As part of a coherent foreign policy, sustainability is a key element in free trade agreements. The aim is to negotiate agreements that are compatible with sustainable development in Switzerland and its partner countries, to promote sustainable trade and to prevent environmental and social dumping.
Sustainable development in free trade agreements
As part of a coherent economic policy, Switzerland aims to sign agreements that enable sustainable growth in Switzerland and its partner countries. To help achieving this objective, Switzerland is committed to including specific provisions governing the social and environmental aspects of trade whenever it negotiates new or updates existing free trade agreements (FTAs).
These provisions apply to all sectors covered by the FTAs, including agri-food production, and reflect the commitments made by the countries working towards the United Nations Sustainable Development Goals (SDGs). These establish a common framework that parties undertake to observe in their preferential trade arrangements so that the economic objectives of the FTAs align with the parties’ aims in terms of protecting the environment and workers’ rights.
Switzerland and its fellow EFTA members drew up the first model chapter on trade and sustainable development for FTAs in 2010. This model chapter was revised between 2017 and 2020, both in terms of its content, adding new provisions on specific issues, and at institutional level, strengthening the dispute resolution mechanism.
Monitoring the implementation of these provisions is the responsibility of the Joint Committee of the Contracting Parties under the respective Agreement. Further information on the priorities of Switzerland and the other EFTA States in this regard can be found on the EFTA website.
The key elements of the revised model chapter
The parties confirm their intention to uphold the principle whereby economic development, social development and environmental protection form independent pillars of sustainable development and undertake to develop international trade in a way that benefits everyone.
They also acknowledge the main international instruments for protecting the environment and workers’ rights, including the 2030 Agenda for Sustainable Development.
The chapter recognises the parties’ right to set their own national levels of protection for the environment and labour while striving for the highest possible level of protection in these two areas.
The parties commit to applying their national legislation effectively in terms of protecting the environment and workers. They also undertake not to reduce the level of protection afforded nationally in order to attract investments or obtain a competitive trade advantage. In addition, they agree not to offer companies any opportunity to deviate from current environmental or labour law.
The thematic and institutional articles of the revised sustainability chapter are presented below
Protecting workers’ rights
The parties confirm their obligations to uphold, promote and implement the International Labour Organization’s principles of the fundamental rights at work (freedom of association, elimination of forced labour, abolition of child labour, equality) and recognise the ILO Decent Work Agenda. The article also stipulates the effective implementation of the ILO Conventions ratified by the parties and a commitment to work towards ratifying other Conventions categorised as “up-to-date” by the ILO.
The new article adds new obligations regarding implementing social security, occupational health and safety and fair wages measures at national level, fostering social dialogue and tripartism and introducing a working labour inspection system. Another new provision is designed to ensure that administrative and judicial procedures are put in place to enable any infringements of workers’ rights to be remedied effectively.
A new article on trade and climate change has been added. This underlines the importance of pursuing the aims of the United Nations Framework Convention on Climate Change (UNFCCC) and the Paris Agreement in order to combat the danger posed by climate change. At operational level, the parties undertake to fulfil their obligations under the Paris Agreement effectively and promote the transition to a low-carbon economy.
Sustainable management of natural resources
The revised chapter pays particular attention to developing a trade in natural resources such as forestry products, fish and wildlife that is based on sustainable principles. The focus here is on preventing the trade in products sourced illegally and promoting the trade in products that help to preserve biodiversity.
The article on the sustainable management of forestry resources emphasises the importance of sustainable forest management as a way of reducing greenhouse gas emissions and the loss of biodiversity due to deforestation and the destruction of natural forests and peat bogs. The parties commit to promote the effective application of forestry law and good governance. They also commit to developing and applying certification schemes for products from sustainably managed forests and to ensuring the effective implementation of instruments geared towards abolishing the trade in products from illegally extracted timber.
Switzerland recently aligned its law protecting forestry resources with the EU’s Timber Regulation. Any importer wishing to bring timber into the Swiss market has to demonstrate that due diligence has been applied. Specifically, information on the origin and type of the timber must be provided when it is imported.
The new article on trade and biodiversity underlines the importance of conservation and the sustainable use of biodiversity and envisages the active application of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Measures must also be taken at national level to fight effectively against transnational wildlife crime at every step of the value chain. In addition, the article contains a clause which aims to strengthen efforts to combat the spread of exotic invasive species through trade.
Sustainable management of marine resources
The new article on trade and sustainable fishery and aquaculture management is geared towards the conservation and sustainable management of marine resources and aquatic ecosystems. It contains a commitment to formulate and implement measures and policies to combat illegal, unreported and unregulated (IUU) fishing in an effective and transparent way. To this end, the parties undertake to exclude products of IUU fishing from trade flows by introducing national catch certificate schemes.
Switzerland has adopted such a scheme, introducing an ordinance on monitoring the legal origin of imported marine fishery products in 2017.
In this new article, the parties recognise the importance of sustainable agricultural and food systems and the role that trade plays in achieving this objective. Specifically, the article foresees the establishment of a bilateral dialogue on best practices for sustainable agricultural and food systems, in which the parties undertake to report regularly on their progress.
Sustainable supply chains
The article encourages trade and investment conducive to sustainable development by supporting, in particular, the development and application of sustainability certification schemes. These help to make products more transparent and traceable at every step of the supply chain.
Responsible business conduct
In this new article, the Parties commit themselves to promote responsible business conduct. Private companies are encouraged to develop sustainable supply chains and manage them responsibly. The parties confirm their commitment to the relevant international instruments: the OECD Guidelines for Multinational Enterprises, the ILO’s Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, the UN Global Compact and the UN Guiding Principles on Business and Human Rights.
Inclusive economic development and equal opportunities
This new article stresses the importance of inclusive economic development and equal opportunities for all. The parties acknowledge the importance of implementing measures that take gender into account. At operational level, the parties undertake to introduce the international instruments applicable to them with regard to gender equality and non-discrimination.
Monitoring compliance with sustainability regulations
The FTA joint committees, which meet regularly, are directly responsible for monitoring compliance with sustainability regulations. To prepare for these meetings, SECO gathers information relevant to the fulfilment of the obligations in the sustainability chapters from various sources (in particular competent federal offices, Swiss representations abroad). Civil society is also invited to help monitor compliance with sustainability regulations. The relevant information can be shared with the authorities in various forums, such as the EAER’s Economic Policy Committee, or in the WTO/FTA Liaison Committee, a forum open to all interested parties. The Tripartite Federal Commission on ILO Affairs also informs about and holds discussions on the implementation of FTA provisions on labour standards.
Strengthening the dispute resolution mechanism
In the past, the only way to resolve any disputes was through consultations. The introduction of a panel of experts in the revised model chapter now provides another way to help settle any disputes that the joint committees or other forms of consultation have failed to resolve. Detailed criteria are set out for the composition and work of this panel:
(i) Members must be recognised experts in the relevant field and be independent of the party governments.
(ii) The panel is tasked with drawing up a report containing recommendations for ending the dispute.
(iii) The report and the recommendations are to be made public.
(iv) The parties shall meet to agree on actions to take to implement these recommendations.
(v) The joint committee is responsible for monitoring the implementation of the recommendations.