements within the WTO Doha Round have yielded no results. As a result, in 2006, the EU Commission has developed a comprehensive strategy to conclude FTAs with an ever-expanding number of trading partners. [111] The Commission’s policy documents clearly demonstrate a deliberate endeavour to incorporate labour-related clauses, mainly by making reference to treaties of the ILO, in these new generation FTAs. This is done within the context of the EU Sustainable Development Agenda, which has taken on a discernible social aspect, as mentioned earlier. This work examined the labour aspect of the sustainable development provision within the FTA between the EU and Mercosur. It explored the extent to which this provision addresses the disconnect between labour rights and freedoms and international trade law. Firstly, the work noted that this provision is ground-breaking in comparison to WTO regulations because it explicitly references ILO conventions. It establishes specialised institutions and commits the parties to long-term collaboration on labour-related issues. Secondly, the article pointed out that the provision lacks binding requirements for the ratification and implementation of the mentioned ILO conventions and lacks any enforcement mechanism. The article concludes by proposing two possible approaches to strengthen the protection of labour rights: one approach involves incorporating a mechanism specifically focused on establishing a minimum wage standard within the technical provisions of the agreement. The other approach entails including a prohibition on the importation of goods and services produced through forced, compulsory, or child labour. These potential innovations could draw inspiration from [continua ..]

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