Advertisement

Free Trade Agreements and Responsible Business: Examples from the EU’s Bilateral Agreements in East and Southeast Asia

  • Erja Kettunen-Matilainen
  • Claes G. Alvstam
Chapter

Abstract

This chapter analyses the impact of free trade agreements on responsible business in Asian emerging economies. We review the origins of the discussion on sustainable development in international negotiations and conventions, and explore the EU’s three FTAs with Asian countries, i.e., South Korea, Singapore and Vietnam with respect to references to corporate social responsibility and sustainable development. Our main finding is the gradual evolution of the EU’s FTAs towards including more explicit clauses on environmental and labour issues. This conforms to the idea of multilateralising regionalism, i.e., that issues may be first agreed in bilateral or regional FTAs and then gradually transferred to the multilateral level. Despite not incurring direct impacts on firms, this may serve as an institutional push for countries to address the need for responsible business in national legislation.

Keywords

FTAs EU Asia Sustainable development Corporate responsibility 

References

  1. Ahnlid, A. (2012). The EU Meeting the Asian Trade Challenge—From Follower to Forerunner? In L. Oxelheim (Ed.), EU-Asia and the Re-polarization of the Global Economic Arena (pp. 95–123). Singapore: World Scientific.CrossRefGoogle Scholar
  2. Alvaredo, F., Chancel, L., Piketty, T., Saez, E., & Zucman, G. (2017). Global Inequality Dynamics: New Findings from WID.world. American Economic Review, 107(5), 404–409.CrossRefGoogle Scholar
  3. Alvstam, C. G., Kettunen, E., & Ström, P. (2017). The Service Sector in the Free-Trade Agreement Between the EU and Singapore: Closing the Gap Between Policy and Business Realities. Asia Europe Journal, 15(1), 75–105.CrossRefGoogle Scholar
  4. Baldwin, R. (2006). Multilateralizing Regionalism: Spaghetti Bowls as Building Blocks on the Path to Global Free Trade. The World Economy, 29(11), 1451–1518.CrossRefGoogle Scholar
  5. Baldwin, R. (2014). Multilateralising 21st Century Regionalism. Global Forum on Trade: Reconciling Regionalism and Multilateralism in a Post-Bali World. OECD Conference, Feb 11–12, Paris.Google Scholar
  6. Baldwin, R., & Low, P. (Eds.). (2009). Multilateralizing Regionalism: Challenges for the Global Trading System. Cambridge: Cambridge University Press.Google Scholar
  7. Baldwin, R., & Robert-Nicoud, F. (2014). Trade-in-Goods and Trade-in-Tasks: An Integrating Framework. Journal of International Economics, 92, 51–62.CrossRefGoogle Scholar
  8. Baldwin, R., & Thornton, P. (2008). Multilateralising Regionalism. Ideas for a WTO Action Plan on Regionalism. London: Centre for Economic Policy Research (CEPR).Google Scholar
  9. Bondy, K., Moon, J., & Matten, D. (2012). An Institution of Corporate Social Responsibility (CSR) in Multi-National Corporations (MNC): Form and Implications. Journal of Business Ethics, 111, 281–299.CrossRefGoogle Scholar
  10. Bhagwati, J. (2008). Termites in the Trading System: How Preferential Agreements Undermine Free Trade. Oxford: Oxford University Press.Google Scholar
  11. Collier, P. (2007). The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It? Oxford: Oxford University Press.Google Scholar
  12. Crane, A., & Matten, D. (2007). Editor’s Introduction: Corporate Social Responsibility as a Field of Scholarship. In A. Crane & D. Matten (Eds.), Corporate Social Responsibility. London: Sage.Google Scholar
  13. Cuervo-Cazurra, A, R., Mudambi, R., & Pedersen, T. (2017). Globalization: Rising Skepticism. Global Strategy Journal, 7(2), 155–158.CrossRefGoogle Scholar
