The legal value of 3(5) in the area of international trade

One of the EU’s main aims regarding its actions with the wider world is to contribute to

sustainable development. This constitutional objective is enshrined in Article 3(5) of the TEU

establishes that the EU shall contribute to the sustainable development of the Earth in the area

of international trade. This objective does not come as a surprise when looking at the

existential threat of the effects of climate change and environmental degradation that both the

EU and the rest of the world face (A European Green Deal, 2021). Moreover, this objective

to contribute to sustainable development is in line with the EU’s goal to cut at least 55% of

the net greenhouse gas emissions compared to 1990 levels by 2030 (A European Green Deal,

2021).

However, a closer look into Article 3(5) TEU, the same provision sets as an objective the

promotion of free and fair trade in its relations with the wider world. When it comes to

international trade, the EU holds exclusive power to conclude international agreements and

legislate on trade (External Trade - EUR-Lex, n.d.). As one of the “ biggest players in world

trade” the EU has entered into several trade agreements at an international level and currently

holds 42 trade agreements in force (Borchert et al., 2021). In view of these two constitutional

objectives, this essay will strive to explore the legal value of article 3(5) TEU to contribute to

sustainable development in relation to EU trade policy.

To understand the legal value of the objectives under article 3(5) TEU it is important to note

that this provision does not establish a legal basis for the EU to act. Rather it merely states

that whenever the EU acts in international trade relations, it shall aim to contribute to

sustainable development of the Earth. Thus, the legal value of Article 3(5) in promoting

sustainable development of the Earth is seen as a guiding principle. As a constitutional

objective, it merely influences the way the EU carries out trade policy. More specifically,
when it comes to the EU’s external actions in trade, Article 21 TEU outlines the objectives by

which the EU’s action should be guided in this area, stating that its foreign policy shall “help

develop international measures to preserve and improve the quality of the environment and

the sustainable management of global natural resources, in order to ensure sustainable

development”. A joint reading of these provisions reveals a constitutional commitment to

contribute to sustainable development and in light of this, trade policy must adhere to these

principles. This leads to the question of how exactly the EU complies with this commitment

when concluding international trade policies and what are the tools the EU has to achieve

them.

The constitutional commitment that derives from Article 3(5) TEU, forming part of the EU’s

identity, predisposes the EU to act in line with those objectives. According to Ian Manners,

this norm-based identity grants the EU a unique power and influence in international affairs

(Lawrence, 2020, p. 35) Manners coined this unique power Normative Power Europe (NPE).

It is a normative power because of the EU’s special character of committing to norms such as

democracy, peace and sustainable development in its constitution. NPE theory argues that

this characteristic distinguishes the EU from other international state actors because it impels

it to act in a normative way (Lawrence, 2020). How exactly is this normative power

exercised? According to the theory, it is done by setting standards and preferences that

influence the rest of the world.

A way in which the EU means to contribute to sustainable development is through its trade

with the rest of the world. According to the EU, international trade agreements are an

“important driver for sustainable growth both in the EU and in partner countries”(Sustainable

Development, 2023). The obligation to comply with the commitment to foster sustainability

and to ensure consistency with the principles set under article 21 TEU, led the EU to include

Trade and Sustainable Development (TSD) chapters when concluding trade agreements. The
chapters include specific commitments in respect to environmental standards, labor and

human rights issues and it is the way in which the EU sees itself balancing the economic

growth-focused objectives with non-economic objectives (Lawrence, 2020). The TSD

chapter is therefore one of the tools the EU uses to achieve the objective of sustainable

development in the area of trade. In general, TSD chapters include three types of provisions

1) substantive standards; 2) procedural commitments and 3)institutional mechanisms

(Harrison et al., 2018). In regards to the substantive standards, trade agreements require both

parties to agree to follow the International Labour Organization's (ILO) basic labor standards.

