Thank you for your introduction Mathilde,
Deputy Secretary-General Kono, elected representatives, ladies and gentlemen, good afternoon.
I am grateful for the opportunity to participate in this forum. In my previous portfolio as European Commissioner for Agriculture and Rural Development, my team and I had very open and constructive two-way dialogue with the OECD, and I look forward to this continuing in my new role.
It is very timely and appropriate to host this forum, and I would like to thank the OECD for facilitating our discussion.
We are still in the middle of dealing with the Covid-19 pandemic and policymakers have hugely important choices to make in the coming weeks.
This is a global problem which is affecting citizens everywhere. It is a public health crisis first and foremost, but equally an economic disaster of huge proportions. All sectors of the economy are being hit: demand has dropped, supply chains are disrupted, and investments are put on hold.
Many countries, including a number of EU Member States, have published their plans for phased easing of Covid-19 restrictions. It is important for our citizens and businesses to see light at the end of the tunnel.
However, as I told a meeting of G20 trade ministers last week, there remains an overwhelming need for coordinated action between countries and regions if the exit from Covid-19 is to be coherent and lasting.
The pandemic has proven that we rely on global supply chains to deliver vital goods like medicine and food to where they are needed.
So, solidarity between trading partners is the optimal route to exit - and ultimately recover from – this severe shock to our public and economic health.
The European Union recognises that some things will be different post-Covid-19; there will be a “new normal”. While an open trade policy will be vital for a successful economic recovery, we should also use the opportunity to address some of the shortcomings in the functioning and governance of global trade.
To give just a few examples:
Building strategic stockpiles of vital medical and protective equipment will make regions better prepared for future pandemics.
Diversifying and solidifying supply chains will make our economies less vulnerable and less exposed to power politics.
And strengthening international rules and beefing up our toolbox to protect against unfair practices by others will keep the playing field level.
And returning to the topic of our discussion today: we realise more than ever in the present crisis that it is important for businesses to integrate the interests of our workers, our society, and our planet into their operations.
Integrating better risk mitigation processes and good governance practices across their supply chains will generate a net advantage in the long-term.
Of course, many companies in the EU and beyond realize this and have already integrated these practices into their business models.
They have understood that it is not a burden, but a strategic choice that brings added value to their companies. Now is the right time to assess how we can support even more companies to make this transition.
With this and other priorities in mind, we are conducting an internal review of our European trade and investment policy.
They say there is an opportunity hidden in every crisis, and we are determined to use this unprecedented situation to update and enhance our trade priorities.
We will conduct a wide expert analysis with feedback from our Member States, from the European Parliament, and from all key stakeholders, including employers and trade unions.
I’m pleased to inform my fellow panellist Sharan from ITUC that my next appointment this afternoon is a meeting with ETUC to discuss this and many other important topics!
In line with our commitment to transparency and citizen engagement, we will also conduct a public consultation to hear the views and concerns of Europeans everywhere. I encourage all of you to take part in it.
Our goal is to produce a document that will help us lead from the front in shaping a strong post-Covid global trade and investment environment, with a fit-for-purpose international rulebook underpinning it.
What we are advocating is a model of “Open Strategic Autonomy”: this simply means a coherent set of policies that achieve the right balance between a Europe that is “open for business” and a Europe that protects its people and companies.
Sustainable value chains and due diligence will be an important part of this work. A truly resilient economy is one that protects workers, companies and supply chains, while at the same time safeguarding international trade, keeping our markets open and discouraging import and export restrictions. So rebuilding the economy in an even more sustainable way is not just a plus, it is a necessity.
Keeping all this in mind, you will not be surprised to hear that Responsible Business Conduct will remain hugely important for our trade agenda. We are operating mainly on three fronts:
First, building and promoting international standards, through rule making and capacity building;
Second, using our trade agreements as a platform to engage with partner countries;
And third, developing specific initiatives such as EU legislation on due diligence or conflict minerals.
The EU has been a staunch supporter of international guidelines for responsible business conduct, including those developed by the OECD.
From the outset, we realised that capacity building is key – that is why the EU set up two €9 million training and outreach programmes with our key trading partners in Asia and Latin American, supported by the OECD, ILO, and UN.
Five years after the start of these projects, we see that policymakers and companies in the target countries are realising the importance of sustainability in supply chains for consumers, investors and thus for their business operation. The COVID-19 crisis now adds an extra resilience dimension to this.
For example, in the case of Vietnam, a concrete outcome of our engagement was an updated national textiles strategy that includes a chapter on responsible business.
Together with the OECD we are also supporting dialogue on purchasing practices in Bangladesh – a crucial topic to drive changes in the garment sector - based on the OECD garment guidelines. Of course, responsible business conduct also means ensuring decent and safe working conditions in the current Pandemic context.
