EU Approach to International Trade Regimes and Climate Change Mitigation

Question 1

What are the main overarching questions of this lecture on trade & CC mitigation? (2)

Answer 1

1/ What is the better approach to trade and CC mitigation issues?

2/ A unilateral or plurilateral approach?

Question 2

What are the key issues related to unilateralism in trade & envtal matters? (2)

Answer 2

1/ extraterritoriality

2/ unilateral nature of measures

Question 3

What is a major question related to unilateralism in trade & envtal matters?

Answer 3

Can States legally address harm occurring outside their jurisdiction through trade restrictions?

Question 4

What are 2 relevant cases on topic of unilateralism in trade & envtal matters?

Answer 4

1/ US-Tuna (Mexico) - 1991 GATT Panel Report

2/ US-Shrimp - 1998 WTO AB Report

Question 5

What are arguments related to extraterritoriality which oppose the use of trade measures addressing harm abroad? (2)

Answer 5

1/ formal jurisdictional objections

2/ eco-imperialism or economic coercion

Question 6

Contributions of US-Tuna (Mexico) Report regarding extraterritoriality argument? (2)

Answer 6

1/ US ban on tuna imports = ‘extrajurisdictional’

2/ MS cannot force other parties to change their policies within their jurisdiction

Question 7

Contribution US-Shrimp Report regarding extraterritoriality and eco-imperialism/coercion?

Answer 7

Conditioning market access on unilateral public interest measure may, to some degree, be a common aspect of measures falling within scope of Art. XX GATT public policy exceptions

Question 8

What are arguments related to unilateralism which oppose trade measures addressing harm abroad? (2)

Answer 8

1/ lack of inclusion/consultation

2/ lack of calibration

Question 9

Contribution US-Shrimp Report regarding unilateralism arguments? (3)

Answer 9

1/ US had not engaged in serious negotiations before enforcing its unilateral import prohibition

2/ US shrimp ban was rigid and unbending standard

3/ US shrimp ban did not take into consideration different conditions other MS

Question 10

Which case is relevant regarding jurisdiction of EU to regulate harm occurring abroad?

Answer 10

ATAA

Question 11

Contribution ATAA case on ECJ’s approach to extraterritoriality EU law? (5)

Answer 11

1/ Art. 3(5) TEU: EU must observe IL in its entirety

2/ but permissive stance: if absence of a rule prohibiting from legislating extraterritorially, possibility to do so as long as rules enforced within territory

3/ enforcement in EU territory is therefore trigger for EU jurisdiction

4/ element of choice

5/ no consideration of extraterritorial economic coercive effects

Question 12

Which arguments related to EU law are relevant to address concerns of unilateralism (extraterritoriality)? (5)

Answer 12

1/ Arts. 3(5) and 21(1)(2)(f) TEU

2/ WTO DSB decisions binding in EU legal order

3/ Art. 11 TEU and Art. 2 Prot. 2: consultations with stakeholders

4/ broad discretion EU institutions to comply with pcple of proportionality (cf Inuit II)

5/ safety valves

Question 13

What is lacking regarding consultations with stakeholders pursuant to Art. 11 TEU and Art. 2 Prot. 2? (3)

Answer 13

1/ contributes to legitimacy

2/ but does not ensure a legal right allowing for legal contestation

3/ cf Inuit II: only procedural rules of legal basis are relevant, there is not always an obligation to consult stakeholders

Question 14

What are other EU constitutional law constraints regarding trade and envt? (4)

Answer 14

1/ EU Treaties set out both free trade & envtal goals and objectives (Art. 3(3)(5) TEU, Art. 21(2)(e-f) TEU)

2/ no hierarchy clauses

3/ but integration articles (Art. 11 TFEU)

4/ consistency required between different areas of external action (Art. 21(3) TEU)

Question 15

Considerations on CBAM? (6)

Answer 15

1/ legal basis: Art. 192(1) TFEU

2/ producer-based measures

3/ carbon price for emissions embedded in imports

4/ aim: prevent carbon leakage

5/ scope: cement, electricity, fertilisers, steel, aluminium, hydrogen

6/ revenue will go to EU budget

Question 16

What is attempt of Trade Policy Review of 2021?

