1. Introduction
As the world’s largest trading bloc and the second largest economy, the European Union (EU) has established itself as a significant market power1 in the global trading system and its global reach has been expanded through an increasingly complex web of free trade agreements (FTAs). While the EU’s external trade policy seeks to maintain high regulatory standards, achieving broader social objectives remains central to the overall trade philosophy.2 Respect for human rights is a founding value or ‘constitutive norm’3 of the EU as reaffirmed by the Lisbon Treaty (2009). As a regional actor, the EU has sought to inject a social dimension into its external trade relations since the early 1990s, through the inclusion of social clauses in its FTAs.4 However, the promotion of values is not limited to so-called universal5 human rights. It also includes other ‘social norms’,6 such as labour standards and objectives to uphold the rule of law, good governance and to pursue policies that promote sustainable development and protection of the environment.
Over the past two decades, the EU has increasingly recognised the importance of promoting robust social policies as a response to globalisation, and its constitutive values have been embedded through its external trade relations. The EU is now characterised as a normative power7 which ‘changes the norms, standards and prescriptions of world politics away from the bounded experience of state-centricity’,8 and this conceptualisation has profound implications for our understanding of how the EU seeks to use FTAs as part of its external trade policy. Bilateral and regional trade agreements constitute a significant part of the EU’s trade policy and if all current negotiations were concluded, they could cover almost two-thirds of EU trade.9 FTAs are, therefore, seen to be an important mechanism for ‘harnessing globalisation’10 with the aim of reconciling the ‘means of globalisation…with its ends’11 or, in other words, ensuring that the opening of markets and advancements in technology enhances the capabilities and well-being of individuals globally. Through its external policies, the EU has universalised human rights standards12 and social norms and has effectively projected an image of itself as a ‘formidable force for good’.13
This article examines the territorial reach and limitations of EU law and international law in relation to human rights clauses and social norms in EU FTAs. Section 2 discusses the nature of EU obligations in relation to human rights clauses and argues that, while human rights do not fall within the area of exclusive EU competence, it is widely accepted that the EU may be liable for contributing to human rights violations in the context of trade agreements under international law and EU law.14 Section 3 examines the EU’s obligations in relation to other policies with extraterritorial effects, namely, the social norms set out in Trade and Sustainable Development (TSD) chapters of EU FTAs. It will be shown that social norms raise more complex questions regarding the territorial reach of EU law. Section 4 examines dispute settlement provisions within EU FTAs and argues that the EU’s trade agreements are constructed in a way that excludes rights. Section 5 explores recent developments in EU law15 that support the proposition that the EU is under an obligation to ensure its trade agreements with developing countries are conducted in a ‘development-friendly’ manner. While the precise nature of this obligation is not certain, it is concluded that the obligation for ‘development-friendly’ trade appears to extend the territorial reach of EU law further, at least in the context of trade and development agreements. A critical assessment of the obligations of the EU in relation to human rights clauses and social norms contained within FTAs provides important insights into the evolving processes associated with globalisation, the relationship between international law and EU law and the way in which the EU may shape international law. This chapter aims to show that when negotiating FTAs, it is profoundly important to consider the way in which implementation of the trade agreement may affect the human rights of persons outside the territory of the EU.
2. EU obligations in relation to human rights clauses in FTAs
‘Human rights’ refer to a spectrum of rights, some of which may have peremptory status in international law.16 Rights may derive their authority from treaty law, general principles of international law or customary law,17 and the nature of the right may be peremptory or erga omnes.18 Rights expressed through the international and constitutional legal frameworks are binding, although by their nature they may be non-derogable or derogable.19 From the international law perspective, human rights have thus far been conceptualised as conferring entitlements, duties and obligations through a state-centric relational model.
At the EU level there is a clear divergence between the exclusive competence of the EU to act in trade, through its common commercial policy,20 and human rights, where there is no exclusive competence to act.21 As a result, the EU does not have a coherent external human rights policy or a mechanism for which it, as a regional actor and not a state actor, can be held accountable for any breach.22 The EU, while not a state, is an international organisation in the ordinary sense, in that it has been established by international treaties, is a subject of international law and it is a sui generis international organisation that has ‘an autonomous legal order’.23 Consequently, the EU may be held accountable for violations of human rights committed extraterritorially and those arising from the extraterritorial effects of its external policies. Linking trade with human rights compliance is expressed in law and justified on the normative basis that the EU should act to extend its values, standards and principles through its external action.24 The Lisbon Treaty expressly provides that the EU should respect the human rights of persons outside of its territory both in relation to its extraterritorial conduct and its policies that have extraterritorial effects. In Article 2 Treaty on the European Union (TEU), the constitutive norms of the Union are identified as the ‘respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights’. Building on this normative base, the EU’s competence to embed liberal economic values and social norms through its internal and external actions is constituted through the legal bases of Article 3 TEU and Article 21 TEU. Article 3(5) TEU provides that the EU ‘shall uphold and promote its values and interests’ in its relations with the wider world. Further, it provides that the EU shall ‘contribute to … free and fair trade, eradication of poverty, and the protection of human rights …’ in its external relations. Article 21(1) TEU, which states that the EU’s external action ‘shall be guided by the principles which have inspired its own creation, development and enlargement, and which it seeks to advance in the wider world’, complements Article 3(5). Furthermore, Article 21(3) TEU reinforces that the EU ‘shall respect the principles and pursue the objectives’ set out in Article 3(5) and Article 21 TEU, but also encompasses ‘the external aspects of other policies’.25 Article 21(3) TEU is, therefore, ‘normatively stronger’ than Article 3(5) as it also relates to the ‘external aspects of the EU’s internal policies’.26