  14. Cuyvers, L. (2014). The Sustainable Development Clauses in Free Trade Agreements of the EU with Asian Countries: Perspectives for ASEAN? Journal of Contemporary European Studies, 22(4), 427–449.CrossRefGoogle Scholar
  15. DG Trade. (2018a). EU Trade Policy. Countries and Regions: South Korea. Accessed 18 May 2018 at http://ec.europa.eu/trade/policy/countries-and-regions/countries/south-korea/.
  16. DG Trade. (2018b). EU Trade Policy. Countries and Regions: Singapore. Accessed 18 May 2018 at http://ec.europa.eu/trade/policy/countries-and-regions/countries/singapore/.
  17. DG Trade. (2018c). EU Trade Policy. Countries and Regions: Vietnam. Accessed 18 May 2018 at http://ec.europa.eu/trade/policy/countries-and-regions/countries/vietnam/.
  18. EESC. (2018). Employers’ Group. European Economic and Social Committee. Accessed 20 May 2018 at http://www.eesc.europa.eu/members-groups/groups/employers-group.
  19. European Commission. (2017). Trade and Sustainable Development (TSD) Chapters in EU Free Trade Agreements (FTAs). Non-paper of the Commission Services. Accessed 18 May 2018 at http://trade.ec.europa.eu/doclib/press/index.cfm?id=1689.
  20. Gjølberg, M. (2010). Varieties of Corporate Social Responsibility (CSR): CSR Meets the “Nordic Model”. Regulation & Governance, 4, 203–229.CrossRefGoogle Scholar
  21. Heron, T. (2011). Asymmetric Bargaining and Development Trade-Offs in the CARIFORUM-European Union Economic Partnership Agreement. Review of International Political Economy, 18(3), 328–357.CrossRefGoogle Scholar
  22. IISD. (1996). The World Trade Organization and Sustainable Development: An Independent Assessment. Winnipeg: International Institute for Sustainable Development.Google Scholar
  23. Judge, W. Q., Fainshmidt, S., & Brown, J. L. (2014). Which Model of Capitalism Best Delivers Both Wealth and Equality? Journal of International Business Studies, 45(4), 363–386.CrossRefGoogle Scholar
  24. Kobrin, S. J. (2017). Bricks and Mortar in a Borderless World; Globalization, the Backlash, and the Multinational Enterprise. Global Strategy Journal, 7(2), 159–171.CrossRefGoogle Scholar
  25. Krugman, P. (2012). End This Depression Now! New York: W. W. Norton.Google Scholar
  26. Lechner, L. (2016). The Domestic Battle Over the Design of Non-trade Issues in Preferential Trade Agreements. Review of International Political Economy, 23(5), 840–871.CrossRefGoogle Scholar
  27. Lindberg, L., & Alvstam, C. G. (2012a). The Ambiguous Role of the WTO in Times of Stalled Multilateral Negotiations and Proliferating FTAs in East Asia. International Negotiation Journal, 17(1), 163–187.CrossRefGoogle Scholar
  28. Lindberg, L., & Alvstam, C. G. (2012b). Interregional Trade Facing Re-polarization: The EU Trade Negotiations with ASEAN Countries. In L. Oxelheim (Ed.), EU-Asia and the Re-polarization of the Global Economic Arena (pp. 55–94). Singapore: World Scientific.CrossRefGoogle Scholar
  29. Meyer, K. E. (2017). International Business in an Era of Anti-Globalization. Multinational Business Review, 25(2), 78–90.CrossRefGoogle Scholar
  30. Meyer, K. E., & Peng, M. W. (2016). Retrospective: Theoretical Foundations of Emerging Economy Business Research. Journal of International Business Studies, 47, 3–22.CrossRefGoogle Scholar
  31. Milanovic, B. (2016). Global Inequality: A New Approach for the Age of Globalization. Cambridge: Harvard University Press.CrossRefGoogle Scholar
