FROM STATES TO FIRMS: CORPORATE DUE DILIGENCE AND THE LIMITS OF TRADE-BASED LABOUR GOVERNANCE UNDER THE EVFTA

Abstract

This article examines whether the Corporate Sustainability Due Diligence Directive (CS3D) can overcome the structural limitations of labour governance embedded in EU free trade agreements, with particular reference to the EU–Vietnam Free Trade Agreement (EVFTA).
It argues that the ineffectiveness of trade-based labour provisions is not a technical failing but the manifestation of a deeper structural misalignment: free trade agreements bind states, while labour violations occur within private, transnational production networks that treaty law cannot directly reach. The CS3D responds to this gap by relocating legal responsibility from states to the corporate actors that effectively control supply chain conditions — converting due diligence from a voluntary standard into an enforceable obligation supported by administrative supervision and civil liability. The article characterises the resulting relationship between the two regimes as one of asymmetrical integration rather than substitution, and identifies an internal contradiction within EU policy that existing scholarship has not directly addressed: the CS3D imposes obligations to prevent supply chain harms driven by cost pressures, while EU trade instruments — including the EVFTA — continue to structurally generate those same pressures. Unless resolved, this contradiction risks transforming mandatory due diligence into a compliance architecture that legitimises existing asymmetries rather than dismantling them.

Keywords: Corporate Sustainability due Diligence Directive, EU–Vietnam Free Trade Agreement, Trade and Sustainable Development, Global Value Chains, Transnational Labour Governance, Business and Human Rights, Extraterritoriality, Asymmetrical Integration