However, the Lisbon Treaty does not provide a prescriptive framework for the realisation or implementation of these objectives or principles. While there are certainly subtle differences in the linguistic construction of Article 3(5) TEU and Article 21(1) TEU, both serve to constrain the external actions of the EU in its relationship with third countries.27 As noted by Lorand Bartels, the EU is not under a positive obligation to ‘protect persons located extraterritorially from the acts of EU businesses’ or to ‘provide development aid to developing countries in order to fulfil their human rights’.28 However, the thrust of Article 3 and Article 21 TEU is that the EU should act in a way that pursues these objectives in its external actions and external aspects of its other policies. Indeed, the EU appears to project its missionary objectives through its external trade policy. For example, in 2015 the EU introduced its new ‘responsible’ trade policy, Trade for All, which both envisages the liberalisation of trade within a rights framework29 and identifies FTAs as ‘levers to promote, around the world, values like sustainable development [and] human rights’.30
Moshe Hirsch submits that the EU’s conceptualisation of FTAs as a mechanism through which compliance with human rights standards and social norms can be achieved is significantly motivated by its collective identity and its perceived role as a human rights promoter.31 For example, an early attempt to maximise the ‘collective influence’ was evident in the intergovernmental European Political Cooperation (EPC), which had the aim, among other things, of promoting respect for human rights in relations with third countries and the 12 European Community states:
The Twelve make every effort to promote and protect human rights and fundamental freedoms: when abuses occur, they often intervene with other governments to underline European concerns and press for full respect for human rights.32
As a regional actor, the first iteration of a social clause in an EU trade and cooperation agreement can be traced back to the Lomé IV Convention, with Article 5(1) advocating a ‘human-centred’ conception of development, wherein the individual is ‘the main protagonist and beneficiary of development’. This provision underscored the EU’s ‘positive approach’ to development, where ‘respect for human rights is recognised as a basic factor of real development and where cooperation is conceived as a contribution to the promotion of these rights’. Significantly, the parties to the Convention identified ‘respect for human rights, democratic principles and the rule of law’ as an ‘essential element’ of the trade and development cooperation agreement.33 The underlying rationale for the inclusion of this clause was the EU’s increasing concern that there existed no legal mechanism through which trade and development concessions could be suspended on the occurrence of a flagrant violation of human rights by any of its trade partners.34
That human rights are constitutive norms of the EU and central to its identity in the international community is evident through the statements of the EU’s institutions. For example, the European External Action Service (EEAS) has described human rights as the ‘silver thread’ running through all of the EU’s external actions.35 Similarly, the Council has identified the promotion and safeguarding of human rights as a legitimate duty and in 2012 adopted the Strategic Framework on Human Rights and Democracy and its associated Action Plan,36 encouraging the EU’s institutions to adopt a more coherent approach to the mainstreaming of rights. In legal terms, the EU’s constitutive values are not only expressed through the Treaty of Lisbon and earlier EU constitutional documents, but also through the European Charter of Fundamental Rights (CFR). The CFR is comprised of six areas of rights protection relating to human dignity, freedom, equality, solidarity, citizens’ rights and justice and entrenches rights and freedoms in the Union.37 Creating an ‘ever closer union’ based on ‘common values’, the Charter seeks to strengthen the protection of individual fundamental rights and freedoms for citizens within the EU, placing the ‘individual at the heart of its activities … and … creating an area of freedom, security and justice’.38
Although the EU has implemented laws that promote and protect human rights, these are not as extensive as those undertaken by the Member States at the constitutional level and under international law. Indeed, it is the peculiarity of the EU as a cosmopolitan order, rather than a State, that has resulted in the emergence of a two-tier system of rights protection, where a narrower range of rights is afforded protection by the EU through the CFR than the rights protected by the individual Member States. The legal framework of the EU ‘assigns a more circumscribed role to human rights within the context of internally focused EU policies and the dominant focus is external, empowering and even obliging the EU to actively promote human rights in its international policies’.39 It is the two-tier system that ‘strikes at the heart of the principle of universality on which human rights rest both legally and conceptually’40 and reveals the hypocrisy of the EU as a normative actor that rhetorically promotes universal values but in reality curtails the extent to which such universal values are protected.
2.1. Extraterritorial effects of human rights obligations in EU FTAs
The development of social policy, both internally and externally, by the EU has been an evolutive process spanning many decades and, in some instances, the CJEU has found that the economic aims of the Union may be ‘secondary’ to its social aims.41 However, even though the relationship between trade and development has become ‘progressively stronger’,42 the jurisprudence on the interrelationship between trade and development and trade and human rights, is extremely limited. Only two cases have addressed the potential legal consequences and extraterritorial effects of human rights clauses in EU FTAs.
In the first case, Portugal v Council,43 the exclusive competence of the EU to conclude a trade and cooperation agreement with India, which contained a human rights clause,44 was challenged. As there is no exclusive EU competence relating to human rights, Portugal sought the annulment of the agreement on the grounds that the conclusion of the agreement by the EU institutions was ultra vires. The most interesting analysis of this case is found in the Opinion of Advocate General La Pergola, who articulated development as a ‘complex vision’ that is ‘the product of interaction between its economic, social and political aspects’.45 On the nature of ex Article 130(u) Maastricht Treaty (development cooperation, now governed by Article 208 TFEU), La Pergola stated that the failure to include a democracy clause in the cooperation agreement would not only undermine compliance with the legal requirements of ex Article 130(u) Maastricht Treaty, but would ‘compromise the legality of Community action’. Reinforcing this point, the Court found that human rights violations ‘may be, amongst other things, an important factor for the exercise of the right to have a development cooperation agreement suspended or terminated’.46 However, the Court did not consider the extraterritorial application of human rights clauses, but merely impressed upon the EU the importance of including particular clauses to ensure compliance with primary obligations set out in the treaties.
