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13 December 2023

James Harrison is Professor in the School of Law at the University of Warwick. Emily Lydgate is Professor in Environmental Law at the University of Sussex and Deputy Director of the UK Trade Policy Observatory (UKTPO).  Ioannis Papadakis is a researcher at the Centre for Inclusive Trade Policy (CITP) and a Research Fellow in Economics. Sunayana Sasmal currently serves as a Research Fellow in International Trade Law at the UKTPO. Mattia di Ubaldo is Fellow of the UKTPO and Research Fellow in Economics of European Trade Policies. L. Alan Winters is Founding Director of the UKTPO,  Co-Director of the CITP and Professor of Economics at the University of Sussex.

In answering this important question, different disciplinary approaches have emerged as have a range of different and sometimes contradictory findings. At the moment, scholars from the different disciplines are not talking to each other about the implications of this. The authors of this blog suggest it is vitally important that they begin to do so.  

Trade agreements around the world increasingly include environmental and labour provisions. Their presence attests to policymakers’ recognition that trade agreements cannot simply focus on economic issues. They should also address environmental and social concerns. But the existence of these provisions on paper is not itself a cause for celebration. Such provisions are only meaningful if they have positive outcomes in reality – if they, for instance, lead to decreased carbon emissions or enhanced conditions for workers.

Different methodological approaches to researching this issue have come to different conclusions about their real-world impact. First, quantitative studies, largely undertaken by economists, have tended to identify significant and generalised positive impacts for at least some provisions.

On the environmental side, one early influential study found that EU FTAs with environmental provisions improve environmental conditions in countries with strong civil societies. It also concluded that US FTAs are effective during the negotiation period in improving the environmental policy environment of partner countries. Another, covering 680 PTAs with environmental provisions, found that environmental provisions can help reduce dirty exports and increase green exports from developing countries.

In relation to labour provisions, one study found that the likelihood of a state fully protecting workers’ rights rises by 10% once it has signed an FTA with the EU which contains labour provisions. Another study found that labour provisions had a positive impact on (particularly female) labour force participation rates (although not on other labour rights).

On the other hand, more recent work, carried out with more advanced statistical techniques and more granular data on both the content of FTAs and the environmental outcomes, tends to find only mixed evidence: some specific provisions on greenhouse gases appear to be effective, but results are not consistent across models. No significant effects are found for labour provisions. Some recent work has also focused on specific outcomes produced by environmental provisions. Thus, one study, focused on deforestation, found that environmental provisions are effective in limiting deforestation following the entry into force of FTAs, but only because FTAs without such provisions increase deforestation and the provisions offset this.

There is also some indirect evidence of the effects of FTAs.  One study suggests a positive relationship between domestic environmental legislation (not environmental outcomes) and preferential trade agreements with environmental provisions, while another finds that FDI is deterred if FTA labour and environmental provisions have a higher degree of legalization. However, others suggest that such provisions might increase the costs of trade and production.

To sum up this first side of the literature, quantitative studies tend to suggest that some generalisable, although often limited, effects can be ascribed to labour and environmental provisions in FTAs. Across a wide range of different agreements, these studies suggest that some changes will happen as a result of the presence of some types of provisions – for instance that deforestation will be limited or domestic environmental legislation will be signed.

Legal scholars are often puzzled by these results. Environmental and labour provisions take multiple forms in different FTAs and are often not the kind of binding and enforceable provisions that are expected to produce significant results. In high-level summary, trade and sustainable development (TSD) chapters (as found in EU FTAs) and equivalent provisions in other FTAs often consist of ‘best endeavours’ clauses that commit parties to work towards high standards; cooperation on thematic issues, including through upholding agreements such as conventions of the International Labour Organization or the Paris Agreement; and obligations not to reduce levels of protection, often described as non-regression clauses.

Much debate has focused on whether these non-regression clauses should be tied to sanctions, as the US has done, and more recently the UK, Australia and New Zealand. In contrast, EU FTA commitments emphasize implementation through stakeholder dialogue of bespoke committees, such as a Civil Society Forum and Domestic Advisory Group. The EU has unveiled a plan for a limited increase in the use of sanctions in TSD chapter enforcement, and the USMCA has introduced new and innovative forms of labour rights enforcement.

Enforcement mechanisms remain an important focus for legal scholarship, as does the influence of FTA negotiations in changing domestic environmental and labour laws. However, focusing solely on treaty texts and the strength of the bodies that potentially enforce them, doesn’t provide a full account of the impacts of particular provisions.

Qualitative studies have been used by political scientists, geographers, business and socio-legal scholars to attempt to understand how obligations contained in treaty texts have translated into changes in labour and environmental outcomes. Such studies have generally involved case study methodologies and techniques such as in-depth interviews, focus groups and participant observation that allow deep exploration of the causal effects of certain sustainability provisions.

