I’ve never understood the expression: they want to have their cake and eat it too. Who on this planet wants to hold onto a piece of cake and not eat it?!? I was at a birthday party this weekend, and my 5-year-old asked me to hold his plate of delicious cookies ‘n cream cake while he played. It had Oreos in it. He came back ten minutes later and asked for it. I could only hand him a plate holding some crumbs and say, “I have a confession.”
I’m getting somewhere with this cake metaphor, I promise.
This Sunday, 10 March 2024, the Member States of the European Free Trade Association (EFTA) and the Republic of India signed a comprehensive Trade and Economic Partnership Agreement (TEPA). India has long been a notable and respectable trade adversary, at least in the United States, refusing to cave to global pressure to sign hundreds of trade deals that will surely flood its markets and extract its resources. All eyes have been on the TEPA negotiations, therefore, to see whether India would use the TEPA to show the United States and the European Union (EU) that it could satisfy some of their trade demands – which include commitments to international labor rights – without actually ceding its regulatory autonomy. The overarching question, therefore, is whether India can have its cake and eat it too.
India’s performance in the TEPA negotiations does not disappoint.
I’ll let others weigh in on the TEPA’s non-labor topics, but I wanted to review the TEPA labor provisions. I focus on those provisions both because labor is my specialty (please do not ask me about government procurement) and because it has become a hot topic in the United States and EU – both of which have been in trade talks with India.
Substantively, the agreement follows the EU model agreement (but not procedurally; see below).
Article 11.6 commits:
(1) The Parties, in accordance with their obligations as members of the ILO and the ILO Declaration on Fundamental Principles and Rights at Work, commit to respect, promote and realise, in good faith, the fundamental principles and rights at work embodied in the fundamental ILO Conventions, namely:
(a) freedom of association and the effective recognition of the right to collective bargaining;
(b) the elimination of all forms of forced or compulsory labour;
(c) the effective abolition of child labour;
(d) the elimination of discrimination in respect of employment and occupation; and
(e) a safe and healthy working environment.
(2) The Parties affirm their commitment to effectively implement in their laws and practices the ILO Conventions which they have respectively ratified. The Parties will make efforts towards ratifying the fundamental ILO Conventions in a promotional and flexible manner without time limits and according to the ILO Declaration on Social Justice for a Fair Globalization of 2008.
This section anchors commitments to concrete instruments that workers, employers, and governments negotiated at the ILO, backed with interpretive jurisprudence that affords the parties and observers concrete data against which to weigh implementation. It is a far cry from the nebulous, non-binding-turned-binding ILO Declaration, which the United States uses to benchmark commitments to international labor standards in its trade agreements.
This section is also an example of how trade partners have modified their labor text to include occupational safety and health – a new “fundamental” labor standard recently added to the ILO’s repertoire and, hence, traditional trade and labor language.
India’s acceptance of this language suggests it may be meeting the demands of the European Union, its on-again, off-again trade courter. The European Union has long required its trade counterparts to agree to commitments to the ILO Conventions (check) and to strive or make efforts to ratify the fundamental conventions it hasn’t yet ratified (check). The language goes beyond U.S. demands to respect the non-binding ILO Declaration. Two birds, one TEPA stone.
Back to cake.
India has long proven immune to global pressure to relinquish its markets and regulatory autonomy. The TEPA is no different. Despite committing to the ILO’s fundamental conventions, the parties include several provisions ensuring that the real labor standards they are obligated to under the trade agreement are…the ones they already have in place.
Article 11.1(3) first clarifies that the parties aren’t trying to form a labor standards club.
Accordingly, the Parties emphasise that it is their aim to strengthen their trade relations and cooperation in ways that promote sustainable development, and it is not their intention in this Chapter to harmonise the labour or environment standards of the Parties.
Next, under a self-explanatory section called Right to Regulate and Upholding Levels of Protection, under Article 11.2, the parties make sure they have the right to decide their own levels of protection:
Recognising the right of each Party, in a manner consistent with the provisions of this Chapter, to set its domestic sustainable development policies and priorities, to establish its own levels of labour and environmental protection, and to adopt or modify accordingly its relevant laws and policies, each Party shall seek to ensure that its laws, policies and practices provide for and encourage achieving sustainable development objectives.
That provision, dear readers, may cause a bit of a stir in the international labor law community. While many of us are more than a little uncomfortable with the United States going Commando on Mexican auto facilities to enforce international standards, our distaste for enforcement driven by economically advantaged state actors may dissipate when considering India’s weak labor protections. The country has ongoing problems with bonded and forced labor, including concerning children, among other issues.
Indeed, if the EFTA tries to push India into changing its labor rights approach under the agreement, under Article 11.2, the TEPA gives India cause to call foul:
3. The Parties stress that environmental and labour measures shall not be applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between the Parties or a disguised restriction on trade.
At the end of the day, however, these provisions – good, bad, and neutral – mean little for the parties’ trade relations. While the EU has undertaken recent changes to subject commitments regarding labor and the environment to binding dispute settlement, the TEPA takes a step back.
Article 11.11
Non-Application of Dispute Settlement
No Party shall have recourse to Chapter 12 (Dispute Settlement) for any matter arising under this chapter.
To conclude, India and the EFTA likely got what they wanted. They entered into a trade agreement to facilitate trade and cooperation and gestured towards sustainable development to assuage domestic and international pressure – all while committing to do little more than maintain their laws and talk through concerns. So long as the enforcement of international standards, the product of negotiations on the ILO’s neutral platform, is outsourced to governments armed with their own interests and interpretations, countries like India are on notice to defend themselves by watering down sustainability commitments and excluding those commitments from binding dispute settlement. And, I have a confession. I don’t blame them.