More recently, in 2016, the relationship between trade and human rights was called into question, albeit tangentially, in the case of Front Polisario.47 This case concerned the applicability of the EU’s Association Agreement with Morocco48 to the disputed territory of Western Sahara. Front Polisario, a national liberation movement that controls a small part of Western Sahara, sought to annul the Agreement insofar as it applied to the territory of Western Sahara. In its claim, Front Polisario argued that the extension of the agreement to the disputed territory of Western Sahara was unlawful on the basis that the EU could not ensure that implementation of the Agreement would not be ‘carried out in a manner detrimental to the population of [Western Sahara] and did not entail infringements of fundamental rights of the persons concerned’.49 Before the General Court, Front Polisario sought the annulment of the Agreement as it applied to Western Sahara and claimed that its application to this territory constituted a violation of the EU’s obligations under the CFR and under international law.
On examining the scope of the Agreement, the General Court identified the importance of conducting an impact assessment50 before the negotiation and implementation of an agreement to ensure that progressive liberalisation would not result in the violation of fundamental rights, including the rights to human dignity, to life and to the integrity of the person,51 the prohibition of slavery and forced labour,52 the freedom to choose an occupation and right to engage in work,53 the freedom to conduct a business,54 the right to property,55 the right to fair and just working conditions and the prohibition of child labour and protection of young people at work.56 This demonstrates a progressive approach and one that incorporates respect for civil and political rights, as well as economic, social and collective rights. Furthermore, in this case, the Court agreed with the Council’s argument that the EU and its institutions cannot be held accountable for the infringement of fundamental rights committed by a non-member, but nevertheless found that this approach ‘ignores the fact that, if the European Union allows the export to its Member States of products originating in that other country which have been produced or obtained in conditions which do not respect the fundamental rights of the population of the territory from which they originate, it may indirectly encourage such infringements or profit from them’.57 Reinforcing the EU’s purported ethic of responsibility, the Court at first instance ordered the annulment of the agreement to the extent that it applied to Western Sahara, marking a significant shift in the willingness of the Court to intervene in trade matters. Geraldo Vidigal argues that the decision of the General Court could be interpreted as recognising a ‘weak’ duty of the EU institutions to ensure that the trade agreement itself is not a violation of fundamental rights and a ‘strong’ duty to ensure that the EU institutions, through the implementation of the agreement, do not ‘indirectly encourage’ violations of fundamental rights nor do they ‘benefit’ from them.58 However, the obligation to conduct an impact assessment remains procedural and there is certainly a duty on the part of EU institutions to ensure that these have been carried out carefully and impartially.
On appeal to the CJEU and in the Opinion of Advocate General Wathelet, it was acknowledged that fundamental rights may have extraterritorial effects, particularly ‘where an activity is governed by EU law and carried out under the effective control of the EU and/or its Member States but outside their territory’.59 While the Advocate General believed the General Court to have erred in applying the CFR extraterritorially to Western Sahara,60 he disputed the Council’s claim that human rights in third countries are merely of political concern to the EU and confirmed that the EU and its institutions ‘must respect international law in the exercise of its powers’.61 However, the CJEU found that Front Polisario did not satisfy the requirements for standing under EU law and, therefore, the case was deemed to be inadmissible. Consequently, the CJEU did not determine whether part of a trade agreement could be annulled on the basis that its implementation might interfere with the human rights of persons outside EU territory.62 Nevertheless, the Front Polisario case confirms that the EU and its institutions may incur non-contractual liability63 for contributing to human rights violations extraterritorially, even where such a violation takes place by a third party against a third party.64
3. EU obligations in relation to social norms
In addition to human rights clauses, FTAs also refer to a broad spectrum of social norms, including commitments to labour standards and the pursuit of objectives such as upholding the rule of law, good governance and sustainable development. The legal effect of social norms, which are increasingly contained within Trade and Sustainable Development (TSD) chapters of EU FTAs, is not certain and raises interesting questions relating to the territorial reach of EU law.
3.1. Labour standards in FTAs
Linking trade with social concerns is not a new phenomenon, although the depth and coverage of commitments has changed over time. At the World Trade Organization (WTO), an early attempt to include a ‘social clause’ in the WTO’s Singapore Declaration (1996), which would see the linkage of trade and labour standards in the multilateral framework, was rejected.65 Over the past two decades, the EU has attempted to incorporate labour standards through its trade agreements and while there is variance in the scope of labour standards in each agreement, a ‘widening and deepening’ of labour provisions has been observed across EU FTAs since the mid2000s.66 Early iterations of labour standards in EU trade agreements, like the EU-Chile FTA of 2003, advanced the EU’s ethos that social development must go ‘hand in hand’ with economic development, but labour standards were expressed as non-binding commitments and the agreement did not include a mechanism for their enforcement.67 By contrast, labour standards under new-generation FTAs are more expansive, as illustrated by the EU-Korea FTA, which provides that each party has the right to determine its own levels of environmental and labour protection but ‘shall seek to ensure that those laws and policies provide for and encourage high levels of environmental and labour protection, consistent with internationally recognised standards or agreements’.68 New-generation FTAs typically include a commitment to respect core labour standards as human rights,69 and the EU-Korea FTA, which has served as a template for more recent EU FTAs, identifies core labour standards as four fundamental labour rights.70 Furthermore, it makes explicit reference to the International Labour Organization’s (ILO) Decent Work Agenda, the language of which is now commonplace in other EU FTAs, including the ‘deep and comprehensive’ FTAs with Moldova, Georgia and Ukraine.71
TSD chapters typically have a tripartite framework consisting of substantive standards, procedural commitments and institutional mechanisms.72 The substantive standards typically consist of ‘minimum obligations’ that implement multilateral obligations like the core standards of the ILO and the decent work agenda and other obligations that require a de minimis level of protection, while encouraging the parties to raise their levels of protection, provided that doing so is not a disguised attempt at protectionism.73 Recently, the EU has sought to adopt a ‘gender-sensitive’ approach to its trade agreements, with the Strategic Partnership Agreement accompanying the EU-Japan FTA expected to provide a significant gender component to the labour provisions in the FTA. The incorporation of gender into EU-FTAs, particularly in relation to labour provisions, marks a historic step in the evolution of social clauses mirroring progressive FTAs being negotiated in other parts of the world, such as the revised Canada-Chile agreement.
