EU is subject to South Korea's labour rights dispute
At the end of January 2021, an arbitration panel rejected the EU Commission's complaint that South Korea violated labour agreements under the joint free trade agreement. This decision is likely to cause abdominal pain in Brussels, after all, the EU Commission also insists on the alleged effectiveness of its sustainability agreements with other trade agreements, such as the Mercosur countries.
Due to continued criticism from civil society and parliamentarians, the EU Commission launched a broad-based process in 2018 to improve its sustainability agreements. In doing so, it considered providing them with sanctions (such as suspension of trade privileges). However, it quickly concluded that the ‘dialogue-based’ variant was preferable to a ‘sanction-proven’ one. This is incomprehensible. The rest of these free trade agreements do indeed provide for sanctions if their provisions are violated. The sharpest sword is probably the notorious corporate litigation rights, to which only companies have access, but not governments or even victims of human or labour rights violations. The toothless provisions of the sustainability chapters, on the other hand, fall far short of their effectiveness. The ‘South Korea judgment’ confirms this.
The first of the new generation: The Free Trade Agreement with South Korea
But back to the beginning: The EU-South Korea Free Trade Agreement (FTA) was the first of a new generation of agreements and, when it provisionally entered into force in 2011, it was presented as the EU’s most ‘ambitious’ and ‘comprehensive’ agreement to date. For the first time, there was a chapter on Trade and Sustainable Development (TSD), which also included labour and environmental standards. In this way, trade agreements should be made more balanced, since they are, per se, primarily aimed at boosting trade at all costs and maximising the profits of a few, often to the detriment of the environment and human rights. In the TSD chapter of the EU-South Korea Agreement, the parties undertook to ‘respect, promote and implement’ the core labour standards of the International Labour Organization (ILO) and to progressively ratify and implement the basic ILO conventions. In addition, the TSD chapter created institutional structures such as a Civil Society Dialogue Forum and a Domestic Advisory Group (DAG). The agreement also relies on consultations on the violation of provisions from the sustainability chapter.
In fact, massive labour rights violations have been known in South Korea for years. The International Trade Union Confederation (ITUC) repeatedly reports labour rights violations, police violence against strikers and mass arrests, especially of trade union leaders. In July 2016, KCTU President Han Sang-kyun was sentenced to five years in prison for organising ‘illegal demonstrations’. He was imprisoned for three years.
The EU is forced to act
The EU has long ignored these grievances, but has been repeatedly asked by DAG civil society representatives to take formal steps under the trade agreement (in January 2014 and December 2016). Finally, the EU could no longer go beyond this and, as a first step, sought formal government consultations between South Korea and the EU, as provided for in the sustainability chapter of the agreement (December 2018 to December 2019). As these remained inconclusive, the EU actually submitted its first complaint under a bilateral free trade agreement. The EU argued that South Korea's failure to ratify several core conventions of the International Labour Organization (ILO), in particular Convention 87 on the Freedom of Association of Workers, is a violation of the terms of its 2010 Trade Pact. The EU is particularly concerned about the domestic rules in South Korea, which seem to prevent ‘platform workers’ and freelancers – such as over-drivers or hospitable teachers – from forming independent trade unions, as their independent status means that they are not recognised as ‘workers’.
Toothless tiger
The arbitration panel, which was formed in December 2019 by three persons, should actually come to a conclusion as early as March 2020. Several hearings were delayed, with the result that a ‘judgment’ has only been available since January 2021. Judgement in quotation marks, because the panelists have to submit a report and an evaluation. However, they do not foresee any consequences for the rights and obligations of the parties. South Korea therefore has no pressure to improve its labour law situation.
In fact, the case was rejected by the panel:[i] While the Panel noted that South Korea's efforts to ratify the ILO core labour standards were not optimal, much remains to be done. However, it could not identify any breach of the provisions of the sustainability chapter, as the agreements made in the trade agreement on labour rights and ratification of the ILO conventions were too non-binding. Thus, no breach of the treaty could be demonstrated, since the agreement only required South Korea to make ‘continued and sustained efforts’, but not to actually ratify the ILO agreements. Seoul was able to claim that it had tried to bring the ILO conventions through its legislature, but that there had never been a majority there.
The case shows – also with regard to other agreements, such as with China or Mercosur – that the existing provisions in sustainability chapters are not at all suitable for implementing human rights or environmental due diligence obligations. As long as trading partners do not have to fear a suspension of the agreed trade provisions and the agreements in the sustainability chapter are kept so spongy, the pressure to act is low.
This is further underlined by the fact that South Korea argued not to have violated agreements of the agreement, as the working conditions for e.g. transport services are not related to the trade agreement with the EU. Here, too, it can be seen that the non-binding language of the chapter offers ample room for interpretation.
In fact, there is already another way to handle it, but the EU ignores it: The ECJ has ruled in the so-called Singapore case that a trade agreement can be suspended if there are violations of environmental and labour standards. In theory, the EU would not have to change anything, but only implement it.[ii]
Alessa Hartmann
The author is responsible for trade and investment policy at PowerShift e.V.
[i] See Report of the Panel of Experts: https://trade.ec.europa.eu/doclib/docs/2021/january/tradoc_159358.pdf
[ii] See 26 Opinion 2/15, ECLI: EU: C: 2017:376, para. 161. For further discussion see Nesbit, Ankersmit, Friel and Colsa, “Ensuring compliance with environmental obligations through a future UK-EU relationship” (London: Institute for European Environmental Policy, October 2017) pp. 27-8.
