Promoting Sustainability through Dispute Settlement. The First Practice in the New EU Trade Agreements

The EU trade policy is characterized by the constant effort to respect and promote sustainable development as significantly advanced and articulated in the sustainable development goals (SDGs) of the UN 2030 Agenda, with special attention to strengthening the international rule of law. At the bilateral level, the EU pursues its trade agenda of openness, sustainability and assertiveness through the new generation of trade agreements (TAs) – free trade agreements (FTAs) or preferential trade agreements (PTAs) – furthered by the EU within the “Global Europe: Competing in the World” strategy, significantly enhanced and most authoritatively consolidated with the enter into force of the Lisbon Treaty. The new EU TAs carry out the common commercial policy in alignment with the values of the EU international action codified in Articles 3, para. 5, and 21 of the TEU. They are thus among the most innovative and relevant tools in the field of International Economic Law, where trade and investments are reconceived to be major drivers of sustainability, in line with the UN approach of the 2030 Agenda, recently reaffirmed in the Pact for the Future. In fact, beyond significantly extending and deepening economic integration among the contracting parties by comparison to the WTO system, the new EU TAs feature ambitious chapters focused on trade and sustainable development (TSD Chapters), and the scope of these chapters is continually expanding. For instance, since 2019 TSD Chapters have included a provision specifically devoted to trade and climate change, where the Parties reaffirm their commitment to “effectively implement the UNFCCC and the 2015 Paris Agreement […] includ[ing] the obligation to refrain from any action or omission which materially defeats the object and purpose of the Paris Agreement”. The new EU TAs also generate additional sustainability sections, such as those on trade and gender equality and women’s economic empowerment. The EU TAs include articulated institutional mechanisms for their functioning, with several specialized intergovernmental bodies and arbitration panels/groups of experts to settle disputes. Moreover, civil society plays an important role in the monitoring and implementation of the EU TAs, as a result of the setting up of the domestic advisory groups (DAGs) and civil society dialogue mechanisms. Private parties are also significantly empowered in the new EU PTAs through the increasing references to corporate social responsibility found in the preambles and specific provisions of those treaty instruments. Recently, the EU has activated the bilateral dispute settlement mechanisms (DSMs) of the new TAs. The reports issued so far consistently emphasize issues related to sustainability. Notably, the Korea – Labour Commitments case specifically focuses on enforcing certain provisions of the TSD Chapter within the EU-South Korea Free Trade Agreement. The purpose of this work is to highlight those sustainability issues in the contentious proceedings triggered by the EU after a brief presentation of the key aspects of the TAs procedures dealing with the complaints raised by the contracting parties.