  32. Oinas, P., & Kettunen, E. (2017). Realities of Responsible Business: Institutional and Structural Conditions in MNE-Local Government Bargaining. In M. Fuchs, S. Henn, M. Franz, & R. Mudambi (Eds.), Managing Culture and Interspace in Cross-Border Investments: Building a Global Company (pp. 135–145). New York and Oxon: Routledge.CrossRefGoogle Scholar
  33. Peng, M. W. (2003). Institutional Transitions and Strategic Choices. Academy of Management Review, 28(2), 275–296.CrossRefGoogle Scholar
  34. Puffer, S., & McCarthy, D. J. (2007). Can Russia’s State-Managed, Network Capitalism Be Competitive? Institutional Pull Versus Institutional Push. Journal of World Business, 42, 1–13.CrossRefGoogle Scholar
  35. Reid, D. (1995). Sustainable Development: An Introductory Guide. London, UK: Earthscan and Routledge.Google Scholar
  36. Rodrik, D. (2018). Straight Talk on Trade: Ideas for a Sane World Economy. Princeton: Princeton University Press.CrossRefGoogle Scholar
  37. Sachs, J. D. (2015). The Age of Sustainable Development. New York: Columbia University Press.CrossRefGoogle Scholar
  38. Schwieder, R. (2016). Broadening the Global Compact Agenda. Columbia FDI Perspectives No. 189. New York: Columbia Center on Sustainable Investment.Google Scholar
  39. Stiglitz, J. E. (2018). Globalization and Its Discontents Revisited: Anti-globalization in the Era of Trump. New York: W. W. Norton.Google Scholar
  40. Su, W., Peng, M. W., Tan, W., & Cheung, Y.-L. (2016). The Signaling Effect of Corporate Social Responsibility in Emerging Economies. Journal of Business Ethics, 134(3), 479–491.CrossRefGoogle Scholar
  41. Tschopp, D., & Hamilton, T. (2012). The Potential Role for Corporate Social Responsibility Reporting in Trade Agreements. Social and Environmental Accountability Journal, 32(1), 27–38.CrossRefGoogle Scholar
  42. UN. (2018a.) Sustainable Development: Background: General Assembly of the United Nations. Accessed 17 May 2018 at http://www.un.org/en/ga/president/65/issues/sustdev.shtml.
  43. UN. (2018b). Sustainable Development Knowledge Platform. Trade. Accessed 17 May 2018 at https://sustainabledevelopment.un.org/topics/trade.
  44. UNCTAD. (2014). Investing in the SDGs: An Action Plan. World Investment Report. Geneva: United Nations Conference for Trade and Development.Google Scholar
  45. van Tulder, R., & van Zanten, J. A. (2018). MNEs and the Sustainable Development Goals: What Do First Steps Reveal? Columbia FDI Perspectives No. 227. New York: Columbia Center on Sustainable Investment.Google Scholar
  46. Wagner, A. (2017). The Failure of Corporate Social Responsibility Provisions Within International Trade Agreements and Export Credit Agencies as a Solution. Boston University International Law Journal, 35, 195–221.Google Scholar

Interviews

  1. Interview A, with an official at the Finnish Ministry for Foreign Affairs, Helsinki, 19 April 2017.Google Scholar
  2. Interview B, with an official at the Finnish Ministry for Foreign Affairs, Helsinki, 3 May 2017.Google Scholar
  3. Interview C, with an official at the Finnish Embassy in Seoul, 27 June 2016.Google Scholar
  4. Interview D, with an official at the EU Delegation in Korea, Seoul, 27 June 2016.Google Scholar
  5. Interview E, with a representative of the EU Chamber of Commerce in Malaysia, Kuala Lumpur, 14 December 2015.Google Scholar
  6. Interview F, with an official at the Finnish Embassy in Seoul, 27 June 2016.Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Erja Kettunen-Matilainen
    • 1
  • Claes G. Alvstam
    • 2
  1. 1.Turku School of EconomicsUniversity of TurkuTurkuFinland
  2. 2.School of Business, Economics and LawUniversity of GothenburgGothenburgSweden

Personalised recommendations