Areas Covered
As well as covering trade in goods and services, free trade agreements commonly cover a range of other issues as
- technical and non-tariff barriers to trade
- health and welfare provisions,
- custom and trade facilitation,
- subsidies competition and trade monopolies,
- investment,
- temporary entry of persons,
- recognition of qualifications,
- communications,
- financial services,
- procurement,
- intellectual property,
- trade and labour,
- trading environment,
- dispute resolution
- enforcement and regulatory mechanisms for the agreement.
More modern agreements provide institutions and mechanisms for cooperation in relation to regulation including
- the exchange of information
- consultation in the evolution of standards; and
- ongoing cooperation.
Barriers to Trade
Preferential trade agreement seeks to reduced technical barriers to trade in goods and services. The barriers may be regulations such as labelling, product standards, safety standards, packaging and technical requirements.
Some agreements provide for the mutual recognition of standards and for conformity assessment and in each relevant sector. There may be specific mutual recognition agreements.
Modern free trade agreements also cover issues relevant to trade such as competition policy, public procurement, intellectual property recognition and cooperation between authorities.
Provisions for public procurement are found in many modern -preferential trade agreements. Such agreements allow access to tenders for government contracts for services in the governmental and quasi-governmental sectors.
Recognition of Standards
Free trade agreements commonly embody provisions on the mutual recognition of standards and provisions for conformity assessment. The mutual recognition agreement may apply with countries in respect of which there is no free trade agreement. The EU has mutual recognition agreements with the USA, Australia and New Zealand.
The agreements provide for the assessment of conformity in relation to product standards and technical requirements. They are commonly aligned with international standards applicable worldwide in the sector. They provide for mutual recognition of procedures for testing conformity together with certificates and marks from the relevant bodies. This standardisation is of great importance in facilitating world trade.
The recognition of the procedural aspects of attesting conformity does not necessarily involve recognition of the other state’s regulations or technical requirements or of their conformity or equivalence to domestic law. The third party conformity body may be required to attest standards both domestically and with the those of the other state party.
The agreements generally establish principles with sectoral annexes dealing with the standards and procedures for assessing standards in the particular sectors. Representatives of industry and international regulatory involve may be involved in the conformity assessment procedures.
In the context of Brexit, the position will start with regulatory alignment with the EU, subject to whatever procedures and provisions may apply in respect of maintaining regulatory alignment or preventing regulatory divergence thereafter under an agreement between the UK and the EU.
Human Rights and Standards
Some EU trade agreements have made human rights compliance by the other state party, a condition of the agreement. Commonly, they require compliance with basic human rights provisions and the rule of law.
There are commonly provisions for compliance with environmental and labour standards in accordance with UN and other international bodies’ conventions such as the ILO standards and provisions for sustainable development. This may include adherence to conventions in the areas of environmental protection, endangered species and animal welfare.
Dispute Resolution
Free trade agreements invariably make provision for dispute settlement. Most free trade agreements provide for dispute resolution between states only. There is commonly provision for a joint committee to deal with issues that arise in the course of the agreement. There may be provision for arbitration of disputes or resolution by other means. The World Trade Organisation’s dispute settlement mechanism may be adopted. A complaint is usually made to a joint panel.
Generally, trade agreements do not provide for direct effect. Generally, traders must rely on their own states to take steps, such as to seek trade remedies and countervailing measures. sanctions in the event of a breach.
Provision may be made for the direct settlement of the dispute between individuals and state in the very limited cases. This element is most commonly found in investor disputes. An investor is often given a right to recourse to where the host state violates rights granted by international law, such as by compulsory acquisition or expropriation. Rights may be conferred by the relevant domestic law of the host state.
A thoroughgoing UK – EU Agreement may involve a more comprehensive disputes settlement mechanism, that those commonly provided. It may involve a joint court equivalent to the EFTA court, comprised of EU and UK judges.
In the case of the EU-Swiss bilateral agreements, the Court of Justice of the European Union publishes a decision. This is then referred to a joint committee of Swiss and EU officials which decides how the matter should be resolved in the context of bilateral relationships. It has been difficult for the Swiss side to get any change negotiated in the joint committee because the Commission officials have tended to regard the CJEU judgement as binding and representing the definitive EU law position.
Anti-Dumping
The World Trade Organisation permits states to take unilateral countermeasures against dumping. In the context of free trade agreements, there may be anti-dumping measures where imports sales are made at below cost. Free trade agreements may also provide for trade defence measures with procedural provisions and escalation prior to the application of the measures.
There are mechanisms for retaliatory trade measures to counter dumping and breaches of the agreement by the other party. Regard is had to the interests of various parties including the interests of the EU or itself. There is provision for participation by persons/entities affected in the decision-making process. Trade defence measures may include temporary measures in respect of certain products followed by longer-term measures at the conclusion o the procedure.
Contact McMahon Legal