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11th Aug 2022

EU to sanction trade partners breaching labour, climate rules

  • Sanctions would apply to future trade agreements currently under negotiation, but not retrospectively (Photo: Neil Palmer (CIAT))
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EU trading partners who breach international labour standards or climate commitments, face being slapped with sanctions, under EU Commission proposals on Wednesday (22 June).

"While our approach should remain centred on cooperation and engagement, there may be circumstances where sanctions are warranted," EU trade commissioner Valdis Dombrovskis said in a news conference.

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Dombrovskis was referring to circumstances where a partner country breaches the principles of the International Labour Organization and commitments under the 2015 Paris Climate Agreement.

But the commission insisted that sanctions will remain the last resort.

The proposal comes after civil society organisations and MEPs raised concerns over, for example, child labour and deforestation risks not being properly addressed in trade agreements between the EU and third countries.

Sanctions would apply to future trade agreements currently under negotiation, but not to existing trade agreements or those finalised but not yet ratified — such as the controversial EU-Mercosur trade deal.

Nevertheless, many modern trade agreements such as those with Japan or Mexico already include sustainability chapters.

The European Union is currently involved in negotiations with New Zealand, Australia, and India, and wants to launch talks with Indonesia soon.

The new sanctions approach could be first applied to the trade agreement being negotiated with New Zealand since talks are very advanced, Dombrovskis said.

But EU member states will have to greenlight the commission's inclusion of the sanctions regime into each new trade agreement.

The proposals come after 15 EU countries called on the commission to accelerate the work to finalise and ratify trade agreements to increase the EU's overall credibility as "a serious trade partner".

They argued that the Regional Comprehensive Economic Partnership (RCEP), the world's largest trade agreement including China, Japan, South Korea, New Zealand and Australia, should be a "wake-up call" for Europe.

Nevertheless, the new sanction scheme could be considered an obstacle to completing future negotiations.

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