Linkages of Trade, Environment and Labour in FTAs: Trends and Prospects

Trade-related issues such as market access and tariff elimination or reduction have been the main concerns of free trade agreements or FTAs since the early 2000s. With more attention recently given to the concept of sustainable development, however, a growing number of countries start to share a common understanding that global and concerted efforts for environmental and labour protection are crucial for sustainable growth. In this context more of the recent FTAs focus on non-trade concerns such as protection of the environment and workers. A leading example is the FTA between Korea and the EU. Ever since the Korea-EU FTA, the EU has included a chapter on “Trade and Sustainable Development” or “TSD” to extensively provide for environment and labour obligations in its bilateral trade agreements. Further, it is noteworthy that the U.S. and the EU have resorted to dispute settlement and enforcement mechanisms within their FTAs to ensure that their trade partners effectively implement environment and labour obligations at the domestic level. For instance, on December 17, 2018, the European Commission requested a consultation to Korea under the Korea-EU FTA on the grounds that the Korean government had not shown sufficient efforts in ratifying the remaining four of the eight fundamental ILO Conventions and thus acted inconsistently with the TSD Chapter of the same FTA. This is the first case that the EU has ever initiated a dispute settlement procedure under a TSD chapter. The Panel of Experts was composed on December 30, 2019, and the final report was recently published on January 25th, 2021. Against this background, for consideration by the Korean government this Brief discusses the emerging trends of environmental and labour provisions in U.S. and EU trade agreements (with a special emphasis on the USMCA), particularly focusing on the aspect of ‘enforceability’ of such obligations.