Green Trade Agreements

Green Trade Agreements

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Also by Dale Colyer AGRICULTURE AND SURVIVAL: The Role of Agriculture in Ecuador’s Development (co-edited with Morris D. Whitaker) COMPETITION IN AGRICULTURE: The United States and the World Market (co-edited with P. Lynn Kennedy, William A. Amponsah, Stanley M. Fletcher and Curtis M. Jolly)

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Green Trade Agreements Dale Colyer Professor Emeritus, West Virginia University, USA

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© Dale Colyer 2011 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2011 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978–0–230–32106–9 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Colyer, Dale. Green trade agreements / Dale Colyer. p. cm. Includes bibliographical references and index. ISBN 978–0–230–32106–9 1. International economic relations – Environmental aspects. 2. Commercial treaties – Environmental aspects. I. Title. HF1359.C6629 2011 382’.9—dc23

2011020963

10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 15 14 13 12 11 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne

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This book is dedicated to my grandchildren Nick, Alex and Charlie Krasnoff and Max and Emily Colyer

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Contents List of Illustrations

x

List of Abbreviations

xi

Preface

xiv

1 Introduction

1

Data and terminology Plan of the book

4 5

2 Environmental Impacts of Trade Environmental impacts of international trade Assessing actual environmental impacts Chapter conclusions

3 Background Issues

7 7 12 17

19

Legal status of FTAs The tuna–dolphin case: a triggering event Including environmental provisions in FTAs Multilateral environmental agreements

4 NAFTA’s Environmental Provisions Main agreement The environmental side agreement US–Mexico border issues Appendix 4.1: CEC Council

19 22 23 28

30 31 35 44 46

5 Environment and GATT/WTO The tuna–dolphin ruling Uruguay Round environmental response WTO negotiations Doha Round negotiations status Trade disputes and the environment

6 FTA Trade Provisions

48 49 50 51 59 60

64

Why, what and where? Classification of environmental provisions

64 65

vii

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viii

Contents

7 US Trade Agreements Trade Promotion Act Congressional policy in 2007 Trade agreements Pending agreements FTAA provisions Chapter conclusions Appendix 7.1 The US–Jordan Environmental Article

89 89 91 92 106 107 108 108

8 FTAs in the Americas

110

Canadian FTAs Mexican FTAs Chile’s FTAs Taiwan–Central America MERCOSUR Other FTAs Chapter conclusions

110 114 115 118 120 121 122

9 European Trade Agreements European Union FTAs EFTA agreements Other European FTAs Appendix 9.1: EFTA–Tunisia assistance chapter

123 123 133 136 139

10 Trade Agreements in ROW

141

ASEAN FTAs APEC Japan’s agreements Australia and New Zealand Other Asian FTAs Africa and Middle East Chapter summary

141 142 143 146 149 150 153

11 Environmental Impact Analysis Methodology Canadian EIAs EU environmental reviews Other environmental reviews Critiques of environmental assessments

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154 155 165 171 181 184

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Contents ix Appendix 11.1: Legal context for trade negotiations (from CAFTA–DR–US FTA) Appendix 11.2: Responders to the draft environmental review of the US–Chile FTA Appendix 11.3: European Union SIAs reviewed for this chapter Appendix 11.4: Environmental impacts reported in the EU–Mediterranean SIA

12 Impacts of Environmental Provisions Impacts of US FTAs Canadian environmental cooperation EU–CARIFORUM cooperation Other EU cooperation Other FTAs and ECAs Summary of impacts Appendix 12A.1: Summaries of submission and response: Minera San Xavier (2007) Appendix 12A.3: Joint Communiqué of the United States–Chile Environmental Affairs Council and Joint Commission for Environmental Cooperation

13 Summary and Outlook Summary Conclusions Implications

188 190 191 192

195 195 222 226 228 229 231 234

238

241 241 249 252

Notes

255

References

260

Author Index

283

Subject Index

289

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Illustrations

Tables 2.1 4.1 7.1 7.2 8.1 8.2 8.3 8.4 9.1 9.2 9.3 10.1 10.2 10.3 11.1 12.1 12A.2

Annual economic losses from terrestrial invasive species 2004 budget of the CEC US regional and bilateral trade agreements Environmental chapter articles in pending trade agreements Canadian free trade agreements in force in 2010 Mexican free trade agreements in force in 2010 Chilean free trade agreements Central American country FTAs with Taiwan European Union free trade agreements EFTA free trade agreements FTAs by other WTO European countries Environmental provisions in Japan’s FTAs China’s free trade agreements Some regional FTAs in the Asia-Pacific region EU and ACP negotiating groups FTA environmental scorecard Citizen submissions to CEC

16 39 90 107 111 114 116 118 124 134 137 144 150 151 178 233 235

Figure 4.1

Border area covered by BECC and NADB

44

Boxes 4.1 12.1

Guidelines for submitting noncompliance complaints to the CEC Objectives of the North American Agreement on Environmental Cooperation

40 199

x

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Abbreviations ACP AFTA ALADI APEC APHIS ASEAN BECA BECC BEIF BMZ

CBD CDM CEC CELA CEP CEQ CGE CIEL CITES CONAMA CTE CU DFAIT DOI DSB DSU EC ECA EDF EEA

African, Caribbean and Pacific Asian Free Trade Area Latin American Integration Association (Asociación Latinoamericana de Integración) Asia-Pacific Economic Cooperation Animal and Plant Health Inspection Service Association of Southeast Asian Nations Border Environmental Cooperation Agreement Border Environmental Cooperation Commission Border Environmental Infrastructure Fund German Federal Ministry for Economic Cooperation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung) Convention on Biodiversity Clean Development Mechanism Commission on Environmental Cooperation Canadian Environmental Law Association Closer Economic Partnership Agreements Council of Environmental Quality Computable General Equilibrium Model Center for International Environmental Law Convention on International Trade in Endangered Species Chilean National Commission on Environment Committee on Trade and the Environment Customs Union Department of Foreign Affairs and International Trade – Canada US Department of the Interior Dispute Settlement Body Dispute Settlement Understanding European Commission Environmental Cooperation Agreement European Development Fund European Economic Area

xi

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xii

List of Abbreviations

EFTA EIA EKC ELI EMIT EPA EPA ER ERG EU FAO FDI FTA FTAA GAO GATS GATT GEM GTAP ICTSD IISD ISSG ITO ITTO JBIC JICA JMOFA JPAC LGEEP

