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2 Fév 2023

How do UK trade agreements measure up on human rights?


We have applied our human rights tests to the UK's post-Brexit Free Trade Agreements, revealing significant gaps in human rights protections. This presents an opportunity for the UK to set a new trade strategy which promotes human rights.

The UK has the opportunity to play a significant role in shaping a world trading system that promotes and protects human rights as an independent trading nation with its own seat at the World Trade Organisation. Yet the Free Trade Agreements (FTAs) negotiated since the UK left the European Union (EU) have fallen worryingly short on human rights, wasting their potential to drive prosperity and rights-based sustainable development.

Our four key human rights tests for UK Free Trade Agreements distinguish responsible trade deals which respect and enhance human rights from those which could lead to harm for workers and communities. Applied to post-Brexit FTAs, this analysis demonstrates these agreements have thus far missed the mark. An important opportunity exists to ensure the UK’s future deals do not replicate this pattern and instead proactively centre human rights in trade policy.

Our four tests call for UK trade agreements to:

  • contain enforceable human rights conditions
  • be subject to an independent human rights and environmental impact assessment
  • contain enforceable human rights obligations on businesses and investors
  • exclude the investor-state dispute settlement mechanism

Context: The state of play with UK trade agreements

Since leaving the EU single market in January 2021, the UK has implemented an independent trade policy.

The Government has made negotiating new agreements a central priority of this trade policy. Most of the UK’s trade agreements are simply "rolled over" versions of EU trade agreements. However, the UK has negotiated a number of new FTAs since Brexit: with the EU, Japan, Australia and New Zealand. The Australia and New Zealand agreements are the first UK FTAs not based upon a pre-existing EU deal. The UK has also acceded to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a deal with 11 signatories (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam).

In addition, the UK is in the process of negotiating further FTAs with Canada, the six-country Gulf Cooperation Council, India, Israel, Mexico, South Korea and Switzerland.

A single coherent strategy for trade policy, which lays out how human rights will be protected within trade agreements, is urgently needed. This has been called for by parliamentarians as well as business and civil society groups. These four tests provide a basis for such a strategy.

The following sections will analyse the extent to which the UK’s FTAs, including those currently in negotiation, meet the four key human rights tests.

Test 1: Agreements should contain enforceable human rights conditions

What the test says:

UK FTAs should be contingent on the mutual implementation of core United Nations (UN) and International Labour Organization (ILO) human rights conventions. This would ensure trade deals support commitments to human rights around the world.

What's happening:

Hover over each trade agreement for more details

The UK has demonstrated an openness to including chapters covering human rights and labour rights in its trade agreements. However, recent agreements have seen the UK regress sharply on this front. Comparison with the EU’s approach – which increasingly seeks to improve human rights protections in trade agreements, including through enforcement mechanisms – only compounds this regression.

Trade agreements create the conditions for increased trade, and therefore run the risk of increasing the exploitation of workers and communities in pursuit of this growth. This risk is widely recognised, with the ILO referring to “the need to create a minimum social foundation for the development of trade”. States have increasingly included safeguards in trade agreements to uphold human rights. For example, 85 of the 293 FTAs in force in 2019 contained labour chapters create commitments around labour rights.

The most effective of these chapters refer to core UN and ILO conventions and contain enforceable consequences (such as the suspension of the trade agreement) if rights violations occur. These provisions can be found in certain UK agreements.

For example, the UK-EU agreement has been praised by trade unions for its strong provisions on human rights and labour rights. Not only does the agreement commit both parties to upholding the ILO core conventions and to not regressing from existing levels of rights protections, it also contains an enforcement mechanism which can result in penalties if either party fails to uphold these commitments. However there is a further requirement: to trigger penalties, violations of labour rights must be proven to be "trade-affecting". This is a high bar since it’s challenging to prove a directly causative relationship between domestic policies and trade flows. Although the UK-EU agreement is one of the strongest examples of a trade agreement which contains a mechanism to uphold rights, the "trade-affecting" test means even this agreement falls short.

The approach taken to respecting rights in the UK-Japan agreement replicates the model followed by the EU: a Trade and Sustainable Development (TSD) chapter which commits both parties to core labour rights and provides for a monitoring committee to track compliance. This is welcome, but is undermined by a relatively weak enforcement mechanism. Suspected violations can lead to consultations between the two governments and, if a resolution is not reached, will go in front of an expert panel. This approach has been criticised as ineffective and cumbersome, and the European Commission is in the process of reforming TSD chapters to address some of their shortcomings.

While the EU looks to improve its approach to human rights protections in new trade agreements, the UK is moving in the opposite direction.

The UK’s approach to trade and human rights has been called out as inconsistent by the UK Parliament’s International Trade Committee, which noted FTA partners are held to lower human rights and labour rights standards than countries offered enhanced access to the UK market via the ‘Developing Countries Trading Scheme’.

The UK agreements with Australia and New Zealand – the first entirely new agreements struck post-Brexit – include chapters committing both parties to endorsing the ILO Declaration on labour rights, as well as a variety of other "non-trade" provisions covering gender, development and the environment. However, none of these provisions are enforceable. This means failure to meet these commitments will result in zero consequences – if they have any value at all, it’s strictly symbolic.

