Trade and Sustainable Development in EFTA’s FTAs

In the EFTA States, openness to trade and access to international markets is the basis for economic growth and general welfare. EFTA States also apply and actively promote high standards for sustainable development and inclusiveness in their trade policies, trade relations and their respective foreign policy. With the adoption of model provisions on trade and sustainable development in 2010, EFTA Ministers acknowledged a need for enhanced policy coherence at the national and international levels in order to harness the potential for a positive contribution of international trade to the promotion of sustainable development.

What do we do?

Since 2010 the EFTA States have further developed and systematically included model provisions in their Free Trade Agreements (FTAs). The provisions reflect a cooperative approach and put an emphasis on policy coherence. They recognise that economic development, social development and environmental protection are interdependent and mutually supportive components of sustainable development and foresee that the Parties reaffirm their commitment to promote the development of international trade in such a way as to contribute to sustainable development. The provisions of the Trade and Sustainable Development chapter specifically address trade- or investment-related aspects of labour and environmental standards. Some of the standards and obligations referred to in the chapter also have a human rights dimension or may relate to the fulfilment of such rights.

A new report explaining EFTA’s 10 years of experience of negotiating and including Chapters on Trade and Sustainable Development in EFTA’s Free Trade Agreements has been developed. It includes discussions on developments in this field over the last 10 years, new updates as well as measures on monitoring and implementation. A link to the report can be found here.

With which partners do we have a trade and sustainable chapter?

A chapter on trade and sustainable development has been included in EFTA’s FTAs with Montenegro (signed in 2011), Bosnia and Herzegovina (2013), the Central American States (2013), Georgia (2016), the Philippines (2016), Ecuador (2018), Indonesia (2018) and Mercosur (not yet signed). The EFTA-Hong Kong China FTA (2011) includes a chapter on trade and environment, while a side agreement on labour has been concluded in parallel. A chapter has also been added as part of a comprehensive review of the FTA with Turkey (2018) and been added to the existing FTAs with Albania (2015) and Serbia (2015).

New developments

The EFTA States decided in 2017 to engage in a review of the model provisions. This process was finalised in 2020 and articles on Sustainable Forest Management and Associated Trade, Trade and Climate Change, Trade and Biological Diversity, Trade and Sustainable Management of Fisheries and Aquaculture, Trade and Sustainable Agriculture and Food Systems, Promotion of Trade and Investment Favouring Sustainable Development, Responsible Business Conduct, Panel of Experts and an article on gender equality called Inclusive Economic Development and Equal Opportunities for All have been added and an article on International Labour Standards and Agreements has been strengthened.

Monitoring and implementation

The Joint Committee, established under the respective FTA, monitors the implementation of the chapter. Joint Committee meetings are held in regular intervals and consist of delegations from both sides reviewing the functioning of the FTA. The Joint Committee meeting hence is the prime forum to raise potential issues concerning the implementation of commitments under the TSD chapter. 

A thorough preparation of the meeting is therefore key. Against this background, EFTA has in 2021 established a dedicated mechanism for the systematic monitoring of the implementation of the TSD provisions agreed with each partner country. The mechanism consists of an input and an output phase, which feed into and out of the Joint Committee meeting. 

EFTA continuously gathers and analyses information on implementation issues possibly present in a partner country for the period under review, maintaining up-to-date country profiles that are drawn upon in the run-up to Joint Committee meetings (the input phase). Doing so, it relies on publicly available information sources, as well as specific input sought from experts in Member States, as well as EFTA Advisory Bodies. Furthermore, EFTA encourages public contributions of relevant information on a specific partner, including through this website at any time.

The information gathered during the input phase is then synthesised and can provide the basis for dialogue with the partner countries during the Joint Committee meetings. The dialogue in turn will serve as the basis for Member States to decide on potential follow-ups should the need arise. Possible follow-ups to support the effective implementation of the TSD chapter include technical cooperation activities as well as the dispute resolution mechanisms foreseen under the individual TSD chapters.

The output phase consists of disseminating information of the meeting results back to abovementioned stakeholders, allowing to close the feedback loop for the current cycle of the mechanism and to pave the way for an informed and consistent repetition of the cycle moving forward.

The future

The negotiation of ambitious and robust provisions on trade and sustainable development in FTAs will remain a priority for the EFTA States. With the newly concluded review of the chapter, not only  have new provisions on environment and gender and updated provisions on labour been added, but also the monitoring and implementation of the commitments has been strengthened by the newly introduced possibility to establish a panel of experts to make recommendations towards the resolution of any issue that may arise. Consistently adding more and more FTAs with concrete commitments on trade and sustainable development to our network is one way EFTA States can contribute to sustainable development. In addition, the increased focus on monitoring and implementation should better allow us to assess how we can best and continuously strengthen our efforts in the time to come.

Feel free to contribute

If you have any inquiries or suggestions on trade and sustainable development, please share with us by sending to this email.

Director
Trade Relations Division

+41 223322 630

Officer
Trade Relations Division

+41 22 332 26 31

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EEA Seminar - 17 February 2022