Converging EU/US trade policy: What are the prospects for a ‘common’ approach to forced labour?

The dynamic in EU/US trade relations has changed. 2021 heralded the first in a series of announcements ending long-running EU/US Trade disputes (Airbus/Boeing; Steel/Aluminum). That trend has continued in early 2022 (shellfish). With work progressing under the TTC, and a political promise to work together to address greenhouse emissions, the question arises as to how far this “positive agenda” will go? Could this foster alignment on other social concerns?

Addressing forced labour through trade policy is a potential candidate for collaboration.

According to ILO statistics, forced labour is increasing worldwide. So is the impetus to use trade policy to address it.  On 22 October, the G7 Trade Ministers issued a call to eradicate forced labour from global supply chains. Both the US and the EU have indicated that they are launching initiatives.

But what is the scope for transatlantic alignment on this particular issue?

Defining the problem

The ILO defines forced labour as “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily” [ILO Forced Labour Convention 29, 1930: Art. 2(1)].

Forced labour continues to manifest itself in new forms throughout the world, and, in a context of globalisation and increased migration, many of these contemporary forms are increasing. Plus, it is now recognised that a broader concept of forced labour may be needed; one that encompasses work brought about by physical, psychological or economic coercion.

Addressing labour rights through trade policy

Using trade policy to tackle forced labour is not a new concept.

Both the US and the EU systematically seek to include clauses in their bilateral trade agreements (FTAs, BITS and GSP arrangements). But how effective is this?

Typically, these clauses require a commitment to adhere to existing norms such as ILO labour standards. The precise terms of the clauses are, inevitably a negotiated outcome and the degree of commitment is thus variable.

Some EU Agreements reflect a recognition of regulatory sovereignty in this field. For instance, the draft text of the EU- China Investment Treaty is framed as follows:

“The Parties recognise the right of each Party to determine its sustainable development policies and priorities, to establish its own levels of domestic labour and environmental protection, and to adopt or modify its relevant laws and policies accordingly, consistently with its multilateral commitments in the fields of labour and environment.”

For a study on the different EU clauses, see here.

The use of bilateral trade instruments to advance a “social agenda” is set to continue. USTR’s recent announcement of a focused strategy to address forced labour explicitly referred to monitoring and upholding obligations in existing agreements (e.g US-Canada- Mexico Agreement which imposes an obligation on all signatories to enact bans on imports made with forced labour). In the context of the EU’s review of the 15 point Trade and Sustainable Development Chapter, the proposals are expected to reinforce rather than dilute these clauses.

In the multilateral context, although Ministers of WTO committed to observe internationally recognised core labour standards (including the prohibition against forced labour) as long ago as 1996, the introduction of labour standards into WTO agreements has historically faced resistance. But the specific issue of forced labour has been raised again in the context of the negotiations on fisheries subsidies. In 2021, the US tabled a proposal to “address the prevalent use of forced labor on fishing vessels.” Whilst this was welcomed by some Members, others like China seem less keen. And the negotiations are yet to concretise in to an actual agreement.

As to EU/US cooperation specifically, the TTC could be a forum to consider labour rights: the EU/US inaugural statement reflects the ambition to cooperate on the topic (see para 2) and one of the many working groups set up under the TTC has a work stream dedicated to promoting and protecting labour rights. But it remains to be seen how this cooperation and sharing of best practices will translate into specific mechanisms.

Indeed, whilst the EU and US broadly share the objective of addressing forced labour (at home and globally)[1], it is not clear that they see the same regulatory route to achieving this goal.

Diverging ‘domestic’ regulatory models

In December 2021, the U.S.’ Uyghur Forced Labor Prevention Act was signed into US law. It lays a legal foundation to establish new import restrictions on goods made in China’s Xinjiang Uyghur Autonomous Region on the basis of a rebuttable presumption that these goods have been produced through the use of forced labour. It was presented by USTR Katherine Tai as a response to the moral and economic imperative of eliminating the practice of exploitation in supply chains, but does so by focusing on a specific Country (China).

This has been met by certain EU counterparts with scepticism, including Bernd Lange, chair of the Committee on International Trade at the European Parliament who publically stated that the response should be “global” and not country (origin) specific.

And the EU appears to be forging a diverging path. The European Parliament called for a legislative proposal on an “effective traceability mechanism for goods produced through forced labour”. This follows from repeated calls over the past decade to use existing trade mechanisms (including the GSPs) to seek labour commitments.

 In July 2021, the Commission and EEAS published guidance on “due diligence for EU businesses to address the risk of forced labour in their operations and supply chains”. The guidance may be non-binding but it places European companies at the centre of efforts to ensure the implementation of effective human rights due diligence practices to address forced labour risks in their supply chains. Moreover, on 15 September, during the 2021 State of the Union Address, EU Commission President Ursula von der Leyen announced the European Commission’s intention to introduce a ban on the import of products made with forced labour into the EU market. Sabine Weyand, Director General of DG Trade has expressed the position in a widely reported briefing to the European Parliament’s Committee on International Trade that any such regulation on market access should be bundled with corporate governance proposals.

What’s next?

On the EU side, the full scope of the promised proposal to address products produced with forced labour remains to emerge – but it is still not clear that this will take the form of a bespoke trade instrument as opposed to building on the increasingly extensive body of requirements on corporations. Across the Atlantic, the approach looks set to be more territorial in focus. And that is a gap that could be difficult to bridge.  

But, whichever approach is applied, arguably the biggest challenge of all will apply regardless: enforcement. Ultimately, this will prove key to addressing the accountability gap between standards and the continuing use of forced labour.

The view expressed are personal and do not necessarily reflect the position of the European Union, the European Commission or its legal service.

[1] See for instance the EU’s Trade Policy Review