Most of the detailed studies have focused on EU trade and sustainable development (TSD) chapters and the labour standards provisions therein – although as environmental provisions are implemented and enforced in the same way, there are some learnings from these studies on the environmental side. Case studies on impacts in the EU’s FTAs with the CARIFORUM countries, Colombia, Korea, Moldova and Peru have found little or no evidence that the existence of TSD chapters led to improvements in labour standards governance, nor that there were significant prospects for longer-term change. Less robust studies of labour standards provisions in individual US agreements have led to similar conclusions. Positive impacts have been found to occur only in very limited scenarios when accompanied by specific actions by key actors (government officials, civil society actors, trade unions etc.), in relation to specific trade agreements where those issues became politically contentious, such as prior to the ratification of the EU-Vietnam FTA.

Overall, the findings of the studies presented here are very different. But their methodological strengths and weaknesses can also be contrasted. Quantitative studies are able to consider labour and environmental provisions across a wide range of agreements, thereby providing information about general tendencies. But these studies, particularly the earlier ones, are less compelling on the issue of causality. While sustainability provisions are posited as a likely cause of improvements in environmental and labour protection, there are generally weak attempts to substantiate causal links. The few studies that do make serious efforts to identify causal (and unbiased) links, tend to come up with many fewer positive effects. Most importantly, however, they all lack a convincing narrative about the mechanisms leading from FTA provisions to impacts on the ground.

Qualitative studies take causality seriously and can give detailed answers on the direct causal questions of how and why sustainability provisions have or do not have effects. On the other hand, they are weaker when it comes to generalisability; reliance on individual case studies leaves qualitative studies open to accusations that they have missed the ‘bigger picture’.

Scholars who have adopted these different approaches should come together to try to understand the rationale for these different findings and to promote better understanding of their respective research methods. Drafting this blog challenged some of our assumptions about how different disciplines tackle research questions, and facilitated our understanding of the strengths and weaknesses of our research approaches.

But this is not only an academic question. Understanding these methodological strengths and weaknesses has implications for policy making, as correct and full facts are essential to make good policy. For instance, there are policies with unintended consequences that can be identified by talking to people. When these are not considered, empirical analysis may lead to misleading policy prescriptions, even if the effects it estimates are precise, causal and generalisable.

Policymakers need to understand the effects of labour and environmental provisions if they are to take the right kinds of actions to promote better social and environmental outcomes through trade agreements. The authors of this blog all agree that there is a big difference between (1) telling policymakers they can achieve meaningful change through inserting environmental or labour provisions into trade agreements and (2) that to be effective, they must think very carefully about both the design of those provisions and how they will be taken up and utilised by key actors thereafter.

A broad account of how the disciplines can work together might go something like this: Economic studies identify FTAs where the correlation between environmental or labour provisions and positive outcomes appears to be high. Legal scholars bring a detailed understanding of the typology of FTA environmental and social provisions within these FTAs, using this to further refine economists’ findings about causal mechanisms. Political scientists, geographers, business, and socio-legal scholars interrogate how issues such as relationships, power asymmetries, access to information and access to resources shape the effectiveness of the environmental and social provisions in practice.

The opinions expressed in this blog are those of the authors alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.

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December 13th, 2023

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16 June 2023

Chloe Anthony, Doctoral Researcher at University of Sussex Law School and Legal Researcher for the UK Environmental Law Association’s Governance and Devolution Group.

The Retained EU Law (Revocation and Reform) Bill is part of the Government’s ‘Brexit opportunities’ agenda. It is currently in its final stages in Parliament, going back and forth between the Houses, in a debate on the inclusion of clauses that aim to safeguard parliamentary scrutiny and prevent the lowering of environmental protections. It returns to the Commons on 20 June. (more…)

June 16th, 2023

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8 June 2023

Michael Gasiorek is Director of the UK Trade Policy Observatory and Co-Director of the Centre for Inclusive Trade Policy. He is Professor of Economics at the University of Sussex Business School. Peter Holmes is a Fellow of the UK Trade Policy Observatory and Emeritus Reader in Economics at the University of Sussex Business School. Manuel Tong Koecklin is a Research Fellow in the Economics of Trade at the UK Trade Policy Observatory and University of Sussex Business School.

Recently, there have been a series of reports in the media focussing on the challenges that electric vehicle (EV) manufacturers are likely to face, from the end of this year, in exporting electric vehicles tariff-free to the EU. The concern it because of the changes in the rules of origin (ROOs) requirements (for EVs and batteries) which will become more difficult from January 2024, and again from 2027 and 2028 onwards. (more…)

June 8th, 2023

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19 May 2023

Michael Gasiorek is Director of the UK Trade Policy Observatory and Co-Director of the Centre for Inclusive Trade Policy. He is Professor of Economics at the University of Sussex Business School. Nicolo Tamberi is Research Officer in Economics at the University of Sussex and Fellow of UKTPO.

