Unravelling the Puzzle of Social Standards’ Design in EU and US Trade Agreements

ABSTRACT

The European Union (EU) and the United States (US) are signing preferential trade agreements (PTAs) increasingly used as vehicles for exporting social regulation, such as labour and environmental standards. Despite the similarity in terms of the inclusion of such provisions, their design varies greatly between US and EU agreements. The US exports its domestic standards, relying on coercive enforcement, while the EU emphasises international rules and soft measures. Why do US PTAs have stricter social standards than those signed by the EU? Using the principal–agent approach to explain the domestic politics of social provisions in EU and US PTAs, I argue that greater insulation of trade executives from interest groups and legislators results in their ability to set the agreement agenda independently, in accordance with their normative preferences. The argument is supported by case studies and original interview data.

KEYWORDS:

• Preferential trade agreements
• labour
• environment
• principal-agent analysis
• EU
• US

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Evgeny Postnikov is Lecturer in International Relations in the School of Social and Political Sciences at the University of Melbourne. His research interests centre on international political economy, especially trade policy and its links with social issues, such as labour rights and the environment. Prior to joining the University of Melbourne, he was Lecturer in International Relations at the University of Glasgow. He completed his PhD at the University of Pittsburgh in 2014.

Notes

1. OEP is a popular approach among the scholars of international political economy. It derives actors’ interests over economic policies from their position within the international economy, relying on economic theories of preference formation, analyses how those interests are aggregated through domestic institutions and looks at how interstate bargaining shapes final policy outcomes.

2. Notable exceptions are De Bièvre and Dür (2005) and Conceição-Heldt (2013).

3. The US also includes collaborative mechanisms in social chapters in its PTA; however, they do not serve as a means of enforcement and, according to USTR officials, do not play a great role in instigating domestic change it trading partners (author’s interviews, 9–10 May 2017).

4. Kerremans and Gistelinck (2009) is a notable exception.

5. Both DG Trade and USTR work with other agencies (e.g. DG Employment or the Department of Labor), depending on an issue but remain leading agencies responsible for the negotiations’ agenda.

6. Interview data help to corroborate this claim and avoid the pitfall of deducing preferences from observed behaviour.

7. See the Appendix for the list of respondents.

8. Manners (2002) describes the EU as ‘normative power’.

9. Scholars pointed at the variety of strategies, such as cognitive framing and manipulation of discourse, used by the Commission to overcome pressures from societal actors and shape the trade agenda (Siles-Brügge 2011).

10. Thus, some NGOs, such as the Global Trade Watch, implied that the fears about the lack of enforcement were not necessarily justified (De Palma 2001).