C. EU Investment Protection Agreements

and Save the Children and the series of guidance documents developed by UNICEF as sources of reference. Finally, it calls for “complementary measures such as the prohibition of the importation of products related to severe human rights violations such as forced labour or child labour; stresses the importance of including the objective of combating forced labour and child labour in Trade and Sustainable Development chapters of Union trade agreements” (2020/2129(INL)).

In terms of enforcement, the report provides for the need for each Member State to designate a national competent authority responsible for the supervision of the application of the Directive, with the power to impose sanctions. The text refers in particular to “proportionate sanctions to infringements of the national provisions adopted in accordance with this Directive” (art. 18). Article 18.2 further specifies that:

The competent national authorities may in particular impose proportionate fines calculated on the basis of an undertaking’s turnover, temporarily or indefinitely exclude undertakings from public procurement, from state aid, from public support schemes including schemes relying on Export Credit Agencies and loans, resort to the seizure of commodities and other appropriate administrative sanctions. (2020/2129(INL))

The draft text also provides for a civil liability provision whereby “undertakings” should, “in accordance with national law be held liable and provide remediation for any harm arising out of potential or actual adverse impacts on human rights, the environment or good governance that they, or undertakings under their control, have caused or contributed to by acts or omissions” (2020/2129(INL), art. 19.2), which is coupled with a due diligence defence (art. 19.3).

C. EU Investment Protection Agreements

Trade policy concerns just as much the international trade of goods and services as it does cross-border investments. Net outflows of EU foreign direct investment were USD 246 billion in 2019 (BoP, current USD) (International Monetary Fund, n.d.). Signed on a bilateral basis, investment protection agreements (IPAs) help “protect and promote investment of European companies abroad” by protecting the assets of European companies “against practices by the host State, which are prohibited in the EU” (European Commission, 2020a, pp. 1–3). As of 2020, EU Member States were party to some 1400 IPAs with third countries (European Commission, 2020a).

Such protection does not translate into a carte blanche for corporations operating abroad: as the EU IPAs “only provide protection for investments that are in accordance with domestic legislation,” companies “are therefore legally bound by all the obligations contained in the domestic legislation of the host State, including environmental or labour protection or respect of human rights” (European Commission, 2020a, p. 4). Yet in a competitive investment climate, there is the real danger that exporting countries relax or simply do not enforce labour standards “in order to attract foreign investment” in the first place (Titievskaia et al., 2021, p. 2).