LIRLF MEA MERCOSUR NAAEC NADB NAFEC NAFTA

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European Free Trade Association Environmental Impact Assessments Environmental Kuznets Curve Environmental Law Institute Group on Environmental Measures and International Trade – GATT Economic Partnership Agreements – EU US Environmental Protection Agency Environmental Review Environmental Review Group European Union Food and Agricultural Organization – UN Foreign Direct Investment Free Trade Agreement Free Trade Area of the Americas Government Accountability Office, US General Agreement on Trade in Services General Agreement on Tariffs and Trade Global Environmental Mechanism Global Trade Analysis Project International Centre for Trade and Sustainable Development International Institute for Sustainable Development Invasive Species Specialist Group International Trade Organization International Tropical Timber Organization Japan Bank for International Cooperation Japan International Cooperation Agency Japanese Ministry of Foreign Affairs Joint Public Advisory Committee General Law in Ecological Equilibrium and Protection of the Environment (Ley General del Equilibrio Ecológico y Protección al Ambiente) Lower Interest Rate Lending Facility – NADB Multilateral Environmental Agreement Common Market of the South (Mercado Común del Sur) North American Agreement on Environmental Cooperation North American Development Bank North American Fund for Environmental Cooperation North American Free Trade Agreement

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List of Abbreviations xiii

NAMA NEPA NGO NIA NISC NOAA NWF OAS OCT OECD PECC POPs PPM PTA ROW RTA SACU SDS SEM SEP SIA SIECA SPS STO SWEP TBT TEPAC TPA TPSC TRIPS UNEP UNFCCC USAID USDA USTR WCIF WEC WEO WTO WWF

Non-Agricultural Market Access National Environmental Policy Act – USA Nongovernmental Organization National Interest Analysis – New Zealand National Invasive Species Council National Oceanic and Atmospheric Administration National Wildlife Federation Organization of American States Overseas Countries and Territories Organisation for Economic Co-operation and Development Peru Environmental Cooperation Commission Stockholm Convention on Persistent Organic Pollutants Processes and Production Methods Preferential Trade Agreement Rest of the World Regional Trade Agreement Southern African Customs Union Sustainable Development Strategy – EU Secretariat for Environmental Matters Strategic Economic Partnerships Sustainability Impact Assessments – EU Secretariat for Central American Integration Sanitary/phytosanitary Specific Trade Obligations, of MEAs Solid Waste Environmental Program, NADB Technical Barriers to Trade Trade and Environmental Advisory Committee Trade Promotion Act of 2002 Trade Policy Staff Committee – USA Trade in Intellectual Property Agreement United Nations Environmental Programme UN Framework Convention on Climate Change US Agency for International Development US Department of Agriculture US Trade Representative Water Conservation Investment Fund – NADB World Environment Center World Environmental Organization – proposed World Trade Organization World Wildlife Fund

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Preface This book is an outgrowth of work on international trade initiated under a Southern Regional Research Committee project in the 1990s. Research on trade in agricultural products led to an interest in the effects of NAFTA and to the relationships of trade and the environment, especially in Mexico. After retiring at the end of 2001 and following passage of the Trade Act of 2002, which mandated the inclusion of environmental provisions in US FTAs, the nature and effects of such provisions became my primary research focus. This resulted in the presentation of a number of papers and published journal articles on the topic, starting in 2002. However, given the growth in trade agreements with environmental provisions, it is not possible to adequately cover the issue in short papers and its importance called for a more extensive treatment of the topic. The issue arose during early negotiations of NAFTA, when environmentalists became concerned about perceived impacts on the environment, seeing the potential for a race to the bottom as the trading partners relaxed their laws to attract investment. The approach of the George H. W. Bush administration was to negotiate a separate environmental agreement. However, when the Clinton administration moved to complete the negotiations it was decided to include environmental measures in the agreement as well as an extensive side agreement to address environmental issues through establishment of the North American Agreement on Environmental Cooperation. Thus, NAFTA was the first free trade agreement to include extensive environmental provisions, although GATT, under Article XX, had permitted use of conservation of natural resources as an exception to prohibitions of trade restricting measures. The issue was thrust into prominence, however, due to the ruling of the GATT dispute panel in the tuna–dolphin case brought by Mexico against the US. The ruling held that the US restriction on imports of tuna caught by methods that did not protect the environment was an illegal restraint of trade. This galvanized environmentalists, who viewed the ruling as strong evidence that GATT trade rules were harmful to the environment. The results affected both the conclusion of NAFTA and the Uruguay Round of GATT. It also had longer-run effects, as demonstrated by the protests which helped scuttle the Seattle WTO xiv

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Ministerial meeting and, thus, delayed the next round of trade negotiations. While viewed initially as a victory for free trade advocates who objected to including environmental issues in trade agreements, the longer-run effect was to assure that trade measures could not ignore the environment. Thus, from initial Article XX of the GATT Agreements and the extensive treatment of the environment in NAFTA, environmental provisions are being included in a growing number of FTAs of both developed and developing countries. Many people have contributed to this book in various ways. The Division Resource Management of West Virginia University provided continued support through facilities that permitted access to the many web-based sources used for documenting FTA provisions and the literature cited throughout the book. Gloria Nestor did the art work for the figure on the US–Mexico border area. Lisa Lewis provided support throughout the project. My neighbor, Matt Valenti, helped advance the work by moving my computer to my bedroom after I broke my ankle in July 2010. The anonymous reviewers of my journal articles and editors of the journals made important suggestions and helped improve the work. Of the latter, William Kerr of the Estey Centre Journal of International Law and Trade Policy is especially noteworthy.

