Recently, the European Union (EU) announced that all its future preferential trade agreements (PTAs) need to include a reference to the ratification and implementation of the Paris Climate Agreement, starting with the trade agreement concluded last year between the EU and Japan. Indeed, the EU-Japan Economic Partnership includes a reaffirmation of the commitment to implement the Paris Agreement.
The move to refer to the Paris Agreement seems to be the result of an initiative by the French government demanding that the Paris Agreement becomes an integral part of future EU trade agreement. The EU’s trade commissioner, Cecilia Malmström, quickly confirmed that this is now the EU’s official policy stance.
Yes Paris deal reference needed in all EU trade agreement today. In Japan agreement and will be in with Mexico and Mercosur..
— Cecilia Malmström (@MalmstromEU) 1. Februar 2018
How can we make sense of this move? While more and more PTAs include environmental provisions, the inclusion of climate-specific provisions is a rare phenomenon. Whereas many countries still shy away from linking trade agreements to climate policy commitments, the EU is the champion of integrating the trade and climate agendas. Against this background, the recent decision to not only make the ratification but also the implementation of the Paris Climate Accord an integral part of EU PTAs seems a logical next step.
History shows that this issue linkage can be effective. Five years ago, the EU requested Russia to ratify the Kyoto Protocol before approving its WTO accession. This suggests that more can be done for environmental purposes in cases the EU leverages its trade power.
Consequences for US withdrawing from Paris Agreement
What are the likely consequences? In light of the announcement of withdrawal of the United States (US) from the Paris Agreement most commentators discussed the implications of the EU’s new initiative for the TTIP negotiations. However, since the TTIP negotiations are on hold due to the more protectionist policy stance of the Trump administration, the practical impact on the transatlantic trade relations is limited.
Implications for developing and emerging countries
At the same time, if one takes a closer look at the ratification list of the Paris Agreement it becomes apparent that Colombia and Turkey, which are currently negotiating trade agreements with the EU, have not yet ratified the Paris Agreement. They would have to ratify Paris before being able to strike a trade deal with the EU. In addition, the fact that a number of African, Caribbean, and Pacific (ACP) countries have not yet ratified Paris could become an issue in case the EU and the ACP countries were to re-negotiate their Economic Partnership Agreements (EPAs).
After all, the inclusion of references to the Paris Climate Accord in future EU trade agreements insures against the potential withdrawal of the EU’s partner countries, following the example of the Trump administration, from the Paris Climate Accord.