[CTC] U.S., EU To Delay Talks On Dispute Settlement For Labor, Environment Rules

[Arthur Stamoulis]

INSIDE US TRADE
U.S., EU To Delay Talks On Dispute Settlement For Labor, Environment Rules

March 28, 2016 
The United States and European Union will not try to settle their differences on how to enforce labor and environmental rules in the context of the Transatlantic Trade and Investment Partnership until they have agreed on the substantive obligations they will take on as part of a deal, according to a senior European Commission official.

“The approach we are taking for the negotiations currently, is that we want to agree with the Americans first what kind of commitments -- substantive commitments -- we want to elaborate together in the field of labor and environment because that is where at this stage we feel we need to exercise leadership,” Hiddo Houben, the deputy chief TTIP negotiator for the EU, told the European Parliament's International Trade (INTA) committee on March 14.

The Commission amplified that point in its report on the 12th round of negotiations held in Brussels in February when it said it will make a proposal on dispute settlement as part of institutional provisions at a later stage along with a proposal on climate change. “This is because discussions on the implementation and enforcement procedures applicable to labour and environmental obligations require us to know what we commit to implement and enforce,” the report said.

In addition, the EU sustainable development proposal <http://insidetrade.com/node/150783>, tabled at the 11th negotiating round in October 2015, specifically said that the EU will develop additional proposals, including on dispute settlement, at a later stage.

“[I]f we look at the past trade agreements, the United States makes commitments in the field of labor and the environment enforceable through trade sanctions and financial sanctions,” Houben testified to INTA. “We have made our commitments fully enforceable in dispute settlement, but we have not gone to the ultimate point to which we also apply the financial or trade sanctions."

An EU position paper on sustainable development tabled in May 2014 described a dispute settlement mechanism that would entail consultations and a report by independent experts. It did not envision recourse to trade sanctions if the party at fault fails to comply with the report.

This is the same approach that the EU took in its trade agreement with Canada. There the EU and Canada agreed that if a party believes the other is not living up to its commitments, a panel of experts would examine the issue and publish a report on the findings of its investigation. If it finds that a party has not fulfilled its obligations, the EU and Canada would enter into consultations and the responding party would inform the requesting party of the changes it will make to uphold the obligations. The agreement does not mention fines or trade sanctions.

The commission's report on the 12th round of TTIP negotiations also makes clear that the commission intends to develop provisions on climate change that reflect the United Nations' Paris Agreement concluded in December 2015.

This could run counter to a new overall trade negotiating objective <http://insidetrade.com/node/151583> that says U.S. negotiators should “ensure that trade agreements do not establish obligations for the United States regarding greenhouse gas emissions measures, including obligations that require changes to United States laws or regulations or that would affect the implementation of such laws or regulations, other than those fulfilling the other negotiating objectives in this section."

The explanatory statement released by the conference committee on the customs bill specifically mentioned that such obligations could be related to the environment and the reduction of tariffs on environmental goods.

It also made clear that, if an agreement were to include a provision establishing obligations regarding U.S. greenhouse gas emissions measures, the trade agreement "should be disqualified from eligibility for trade authorities procedures and should be considered under regular order, just like an agreement that fails to make progress in achieving the negotiating objectives" in the fast-track law.

INTA Committee Chairman Bernd Lange, a German member of the Socialists and Democrats group, criticized the sustainable development text for its lack of an enforcement mechanism at the March 14 hearing. “It's a wonderful chapter, your proposal,” he said. “But of course one key problem is that the enforcement part is missing."

Lange has previously said that he is supportive of subjecting a chapter on sustainable development <http://insidetrade.com/node/152818> to dispute settlement, but only after other methods of resolution have been exhausted. For instance, he said that governments should first attempt to have a dialogue to address breaches of labor and environment rules before a case is brought to dispute settlement.

Lange also referenced the resolution developed by the INTA committee and passed by parliament in July 2015 outlining its priorities for the TTIP negotiations with the U.S. That resolution recommended to the commission that rules on sustainable development be “binding and enforceable.”

At the 12th round in Brussels, the U.S. tabled proposals on labor and environmental standards for the first time. The EU also further explained its proposal, which it tabled at the 11th negotiating round in October 2015 in Miami.

“The discussions allowed for a better understanding of similarities and differences between the EU and the US texts, as well as for identifying areas for further exchanges,” the commission report said. “Work will now proceed to establish a consolidated text.”
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