Earlier this week Vauxhall announced it may withdraw from producing electric vehicles in the UK owing to difficulties from meeting ‘rules of origin’ on EU exports. The car manufacturer called for a revision to the Trade and Cooperation Agreement (TCA) between the EU and then UK, notably regarding rules of origin (ROOs). Ford and Jaguar Land-Rover have also warned of the difficulties and called for a revision to the TCA and German producers have also expressed concerns about the meeting these ROOs. (more…)

May 19th, 2023

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31 March 2023

Minako Morita-Jaeger is Policy Research Fellow at the UK Trade Policy Observatory and Senior Research Fellow in International Trade in the Department of Economics, University of Sussex

On 31st March, the UK announced an agreement in principle to become a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Politically, this is a positive step, especially as the Prime Minister can sell accession as a tangible achievement of the UK’s independent trade policy. But what is the real value of joining the CPTPP, and what are the key issues to examine? (more…)

March 31st, 2023

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13 March 2023

Emily Lydgate is Reader (Senior Associate Professor) in Environmental Law at University of Sussex School of Law, Politics and Sociology and Deputy Director of the UK Trade Policy Observatory

The UKTPO is pleased to re-publish this TaPP Network Workshop Summary, an output of a TaPP workshop in January with speakers Geraldo Vidigal (University of Amsterdam), Emily Lydgate (UKTPO/CITP), Ilaria Espa (USI/WTI), and Greg Messenger (TaPP/University of Bristol). Rather than a blog, this note summarises views of panel participants and the authors. It provides useful insights on the latest developments in this area and policy recommendations for the UK in navigating the new subsidies race between the US and the EU. (more…)

March 13th, 2023

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7 December 2022

Emily Lydgate, Reader in Environmental Law at University of Sussex and Deputy Director of the UKTPO [1]

Figures from the World Trade Organization suggest that the negotiation of new Free Trade Agreements (FTAs) peaked in 2008, and has since declined.[2] Meanwhile, the Biden Administration has disavowed FTAs. The UK emerged post-Brexit as an enthusiastic advocate, responsible for much of the 2020 outlying peak in WTO FTA notifications. However, even in the UK, the Trade Secretary recently said: ‘I would like us to move away from the DIT being seen as the Department for Free Trade Agreements and back to the Department for International Trade.’

Having created a so-called spaghetti bowl of FTAs, are the wealthy countries that have driven most FTA negotiations[3] finally running out of noodles? (more…)

December 7th, 2022

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27 October 2022

Camille Vallier is a Fellow of the UK Trade Policy Observatory and Research Fellow in Trade and Sustainable Law at the School of Law, Politics and Sociology, University of Sussex. This blog was originally published by Trade 4 Sustainable Development.

After having defended a sustainable development approach to trade based on cooperation and dialogue for the past decade, the European Union (EU) announced in June 2022 its intention to tighten its approach. The recent Communication “The power of trade partnership: together for green and just economic growth” presents the EU’s new strategy, which, among other measures, plans to extend the general state to state dispute settlement mechanism to the TSD chapter and to include the possibility of trade sanctions for non-compliance with certain provisions of the TSD chapter. These new measures have been adopted in response to a long-lasting observation that the current system does not enable a full and satisfying implementation and enforcement of sustainability provisions. (more…)

October 27th, 2022

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14 October 2022

Maria Savona is Professor of Economics of Innovation at the Science Policy Research Unit (SPRU) at the University of Sussex Business School and Full Professor at the Department of Finance and Economics at LUISS Business School in Rome. Filippo Bontadini is Assistant Professor in Applied Economics at LUISS and Associate Fellow at SPRU, University of Sussex. Valentina Meliciani is Professor of Applied Economics and Dean of the School of European Political Economy at LUISS. Ariel L. Wirkierman is Lecturer in Economics at Goldsmiths, University of London. 

After the great recession of 2008-2009, the world economy seemed to enter a phase of de-globalisation or deceleration in globalisation. But, is this really the case? Are we actually just experiencing a reorganisation and regionalization of production and value chains? Are these trends similarly affecting Europe, Asia-Pacific and the Americas, or are there regionally distinctive trends? (more…)

October 14th, 2022

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Share this article: FacebooktwitterredditpinterestlinkedinmailErika Szyszczak16 September 2022

Erika Szyszczak is a Fellow of the UK Trade Policy Observatory and Professor Emerita of Law at the University of Sussex.

On 23 February 2022, in a Communication on decent work worldwide, the EU announced a new legislative initiative tackling issues of sustainability and working conditions in global trade. [1] On the same day, the European Commission published a proposal for a Directive on corporate sustainability due diligence. (more…)

September 16th, 2022

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