EU Trade Agreements are subjected to a three pronged review before the European Parliament (EP), Council and the European Court of Justice (ECJ), which ordinarily would widen the net for any agreement that falls foul of human-rights ethos to be rescinded. This is not mere comity but a treaty obligation under Article 1 of the Lisbon Treaty and the EU Policy. The EU has taken several initiatives that show its commitments. It has started the EU Cities Award for Fair and Ethical Trade to allow member-state consumers to undertake informed decisions, passed resolutions to halt EU imports of minerals that fund conflicts and forced labour, has advocated for torture-free trade related UN Convention and has recently been incorporating legally-binding labour and environment standards in all its agreements with a specific reference to Paris Agreement. However, since all three bodies at the EU pursue different goals, the conditionality clauses have not always been uniform.[1]
Several of its agreements have been halted over contentious issues of human-rights, such as the EU FTAs with Malaysia, Thailand El Salvador. EU-Myanmar Negotiations on Bilateral Investment have halted after 5 rounds of negotiations because of the Rohingya refugee crisis. Negotiations for a renewed agreement with Russia have also been suspended by the European Council since March, 2014 (annexation of Crimea). EU has also started an official procedure which could lead to suspension of the EU Cambodia Preferential Trading Status because of violation of human rights and labour rights. It has attempted to modernise the first-generation FTAs (executed before 2005) to include more ‘rule and value based’ systems (Mexico, since April 2018) and consistently provided macro-financial assistance to countries like Jordan and Tunisia hosting Syrian refugees, to improve their balance of payments. However, there have been criticisms that in its attempts to forge economic deals with more industrialised states, it has been willing to compromise on the human-rights aspects. A few authors believe, that the EU’s diminishing importance as a commercial hub over emerging economies such as China, India and Brazil, might be reason.
The EU-India Free Trade Agreement (‘FTA’) negotiations that commenced around 2007, have been stalled since 2013 over several issues including India’s dismal record of its treatment of minorities and human-rights defenders, its position on Kashmir (and lately, the Citizenship Amendment Act) and environmental and labour standards such as its tolerance of bonded and child labour. Agreed, there have been a few agreements pursued (1994 Cooperation Agreement on Partnership and Development and the 2004 Strategic Partnership agreement), but they have been more in the nature of political statements than binding economic commitments.
There are also a few concerns emerging with an ‘EU-wide advocacy’ solution, for several reasons including: the marked increase in populist right-wing led governments (for instance, Hungary), rising grievances against the high standards propounded by courts such as the Abu Qatada judgement of the ECtHR which upheld that fair trial principles triumph even national interests, in the context of deportation of Abu Qatada to Jordan, recession trends and economic slowdowns (for example, in Greece) that have lowered the bloc’s bargaining power, EU’s inconsistency in its own internal affairs (for instance, no actions have been taken against Spain over its actions in Catalonia over similar issues of self-determination) and a perception amongst developing countries that human-rights is a Western concept (recently cited by India’s Home Minister, Amit Shah).
Adoption of an intersectional approach
Although the EU speaks collectively on these matters, it is not denied that larger member-states often prevail over the smaller ones at the EP, hence a supranational assessment may not be the best way forward. As of March 2019, 13 member states including Germany, Belgium and France, enjoyed a trade surplus with India, while 20 member states including Netherlands and Spain stood at a deficit. A greater asymmetry of positions could indicate which way the deal ultimately tilts. The latter group would seem to be more willing to hold India to higher standards.
An analysis of the goods traded would be the next step. The EU enjoys a higher export-import ratio over India in goods such as aircrafts and associated equipments for which finding alternate markets would be difficult. Whereas India’s trade in terms of food-products, including sea-food (running into 50,000 crores) have been facing losses over the US halting imports. After the US, the EU would have naturally been the next biggest market, but the inking of the EU-Vietnam FTA indicates that further losses could percolate from the EU.
For a while now, India has been continually adopting a protectionist stance. The government has been contemplating restrictions on imports of electronic goods since it believes that its signing of the WTO’s Information Technology Agreement that led to higher imports by reduction of import duties, hurt its domestic consumers. In April 2019, the EU had taken India to the WTO Dispute Settlement Body on ICT Goods for imposing ‘unlawful duties’. It has also maintained this stance at the recently concluded Regional Comprehensive Economic Partnership (RCEP) over concerns about Chinese goods flooding the market. It seems less likely to compromise over the EU deal now. Apart from this, India has an alternative in the form of an FTA with the Eurasian Economic Union (EAEU) led by its political ally Russia (other countries include Armenia, Belarus, Kazakhstan, and Kyrgyzstan). Since the bloc lies at a distance, it would be unlikely to invest heavily and India need not be too worried about losses to its domestic players. Moreover, there is greater scope for exchange in technology (India has previously expressed its willingness to provide SEZs to Russia) and the bloc is as large as MERCOSUR (Argentina, Brazil, Uruguay and Paraguay) with whom India has had trade pacts since 2009. While Singapore, Thailand, Turkey and Egypt are in the process of negotiating FTAs with EAEU. Vietnam has already entered into an FTA with the bloc and this could be setting a precedent. Finally, India could enter into deal without the added weight of incorporation of human-rights clauses and this makes it more likely to maintain its position on the EU FTA.
However, the EU still holds the bargaining chip because India’s current economic losses and decreasing levels of investment could deter concrete deals at this point.