Secondly, TSD chapters also include procedural commitments. These commitments are in the

form of maintaining communication and cooperation between the parties; monitoring and

reviewing the agreement's sustainability impacts and the commitment to maintaining levels of

domestic labor protection (Harrison et al., 2018). Thirdly, TSD chapters include an

establishment of a state officials Committee responsible for overviewing the implementation

of it. They receive advice from an advisory group including business, labor, non-

governmental organization (NGOs), and occasionally academic representatives (Harrison et

al., 2018). In addition, there is a panel of experts that looks into the parties' complaints and

offers recommendations. However, academic literature has observed the content of TSD

chapters more rigorously and highlighted its weakness.

Lawrence (2021) examines the use of TDS chapters as a tool to incorporate environmental

and social values in trade agreements in light of the NPE theory. In her paper, the author

presents the argument that the TSD chapters are weak in terms of advancing normative power

in the positive sense in areas such as climate change measures and labor standards (p. 41).

TSD chapters don’t advance but reaffirm commitments that have already been agreed on (p.

41). There are no enforcement mechanisms which essentially means they are toothless.
Firstly, Lawrence notes that TSD chapters normally include the commitment from the parties

to effectively enforce their current environmental and labor standards. The logic behind this

commitment is to make sure that parties, in view of making it the cheapest possible for

investors to operate in the country, do not significantly lower labor regulatory rules so as to

create a race to the bottom strategy (Lawrence, 2020, p. 40). In practice, the requirement to

effectively enforce these standards fails to require a high standard of labor and environmental

protection, but requires the parties to only enforce their current rules (Lawrence, 2020, p. 41).

The commitment provisions do not require a high level of protection or more ambitious levels

than what the current ones establish, for example the already established ILO basic labor

standards.

Secondly, breaches of labor and environmental protection provisions in the agreements are

settled before an Expert Panel with non-binding recommendations (Lawrence, 2020, p. 44).

This essentially means that compliance with the protection of labor and environmental

standards is left to the best effort of the parties (p. 44). What is more, the recommendations

by the Expert Panel are not associated with penalties or sanctions in the case of non-

compliance with them (p. 44).

In a similar vein, in their study Harrison et al. (2018) found no evidence that the TDS

chapters caused an improvement in labor standards. This research particularly focused on the

implementation of labor provisions in three different EU free trade agreements. Harrison et

al. (2018) concluded that the labor provisions in the chapters are not advancing labor

standards as their research shows that trading partners access “minimalist” labor standard

obligations (p. 273).

The legal value of the objectives under article 3(5) TEU seen through the use of the TSD

chapters seems limited for the aforementioned reasons. While it is true that this provision
serves only as a guidance to the EU institutions when coming up with foreign policy and it is

not a legal basis, the EU’s external action is supposed to comply also with the objectives set

in article 21 TEU. Furthermore, the findings mentioned above seem to be in contradiction

with the unique normative power that the EU has in importing its norms and values abroad as

explained by the NPE theory.

The existing academic debate overall shows how the weak implementation of TSD chapters

sits uncomfortably with the constitutional objective of the EU to contribute to sustainable

development. If one takes the premise of NPE theory, then the EU’s normative power should

be more successfully exercised through its trade agreements. The result is disappointing since

given the market power held by the EU in global trade, the EU surely has enough negotiating

power to impose a binding dispute settlement procedure in its trade agreements (Lawrence,

2020, p. 45).