In the months since signing the Australia and New Zealand agreements, the UK Government has further softened its commitment to human rights in trade policy. The Minister for Trade Policy has announced: “Free trade agreements are not always the best way to engage on human rights—there are often better ways to do that—but we do make sure that, wherever appropriate, human rights are included in free trade agreements.” References to human rights in the "strategic approach" documents which the DIT publishes prior to each negotiation have been limited to simply recognising human rights concerns have been raised in response to its consultation and committing to continue working internationally to promote human rights.

On labour rights, the DIT states one of its aims for negotiations with India and the Gulf Cooperation Council (GCC) as “to reaffirm parties’ commitments to international labour standards, including at the ILO”. Since neither India nor five of the six GCC nations have ratified the key ILO conventions 87 and 98, on Freedom of Association and Collective Bargaining, it is unclear what this "reaffirming" is supposed to achieve.

The CPTPP already includes a TSD chapter, although in common with the EU’s TSD chapters, it lacks enforceability. The labour chapter of the CPTPP agreement commits signatories to uphold labour rights. However, it requires any violations to be proven to be "trade-affecting" and allows for the triggering of a dispute settlement mechanism only once a further test has been met: “parties shall make every effort through cooperation and consultation based on the principle of mutual respect to resolve any matter". These provisions mean CPTPP is unlikely to be effective at supporting high labour standards. Indeed, other members of the CPTPP include Vietnam, where independent unions are not permitted.

Human rights protections in trade agreements would be popular with the UK public. Polling released by the Department for International Trade (DIT) in February 2022 shows "respect for human rights" and "strong workers’ rights" are the public’s top considerations when determining whether a country is an appealing trading partner.

The UK should:

  • Publish a strategy making it clear it will only sign FTAs with countries which have ratified and effectively implemented the core UN and ILO human rights conventions
  • Negotiate FTAs which commit each party to upholding human rights and labour rights
  • Include an enforcement mechanism in all FTAs which allows for trade sanctions if either party fails to satisfy these commitments

Test 2: Agreements should be subject to an independent human rights risk assessment

What the test says:

Modern, comprehensive trade agreements of the type the UK is aiming to negotiate have potentially far-reaching economic, social and environmental impacts. Before any new FTA is signed, an independent human rights and environmental impact assessment (HREIA) should be carried out to identify the key risks the agreement poses to human rights and how these risks might be mitigated.

What's happening:

Hover over each trade agreement for more details

Human rights and environmental impact assessments (HREIAs) are an essential way to ensure more trade does not come at the expense of human rights. The UK Government has failed to conduct an HREIA of any new or potential trade agreement. Every UK trade agreement therefore fails to meet this test. Given the UK’s current policy and commitment is to conduct a general impact assessment as well as an environmental assessment of each FTA prior to ratification, adding a human rights assessment to these processes would be a progressive and achievable step forward.

HREIAs will only become more critical as the UK negotiates FTAs with countries with concerning human rights records. As the UK Parliament’s Joint Committee on Human Rights recommended in 2019, “[t]he Government must undertake adequate human rights analysis of all international agreements as part of its internal sign-off process. For simpler agreements there should be a memorandum. For more complex agreements (such as complex trade agreements) a human rights impact assessment might be more appropriate.”

While HREIAs should be conducted and published in advance of the signing of an FTA, retrospective analysis is also critical. Chatham House has concluded:

“Ex ante human rights impact assessments have struggled to provide compelling analyses of the relationships between trade agreements and the enjoyment of different human rights, let alone a clear roadmap for policymakers and trade negotiators as to what should be done.”

Retrospective analysis would fill the gaps inevitably left by ex ante assessments, and the findings of both types of assessment would be invaluable in shaping future trade negotiations.

The UK has ample opportunity to learn from emerging international good practice. In 2011 the UN Rapporteur on the Right to Food submitted ‘Guiding principles on human rights impact assessments of trade and investment agreements’ to the Human Rights Council. Over the last decade, the EU has been including human rights in its Sustainability Impact Assessments, conducted during trade negotiations, while the UN Economic Commission for Africa and Friedrich-Ebert-Stiftung have collaborated on a thorough Human Rights Impact Assessment of the African Continental Free Trade Agreement.

The UK should:

  • Commission independent human rights impact assessments of all FTAs, both in advance of signing and on a retrospective basis

Test 3: Agreements should contain enforceable human rights obligations on businesses and investors

What the test says:

FTAs aiming to promote human rights should create opportunities and incentives, such as human rights criteria for public procurement, export credit and tariff reductions, to promote responsible business. To ensure a level playing field, they should also create mechanisms to hold corporations accountable, and impose penalties for failure to uphold human rights and environmental protections.

What's happening:

Hover over each trade agreement for more details

Trade agreements offer companies greater freedom and opportunity to do business internationally; they should also place obligations on companies to act in support of human rights and the environment. The UK’s post-Brexit trade agreements have failed to meet this test across the board. Agreements currently in negotiation present an important opportunity to shift course, although available information relating to these negotiations provides little evidence improvements are forthcoming.