In terms of procedural commitments, TSD chapters provide consultative mechanisms that promote ‘dialogue and cooperation between the parties, transparency in introducing new labour standards measures, monitoring and review of the sustainability impacts of the agreement and a commitment to upholding levels of domestic labour protection’.74 The monitoring of implementation and enforcement of the TSD Chapter is generally overseen by a civil society mechanism that may take the form of a Domestic Advisory Group (DAG) and a panel of experts that can examine any complaint and make recommendations to the parties.75 While new-generation FTAs refer to the ILO’s Decent Work Agenda and core labour standards, the ILO conceives of its role in monitoring labour provision in FTAs as a passive one, offering technical assistance and expertise where needed to ensure coherence between national labour standards, labour provisions in FTAs and multilateral obligations.76 Strictly speaking, labour standards in FTAs are legally binding, although the enforcement mechanisms through which alleged labour standard violations can be scrutinised are not as strong as those applying to other parts of a FTA. The implications of weak enforcement will be considered in more detail later in this article.
3.2. Sustainable development
While the EU-Hungary Europe Agreement77 was the first EU trade agreement to make reference to the principle of sustainable development, the negotiation of the EU-Korea FTA in 2011 saw a further shift in EU external trade policy with the inclusion of a TSD Chapter. A standard iteration of the objective of such a chapter is found in Article 13.1.2 of the EU-Korea FTA:
The Parties recognise that economic development, social development, and environmental protection are interdependent and mutually reinforcing components of sustainable development. They underline the benefit of cooperation on trade-related social and environmental issues as part of a global approach to trade and sustainable development.
To date, the EU-CARIFORUM Economic Partnership Agreement is the most far-reaching of any EU FTA in terms of the parties’ sustainable development obligations, and the Trade and Development Committee can consider sustainable development issues beyond those contained in the TSD Chapter.78
However, the legal effect of such clauses appears to be that they are non-justiciable and difficult to enforce in practice. The language used in relation to the pursuit of sustainable development is often too imprecise to ever render the EU, or indeed the other party, accountable for a violation of its terms. The ambiguity of the language and the vagueness of the obligation – if there can be said to be any obligation at all – that is imposed upon the parties renders such clauses practically redundant. While the vagueness of legal language can expand freedoms and entitlements, it can also limit them. Legal criteria can be ‘so vague that they in fact merely legitimise the EU institution with the competence to “apply” them’.79 Sustainable development is often presented as an ‘overarching objective’ of EU FTAs to be ‘integrated and reflected at every level’ of the trade agreement.80
While there is an international human right to development codified in Article 1 of the UN Declaration on the Right to Development,81 the legal status of the right to development has been the subject of debate for some time.82 The Declaration itself is not legally binding, but the core principles of the right to development find their expression in legally binding instruments in international law. Under international law, ‘sustainable development’ does not have the character of a peremptory norm and while there is disagreement about how this norm should be categorised, there is some agreement among scholars that sustainable development constitutes, at most, a ‘principle’ of international law83 or an ‘interstitial norm’84 that may modify the character of other norms. The opportunity to clarify the contested normative status of sustainable development has arisen in the judgments of the International Court of Justice (ICJ) and the reports of the WTO’s Dispute Settlement Body (DSB). Although the ICJ defines sustainable development as a ‘mere concept’85 to which no legality attaches, it has nevertheless identified this concept as one that can serve as an important hermeneutic tool in the process of judicial reasoning.86 Furthermore, the DSB has found that the concept of sustainable development adds ‘colour, texture, and shading’ to the Appellate Body’s interpretive process.87
That sustainable development finds its expression in so many legally binding documents and in the judgments of the ICJ and recommendations of the WTO’s Appellate Body and Panel reports may, at the very least, reflect common sense among the international community that sustainable development is relevant to the interpretation of international legal norms. Indeed, the ICJ has recognised sustainable development as a current principle of general international law that requires ‘the integration of appropriate environmental measures in the design and implementation of economic development activities’.88 While sustainable development appears to have garnered its status as a powerful interpretive mechanism for judicial bodies, its quantitative role in the implementation of international legal rules has been minimal.89 Nevertheless, the interpretive function of sustainable development serves as a tool to refashion traditional legal concepts, albeit incrementally. Similarly, the practice of the CJEU suggests that the concept of sustainable development is best understood as a matrix to which other normative values, such as human rights, may attach.
3.3. Territorial extension of social norms?
Beyond the context of FTAs, there are some measures relating to sustainable development that have been found to have extraterritorial effects. Joanne Scott has persuasively argued that the EU is increasingly using the mechanism of ‘territorial extension’ to expand its regulatory reach. Territorial extension arises when the application of a measure ‘depends upon the existence of a relevant territorial connection, but where the relevant regulatory determination will be shaped as a matter of law, by conduct or circumstances abroad’.90 The CJEU has applied territorial extension in a number of limited environmental contexts, including the regulation of carbon emissions,91 the environment, fisheries and animal welfare.92 Through territorial extension, the slow creep of the EU’s global regulatory reach – particularly in the context of regulating the environment and sustainable development – becomes more pervasive.