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1 Introduction

International trade and environmental issues have become entwined over the last several decades, largely due a continued concern with the effects of economic activities on the quality of the environment.1 In the 1980s and 90s some environmentalists began to focus on the impacts of international trade on the environment and began to oppose policies to expand trade and/or agitate for including provisions to protect the environment in trade agreements. One result was the inclusion of environmental provisions in the North American Free Trade Agreement (NAFTA) together with negotiation of an extensive environmental side agreement.2 These concerns also led to actions to placate environmentalists in the ongoing negotiations of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). Although no additional environmental provisions were included in the Uruguay Round GATT agreements, environmental concerns did become a part of the World Trade Organization (WTO), established by the Uruguay Round agreements, with the creation of a permanent Committee on Trade and the Environment (CTE). Environmental provisions have been included in many of the free-trade agreements negotiated since NAFTA and are included in the Doha Round of WTO negotiations. A triggering event in the trade and environment debate was the loss in a GATT Dispute Settlement Body by the US to a Mexican challenge to a US law to protect dolphins from harm due to commercial tuna fishing. The loss energized environmentalists to protest against GATT and similar free-trade agreements due to the concern that hardwon environmental protections could be lost due the ability of international trade agreements to override domestic environmental laws. Environmentalists staged protests to the ruling and have been active in the trade area since that time, including being among the protesters at 1

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the 1999 WTO Ministerial meeting in Seattle that contributed to a delay in the start of a new round of trade negotiations. The impacts of trade on the environment have been documented both theoretically and through empirical studies. Freer trade usually involves increased production of the traded goods as well as shifts in where and how goods and services are produced. Thus, there are scale (volume of production), composition and technique environmental effects and while increased production will, ceteris paribus, cause increases in environmental damage, the other two components can be either positive or negative within a given economy that is participating in the free-trade agreement. Therefore, the net effect can be either positive or negative and can affect the trading partners differently. However, one of the fears of environmentalists was that free trade would result in a race to the bottom – that is, that countries would ignore the environment and would not enforce environmental regulations to attract businesses – but this has not been observed as an actual consequence of existing free-trade agreements. There are additional environmental impacts that increased trade can have, including effects of transportation and an increase in invasive species which can harm the environment, including extinction of native species. When the movement to include environmental provisions in trade agreements arose, a vigorous debate between trade economists and environmentalists (and others) ensued, with economists generally arguing to keep environmental issues out of trade agreements. Economists reasoned that the appropriate venue for handling international environmental issues was the large number of multilateral environmental agreements (MEA) negotiated in recent decades, while environmentalists argued that including environmental provisions was necessary to help protect against environmental damages resulting from trade and to assure that the MEAs’ environmental protections as well as domestic environmental laws and regulations were not overruled by the dispute settlement process in the GATT agreements. While still not ubiquitous, the inclusion of environmental provisions in trade agreements has become more common and seems to have increased in the first decade of this century. FTAs have increased rapidly due to both an inability to achieve consensus in the Doha Round and the fact that stronger free-trade arrangements can be attained when the bargaining is between a small number of countries compared to what can be achieved by the over 150 negotiators involved in the Doha Round. Environmental provisions have been included in a substantial number of these due in part to a growing recognition of the importance of protecting the environment.

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Introduction 3

During most of the post-World War II era, freer trade was promoted through the GATT agreements. While an International Trade Organization (ITO) had been proposed at the Bretton Woods meeting that also proposed establishing the United Nations, World Bank and International Monetary Fund, the US Congress never passed the trade organization proposal and, as a replacement, the first GATT agreements were negotiated in 1947 with 23 signatories, mainly the more advanced economies – although a few developing countries in Africa, Latin America and Asia were among the 20; a decade into the twenty-first century there are 153 WTO members with most countries belonging, Russia being a major exception among the larger economies. Environmental issues were not an issue in the GATT agreements, although not totally ignored. Article XX of the GATT provided that there could be exceptions to the rules prohibiting trade for the purpose of protecting the health and life of plants, animals and humans and the 1947 agreement as amended also allowed an exception for protecting natural resources. In addition, the later development of the sanitary/phytosanitary (SPS) and technical barriers to trade (TBT) agreements also had environmental protection implications. Regional and bilateral trade agreements are permitted under GATT Article XXIV and GATS Article XIV. These are permitted if, among other provisions, they do not raise trade barriers to those outside the agreement above levels existing before the regional or bilateral agreement was negotiated. The WTO’s RTA database indicates that 268 regional/bilateral agreements were in force as of early 2011. These include the European Commission (EC) – now the European Union (EU) – established in 1958 as a regional free-trade agreement and the one outstanding success in early FTAs. Starting with NAFTA in the 1990s, specific environmental provisions were included in many regional and bilateral agreements. The US is now required by law to include environmental provisions and several other countries have such provisions in one of more of the treaties to which they are parties, although not at the time NAFTA was being negotiated. The EU does this under its arrangements for promoting sustainable development. These provisions vary from simple pledges to protect the environment, usually in their preambles, to very extensive provisions including separate chapters and environmental side agreements. A common provision is an agreement to not relax their environmental provisions to attract investment. Several provide for cooperation or assistance and may set up institutional arrangements for carrying out the negotiated measures.

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In addition to free-trade agreements, some countries carry out environmental impact analyses, generally before final approval, to determine the impacts of the agreement on their environments. These are required in the US and Canada and are utilized, in addition, by several other countries as well as the European Union, whose approach is different. Impact analyses permit the examination of potential impacts of the increased trade on the environment in the participating countries. Canada, the US and EU have elaborated procedures for conducting the analyses. In general, they have found that the trade agreements will have no significant impacts on their environments due, largely, to the fact that the volume of trade affected is a relatively small part of their total economies. The effects for trading partners may be more significant as trade tends to be a larger part of their economies and due to lower levels of environmental protection. Analyses of the impacts of the trade provisions in the several trade agreements that contain environmental provisions are relatively rare since most have not been in force long enough to determine their effectiveness. An exception is NAFTA, where a number of analyses have been reported with mixed results. Many of these were carried out by the Commission on Environmental Cooperation (CEC), an institution set up under NAFTA to implement and monitor the environmental provisions of NAFTA and its accompanying environmental side agreement. Some analyses have judged the provisions to be a failure and others have observed successful environmental activities – that is, that environmental conditions have either worsened or improved. The results appear to be mixed. Meetings of joint environmental committees or commissions for some other trade agreements have been held to evaluate progress in implementing the mandated environmental activities – for example, in the cases of the US–Peru and EU–CARIFORUM agreements. These usually focus on accomplishments of environmental cooperation where positive results are usually reported. In general, environmental laws have been strengthened but enforcement often lags, especially in developing countries.

