- Binding law, soft treaties: The CSDDD has made due diligence mandatory inside the EU, while trade agreements still ask partners merely to "promote" corporate social responsibility.
- Sanctions remain the exception: Trade remedies for serious breaches appear in only four of the agreements concluded since the Commission’s 2022 review, and Chile, Kenya, Mercosur, Mexico, and India are not among them.
- Pressure from both superpowers: The Turnberry deal commits the EU to ensuring the CSDDD does not unduly restrict transatlantic trade, while new Chinese rules restrict the supply chain information the law requires.
- Due diligence rules outpaced trade deals: As sustainability due diligence becomes legally binding, EU trade agreements should help implement these rules and advance their adoption globally.
- Enforcement at the factory gate: The USMCA’s Rapid Response Mechanism can suspend preferential tariffs for a single facility that denies workers’ freedom of association, a compelling template for linking market access to sustainability.
- A window in Southeast Asia: Malaysia, the Philippines, and Thailand are negotiating with the EU just as they adopt forced labour bans and due diligence legislation.
The adoption of EU supply chain due diligence instruments, most notably the Corporate Sustainability Due Diligence Directive (CSDDD), should mark a watershed in the EU’s model for linking trade to sustainability.
Due diligence is no longer voluntary but legally binding in the EU, a shift that has drawn pushback from the United States and China and created compliance headaches. It is therefore crucial to leverage trade policy to safeguard the effectiveness of EU law. This calls for a thorough rewriting of the so-far ill-suited Trade and Sustainable Development (TSD) chapters in trade agreements, and for drawing lessons from innovative mechanisms that operate at the level of traders and factories and can be triggered by non-state actors.
European citizens’ support for due diligence rules has been strong, but that confidence erodes when barriers are lifted for products that appear to be made under far lower standards. Effectively enforcing stronger sustainability mechanisms vis-à-vis trading partners would address this perceived unfairness, help narrow the gap by raising standards abroad, and strengthen the legitimacy of both the EU’s trade agenda and its social and green one.
The slow hardening of trade and sustainable development rules
Sustainability entered EU trade policy gradually. The Lisbon Treaty marked a turning point, embedding sustainable development in the Common Commercial Policy. The EU-Korea trade deal (2009) packaged, for the first time, labour and environmental commitments into a single so-called TSD chapter. Disputes would go through consultations and non-binding expert panels rather than the general dispute settlement mechanism, so breaches could not trigger trade sanctions.
This soft model was tested in the only TSD dispute to date: the 2018 case against Korea over its delayed ratification of four International Labour Organization (ILO) conventions. The panel found Korea in breach of its commitments, and Seoul’s Democratic government, already committed to labour reform, ratified three conventions. Critics nonetheless argued that the Commission’s approach was not tailor-made, and that it failed to fully use its leverage to press harder on collective bargaining and the right to strike.
The Commission strengthened its TSD approach in 2022, adding trade remedies for serious breaches of ILO core conventions and the Paris Agreement as a last resort. This approach has so far been followed in only four of the agreements concluded since then: New Zealand, Indonesia, Australia, and four Eastern and Southern Africa states. Others continue to exclude sanctions for TSD breaches: Chile, Kenya, Mercosur, Mexico, and India.
Corporate social responsibility (CSR) language entered EU free trade agreements (FTAs) with the EU-CARIFORUM Economic Partnership Agreement (2008), which called for cooperation on "promoting" CSR. The EU-Korea FTA (2009) incorporated a distinct CSR clause inside the first TSD chapter, a formula since replicated across all EU deals in different forms. Earlier agreements merely commit parties to facilitate trade in goods subject to voluntary CSR schemes, as in Korea, or to promote "best practices", as in Colombia, Peru, and Ecuador. Later ones often address responsible supply chain management and commit to supportive policy frameworks — those with the United Kingdom, New Zealand, and Mercosur among them — with Indonesia’s Comprehensive Economic Partnership Agreement (CEPA) even requiring coherence between domestic law and CSR principles, and its Protocol on Sustainable Palm Oil explicitly engaging with due diligence requirements under the EU Deforestation Regulation (EUDR).