In Zuchtvieh,93 a case concerning animal welfare, the Court was asked to examine the scope of Regulation 1/2005 relating to the EU’s regulatory scheme for the transport of animals within its territory. The Court found that where the transport begins in an EU Member State the regulatory framework applies to the entire journey, including transit outside the EU.94 In effect, this extends the EU’s regulatory reach beyond its own territory to any third country through which transit might take place. Advocate General Bot, in his adjoining Opinion, cautioned against such an interpretation and instead found that the language of Regulation 1/2005 was ‘unambiguous’, applying only to transport starting in and taking place in an EU Member State.95 Contrary to the judgment of the Court, the Advocate General stated that there was a clear intention expressed by the EU legislature ‘to confine the scope ratione loci of Regulation 1/2005 to the territory of the EU’ and that to find otherwise would be beyond the authority of the Court.96
Another notable case relating to climate change concerned the territorial extension of the EU’s carbon emissions trading scheme in the context of aviation. In the case of Air Transport Association of America (AATA),97 the EU sought to extend the reach of its environmental policy enshrined in Directive 2008/101 to all planes that land in EU territory. The legitimacy of this law was contested on two grounds, namely that it constituted a discriminatory trade measure and violated the principle of sovereignty protected under the Chicago Convention.98 Both American and Canadian aviation operators argued that the EU’s law on carbon trading should be limited to EU territory and to find otherwise would constitute a violation of international law. One further objection was raised about the introduction of the EU’s scheme as a unilateral measure and it was submitted that such a scheme should be introduced in a multilateral forum, such as the International Civil Aviation Organisation (ICAO).
In relation to the first point and adopting an ‘economic logic’99 to its judgment, the CJEU found that the emissions trading scheme was applied uniformly to all aircraft operators on all routes departing from or arriving at an aerodrome situated in an EU Member State.100 As such, there was no discriminatory treatment. After assessing the extent to which this measure constituted an infringement of the Chicago Convention, the CJEU found that the EU had not applied Directive 2008/101 extraterritorially. Rather, and as stated in the adjoining Opinion of Advocate General Kokott, the territorial extension of this measure:
reflects the nature as well as the spirit and purpose of environmental protection and climate change. It is well known that air pollution knows no boundaries and that greenhouse gases contribute toward climate change worldwide irrespective of where they are emitted.101
In the context of environmental conservation, the approach of the CJEU in AATA reflects the principles espoused in earlier judgments relating to fisheries102 and the waste management of an oil spillage that occurred within the exclusive economic zone of an EU Member State.103 Whether the findings of the CJEU on these matters of territorial extension are correct and legitimate is questionable, but collectively these judgments illustrate a willingness on the part of the Court to extend the regulatory reach of certain EU measures that aim to further the objective of sustainable development to non-Member States through the mechanism of territorial extension. Thus, while sustainable development obligations in FTAs may appear to lack legally binding status, they may not be as imprecise in their scope as previously thought.
4. The exclusion of human rights and social norms in EU FTAs?
The preceding analysis has demonstrated that the state-centric nature of international law can have profound implications for the protection of individual human rights in transnational economic law and specifically through FTAs. Although the scope of trade liberalisation is tailored to the parties under each agreement, the commitment to maintaining de minimis standards in relation to human rights and social norms is common to all types of EU FTAs. However, the standard clause adopted in many FTAs provides that the agreement shall not be ‘construed as conferring rights or obligations’ on individuals ‘other than those created under public international law’.104 Each FTA contains a system for dispute settlement for an alleged breach of the agreement, unless there is an express clause to the contrary that excludes that part of the agreement from dispute settlement. Dispute settlement frameworks exist within each FTA to govern a dispute relating to the alleged infringement of a trade liberalisation clause, and recourse to the WTO’s dispute settlement is available should the parties choose to pursue a remedy at the multilateral level. A comparative analysis of some of the EU’s FTAs and association agreements reveals that there is no standard approach adopted in relation to excluding rights,105 but human rights and social norms are generally excluded from the ordinary dispute settlement mechanism.
Similarly, recourse to the CJEU seems highly improbable in the context of FTAs since the measures do not confer individual rights that are justiciable before the Court. Even where a clause is found to confer an individual right or where the measure is found to fall within an EU policy that has extraterritorial effect, the individual must prove that they have standing before the CJEU in order to bring a claim.106 Satisfying the threshold of standing under Article 263 TFEU has proven to be a significant obstacle for persons seeking redress for alleged violations of international law and EU law committed by the EU’s institutions, as evidenced in the Front Polisario case.107
Rather, the dispute settlement process for the enforcement of human rights and social norms is usually one of political dialogue as opposed to arbitration. Human rights are governed by the essential elements clause, which is now commonplace in the EU’s FTAs. The essential elements clause is complemented by a non-execution clause, which allows the parties to suspend concessions and take ‘appropriate measures’ where a breach of the essential elements clause arises. However, the EU has taken ‘appropriate measures’ in only a small number of cases.108 When comparing the human rights clause with other social norms in EU FTAs, there appears to be a difference in the nature of their enforceability. Bartels argues that ‘despite certain infelicities in wording, the human rights clause is sufficiently robust and flexible to enable the EU to ensure that it can withdraw from any commitment that would imperil its obligation to respect human rights and democratic principles in its external relations’.109 However, there is less certainty regarding the EU’s obligations under the TSD Chapter.
Over time, there has been a shift away from framing labour standards as human rights in EU FTAs toward conceptualising them within the frame of sustainable development. The emphasis in EU FTAs on the ‘soft incentives-based’ approach to the enforcement of labour standards is clear.110 Through the civil society mechanisms and DAGs, the institutional frameworks in FTAs promote dialogue and cooperation between the parties. However, evidence shows that the effectiveness of institutional governance in this framework has been limited.111 The creation of the DAG was delayed in the context of the CARIFORUM-EPA, while other trade partners, such as South Korea, have been unresponsive to the recommendations of the civil society mechanisms. Arguably, it is the lack of a robust and formal complaint framework, through which the State must react to the issues raised by the civil society mechanism, that ‘allows the parties to these agreements to remain inactive, even when confronted with allegations of severe labour standards violations’.112 While the depth and breadth of labour provisions in EU FTAs stand in stark contrast to their weak enforcement mechanisms, the soft incentive-based approach of the EU ‘should not be dismissed as cheap rhetorical commitment’,113 since certain labour standards – especially core labour standards – could be protected under the essential elements clause. It should be recalled, however, that Article 21 TEU treats all human rights as ‘indivisible’ and conferring different treatment to rights draws into question the legitimacy of the categorisation of rights in EU FTAs.