Data and terminology Information on the environmental provisions of trade agreements is taken directly from the agreements. The WTO maintains an electronic database of all trade agreements notified to them as required of members, although the data are not complete – that is, notifications do not always take place or may be delayed for various reasons. The

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Introduction 5

WTO database consists of web-based connections to the databases of member countries or other sources and is the basis of FTAs analyzed for this study. Another source is the Organization of American States (OAS) SICE, a database of all trade agreements of countries in the Americas – this database is kept on servers operated by the OAS. Other sources of trade agreement information are the electronic databases of individual countries, such as those of the US Trade Representative (USTR), Foreign Affairs and International Trade Canada, the European Union, the Ministry of Foreign Affairs for Japan and other national databases. Numerous published sources, such as the Organization for Economic Cooperation and Development (OECD), are also used and will be cited at appropriate places in the text and are located in the reference list at the end of the text. The FTAs examined are limited to those notified to the WTO and contained in the WTO’s RTA database. Although the summary table in the database indicates that 287 RTAs are in force, only 206 (as of February 2011) were in the database. There is considerable variation in the terminology used for trade agreements. Basically there are three general categories: bilateral agreements – those between two countries; plurilateral agreements – those between three or more countries; and multilateral agreements – a term generally reserved for the WTO. There also are two broad types: customs unions (CU), used for agreements among a group of countries which maintain a common set of tariffs for nonmember countries; and others, which do not. The WTO refers to all trade agreements other than itself as regional trade agreements (RTA), including both bilateral and plurilateral agreements under that rubric – Lynch (2010) also uses RTA. More typically “regional” refers to agreements among a group of countries within a specific geographical area, such as NAFTA or MERCOSUR. Bhagwati (2008) prefers to call all agreements, except the WTO, preferential trade agreements (PTA). Throughout this book, however, the term free trade agreement (FTA), the most common usage, will be followed, with the alternative being just trade agreements.

Plan of the book Chapters 2 and 3 will examine the impacts of increased trade on the environment and background issues, respectively. Chapter 4 reviews the environmental provisions of NAFTA, both the main agreement and environmental side agreement. Chapter 5 covers the environmental aspects of the GATT agreements leading up to the WTO, environmentally related activities prior to the Doha Round of negotiations

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and the environmental negotiations from the Doha Round, including those of the regular Committee on Trade and Environment (CTE), the CTE Special Sessions Committee (CTE-SS) and other environmentally related negotiations. Chapter 6 reviews the types of environmental provisions contained in trade agreements included in the numerous agreements enforce though 2010. Chapter 7 analyses the environmental provisions of other US trade agreements, both bilateral and regional agreements as well as those for the Free Trade Area of the Americas agreement, a treaty that was extensively negotiated but never completed, and those agreements signed but not yet approved by Congress, while Chapter 8 covers agreements entered into by Canada and Mexico, the other parties to NAFTA, and FTAs entered into by other nations of the Americas. Chapter 9 covers those of the European Union, European Free Trade Association (EFTA) and other European trade agreements. Chapter 10 covers FTAs with environmental provisions of the rest of the world (ROW) – that is, nations and groups in the Asia-Pacific region, Africa and the Middle East. Chapter 11 covers environmental impact analyses performed for trade agreements before they take effect, while Chapter 12 examines the impacts of the environmental provisions on the environment in the countries where such agreements have been ratified and where analyses are available. The final chapter summarizes and draws conclusions and implications for improving the effectiveness of environmental provisions in free-trade agreements.

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2 Environmental Impacts of Trade

There would be no need to include environmental provisions in trade agreements if trade did not affect the environment. Although there is considerable variation in the perceived effects of trade on the environment, probably because the effects are complex and varied, there is no doubt that they do exist and that they are interrelated. Some see trade as an unmitigated disaster for the environment, while others see nothing but environmental benefits from trade and therefore view increased trade as a way to improve the environment. The reality lies somewhere in between, with both environmental benefits and damages emanating from international trade in goods and services. This topic has been the subject of a vast literature in economic, legal, environmental and other publications reporting on many studies – both theoretical and empirical. Anríquez (2002), Copeland and Taylor (2004), Huang and Labys (2001, 2002) and others have provided extensive reviews of this body of literature. This chapter will not repeat or update those efforts, but will focus on summarizing the potential impacts that trade and, hence, increased trade through freetrade agreements have for the environment, with a brief review of a few empirical studies that document some of those impacts. This is to provide a background for understanding the utilization of trade provisions in FTAs as well as the dialogue (arguments) about including trade provisions in FTAs that occurred in the 1990s, when the issue first arose, in addition to more recent FTAs, and that still continue. The dialogue about whether to include such provisions or not will be a topic in Chapter 3.

Environmental impacts of international trade A common way to classify the impacts of trade on the environment in a given country is to break them down into scale, composition 7

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and technique effects, as outlined by Grossman and Krueger (1991) – see also, among others, Copeland and Taylor (2003a, 2003b, 2004), Vilos-Ghiso and Liverman (2005). This classification is not completely inclusive; there might also be separate effects from transportation of the traded goods distinct from the scale effects, as well as impacts on biodiversity and from invasive species that hitch a ride with the goods being traded. Scale effects Scale effects are those due to growth in an economy – that is, increases in national income resulting from increases in the production of goods and services caused by increased international trade, increases in associated services such as transportation and increased consumption, all of which can result in harm to the environment due to disposal of waste products associated with those activities. All increases in production and economic growth, whether from trade or domestic growth with everything else held constant (types of products produced and methods of production), tend to result in increased production of wastes that must be disposed of, generally by using environmental resources – land, air and water resources. These are generally referred to as “externalities.” Composition effects Composition effects are those associated with the mix of products being produced and consumed. Different products and services have different amounts of waste products (pollutants) associated with their production and consumption. Thus, even if there is no change in total output, there can be effects on the environment due to changes in the mix of products and services. If the mix of goods produced contains a larger portion of less polluting goods with increases in trade, then the impact on the environment can be less – that is, the environment can be improved. But if the mix contains a greater proportion of goods that have associated larger amounts of pollutants, the environment will be harmed. Thus, the net composition impact may be either positive or negative, depending how a country’s mix of goods produced and consumed changes. Therefore, among two trading partners increased trade could result in environmental harm in one and improvement in the other. Technique effects Goods and services can be produced by various production methods or techniques which may also result in the production of different levels

