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WTO + and WTO-X provisions in the European Union-Vietnam Free Trade Agreement: a ‘fruit salad tree’ is yet to grow

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Abstract

The European Union-Vietnam Free Trade Agreement (EVFTA) is an ambitious regional trade agreement, signed by both parties in 2019 and ratified by the European Parliament in February 2020. Like many other ‘new-generation’ RTAs, this agreement is well known for its WTO + and WTO-X provisions. This paper analyzes typical WTO + and WTO-X provisions of the EVFTA, focusing on their concepts, contents and legal enforceability. This paper argues that environmental and human rights protection provisions, which are ‘grafted’ into the regional trade legal system under the form of WTO-X provisions, do not have the same legal value as WTO + provisions. As a result, the EVFTA remains mainly a trade agreement and cannot be counted upon as the sufficient condition to establish harmonization between pillars of sustainable development.

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Notes

  1. See Hofmann et al. (2017); Kawai and Wignaraja (2011)

  2. It is generally accepted that, while the ‘classical’ RTAs focus on tariff cuts and trade in goods, ‘new-generation’ RTAs are often considered as RTAs that aim to open up new markets. They include, among other things, rules on services, public procurement, investment and regulatory cooperation. For definitions and examples of new-generation RTAs, see European Parliament (2017). See also Horn et al. (2008) 

  3. Park (2019)https://doi.org/10.1007/s10308-019-00552-4

  4. Bourgeois G (2019)

  5. A ‘fruit salad tree’ is a tree specially grafted to bear many different fruits. It was created by two Australian farmers, James and Kerry West, in the early 1990s. See their website https://www.fruitsaladtrees.com/.

  6. Marceau G (2009) News from Geneva on RTAs and WTO-plus, WTO-more, and WTO-minus. Multilateralizing Regionalism and the Future Architecture of International Trade Law as a System of Law, ASIL Proceedings

  7. Hofmann et al. (2017) pp. 2-3

  8. Horn et al. (2008)

  9. Le et al. (2017)

  10. VCCI (2019)

  11. World Bank (2020)

  12. Eurocham (2019) Read also the opinion of Tran Tuan Anh, Minister of Industry and Trade, interviewed by Vietnam News Agency (2019)

  13. See EVFTA’s chapter 2, Article 10 on Agricultural export subsidies

  14. See EVFTA’s chapter 2, Article 5 on Remanufactured goods

  15. See Hofmann et al. (2017)

  16. For more discussions on soft law and hard law, see Klabbers (2009)

  17. Golzalo Villalta Puig emphasizes precision in terms of the language used. Provisions containing negative obligations, specific timelines, actionable items and measurable obligations are considered to be enforceable. Those, for example, that commit parties to ‘cooperate’ and ‘enter into dialogue’, or that utilize the term ‘may’ instead of ‘shall’, are not considered to be enforceable. Kenneth Abbott, Duncan Snidal, Hofmann, Osnago and Ruta also use this criterion to evaluate legal enforceability of WTO+ provisions. They consider that a provision might be not legally enforceable due to unclear or loosely formulated legal language. See Puig (2016); Hofmann et al. (2017) p. 7; Abbott and Snidal (2000)

  18. According to Hofmann, Osnago and Ruta, a provision is considered legally enforceable if it has not been excluded from a dispute settlement procedure. This idea is also adopted by Puig, who states that provisions are unenforceable if they exempt the concerned measures from a dispute settlement procedure under the agreement. In his research, Nicolas Croquet advanced some criteria for determining the legal enforceability of WTO+ provisions. In assessing whether provisions could be considered as hard or soft, he noted: (i) the degree of its precision with regard to the dimensions of clarity, detailed nature and self-sufficiency; (ii) the degree of delegation to a third party for enforcement and, in particular, their submission to the jurisdiction of a dispute settlement mechanism. Kenneth Abbott and Duncan Snidal also insist on the level of delegation to a third-party entity detached from and unrelated to the parties to the dispute related to the application of the provision. For this third point, a high degree of delegation is associated with dispute settlement mechanisms involving judicial and arbitral institutions, while a low degree of delegation is associated with dispute settlement mechanisms involving political institutions. Christine Chinkin agrees that soft law norms are not naturally conducive to an adjudicatory dispute settlement. They lend themselves instead to non-judicial forms of dispute settlement and to ‘self-regulation between interested participants’. See Hofmann et al. (2017), idem; Puig (2016). See also Croquet NAJ (2015); Abbott and Snidal (2000); Chinkin (1989)

  19. Kenneth Abbott and Duncan Snidal consider that one of the ‘yardsticks’ to examine the enforceability of a particular norm is the formally binding or non-binding nature of the obligation. See Abbott and Snidal (2000)

  20. Article VII of GATT is referenced in Article 6 related to customs valuation; Article III of GATT is referenced in Article 12 related to national treatment; Article XI of GATT is referenced in Article 13 related to import and export restriction; WTO Agreement on Import Licensing is referenced in Article 15 on import and export licensing procedures; Article VIII of GATT is referenced in Article 16 on administrative fees and other charges on import and exports and formalities; Article XVII of GATT is referenced in Article 18 on state trading enterprise; Article XX of GATT is referenced in Article 20 on general exceptions.

