Negotiating sustainable trade: explaining the difference in social standards in US and EU preferential trade agreements

Since the early 2000s, both US and EU Preferential Trade Agreements (PTAs) include social standards that aim to protect workers and the environment. However, the US and the EU have chosen fundamental different approaches for the enforcement of these clauses. While the US pursues a sanction-based approach, the EU solely relies on dialogue and cooperation mechanisms. Hence, to the surprise of many, social standards in U.S PTAs appear to be stricter than the ones in EU PTAs. Why do the two biggest trade powers of the world handle social clauses in PTAs so differently? In this paper, I argue that disparities in domestic politics account for their different strategies towards social standards. Drawing on the principal-agent literature, the paper analyses the PTA negotiations of the US and the EU with Peru and Colombia.