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Environmental Impacts of Trade 9

and/or types of pollutants. Thus, when a country increases its output of a good (service) to meet increases in demand for exports of that good, the techniques that it adopts to meet the increase will have an effect of the amount of pollutants produced – that is, on the amount of harm done to the environment. If less polluting techniques are adopted then less environmental damage may be done, especially if the same improved techniques are also used for domestic production as well as for traded goods. The opposite would be true if more polluting techniques were adopted. Choice of technique may be affected by the environmental laws and regulations of the country as well as by the diligence with which they are enforced. Transportation effects Transportation is part of the production process since products must be transported from place to place throughout the production and consumption chains until they reach the final point where they are consumed. Inputs must also be transported to the producers. Environmental damages, mainly but not exclusively CO2, from transportation are often included in the scale effects. Transportation involved in international trade, thus, could be and often is considered part of the scale effects, but the international portion is also a trade effect – that is, some of the transportation would not occur if the goods were not traded (Batra et al. 1998; van Veen-Groot and Nijkamp 1999). Grossman and Krueger (1991, p. 4) say “to the extent that expanded trade gives rise to an increased demand for cross-border transportation services without there being any change in trucking practices, increased trade will result in a deterioration in air quality”, while Monkelbaan (2010, p. vi) asserts: “International transport, both aviation and maritime shipping, is a critical element of the global economy and trade. At the same time, it is also one of the main drivers of human-induced climate change.” Thus, as distinct from the scale effects associated with domestic transportation, there are transborder effects of transportation of traded goods. The amount of pollution from transportation is affected by the mode used, with truck and air transport of freight being more harmful to the environment than train and water transportation modes (van Veen-Groot and Nijkamp 1999). Transportation of traded goods, thus, can have significant negative impacts on the environment, especially if truck transportation is used as is the case for much of the movement of goods under NAFTA as well as in the EU; train transport is more common between EU countries than between the US and Mexico, but a growing proportion of EU goods are being moved by trucks (van Veen-Groot

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and Nijkamp 1999). A large share of international trade in general is by maritime shipment, where the large size of the ships generally is relatively efficient from the standpoint of pollutants per ton mile, but nevertheless contributes to air pollution and also to water pollution as the world’s oceans are becoming polluted from wastes disposed from ships. Monkelbaan reports that 90 per cent of world trade is by ship and that this contributes 2.7 per cent of the world’s CO2 emissions. In addition, high value crops such as flowers and some winter fruits and vegetables are shipped by air, which produces a relatively high amounts of air pollution per ton mile if not in terms of the value of the products traded. While the percentage of tonnage of world trade by air is small, it comprises 40 per cent of the value and contributes 2.5 per cent of the emissions – nearly as much as the much larger volume by ships (Monkelbaan 2010). In addition to the air pollutants produced largely by burning fossil fuels, additional environmental effects include damages from spills such as oil from tankers that suffer accidents, potential damages from waste products disposed of in the ocean, hazardous wastes being transported, loss of lives and property from accidents, cargo such as oil that is discharged due to maritime mishaps or accidental discharges and transportation of pests and diseases from one site to another either with the cargo being transported or on the ship separate from the cargo (these latter are discussed in the following section). One of the best-known oil spills was the Exxon Valdez, although that was not a case from international trade since the oil was being shipped from Alaska to California. However, there have been many other oil spills; according to Thinkquest. org (2010) there have been spills in the Persian Gulf (1983), South Africa (1983), off the Shetland Islands (1993), off South Wales (1996) and the Galapagos (2001); plus Greenpeace (2010) lists three recent spills in the Philippines, Indian Ocean and Lebanon; and Gundlach and Hayes (1978) listed seven spills that they investigated in the 1970s. According to the Water Encyclopedia (2010, p. 5) oil spills averaged more than 24 per year in the 1970s but decreased to 6.9 per year in the 1990s. But oil spills are not the only source of ocean pollution from shipping and other sources. The World Wildlife Fund (WWF 2010, p.1) states: “A staggering amount of waste, much of which has only existed in the past 50 years or so, enters the oceans each year.” This includes oil, fertilizers, solid garbage, sewage and toxic chemicals. While the WWF indicates that over 80 per cent of ocean pollution comes from land sources, there is still a very large shipping component to that pollution and trade is a major contributor to the total each year.

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Invasive species Invasive species of plants and animals, including insects, is another source of environmental damage to which international trade contributes. Invasive species are defined by Executive Order 13112 as “an alien species whose introduction does or is likely to cause economic or environmental harm or harm to human health” (NISC 2006, p. 1). The National Invasive Species Council (NISC) refines this (p. 2): “An invasive species is a non-native species whose introduction does or is likely to do harm to human, animal or plant health.” They can be animals, plants or microorganisms. There are a very large number of these that have affected the US and other countries and there are many more potential invaders. Some commonly known invasive species in the US include chestnut blight, Dutch elm disease, starlings, lamprey eel, water hyacinth, fire ants, African bees and Mediterranean fruit flies. The Invasive Species Specialist Group (ISSG) in Australia maintains a large database of invasive species, which is constantly being added to, and has published a list of the 100 worst invasive species (Lowe et al., 2000). Pimentel et al. (2005) estimate that there are around 50,000 nonnative species in the US, while Corn et al. (1999) indicate that there are around 4,500 invasive species. Most invaders are brought into a country through human travel and trade-related activities, although a few make it on their own – for example, the Africanized honey bee, which after escaping in Brazil and hybridizing with local bees spread to other countries including the US. Those that arrive through trade-related activities do so as hideaways with imported products or in their containers, through infected products, in the case of some microorganisms and insects, or as stowaways on the transport equipment, boats, trains, trucks, etc. Some aquatic invaders, for example, have attached themselves to the hulls of ships or have been released in or near harbors from ballast water in freighters. Rats were spread around the world as passengers on ships. Some species are brought in deliberately and either escape or are released into the environment. Kudzu, for example, was brought into the US and released to help control erosion but spread rapidly and crowded out other plants. Rabbits in Australia are a well-known example of a species released that became a pest due to large numbers that spread rapidly. These species are often able to outcompete native species, thereby endangering their survival or even causing their extinction, in part because the invaders may have no natural enemies in the new environment. Others simply cause environmental damage as, for example, the fire ants in the southern US, chestnut blight, which wiped out the American chestnut,

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or citrus canker in Florida. Since trade helps spread invasive species, the increased trade from trade liberalization naturally increases the potential for the spread of invasive species (Levine and D’Antonio 2003).