International examples show trade agreements can be an effective mechanism via which to raise the standards of corporate behaviour; not least since the prospects of lower tariffs and greater market access can be effective incentives to drive change in corporate practices. A key model may be found in the Rapid Response Mechanism in the US-Mexico-Canada (USMCA) agreement. This allows for the benefits of the trade agreements to be withdrawn from a particular factory, company or sector in the event a labour rights violation is uncovered, and is already starting to translate to benefits for workers and communities. For example, when Triondex, a manufacturer of car parts, fired more than 1,000 Mexican workers who had affiliated with an independent trade union, the union brought a complaint under the Rapid Response Mechanism which resulted in an agreement securing workers back pay, severance pay, plus a commitment from Triondex to respect workers’ rights to organise.

Another means through which trade policy can be used to address human rights is through the use of import controls, which prevent goods from entering a market if there are reasonable grounds to suspect supply chain abuses. Import controls are becoming an increasingly popular tool through which states can address forced labour and child labour in their international supply chains. They have been used to great effect by the USA in recent years: the imposition of so-called Withhold Release Orders by the US Customs and Border Patrol has led Malaysian manufacturers of medical equipment to repay migrant workers a total of nearly $30m in recruitment fees. Canada, Mexico and the EU are developing similar approaches. Import controls could either be incorporated into the terms of a bilateral FTA or, for more comprehensive coverage, introduced by the UK on a unilateral basis.

The UK should:

  • Explore options for including a USMCA-style "Rapid Response Mechanism" in future FTAs
  • Introduce import controls to prevent goods produced as a result of forced labour from entering the UK market

Test 4: No Investor-State Dispute Settlement

What the test says:

The UK should not sign any new trade and investment agreements containing an Investor-State Dispute Settlement (ISDS) mechanism. ISDS allows corporations to sue states through an opaque parallel legal system if government polices threaten corporate profits – even if those policies are designed for the common good and to protect human rights and the environment. Corporations have already used ISDS to sue governments more than a thousand times, including over laws aimed at raising minimum wages, guaranteeing affordable water to citizens and phasing out the use of fossil fuels.

What's happening:

Hover over each trade agreement for more details

In apparent recognition of the dangers of ISDS, these mechanisms are absent from the UK’s trade deals with the EU, Japan, Australia and New Zealand. Additionally, the DIT has stated that one of its aims for the UK-Canada negotiation is to “ensure the agreement does not contain an investor state dispute mechanism”. However, the UK's accession to the CPTPP agreement in March 2023 at a stroke extended the opportunity to sue the UK state over policies which threaten corporate profits to investors from Japan, Canada and Mexico.

Eliminating ISDS mechanisms from FTAs would materially improve corporate accountability for human rights abuses. The dangers ISDS poses to a fairer, greener world have been well documented. We have highlighted the risk ISDS could frustrate the introduction of corporate accountability legislation in countries like the UK. Furthermore, the International Panel on Climate Change’s 2022 report specifically mentions the risk ISDS poses to the fight against climate change.

As set out above, ISDS mechanisms are notably missing from a number of key UK agreements: an important step forward in human rights protections. The UK should build on these examples and pursue consistency, pursuing "side-letters" with other CPTPP signatories to suspend the application of ISDS in that agreement.

In other ongoing negotiations, the UK has neither explicitly supported nor rejected ISDS. With the GCC, for example, the UK has a stated objective of negotiating “a legal framework of clear and transparent investment rules”, while with India the DIT claims it will “seek to ensure that UK investors and their investments overseas receive fair, adequate and non-discriminatory treatment”. These vague statements leave wide open the possibility the ISDS mechanism will feature in future UK FTAs.

There are positive examples of other countries showing leadership in rejecting the ISDS system. New Zealand has negotiated "side-letters" suspending the application of ISDS with five other CPTPP signatories. In 2022 a number of European countries including Spain, France and Germany announced their intention to withdraw from the Energy Charter Treaty, an international agreement containing ISDS. The UK should follow suit.

The UK should:

  • Publish a clear position statement indicating ISDS will not feature in future UK trade agreements
  • Urgently explore the use of side-letters to ensure the UK is not exposed to ISDS as a member of the CPTPP agreement

In conclusion

The UK’s approach to trade since Brexit has been haphazard, and there has been little indication the UK Government has a settled view of how trade agreements interrelate with the UK’s broader international goals such as human rights, labour rights and climate.

These issues are too important to depend on the dynamics of individual trade negotiations. Trading partners with poorer human rights records – with whom such protections are especially vital – will likely be reluctant to negotiate anything binding on human rights. This leaves the UK on a path to weak agreements which explicitly place human rights far down their list of priorities and serve to undermine the UK’s broader international priorities.

There is an urgent need for coherence. The UK should set out clearly in a trade strategy how its trade policy will support human rights, labour rights and the climate, including how each trade agreement will meet the four tests laid out here.

Briefing page amended 31 March 2023 following the UK’s accession to CPTPP.

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