Those social norms contained in the TSD chapters and which are couched in imprecise and conditional terms (e.g. sustainable development) are in effect excluded from enforcement as they are not legally binding on the parties in a meaningful way. This is perhaps unsurprising and a comparison can be drawn with the rules at the multilateral level. Referring to the inclusion of social objectives at the WTO, Martti Koskeniemmi noted that ‘though both free trade and social regulatory objectives are written into the WTO treaties, the former are always taken as the starting-point, while the latter have to struggle for limited realisation’.114 The struggle for realisation is insurmountable in the FTA context since certain normative entitlements may be explicitly excluded by a clause in the FTA or in a statement contained in the adjoining Council Declaration to the FTA.115
However, in assessing the justiciability of provisions relating to sustainable development, it should be noted that some countries, including Bolivia and Ecuador, have recognised the right of nature as a legally protected constitutional right. Article 71 of the Constitution of Ecuador (2008) provides that ‘all persons, communities, peoples, and nations can call upon public authorities to enforce the rights of nature’, while Article 108.16 of the Constitution of the Plurinational State of Bolivia (2009) states that all Bolivian citizens have a duty to ‘protect and defend an adequate environment for the development of living beings’.116 The EU-MERCOSUR Association Agreement currently under negotiation in 2018 may present an opportunity to examine the obligations of the EU in relation to sustainable development, although the extent to which the constitutional protection of rights of nature will alter the legal effect of social norms in this FTA remains uncertain.
4.1. Why include human rights and social norms in FTAs?
If it is the case that such clauses lack legal certainty or, where they are legally binding, are unlikely in practice to be enforceable, it may seem curious that the parties agree to the inclusion of such clauses in EU FTAs. Is the commitment to human rights and social norms merely window dressing and is the social ambition of the EU more than rhetorical? While a priori it is not to be assumed that integration through FTAs will necessarily result in the harmonisation of public goods across transnational spaces,117 the EU appears to proceed on the basis that regionalism will lead to greater coherence or an ideational ‘discursive fit’118 among trade partners on matters of trade and social norms alike. Arguably, the inclusion of a social chapter in an FTA increases the likelihood of buy-in from citizens and serves to counterbalance extensive market provisions.119 A survey of the scope of FTAs recently concluded by the EU supports the proposition that embedding universal values into FTAs is unlikely to be contested where there is a high degree of ‘resonance’ or a ‘discursive fit’ between the normative and ethical positions of the parties. However, in some instances where the trade partner expresses a lack of resonance with the EU’s values, the EU has been willing to curtail its missionary objectives under Article 21 TEU in favour of advancing its commercial interests.120 The recently concluded EU-Singapore agreement provides a good illustration of how commercial interests may trump social interests in the FTA context.
Chapter 15 of the EU-Singapore FTA (EUSFTA) establishes a dispute settlement procedure modelled on the WTO dispute settlement system. Under this framework, the parties to the FTA are encouraged to settle any dispute through a consultative process,121 but where this cannot be achieved they may seek recourse to the arbitration panel.122 The decision of the arbitration panel is binding on the parties,123 and they should take the necessary measures ‘to comply in good faith’124 with that ruling. Failure to comply with the ruling may enable the injured party to adopt a countermeasure or suspend obligations.125 However, the dispute settlement system does not cover every aspect of the FTA. Provisions relating to sustainable development set out in Chapter 13, entitled Trade and Sustainable Development, are expressly excluded126 from the arbitration procedures established under Chapter 15.
Furthermore, the EUSFTA illustrates the incommensurability between the ethical perspectives of the EU and Singapore on human rights and, in particular, the death penalty. Lachlan McKenzie and Katharina Meissner found that the Singaporean government ‘was opposed to the symbolic gesture of signing an agreement that would imply a change in the position on the death penalty, human rights or governance’.127 Conditionality had the potential to act as a source of conflict between the two parties, and there were concerns that Singapore may be required to compromise its domestic policy to satisfy the requirements of conditionality. As the EUSFTA was being negotiated to secure trade ties between the two parties, another complementary agreement, the EU-Singapore Partnership and Cooperation Agreement (EUSPCA), which focuses on cooperation in the fields of education, transport, energy, science and technology, was being negotiated. To avoid conflict in the EUSFTA negotiations, a ‘side letter’ was annexed to the EUSPCA, and forms part of the agreement, and confirms that the parties were not aware ‘of any of each other’s domestic laws or their application, which could lead to the invocation of the non-execution mechanism’.128
There is evidence to suggest that the extent to which an EU FTA embeds the founding values of the Union hinges on the priorities advanced by the EU institutions negotiating the agreement, with the European Parliament playing a more interventionist role in promoting rights than the Commission.129 McKenzie and Meissner have identified the shifting ideational base of DG Trade from ‘the trade development nexus towards the growth agenda that prioritises commercial interests’.130 This paradigmatic shift is certainly apparent in the recent mid-term review131 of the Trade for All strategy, which outlines the EU’s commitment ‘to a rules-based multilateral trading system that underpins our [EU] prosperity’ and seeks to shape globalisation in line with ‘the shared interests and values’ of the EU.132 The negotiations between the EU and Singapore reveals aa tension between the EU’s desire to foster good economic relations with emerging economies and the Asian countries’ ‘systematic rejection’ of social clauses within FTAs.133 Here, there appears to be a lack of resonance in the ideational or normative approaches of the regions. It is the EU’s ‘carrot-and-stick’ approach to trade that often encompasses an element of conditionality for developing countries, which has proven unfavourable with many of its Asian partners. Nevertheless, there is an argument to be made that the inclusion of human rights and social norms within FTAs, even with their ‘softer’ enforcement mechanisms, may enable the EU to become ‘an effective standard setter in the long-run’.134 This alone may serve as a sufficient normative basis for the EU to insist on the inclusion of such clauses within FTAs.
