Characteristics of the Process for Securing Compliance with Labour and Environmental Provisions Included in Free Trade Agreements (FTAs)

The greatest issue of contention regarding the inclusion of labour and environmental provisions in FTAs is whether or not to set legal obligations and authorize the adoption of economic measures against the violation of the obligations through a dispute settlement process. While the United States authorizes the adoption of economic measures (sanctions approach), the EU does not grant authorization but requires the disputing Parties to formulate action plans (cooperative approach). Sufficient empirical analysis has not yet been conducted to evaluate which of these two approaches is superior. It is said that the implementation of labour and environmental obligations needs to be continuously monitored and that if compliance with international rules is to be secured, it is necessary to secure the legitimacy of the rules through the involvement of civil society. In other words, the threat of sanctions alone would not ensure the effectiveness of labour and environmental provisions. In fact, it may be pointed out that the process for securing compliance with labour and environmental provisions should be accompanied by the dispute settlement process and the process for securing implementation. The adoption of labour and environmental provisions under multilateral frameworks depends on individual countries’ political will. However, it is important to complement the negative aspect of trade liberalization with FTAs and strengthen multilateral frameworks by recognizing the diversity of measures to secure compliance and adopting provisions suited to the needs of Contracting Parties.