The South Korean government announced on Thursday 4 July, that it had received an official request from the European Union to convene a panel of experts. Indeed, the European Commission has launched the second stage of its consultation procedure aimed at remedying the shortcomings of its trading partner on the respect of certain social rights in South Korea. Finally, it is an opportunity to demonstrate the effectiveness of this mechanism.
In the chapter on trade and sustainable development of the EU-South Korea Free Trade Agreement (FTA), implemented since 2011, “the Parties reaffirm their commitment to the effective implementation of the ILO [International Labour Organisation] Conventions and [...] make continuous and sustained efforts to ratify the core ILO Conventions and other Conventions classified by the ILO [...]”.
However, after 8 years of implementation, Seoul is still reluctant to meet these commitments. The Commission had therefore initiated formal consultations with its Asian partner (see EUROPE 12161/21) in January 2019, activating this mechanism for the first time.
However, the situation in South Korea has not yet changed. Respect for the fundamental principles of freedom of association and the ILO's right to collective bargaining remains problematic; ratification of four fundamental ILO conventions on freedom of association, the right to collective bargaining and forced labour is still lacking.
On 3 July, more than 100,000 Korean public sector workers went on strike to demand job security, an end to precarious working conditions, collective bargaining and the elimination of wage discrimination.
The Commission has therefore initiated the second stage of the FTA procedure: a group of three independent experts – none of whom are nationals of any party – will examine these issues and present its report 90 days after its creation.
Secondly, “the Parties shall endeavour to take into account the opinions or recommendations formulated by the group of experts on the implementation of this Chapter”, under the supervision of the ad hoc committee provided for in the trade agreement.
Positive reactions... and a lot of doubts
Several observers applauded the Commission's decision – often regretting that it had not been taken earlier.
“The European Trade Union (ETUC) and the International Trade Union Confederation (ITUC) and Korean trade unions have demanded this for a long time! Korea has failed to ratify fundamental ILO conventions. [This is the] first time the EU has triggered this mechanism", wrote Daniele Basso, ETUC trade adviser, on Twitter.
“After seemingly endless hesitation, [the Directorate-General for Trade] finally takes the right decision to ramp up the pressure in the dispute with Korea on labour rights. High time for the Commission to prove that a flexible approach can lead to significant results”, noted MEP Bernd Lange (S&D, Germany), who should soon return to his position as Chairman of the Parliamentary Committee on International Trade (‘INTA’), also on Twitter.
The impact of this decision goes beyond the Korean case.
This agreement is the first of the so-called “new generation” trade agreements, including a chapter on trade and sustainable development (TSD) and consultation procedures for its implementation. It has been observed that this mechanism is still not very restrictive.
Indeed, the European Commission has always been reluctant, despite pressure from certain groups in the European Parliament, to consider sanctions in the event of non-compliance with this chapter by its trading partner. It invokes the difficulty of quantifying these damages and the difficulty of targeting those solely responsible.
The agreement concluded on 30 June with Mercosur is modelled on similar principles.
The current debates on this treaty, negotiated with President Jair Bolsonaro's Brazil and others, require the Commission to prove its system. On the European side, there are fears of Brasilia's environmental disengagement. The EU must therefore, from now on, demonstrate the effectiveness of the provisions it defends.
“This is an important test-case for non-sanction based dispute settlement and a strong signal that the Commission takes TSD commitments in its FTAs very seriously”, David Kleimann, Senior Lecturer at the University of Mannheim, told EUROPE. “This case questions Korea's credibility as an international negotiator at the highest level of diplomacy and the power of this tool should not be underestimated”.
According to Lee Sung-wook, Professor of Law at Korea’s Ewha Woman’s University, “we can’t underestimate the significance of this [...]. If the panel of experts conclude that the South Korean government is in violation of the FTA, we stand to face not only the stigma of being the world’s first country violating [an EU FTA’s] labour conditions, but also de facto sanctions and regulations”, he told the Korean newspaper Hankyoreh, on 4 July. (Original version in French by Hermine Donceel)