5. An obligation to pursue ‘development-friendly’ trade?
The preceding analysis acknowledges that there are notable limitations to the territorial reach of EU law in relation to human rights clauses and social norms in EU FTAs. While the focus of this article has been on the EU as a market actor and normative actor, it is important to acknowledge that the EU is also emerging as a significant development actor. As the world’s largest provider of development funding, development policy has a significant place in the EU’s external action. This section concludes the analysis by examining the extent to which, notwithstanding the limitations of extraterritoriality discussed above, the EU is under an obligation to conduct its external policies in a manner that is ‘development-friendly’. If such an obligation does exist, this could have profound implications for the EU’s future trade agreements, particularly with developing countries.
While the EU does not define the term ‘development-friendly’, it referred to this concept in its 2015 Report on Policy Coherence for Development (PCD).135 It states that making FTAs development-friendly is based on three particular aspects: providing support to developing countries for the negotiation and implementation of agreements to which they are party; ensuring a pro-development content of agreements the EU negotiates with developing countries; and needing to take into account the specific needs of individual developing countries when negotiating FTAs to ‘prevent risks or seize opportunities’. The Commission does not elaborate on what constitutes ‘pro-development content’, although in the context of the Economic Partnership Agreements, the Commission has identified longer transition periods, asymmetric liberalisation, special safeguard mechanisms and other principles of special and differential treatment as constituting pro-development content.
In the context of external relations and trade, the European Consensus on Development (2017) provides that the EU will ‘continue through its trade policy to ensure that developing countries, particularly the most vulnerable, reap the benefits of inclusive growth and sustainable development from enhanced participation in regional integration and the multilateral trading system’. On this basis, it is argued that the EU’s obligation to avoid contributing to human rights violations extraterritorially is leading to a policy of ‘development-friendly’ trade. Cases relating to the scope of mixed agreements, which involve the shared competences of the EU and its Member States, best illustrate the extent to which a norm of ‘development-friendly trade’ is emerging.
Mixed agreements may have a number of legal bases, such as Article 207 TFEU (common commercial policy), Article 100 TFEU (transport), Article 191 TFEU (environment) and so forth. Where the mixed agreement incorporates development cooperation, the legal bases of Articles 208–211 TFEU may be relied on, although Article 4(4) TFEU clearly states that the exercise of EU competence in relation to development cooperation shall not prevent the Member States from exercising their competence in this field. Article 208 TFEU sets out the Union’s policy on development cooperation and can be divided into two limbs.The first limb of Article 208 TFEU provides that the objectives of development cooperation ‘shall be conducted within the framework of principles and objectives of the Union’s external action’, thus making the link with Article 21 TEU explicit. The first limb is defined by Panos Koutrakos as the ‘inclusive’ dimension of Article 208, since it ‘establishes a bridge between development cooperation and the objectives governing all the other external policies of the Union’. However, he also identifies an ‘exclusive’ dimension to Article 208 in the second limb of the provision, which states:
Union development cooperation policy shall have as its primary objective the reduction, and in the long term, the eradication of poverty. The Union shall take account of the objectives of development cooperation in the policies that it implements which are likely to affect developing countries.
As the emphasis is placed on poverty reduction as the primary aim of development cooperation, it can be inferred that any other objective falling under Article 21(2) TEU promoting development will be secondary or ‘incidental’ unless it pursues the primary aim of poverty reduction. Consequently, the ‘exclusive’ dimension to Article 208 TFEU ‘rules out reliance on Articles 208–211 TFEU for measures mainly concerned with objectives other than the fight against poverty’.136 If one reads the inclusive and exclusive dimensions together, the effect of Article 208 TFEU is not unfettered in its application. While it reinforces the broad notion of development expressed in EU policy and law, it serves to delimit the extent to which the rules relating to development cooperation can be applied to measures pursuing other primary aims, like that of the Common Foreign and Security Policy. However, it is submitted that the rules and procedures relating to development could fall generally within the common commercial policy (Article 207 TFEU) where such measures are found to be pursuing the primary aim of poverty reduction. Certainly, in the context of EU FTAs that promote trade liberalisation and development cooperation, it seems likely that Article 207 TFEU would be read in the light of Article 208 TFEU and Article 21 TEU, in other words, the objectives of the common commercial policy and development cooperation policy dovetail with the objectives of the EU’s external action.
5.1. The EU-Philippines agreement
The relationship between trade and development was examined in the case of Commission v Council137 which examined the scope of the EU-Philippines Partnership Cooperation Agreement (PCA). This case concerned a challenge by the European Commission, which asserted that the Council had added a number of incorrect legal bases to the PCA. The Commission argued that the agreement was based on Article 207 TFEU and Article 209 TFEU in conjunction with Article 218(5) TFEU, while the Council asserted that additional legal bases were required for those aspects of the agreement relating to the exclusive competence of the Member States (migration, transport and the environment). There appeared to be many aspects to the agreement, not merely development cooperation, and as the EU and a developing country had negotiated the PCA, the CJEU was asked to clarify the character of the agreement. Consisting of 58 provisions, the PCA contained only one provision relating explicitly to development cooperation (Article 29) and the court was asked to clarify whether the principle of the Portugal v Council case138 applied to those measures that ‘go beyond a general agreement to cooperate’.139
Article 29 PCA reiterated that the ‘primary goal of development cooperation is to encourage sustainable development that will contribute to the reduction of poverty and to the attainment of internationally agreed development goals including the Millennium Development Goals’. Article 29 provides that the parties shall cooperate through ‘regular dialogue’ and ‘shall aim at’ promoting various aspects of sustainable development. Such provisions are relatively standard for EU FTAs and the linguistic construction of Article 29 implies a set of non-justiciable objectives that fall outside the scope of legal adjudication given their ‘soft’ nature. Other provisions within the PCA related to development objectives, such as Article 34, which set out obligations and commitments in relation to protection of the environment and of natural resources. Article 34 provided that ‘cooperation in this area shall promote the conservation and improvement of the environment in pursuit of sustainable development’. On interpretation of this part of the PCA, the Commission in its single plea argued that Article 34 in its entirety ‘merely sets out general principles and guidelines on the role that environmental protection should play in the development cooperation of the European Union in respect of the Philippines’.140 It was, therefore, not necessary to base the PCA, in part, on Article 191(4) TFEU, but rather the correct legal base was Article 209 TFEU (development cooperation).