Assessing actual environmental impacts The disputes concerning trade and the environment have led to a large number of studies by economists and others to measure the actual impacts of increased trade on the environment. These have included improvements in the theoretical aspects of trade and the environment, advances in computational and modeling techniques, and a large number of empirical studies to estimate the impacts of trade on the environment – Smith and Espinosa (1996) discuss some of the methodological issues in estimating the relationships of trade and the environment. Studies have included cross-sectional analyses among a large number of countries, time series analyses of data from the 1960s or earlier onward and studies that combined the two approaches. Case and special studies have been made for several individual countries or industries. The following sections present a brief summary of the results. The purpose is to demonstrate the types of real-world relationships that exist between trade and the environment as background information and understanding the reasoning for including environmental provision in trade agreements. Economic analyses Copeland and Taylor (2003a, 2003b, 2004) utilized econometrics to develop models to test for the scale, composition and technique effects on a selected pollutant (sulfur dioxide, SO2), for which good data were available. They found (2003b, p. 3) that: “By isolating the pure scale and technique effects of trade, we estimate that a trade liberalization that raises scale of economic activity by 1% raises pollution concentration by 0.25 to 0.5% via the scale effect, but the accompanying increase in incomes per capita drives concentrations down by 1.25–1.5% via the technique effect.” With respect to the composition effect they say (p. 5), “our empirical work indicates that greater access to international markets creates only relatively small changes in pollution via the composition effect.” They further state (p. 5), “Combining our estimates for scale, composition and technique effects created by trade liberalization appears to be good for the environment – at least for the average country in our sample and for the pollutant we consider.” They used data from 43 countries from 1971 to 1996 and, therefore, the results cannot be fully generalized.

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Another finding of Copeland and Taylor (2003b, p. 5) is that: “Our empirical results suggest ... that relatively rich countries have a comparative advantage in dirty goods.” This is the opposite of findings reported by several other studies. Beghin et al. (1994, p. 176) in a study for the OECD say, “Empirical research tends to confirm that developing economies tend to specialize in dirty industries”, and cite a number of studies that support this finding. They indicate mixed findings with respect to the effects of environmental regulations and migration of dirty industries, the lack of support for the pollution haven hypothesis and related trade and environmental interrelationships. An obvious imperfection in the Copeland–Taylor study is that it is limited to one pollutant and cannot be generalized to other sources of environmental damage; it also refers to a somewhat limited set of countries, although developing as well as developed countries are included. Frankel and Rose (2005) estimated models for three pollutants (Nitrous Oxide, NO2, SO2 and particulate matter (PM)). They found evidence of the environmental Kuznets curve (EKC) with the inverted U curve peaking at different income levels for the three pollutants (and with different models). They also included an openness variable and found that more open economies tended to have reduced levels of pollutants. They noted, however, that when other types of environmental degradation were considered the results were sometimes different, with more degradation produced for some variables, especially for deforestation and production of CO2 . The latter is notable because it is a principal component of the greenhouse gasses associated with global warming. Vilos-Ghiso and Liverman (2005, p. 31) found that among industrial farmers in Mexico, “although both the Composition and Technique effects tend to drive fertilizer usage down, they have not been large enough to offset the Scale effect”. Gallagher (2004) also examined the situation for Mexico and found no evidence of an EKC for that nation. He noted (p. 90) that “without the proper environmental policies in place, economic integration can exacerbate environmental problems”. This finding is consistent with that of Nordström and Vaughan (1999, p. 2) who state: “Trade would unambiguously raise welfare if proper environmental policies were in place” and, further (p. 4), “The gains from trade are sufficient to pay for the additional abatement costs.” However, some studies have shown that many of the less-developed countries would gain little, and some actually lose, from the Doha Round of trade negotiations (see, e.g., Ackerman 2005; Ackerman and Gallagher 2008; Bouët et al. 2007).

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Transportation effects Relatively few empirical studies of the effects of trade-induced transportation on the environment exist. Data on air pollutants might include the contributions from transportation, but they generally cannot be isolated from other sources. However, information on pollutants produced by cars, trucks, trains, airplanes and ocean (or other) vessels and the fuels they use can be used to make estimates of their contribution to air pollution. Van Veen-Groot and Nijkamp (1999) indicate that the increased flows of trade are accompanied by greatly increased transport of the traded products and that all transportation methods produce pollutants, but with considerable variation among the types. They suggest (p. 334) transportation contributes to “local air pollution, noise annoyance, intrusion of landscapes, congestion and high fatality rates”. Further, it contributes to two global environmental problems, global warming and ozone depletion. Declines in transportation costs have contributed to the increased volume of traffic. However, these also are resulting in a shift from less polluting to more damaging forms of transportation, from trains and ships to trucks and planes. For example, in the EU road transport expanded from 47.8 per cent of the total in 1975 to 69 per cent in 1992 (van Veen-Groot and Nijkamp 1999, p. 239). Technology may contribute to reducing the transportation impacts as more efficient engines reduce pollution per ton mile of product. Batra et al. (1998) also examined the effects of trade-related transportation and environmental degradation. They note the use of wide-bodied jets, such as the Boeing 747, to transport fresh fruits, vegetables and seafood (as well as flowers) over long distances – an activity that contributes substantially to air pollution. Ocean transport not only contributes to air pollution through the burning of fossil fuels, but also to water pollution through discharges of waste into the ocean and spillage – for example, oil – due to accidents. It is noted (p. 173) that transportation’s use of energy rose from 24 per cent in 1970 to 31 per cent in 1989 and that airfreight increased from 23 per cent in 1970 to 25 per cent in 1990. They state (p. 174): “The moral of the story is that international trade is a vast source of pollution and the environmental costs of global commerce have been totally ignored by trade theorists.” Gallagher and Taylor (2003) estimate the economic costs of air emissions, SO2 and NOx, from waterborne vessels for the US during 1993–2001. For SO2 they found an average total cost of $126 million per year of which $51 million (40.4 per cent) was due to trade; for NOx the comparable figures were $412 million and $144 million.