Despite this proliferation, CSR clauses remain remarkably weak. The wording relies on soft formulations such as "encourage" and "promote", and on references to voluntary standards, while the scope and extent of the commitments are often left unclear. Their enforceability is minimal even under the new TSD approach, where sanctions do not apply to these clauses.
The European Parliament, in resolutions from 2010, 2013, 2016, and 2017, has repeatedly called for these provisions to be strengthened and updated, but with little success to date.
How to make trade agreements work for supply chain due diligence
The rejection of the old assumption that CSR should be voluntary has recently transformed voluntary supply chain due diligence standards into binding EU law, notably through the CSDDD and the EUDR. This fundamental shift calls for a profound rethink and update of the related provisions in EU trade agreements.
Such an update is all the more necessary against the backdrop of growing resistance from the EU’s largest trading partners to its due diligence agenda. On the one hand, US concerns over its extraterritorial application to American companies fed into the EU-US Turnberry deal (2025), under which the EU committed to ensuring that the CSDDD would not unduly restrict transatlantic trade. The Omnibus reform narrowed and delayed the law, but Washington has since argued that these changes do not go far enough and is pressing the EU for further concessions. On the other, China has adopted new regulations that increasingly complicate CSDDD implementation by restricting the gathering of supply chain information, and that expose companies making CSDDD-driven decisions to Chinese countermeasures.
TSD chapters should therefore acknowledge and better anchor the new binding due diligence standards and, as in the EU-Indonesia CEPA’s protocol on palm oil, commit parties to facilitating corporate compliance. This includes protecting supply chain information flows. They should also secure transnational administrative and judicial enforcement cooperation. Trade remedies should apply to these provisions, so that partners cannot undermine due diligence implementation without consequences. In this context, awareness-raising, technical assistance, and capacity-building will be crucial.
EU trade agreements should also go a step further in promoting CSR, by committing parties to align their legislation with international due diligence standards and to support their codification in multilateral fora. This could build on the recent wave of new forced labour import bans in a number of countries, triggered by US investigations and subsequent tariffs over the absence of such bans. Some of these countries, including Malaysia, the Philippines, and Thailand, are currently negotiating trade agreements with the EU. Their embrace of due diligence legislation presents an opportunity to update the EU’s CSR approach. Thailand may provide a natural first test case: not only has it committed to adopting a forced labour import ban, it is also working on a draft act on human rights and environmental due diligence.
Beyond state-to-state: trade rules can target the factory floor
State-to-state mechanisms like TSD chapters are, however, weak, slow, and dependent on political will. This makes a recent yet still marginal trend particularly worth examining: sustainability requirements in trade agreements applied directly to operators rather than governments.
The EU-Mercosur deal offers one example, although narrow in scope and of questionable impact: it conditions preferential access for fresh egg exports to the EU on compliance with the EU’s hen welfare standards.
A more compelling innovation emerged outside the EU: the US-Mexico-Canada Agreement’s Rapid Response Mechanism (RRM), secured by the Democrats as a condition for approving the deal. Under the RRM, a party can request an independent panel to investigate an alleged denial of freedom of association or collective bargaining rights at a specific firm or facility. If the panel confirms a violation, preferential tariff treatment for that facility’s exports can be suspended. Repeated violations can result in a bar on market access.
The RRM is not without flaws: it is asymmetric, as it restricts Mexico’s ability to challenge US or Canadian facilities; it is resource-intensive; and it excludes agriculture. It also cannot be easily replicated, as it was the result of a convergence of incentives, including political and union pressure on the US side, Mexico’s dependence on the US market, and López Obrador’s labour reform programme. Nonetheless, it offers a powerful template for enforcing sustainability obligations — potentially extending beyond labour rights to environmental, climate, or animal welfare standards — that could complement the EU’s TSD architecture where politically feasible.
The EU cannot leave its trade policy anchored in the era of non-binding pledges. Trade agreements must catch up through stronger TSD provisions and more responsive enforcement mechanisms to uphold EU rules and drive global convergence towards higher standards of responsible business conduct.
The views expressed in this article are strictly personal and do not represent the positions of the European Parliament or the S&D Group.
