There is a growing possibility that the European Union will push to impose high tariffs on countries that do not meet international environmental and labor standards. Korea has been at odds with the EU over its refusal to abide by the International Labor Organization rules.
The Financial Times (FT) reported on the 4th (local time) that France and the Netherlands urged countries to impose high tariffs on countries that violate sustainable development commitments, saying that environmental and labor standards should be strengthened in the EU trade agreement.
According to reports, the trade ministers of France and the Netherlands made the claim in a telephone meeting, saying that the EU should strengthen its “trade and sustainable development” regulations and make them apply effectively. They also urged the government to speed up the implementation of the “carbon border coordination mechanism,” a plan that calls for tariffs on goods imported from non-EU countries.
FT noted that the Netherlands, which traditionally aims for free trade, and France, which has a strong protectionist color to protect agriculture and industry, have spoken out in one voice.
The statement agreed between the two countries came amid a trend of protectionism that will be strengthened after the new coronavirus infection (CORONA 19), with extensive discussions expected on how the EU will readjust its economic and trade policies to overcome the crisis in the future.
French President Emmanuel Macron has stressed that the collapse of the international supply chain under Corona 19 and the shortage of medical supplies prove the validity of Europe’s insistence on strengthening its “right of sovereignty” that he has been insisting on. He also argued that Europe should invest in high-tech industries and prevent countries that do not want to comply with European regulations from accessing European markets.
The EU Commission has drawn a line on such protectionist arguments. EU Trade Commissioner Phil Hogan stresses balance, saying that “unfair competition” that could put EU companies at a disadvantage should be put on the brake, but that the European economy should ensure the benefits it can take from trade.
However, the mood in EU member states is flowing to strengthen trade regulations.
Opposition to a trade deal successfully reached last year by the EU Commission with Mercosur, a South American economic community, has been mounting in EU countries overstepping the Amazon jungle and concerns that South American beef may devastate European non-beef breeders.
In the Netherlands, ratification of a free trade agreement between the EU and Canada is threatened with rejection. It barely passed the House of Representatives at the beginning of the year, but it is not certain whether it will pass the Senate. The Dutch Senate will hold a public hearing on the FTA next week.
The Dutch and French trade ministers’ intensive high tariff measures came from this trend. According to EU sources, Dutch Trade Minister Sigrid Kag and French Trade Minister Jean-Baptis Remon notified EU countries of bilateral consultations last month and reached an agreement last week. The bilateral agreement is expected to be circulated to EU member states within days.
According to the agreement, the EU trade pact usually requires partners to raise or lower tariffs depending on whether they comply with TSD obligations. TSD includes the climate change agreement and ILO regulations.
The agreement said, “Some trading partners have not shown any progress in fulfilling their TSD commitments even years after they signed the trade agreement,” adding that the EU should be allowed to force countries that have not made progress to implement it.
FT said, “This plan reflects the fact that it is difficult to enforce labor and environmental regulations in the existing EU trade agreement,” adding, “The EU continues to be at odds with South Korea and the EU insists that South Korea is not following the ILO treaties.”
The agreement also called for compliance with the 2016 Paris Climate Agreement as a key condition for trade negotiations and for strengthening conditions for the ban on the spread of human rights and weapons of mass destruction.