Answer 16

Attempt to mainstream climate policy objectives across trade instruments

Question 17

Examples of Trade Policy Review attempt to mainstream climate policy objectives across trade instruments? (6)

Answer 17

1/ sustainability elevated to defining feature of EU trade policy

2/ FTAs supposed to facilitate proliferation green technologies

3/ Paris Agreement commitments in all future FTAs

4/ emphasis on stronger enforcement

5/ sustainable investment initiatives aimed at Africa

6/ coordinating bilateral negotiations with unilateral instruments, initiatives in WTO

Question 18

How are trade and sustainability commitments linked in practice?

Answer 18

Sustainability impact assessments for FTAs

Question 19

Characteristics sustainability impact assessments (SIAs) for FTAs? (4)

Answer 19

1/ aim: promote evidence-based policymaking

2/ EC asks external consultant to measure envtal and societal impact of proposed FTA

3/ EC presents political framing of the consultant’s findings

4/ SIA to be conducted during trade negotiations so as to inform decisions of negotiators

Question 20

Which example illustrates the problems with SIAs and their credibility?

Answer 20

EU-Mercosur AA

Question 21

Why are SIAs problematic and lack credibility as illustrated by EU-Mercosur AA? (4)

Answer 21

1/ outcome FTA rarely corresponds to the various hypothetical scenarios with numerous variables in SIAs

2/ political framing is crucial: EC countered criticism about deforestation risks with arguments on regulatory capacity-building & unilateral EU policies, but it is questionable that the EU can influence domestic policies of 3rd country partners

3/ first SIA became obsolete, second SIA was finalised after end of negotiations

4/ Ombudsman: EC conduct constituted maladministration

Question 22

What are potential conflicts regarding trade liberalisation and climate objectives? (4)

Answer 22

1/ energy chapters in FTAs facilitate trade in fossil fuels

2/ trade liberalisation in agricultural products creates incentives to pursue deforestation and increases transport emissions

3/ but, there are attempts to mainstream sustainability considerations across trade agreements

4/ however, hierarchy between potentially conflicting constitutional objectives is unclear

Question 23

Examples of attempts to mainstream sustainability considerations across trade agreements? (3)

Answer 23

1/ regulatory cooperation and technology exchange on renewable energy (EU-Chile, EU-NZ FTAs)

2/ sustainability considerations in public procurement

3/ access to raw materials needed for green transition (EU-Chile FTA)

Question 24

Which instrument illustrates an attempt to foster envtal protection as complementary to trade liberalisation?

Answer 24

TSD chapters in recent FTAs

Question 25

Under which competence to TSD chapters fall? Case law? (4)

Answer 25

1/ Opinion 2/15 (EUSFTA)

2/ under scope CCP

3/ exclusive competence EU

4/ however, various TSD obligations are not linked to any trade conditionality but still exclusive competence

Question 26

Key takeaways of Commission’s Communication from June 2022, attempts to mainstream sustainability considerations across trade agreements? (4)

Answer 26

1/ prioritise trade in envtal goods and services

2/ stronger monitoring of compliance with TSD obligations

3/ stronger cooperation with civ. society organisations

4/ general DS & sanctions applicable (‘failure to comply which materially defeats object and purpose Paris Agreement’)

Question 27

Which example is a material manifestation of the EC’s new approach to trade agreements?

Answer 27

EU-NZ FTA

Question 28

Remarkable features EU-NZ FTA? (5)

Answer 28

1/ elimination of customs duties on envtal goods (Art. 2.5)

2/ envtal, labour and social considerations related to object of procurement allowed (Art. 14.2.4)

3/ more elaborate references to Paris Agreement in TSD chapter

4/ references to biodiversity, forests, fisheries

5/ ordinary DS applicable to TSD chapter (Art. 26.2)

Question 29

Features of sustainable investment facilitation agreements? (9)

Answer 29

1/ trade & dvpt linkages

2/ first ever agreement concluded with Angola in Nov. 2022

3/ modest ambitions: no regulation of market access or trade in goods/services

4/ MFN clause for mutual investment

5/ provisions on transparency applicable invst laws

6/ non-regression pcple

7/ right to regulate

8/ references to MEAs, incl. Paris Agreement

9/ technical assistance & capacity building