While the focus of this case turned on the choice of legal base(s) and the scope of the Union’s exclusive competence, what is most interesting for the purposes of this article is the court’s interpretation of development in relation to the EU’s external action. To determine what falls within the broad notion of development, the court referred to the European Consensus on Development (2006)141 and the financing instrument for development cooperation wherein the development objectives of the Union find their legal expression. Recognising the link between Article 208 TFEU (development cooperation) and Article 21 TEU (external action), the court noted that development cooperation is to be conducted within the framework of principles and objectives arising under Article 21 TEU:
European policy in the field of development cooperation is not limited to measures directly aimed at the eradication of poverty, but also pursues the objectives referred to in Article 21(2) TEU, such as the objective set out in Article 21(2)(d), of fostering the sustainable economic, social, and environmental development of developing countries, with the primary aim of eradicating poverty.142
The court interpreted the obligations of the parties on transport, environment and migration with reference to the ‘intention’ of the parties. It found that the term ‘development’ need not be included in the title of an FTA if it can be shown that the promotion of sustainable social and economic development, the eradication of poverty and the attainment of internationally agreed development goals are among the ‘general principles’ of the agreement. It concluded that the expression of development can be affirmed in other provisions and in the context of the PCA ‘in particular to those [provisions] devoted to employment and social affairs, to agriculture, fisheries and rural development, and to regional development’.143 Establishing the legal test for determining whether a provision contributes to the pursuit of development cooperation, the Court assessed whether the provision contains ‘obligations so extensive that they constitute distinct objectives that are neither secondary nor indirect in relation to the objectives of development cooperation’. Referring to the European Consensus on Development (2006) as a hermeneutic judicial tool, the CJEU adopted an activist interpretative approach to development cooperation and, furthermore, the judgment appears to extend the exclusive competence of the EU to act where the obligation of a measure is ‘neither secondary nor indirect’ to the objectives of development cooperation.
By adopting this interpretive approach the court has expressed a sensitivity toward the commitment to ‘development-friendly trade’ – at least, the court has done so explicitly in the context of those agreements constituting trade and development agreements. If the reasoning of the court is correct, insofar as it identifies the requirement that development cooperation is framed within the principles and objectives set out in Article 21 TEU, then surely the same must be said for the common commercial policy? To accept this proposition would lead to the conclusion that there is an inextricable link between Article 207 TFEU, Article 208 TFEU and Article 21 TEU – with none of them being secondary or incidental to one another – such that the EU must conduct its common commercial policy in accordance with the objectives guiding its external action. In other words, the territorial reach of EU law may be more expansive than once thought, particularly in the context of trade and development cooperation agreements.
6. Conclusion
This article has examined the nature and enforceability of human rights clauses and social norms in EU FTAs to assess the territorial reach of EU law. It has been argued that, while human rights are not an area of exclusive EU competence, the EU may be liable for contributing to human rights violations in the context of international trade. However, the nature of the duty in relation to human rights obligations remains somewhat ambiguous. The Front Polisario case has reinforced the procedural significance of conducting an impact assessment prior to the implementation of a trade agreement, but has left unanswered the question of whether the EU institutions are under a ‘weak’ duty to ensure that the trade agreement itself is not a violation of fundamental rights or a ‘strong’ duty to ensure that they do not ‘indirectly encourage’ or ‘benefit from’ violations of fundamental rights on the implementation of the agreement.
Over time, an increasing judicialisation of labour provisions has been observed, with FTAs including different and more effective means for enforcing labour standards in the context of trade. However, the extent to which the EU might be found liable for contributing to the lowering of labour standards hinges on the efficacy of the enforcement mechanism within an FTA, which typically takes the form of a civil society mechanism or DAG. In some instances, there is evidence to suggest that labour standards in the third country have been lowered on the implementation of some bilateral agreements, for example in the EU-Colombia FTA144 and EU-Vietnam FTA.145 It seems that the enforcement mechanism under the essential elements clause is more robust than the ‘soft incentive-based’ approach for resolving labour standard disputes and the even weaker protection afforded to the objective of sustainable development under the TSD Chapter. However, even though the legal effects of other social norms such as sustainable development may be uncertain, these clauses are ‘not simply a matter of discretionary foreign policy’.146 While the limitations of the civil society mechanisms and DAGs have been acknowledged, this article does not propose that labour provisions in FTAs should be abandoned. Rather, further research should be carried out into the potential for the alternative functions of labour provisions, such as national capacity-building and the strengthening of dialogue mechanisms to promote compliance.147
In part, the purpose of this article has been to problematise the nature and extent of EU obligations in relation to human rights clauses and social norms under EU FTAs to better understand the normative role of the EU in the global economy. The finding that social norms may be effective only through ‘weak’ or ‘soft’ enforcement mechanisms does not necessarily preclude the EU from becoming a global standard-setter. After all, sanctions are not the only way to evince compliance with so-called shared objectives. In practice, it appears that human rights clauses and social norms, which could have a significant bearing on the EU’s policies with extraterritorial effects, are unlikely to be enforced in the context of FTAs. However, the territorial reach of EU law may be extended in the framework of trade and development cooperation agreements if the reasoning of the CJEU in the EU-Philippines case is applied in subsequent cases.