Legal implications
Cedric Ryngaert, expert in international law, opined that EU’s obligations to ensure its trading partner’s compliance with human-rights standards in context of the Fronte Polisario judgement, were not merely extraterritorial but flowed from its territorial obligations to exercise due-diligence since the agreements were concluded within EU, although its effects were felt on a foreign territory. He argues that even though the EU Courts may not be able to prohibit the execution of agreements, they are still competent to examine whether there has been an ‘error of assessment’ on the part of the Council. There could be similar arguments regarding the application of the passive personality principle (although the principle itself has not gained much traction), since individuals from occupied territories are now residing or are nationals of EU member states, the bloc holds a duty towards them.
Purely academic concerns aside, to prevent backlash on the part of the EU Member States, strict standards of assessment could be confined to ‘serious’ violations as opposed to ‘ordinary violations’. The seriousness could be assessed for example, by identifying whether the category of human rights being violated is peremptory in nature or at least the minimum essential or core obligations. This finds support in the example that even the concept of exercise of universal jurisdiction is limited to certain serious violations and Article 42 of the Draft Articles on Responsibility of International Organizations (DARIO) that prohibits international organisations from recognizing as lawful a situation created by a serious breach of peremptory norms nor render aid or assistance in maintaining that situation. Apart from self-determination and the freedom of religion, the core labour standards (on forced/compulsory labour, association and collective bargaining and child labour) are also part of customary international law.To see how strongly these principles are upheld, notice that even as a part of EU’s Public Procurement policies (See, 2014 Directives) which is supposed to comprise a significant proportion of its GDP (almost 14% of their GDP) and where member states are usually allowed discretion, one exception stood out: where the corporation or its operators have been convicted by a final judgement of child labour or trafficking (Art 57(1)(f) Dir 2014/24/EU).
EU agreements with other industrialised nations have not been completely smooth either. EU opted for consultations (17 December 2018) and follow-ups with South-Korea over non-ratification of four fundamental ILO Conventions and has also referred the matter for arbitration(2 July 2019). It has provided support to Central American countries (Guatemala, El Salvador and Costa Rica) in implementing ILO reforms through their regional offices, adoption of due diligence business plans and formation of tripartite councils (for collective bargaining) while condemning the situation in Nicaragua. In Columbia, Peru and Ecuador, where there were issues over child labour, collective bargaining and association rights, illegal mining and fishing issues, it has set up ‘technical missions’ to identify and provide suggestions (labour networks have been set up, hazardous occupations lists revised in Colombia, financing of labour inspection by EU in these countries, commitments to the endangered species convention). It has provided assistance packages to Georgia and Ukraine subject to them undertaking concrete measures (Georgia has enacted laws on occupational safety and health, while maintaining that Ukraine must address governance issues such as through adoption of anti-money laundering laws).
Conclusion
There are existing bottlenecks in several other countries too, yet, there still exists an agreement.
The EU is generally not hesitant in enforcing the provisions, but believes in initially resorting to dialogues and bilateral talks, seeks reports from civil society, looks to the implementation of the provisions through follow-ups. Suspension or unilateral cessation of operation of the FTAs are a bit unusual. The human rights clauses are unique to the FTAs executed by the EU. These provisions are not standalone, and the whole reason why they exist in trade agreements is to incentivise the partner states to uphold their commitments.
EU has a large presence at the WTO. One of its agendas has been entering into agreements with WTO members and keeping them plurilateral, open for other WTO members to enter at a later stage. This would eventually lead to anchoring those agreements at the WTO Level itself, even if negotiated outside the organisation. India would stand at a loss if it were to leave the deal. India could also be a prominent partner when it comes to trade in services(as of 2014, the Trade in Services for EU stood at 728 Billion Euros and 60% of the EU investment abroad is related to services). It has also been negotiating the ambitious plurilateral agreement on services wherein it will engage in EU-financed exchanges, training and other capacity-building initiatives, negotiation of mobility related issues for professionals and conditions of entry and residence for nationals of non-member states. Instead of out rightly lobbying for stopping all negotiations over the FTA, showing that the EU has an upper-hand, and overselling the importance of the EU trade deal to India is what I believe will be the best way to ensure that India fulfills its human rights mandate. The Indian civil society to engage with trade confederations so as to push their business interests to facilitate trade deals considering their losses. Finally, EU at its end could be led by the UN Guiding Principles on Business and Human Rights(the revised Draft for a binding treaty along these lines was formulated in July 2019) to control corporations entering into trade agreements or investing in countries with low human rights track records.
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[1] The proposal to initiate a trade agreement with a non-member state arises from the European Commission (EC).DG Trade is one of the bodies that leads discussions before the EC. There is also the Trade Policy Committee (TPC) (a working group made up of the EU Member States that works alongside the EC). Both are known to adopt a liberal economic approach. However, EP can take the ultimate decision by choosing to not ratify agreements that have already been executed, although it cannot alter them. The EP is believed to espouse political values over commercial interests. To avert such a situation, the TPC has started deliberating with the EP’s Committee on International Trade. Finally, the European External Action Service (EEAS) is motivated to maintain a coherence in External Policies and is known to prefer values over interests. Legal commitments towards human-rights principles is enshrined also as a part of the Common Foreign and Security Policy, Development Cooperation, Common Commercial Policy, Area Freedom and Justice, the 2012 Strategic Framework and corresponding Action Plan for Human Rights and Democracy and the Common Agreement on the use of Political Clauses, 2009. These policy documents, provide that human rights clauses should be included either as a part of the FTA itself, or a political document that precedes the execution of the FTA. The Commission in certain cases also draws up Impact Assessments (before negotiations) and Sustainability Assessments (during the negotiations) to understand the potential impact of trade liberalisation on the HRs situation in the territory and the State’s ability to fulfill their obligations. This has been understood recently, to be a part of the EU’s obligations under Article 21.