EU trade deals and their Sustainable Development chapters support workers’ rights, environmental protection and our ambitious climate agenda as outlined in the European Green Deal. We need to build on this ambition and ensure that enforcement is effective.
In particular, our agreements actively promote the implementation of existing international guidelines on responsible business practices. Let me give you three examples of how this works in practice:
In the context of the EU-Central America Association Agreement, and with the close partnership of the ILO and the OECD, we have organised workshops on responsible business practices in 2017 in Costa Rica and in 2018 in Guatemala. The events brought together policymakers, business, trade unions and civil society, facilitating discussions on Corporate Social Responsibility, and helping to foster capacity-building.
Under the recent CETA agreement with Canada, we have encouraged cooperation between European and Canadian businesses on Sustainable Development guidelines for SMEs.
This focuses on implementing the OECD Guidelines, as well as a compendium on how companies can contribute to the Sustainable Development Goals (SDGs). This is important given that SMEs often lack the means and capacity to do this on their own.
During the first year of the EU-Japan agreement, we have already started discussions on a possible joint action to promote the uptake of Corporate Social Responsibility practices in Asia. We will look to support actions that help to build resilient supply chains following the COVID-19 pandemic.
And the best news of all is that promoting Responsible Business Conduct will be an even bigger priority going forward, as we strengthen our toolbox for implementation of our agreements.
When the situation is acute and public intervention is needed, we have also drafted the necessary legislation. This is the case for due diligence rules for minerals produced in conflict areas.
You know this very well, as we have been working very closely and successfully with the OECD on this in recent years.
The Conflict Minerals Regulation largely takes into account the requirements of the OECD Due Diligence Guidance and will be implemented early next year.
This is an interesting model for further reflection at EU level in relation to how legislation can be combined with international guidelines and existing schemes to ensure these are applied by all. This can help make supply chains cleaner in terms of labour rights and the environment.
This brings me to my final point on the way forward. I will be working hard with my fellow Commissioners in the coming months to drive different initiatives in the context of the post-coronavirus recovery.
While they have their origin in different policy areas, such as corporate governance or the European Green Deal, they share a common view that due diligence can be part of the solution for our businesses.
Companies with due diligence policies in place are likely to build more long-term value and resilience – improving their prospects for recovery.
Commissioner Reynders is leading the work on examining options for regulating due diligence, both in companies’ own operations and through their supply chains. He presented the outcome of a due diligence study in the European Parliament a few weeks ago.
His preference is for a mandatory, horizontal due diligence legislation with possible sectoral guidelines. He indicated that subject to the results of consultations with stakeholders, the Commission would table legislative proposals in 2021 and I will work closely with him on this, given the strong trade dimension involved.
The Commission also launched a review of the reporting obligations of businesses under the Non-Financial Reporting Directive with a view to better integrating environmental and biodiversity criteria.
While horizontal work on due diligence is essential, we also need to be pragmatic and look at how to address the challenges facing specific sectors.
Looking ahead, some further possible actions involving a trade component could include how to implement the Commission’s “zero-tolerance on child labour” commitment. It is obvious that this topic requires a response well beyond trade! That said, there is a clear supply chain due diligence element to this.
I have a keen interest in working on the cocoa sector, which is a big market for the EU. The EU buys almost 64% of Ghana and Ivory Coast cocoa production, which enters duty free, quota free - thanks to the preferential access granted by our Economic Partnership Agreements.
Although the supply chain problems in this sector are not new, there is strong momentum for action at the moment, thanks to recent action by the governments of Ghana and Ivory Coast to support farmers’ income through a guaranteed minimum price for cocoa on domestic and world markets.
Likewise, some leading companies in the sector have shown they are willing to lead the way.
This is why I am keen to support this positive momentum and ensure that the EU prioritises further improvements on child labour and deforestation policies in this sector. I will pursue this agenda in collaboration with fellow Commissioners.
I also want to engage more closely with the EU private sector in this regard, building on the many initiatives that already exist.
The OECD has done important work on due diligence.
I hope we can continue our joint efforts to ensure coherence and clarity of expectations for companies in relation to these initiatives, both in terms of the environmental impact but also in terms of human rights and other social dimensions.
I believe there is significant support from International Organisations, but also from individual European countries and businesses, to do more to achieve the Sustainable Development Goals within our economies.
Due diligence can be part of the solution. When due diligence policies are designed to ensure coherence, avoid red tape and avoid overlapping legislation, they can strengthen the sustainability of our supply chains and make companies more resilient, while at the same time avoiding damage to developing countries that depend on trade.
So, to build a better future we must pledge to keep trade open and transparent, and to make our supply chains more resilient and sustainable through ambitious global partnerships.
The European Union stands ready to maintain its role of global leadership and build stronger partnerships around the world.