  21. See Hofmann et al. (2017)

  22. See Horn et al. (2008)

  23. See Croquet (2015)

  24. See for example in EVFTA chapter 13: Article 1.1 (‘reaffirm their commitment to promote the development of international trade in such a way as to contribute to the objective of sustainable development’); Article 1.2 (‘The Parties reaffirm their commitment to pursue sustainable development, whose pillars – economic development, social development and environmental protection – are inter-dependent and mutually reinforcing’); Article 1.3 (‘They underline the benefit of cooperating on trade-related labor (…) and environmental issues as part of the global approach to trade and sustainable development’); Article 4.4 (‘Nothing in this Agreement shall prevent Parties from adopting or maintaining measures to implement the MEAs to which they are party provided that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between the Parties or a disguised restriction on trade’); Article 2.d (‘Promote the development of sustainable aquaculture, taking into account its economic, social and environmental aspects’); Article 9 (‘The Parties confirm their commitment to enhance the contribution of trade and investment to the goal of sustainable development in its economic, social and environmental dimensions…’); Article 10.4 (‘A Party shall not apply labor or environmental laws in a manner that would constitute a disguised restriction on trade or unjustifiable discrimination between the Parties’).

  25. For the term ‘renvoi clauses’, see Croquet (2015)

  26. Examples are: Article 1.1 on context, objectives and scope (referring to the Agenda 21 on Environment and Development of 1992, the Johannesburg Plan of Implementation on Sustainable Development of 2002, the Ministerial Declaration of the UN Economic and Social Council on full employment and decent work on 2006, the ILO Decent Work Agenda, the outcome document of the UN Conference on Sustainable Development of 2012 entitled ‘The future we want’, the outcome of the UN Summit on Sustainable Development of 2015 entitled ‘Transforming Our World: the 2030 Agenda for Sustainable Development’); Article 3.2 and 3.5 on multilateral labor standards and agreements (referring to the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up, as well as the ILO conventions ratified by both parties); Article 8 on trade and sustainable management of living marine resources and aquaculture products (referring to the UN Convention of the Law of the Sea of 1982 (UNCLOS), the UN Agreement for the Implementation of the Provisions of UNCLOS relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, the FAO Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas, the FAO Agreement on Port State Measures to Prevent, Deter and Eliminate IUU, the FAO Code of Conduct for Responsible Fisheries of 1995); Article 9 on trade and investment favoring sustainable development (the OECD Guidelines for Multinational Enterprises, the UN Global Compact, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy).

  27. Croquet (2015)

  28. Bartels (2012)

  29. Terms used by Holger Hestermeyer when commenting on human rights in Hestermeyer (2008).

  30. See Tran (2017

    )

  31. For example, Article 3.5 provides for the commitment to effectively implement the ILO Conventions; Article 4.2 provides for the commitment to effectively implement MEAs; Art 4.3 concerns the exchange of information and experience with regard to ratification of MEAs; Art 4.4 stipulates the right to adopt or maintain measures to implement the MEAs to which they are party; Art 6.3.c concerns the exchange of information related to initiatives to conserve the biodiversity; Art 6.3.D provides for the obligation to adopt and implement appropriate measures to reduce illegal trade in wildlife; Art 7.2.b related to exchange of information on measures to promote consumption of timber and timber products from sustainably managed forests; Art 10.2 stipulates that the Parties shall not waive or derogate from, or offer to waive or derogate from environmental or labor laws in a manner affecting trade and investment between Parties; Art 10.3 provides that the Parties shall not fail to effectively enforce environmental and labor laws as an encouragement for trade and investment; Art 10.4 states that the Parties shall not apply labor or environmental laws in a manner that would constitute a disguised restriction on trade or unjustifiable discrimination between the Parties; Art 12 stipulates that the Parties shall ensure that measures aimed at protecting environment and labor conditions that may affect trade and investment are developed, introduced and implemented in a transparent manner; Art 15 is related to institutional set-up and overseeing mechanism; Art 16 provides for consultation to solve matters arising under the chapter.

  32. Hradilová and Svoboda (2018)

  33. See the opinions of WTO’s Deputy Director-General Wolff A (2020c)

  34. Wolff (2020c), idem

  35. Schneider-Petsinger (2020). See also Wolff (2020a)

  36. Wolff (2020b) The WTO must not continue as it is. Speech during the discussion on trans-Atlantic cooperation on WTO reform on 10 December 2020. https://www.wto.org/english/news_e/news20_e/ddgaw_10dec20_e.htm. Accessed 20 January 2021

  37. See Tran (2008)

  38. Marceau (2009

    )

  39. OECD (2015)

  40. Pauwelyn (2009)

  41. See EVFTA’s chapter 2, articles 2.1, 2.4, 2.13, 2.14, 2.16, 2.17, 2.18, 2.20, 2.22

  42. Marceau (2009)

  43. See, for example, the EVFTA’s chapter 8 on Liberalization of Investment, Trade in Services and Electronic Commerce, chapter 13 on Trade and Sustainable Development, chapter 14 on Transparency.

  44. Pauwelyn (2009)

  45. World Bank (2020)

  46. World Bank, idem

  47. Of course, the legal enforceability will still depend on the strength of the regional dispute settlement mechanism. See OECD (2015)

  48. Article 1.3 of EVFTA chapter 13 confirms this idea. According to Article 1.3, ‘They (the Parties) underline the benefits of cooperating on trade-related labor (…) in environmental issues as part of the global approach to trade and sustainable development. Accordingly, the scope of this Chapter is on trade-related aspects of labor and environmental issues.’

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    Tran Thi Thuy Duong

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Duong, T.T.T. WTO + and WTO-X provisions in the European Union-Vietnam Free Trade Agreement: a ‘fruit salad tree’ is yet to grow. Asia Eur J 20, 69–80 (2022). https://doi.org/10.1007/s10308-021-00618-2

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