Against the backdrop of the criticism of the failure of the TSD chapter’s efficiency to impose

environmental protection standards in trade agreements, the Commission seemed to

recognize the need for a better strategy and in 2021 issued a Communication reviewing the

trade policy strategy “Trade Policy Review - An Open, Sustainable and Assertive Trade

Policy” (2021 Communication, p. ). With this communication, the Commission asserts that

the EU’s trade policy needs to focus on the core objective of “shaping global rules for a more

sustainable and fairer globalization” (2021 Communication). In view of preparing for the

world of 2030, the Commission argues that making globalization more sustainable must be

the driving factor behind trade policy. To achieve environmental sustainability, the

Commission holds that EU trade policy must use all its tools. What are the tools available for

this?
In response to the weaknesses of TSD chapters as a tool for sustainability objectives, the

Commission communication mentions its commitment to reinforce and strengthen the

implementation of the chapters in future trade agreements. According to the Commission, the

trade strategy would include a review on monitoring mechanisms, the scope of commitments

of TSD chapters and remarkably, the possibility to impose sanctions as a consequence for

non-compliance (2021 Communication, p. 13). Furthermore, the Commission notes that all

imports must comply with EU standards and production requirements, which is legitimized

by the need for environmental protection. Certainly, the rules and requirements that the EU

imposes on imports must be in compliance with WTO rules, but even under the WTO

principles of “securing a predictable and non-discriminatory framework for trade”, the EU

upholds its own right to regulate in line with its preferences (2021 Communication, p. 13).

Through setting regulations and rules for imports, the EU has a great potential to influence

the way other international actors apply standards to their own production. This great

potential of the EU to set higher standards of environmental protection and promote

sustainable development is reflected in Anu Bradford’s so-called Brussels effect. The idea of

the Brussels Effect rests on the premise that due to the EU’s consumer market size being so

attractive, global actors comply with the necessary standards needed to enter the market

(Bradford, 2012, p. 12). Bradford claims that in this way, the EU exercises a global power

that successfully exports to the rest of the world (p. 64). The Brussels Effect idea reflects in

simple terms that the EU has the capacity to impose stringent rules on trading partners, who

will abide by such stringent standards because of the potential to enter the attractive affluent

EU market size.

Bradford writes that “subscribing to EU rules is the price of trading with Europe” (2021, p.

66). However, having seen the EU’s strategy to contribute to sustainability in its trade policy

through the use of TDS chapters, the price does not seem high enough. It has been established
that the EU holds a unique power at the international level, being one of the leading global

trader actors. It has also been established that the EU holds exclusive power to conclude

international agreements and legislate on trade. Furthermore, a joint reading of Article 3(5)

TEU and Article 21 TEU, show the constitutional commitment to contribute to sustainable

development. At surface level, the inclusion of TSD chapters in international trade

agreements that establish substantive standards, procedural commitments and institutional

mechanisms to ensure its implementation seems to be a right step in the direction of

complying with its constitutional commitment for sustainable development in its relations

with the wider world. However, as already mentioned, a closer look reveals how limited it is

in terms of ensuring a high level of environmental protection and a binding dispute

settlement. Should the EU not raise the price international actors must pay when they aim to

trade with the EU? With its exclusive competence to conclude international agreements, the

EU should embrace its negotiating power and strive to attain a better level of environmental

and labor standards in its trade agreements. Not just reliance on the best efforts to comply

with the current standards whatever their form may be, but advocate for better protection. In

addition, monitoring the enforcement of such commitments should include a dispute

settlement body that gives binding recommendations and opinions.

In conclusion, this essay looked at the legal value of the EU’s constitutional objective to

contribute to sustainable development by looking at the efficacy of environmental, labor and

human right commitments present in EU trade agreements. An overview of the current

literature on TDS chapters revealed that it lacks proper enforcement. Without efficient

enforcement of these commitments the delivery of the EU’s constitutional objectives to

promote sustainability while trading with the wider world is not met. The Normative Power

Europe theory and the Brussels Effect present that the EU has the global power mainly due to

its consumer market size, to export its stringent standards abroad. Thus far, TDS
commitments in trade agreements have not produced such results. However, the

Commission’s new proposed strategy reflects this criticism with the possibility to include

sanction mechanisms in case of non-compliance with sustainability standards. A reading of

this proposal shows that it is a last resort method, and hence these TDS chapters alone are

insufficient in complying with the objective to promote sustainability.

References

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