Labour rights in the EU FTAs with Australia and New Zealand

Aneta Tyc
Doctor of Law, Assistant Professor
Department of European, International and Collective Labour Law, Faculty of Law and Administration, University of Lodz

Labour provisions in free trade agreements (FTAs) have proliferated over the last two decades – from only 4 in 1995, the number of FTAs that include labour provisions increased to 21 in 2005, 58 in 2013, 77 in 2016 and 85 in 2019 (ILO, Labour Provisions in G7 Trade Agreements: A comparative perspective, Geneva 2019, 15). Considering the chronological order, the EU FTA with New Zealand (concluded on 30 June 2022) and Australia (under negotiation) constitute examples of FTAs of the fourth generation characterised by the inclusion of labour provisions in the chapters entitled “Trade and Sustainable Development”.

New templates used by the EU introduce temporary remedies, according to which if non-respect of core labour rights is found by the panel, a “mutually acceptable compensation” may be developed by the parties. Besides, the suspension of “the application of obligations under the covered provisions” has been envisaged. However, the agreements still use only soft, promotional formulations, e.g. “Each Party shall make continued and sustained efforts to ratify the fundamental ILO Conventions if they have not yet done so”. This language should be stronger considering that Australia has not yet ratified ILO Convention no. 138 (Minimum Age) and no. 187 (Occupational Safety and Health), and New Zealand has not ratified Convention no. 87 (Freedom of Association and Protection of the Right to Organise) and Conventions nos. 138 and 187 (mentioned above). In addition, more emphasis should be placed on the Conventions which have already been ratified. Even if Australia and New Zealand ratified Convention no. 100 (Equal Remuneration) and no. 111 (Discrimination in Respect of Employment and Occupation), this absolutely does not mean that discrimination has been eliminated in these countries.

The EU-Korea labour dispute case may give the impression of the effectiveness of the EU templates – after all Korea ratified three out of four outstanding – at that time – ILO Conventions (has not ratified Convention no. 105 – Abolition of Forced Labour). However, “questions do remain on whether the Korean legislation amendments fully implement the provisions of C29, C87 and C98. The case thus remains open and the EESC reinforces its call for follow-up action” (the opinion of the European Economic and Social Committee “Next Generation Trade and Sustainable Development – Reviewing the 15-point action plan” 2021). The question is also whether all partners in the future will be willing to introduce changes to their domestic legislation and ratify 10 fundalmental ILO conventions under recommendations issued by the panel of experts.

Recently the European Commission itself has admitted that the current approach needs improvement and in its new document “Trade Policy Review – An Open, Sustainable and Assertive Trade Policy” (2021) has pointed out that there is a need for “a greater effort to ensure the effective implementation and enforcement of sustainable development chapters in EU trade agreements, to level-up social, labour and environmental standards globally”. It is also worth noting that according to the aforementioned opinion of the EESC: “compliance problems not only exist in partner countries (…), there seems to be a lack of instruments for robust enforcement in the EU and its Member States”. The EESC also highlights “the importance of securing pre-ratification commitments of core international agreements or binding and enforceable roadmaps within the TSD chapter itself…”.

In this context, the EU model should be compared with the US one. The latter involves FTAs that use a conditional approach. This amounts to the fact that FTAs contain labour provisions that make the conclusion of a FTA conditional upon respect for particular labour standards (pre-ratification conditionality) and/or provisions in the concluded FTAs that authorise sanctions if labour standards are infringed (post-ratification conditionality). On the other hand, the EU model involves a promotional approach focusing on dialogue and cooperation. A comparative legal analysis may lead to the conclusion that the EU may draw some lessons from the conditionality-based model in place in the US. A new FTA between the US, Mexico and Canada (USMCA) may serve as an example. It effectively required Mexico to carry out very serious reforms of labour law (in 2019) and to ratify all the fundamental ILO Conventions. Moreover, the USMCA introduces other important solutions, e.g. considerably stronger language as regards labour rights, “facility-specific rapid response labor mechanism”, “Labor Value Content” requirements or “greater certainty” clauses, each of which encourages us to perceive the USMCA as a model agreement that could be used when concluding a new treaty.

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