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NAFTA has received more environmental attention than other trade agreements, in part because of its environmental provisions as well the institutions developed to implement the environmental agreement, but also in part due to the controversial nature of agreement. While other modes of transport are used, a large share of the trade is transported in trucks. Much of the trade between the US and Mexico travels over a few trade corridors, with the main one being Saltillo to Dallas. Tejeda-Honstein et al. (2000) examined the increases in nitrous oxides (NOx), hydrocarbons (HC) and particulate matter along that corridor from 1993 (before NAFTA) to 1996 and 2010 (estimated). They found an increase in the US part of 6.2 per cent in 1996 and 34.5 per cent in 1910; for Mexico the total increase was only 8.6 per cent. They conclude (p. 199); “In general the results of this work show an increase in emissions along the NAFTA corridor.” Sierra Club and Holbrook-White (2000) reported on ozone in at the Laredo and El Paso crossings and found no excedences for Laredo but several for El Paso (excedences are when measured ozone levels exceed those considered safe). They reported that truck crossings at Laredo rose from just more than 851,000 early in NAFTA’s implementation to some 1,300,000 in 1999; there are four bridges in the Laredo area, but trucks are prohibited on the two in the central part of the city. Invasive species There are a very large number of studies and data sources for invasive species, including internationally the ISSG and in the US the NISC as well as the US Department of Agriculture and the Fish and Wildlife Service. This section will focus on only a few studies which document the dimensions and costs that result from harmful invasive species. Levine and D’Antonio (2003) forecast invasions of selected types of invasive species and found that the forecasts of invasions vary considerably depending on the model used; one with a good fit indicated a 3–6 per cent increase over 20 years. However, they also found that the per ship rate declined with increasing levels of trade. Analysis of the associated costs can be complex since there are a number of ways costs can be affected, including direct (primary) and indirect (secondary, tertiary) costs (Evans 2003). FAO (cited by Evans) lists six types of impacts for agricultural pests: 1) production, 2) price and market effects, 3) trade, 4) food security and nutrition, 5) human health and environment and 6) financial cost impacts. The trade effects include the loss of current markets due to prohibitions by importing countries when pests are present in producing areas, especially if the importer also produces the product,

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and the potential loss of future markets due to replacement by competitors if the infestation causes sufficient losses that the country cannot supply its usual markets. Pimentel et al. (2005) estimate that around 800 harmful invasives species cause about $120 billion a year in damages. This compares to an OTA estimate of an average for 1906–91 of over $1.1 billion per year, but from only 79 species (OTA 1993, p. 5). Corn et al. (1999), in a report for the US Congress, list the estimated annual costs for a number of selected species: leafy spurge ($100 million), Formosan termites ($1 billion), fire ants ($2 billion), European green crab ($44 million), zebra mussels ($3.1 billion over ten years), Asian clam ($1 billion) and sea lampreys ($10–15 million annually for control only). However, if an invasive species causes the extinction of another species, there generally is no realistic way to estimate the damage. Olson (2006) reviews the economic literature of invasive and provides estimated losses from terrestrial invasive species (plant, animal and microbial species) for several countries. These are shown in Table 2.1. The results indicate that invasive species are a world-wide problem and that total losses must be extremely large and, thus, present very significant economic and social problems for many nations. Since control costs are a significant proportion the total costs, poorer less-developed nations may not have the resources to adequately combat the spread of a harmful invader. Various techniques were used in arriving at the estimates reported in Table 2.1 as there is no standard procedure for making the estimates. One of Olson’s conclusions is that there is a need

Table 2.1 Annual economic losses from terrestrial invasive species Country

Plant species

Animal species

Microbial species

Australia (Aus $)

4 billion

1,195.4 million

N.R.

a

Canada (Can $)

38.2 million

116.3 million

Germany (€)

103 million

60.2 million

5 million

80.8

New Zealand (NZ $)

100 million

2,270 million

NR

United States (US $)

34.5 billion

59.4 billion

39.7 billion

Notes: NR not reported; a $14–16 million reported for emerald ash borer – $15 million used. Source: Adapted from Olson (2006, p. 180).

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for better data and for improved techniques for estimating the impacts of invasive species. It should be noted that the US and other countries have policies that attempt to prevent invasive species from entering the country, although they are not always effective. In the US, the Animal and Plant Health Inspection Service (APHIS) of the US Department of Agriculture (USDA) is charged with protecting animal and plant health, with both domestic and international programs, including preventing invasive species to the extent possible. It describes its international function as (APHIS 2010): APHIS works to protect the health and value of American agriculture and natural resources. APHIS International Services (IS) supports this mission in an international environment by: (1) safeguarding the health of animals, plants, and ecosystems in the United States; (2) facilitating safe agricultural trade; (3) ensuring effective and efficient management of internationally-based programs; and (4) investing in international capacity-building through various training programs abroad to enhance technical, administrative, and diplomatic skills and competencies. The activities include inspecting imported plants, animals and materials, issuing permits for imports, certifying pest-free areas for foreign exporters and related programs to help assure that imported plant and animal products are pest-free.

Chapter conclusions While the studies discussed in this chapter present a mixed picture of the effects of trade on the environment, they leave no doubt that the two are interconnected. They do not paint the picture of trade being an unmitigated disaster for the environment that some environmentalists have maintained, but they also do not find the benign relationship that some of the free-trade proponents made at the start of the debate. The prima facie evidence indicates justification for those advocating consideration of the environment in trade agreements. In this respect it should be noted that some aspects of the environment have long been recognized in GATT and other agreements. The Sanitary/Phytosanitary (SPS) Agreement allows, at least to some extent, for measures to control invasive species – “phytosanitary” refers to plants and plant protection (Andersen et al. 2004; Lovell and Stone 2005). The agreement on implementing SPS specifically recognizes the need to control pests. In

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addition, there also are provisions in the Technical Barriers to Trade Agreement that can be used in relation to invasive species (Roberts et al. 1999). Article XX of the GATT agreement allows countries to use trade measures to protect the life and health of humans, animals and plants, as well as the environment (natural resources), an article that was part of the first, 1947, GATT agreement.

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3 Background Issues

The inclusion of environmental provisions in trade agreements has been contentious (see, e.g., Hoekman and Anderson 2000). Views on trade and the environment vary widely between economists, environmentalists, legal scholars and other analysts with respect to the effects of economic growth and trade liberalization on the environment and/or the effects of environmental regulations on trade. An eclectic group in commenting on the general treatment of the environment (Arrow et al. 1995, p. 91) state: “National and international economic policy have usually ignored the environment.” However, there is broad agreement that the world is faced with severe environmental problems. Nordström and Vaughan (1999, p. 1), in a special study for the WTO, for example, state: “The growing world economy has been accompanied by environmental degradation.” Bhagwati (1993) and Daly (1993) presented arguments for and against free trade, respectively, in the context of the environment in an issue of Scientific American and while environmental issues may have been undervalued among free-trade proponents in the past, they are now often at the forefront in free-trade discussions, although still opposed by some free-trade proponents (Bhagwati 2008).

Legal status of FTAs The movement toward freer world trade began in 1947 with the first GATT agreement, a result of negotiations held in Havana, Cuba, and with 23 original members. Subsequently, a series of seven additional rounds of negotiations were held and membership grew to 153. In the last round completed, the Uruguay Round, GATT morphed into the World Trade Organization and the ninth, the Doha Round, is now underway, although relatively little progress has been achieved in recent 19

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years with strong opposing positions held by the US and several other countries, including Brazil and India. A basic characteristic of GATT is the most favored nation (MFN) concept, where all nations were to receive the same tariff or other treatment as that of the nation receiving the lowest rates or freest access. Bilateral and regional trade agreements violate this provision since the members get more favorable treatment – for example, lower tariffs – than nonmembers (for a more complete discussion of these issues see Bhagwati (2008) or Schott (2004a), as well as the discussion of the Schott presentation by Cooper (2004), who opposes the proliferation of FTAs). Bhagwati is particularly strong in opposing the proliferation of FTAs which he sees as undermining the multilateral processes of GATT and the WTO. Cooper has four objections to the use of FTAs: 1) they discriminate against all nonmember nations; 2) they constitute bad economics due to trade diversion; 3) inclusion of rules of origin in FTAs tends to be protectionist; and 4) they do not tend to move trade toward greater liberalization. However, he favored NAFTA, since he believed it did contribute to greater liberalization including prompting the conclusion of the Uruguay Round of GATT. Schott (2004b, p. 19), however, is more optimistic, saying: “Properly managed, regional pacts can be an important part of the success of, rather than a third best substitute for, the WTO system.” That it is a concern to the WTO, however, is reflected in the proceedings of 2007 conference on multilateralizing FTAs, or regional agreements in WTO terminology (Baldwin and Low 2009). The legal basis for FTAs is provided by GATT Article XXIV and GATS (General Agreement on Trade in Services) Article V. Paragraph 5 of Article XXIV states: Accordingly, the provisions of this Agreement shall not prevent, as between the territories of contracting parties, the formation of a customs union or of a free-trade area or the adoption of an interim agreement necessary for the formation of a customs union or of a free-trade area; Provided that: ... The “provided that” at the end of the statement has conditions that restrict the contracting parties from raising their general tariffs from the levels existing before the agreement was signed – that is, they are not to charge higher tariffs than before the FTA was implemented. Matsushita (2004) maintains that the wording of Article XXIV is vague and open to various interpretations, that the panels reviewing notifications of FTAs seldom agreed on whether a particular FTA met the requirements and

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therefore that clarification was needed. In 1996, the WTO established a Committee on Regional Trade Agreements (WTO 1996, p. 1): to carry out the examination of agreements in accordance with the procedures and terms of reference adopted by the Council for Trade in Goods, the Council for Trade in Services or the Committee on Trade and Development, as the case may be, and thereafter present its report to the relevant body for appropriate action. In 2006, the WTO’s Rules Committee adopted a “WTO Transparency Mechanism” for handling RTAs (FTAs) which included provisions for early notification of proposed RTAs and notification of final adoption, including information to be provided to the WTO (WTO 2006). The WTO prepares a factual presentation on the FTA with the Committee on Regional Trade Agreements to “consider” all FTAs except those between developing countries which are to be handled by the Committee on Trade and Development. The mechanism was adopted and implemented on a provisional basis with consideration for a permanent mechanism to be part of the Doha Round negotiations. The WTO also developed a document on the interpretation of Article XXIV (WTO 2010b), but none of this seems to have affected the process of negotiating and implementing various types of free-trade agreements, in part because there seems to be lack of agreement as to how consistency of FTAs with the WTO is interpreted. The original reason for allowing FTAs and CUs (customs unions) was to permit neighboring countries to facilitate trade between each other. Relatively few FTAs or customs unions were formed during the first three to four decades of GATT, although Cooper (2004) argues that GATT was informed of many, but that they were allowed to languish for lack of approval. A major exception to this was the formation of the sixmember European Community, which was highly successful and over the next few decades grew from six to 27 members and evolved into the European Union; it also met the requirement that many other FTAs fail, that the free-trade provisions should apply to essentially all products traded. The situation with respect to free-trade formation began to change in the 1980s as several FTAs were implemented, including the US–Canada, US–Israel and Australia–New Zealand FTAs. After the formation of the WTO, the rate of FTA formation rose rapidly and the continued failure to achieve consensus in the Doha Round has further enhanced the process. While attempts have been made in the Doha negotiations to address the issue, the endeavor has not been meaningful

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and, with most WTO members belonging to one or more regional and/ or bilateral agreements, there appears to be little support for modifications or for limiting the further formation of FTAs.

The tuna–dolphin case: a triggering event The United States, at the urging of environmentalists, had adopted the Marine Mammal Protection Act in the 1980s. This act prohibited the importation of tuna that had been caught in ways that killed dolphins, which often accompany and feed on schools of the fish (NOAA 2002). This affected the Mexican fishing industry, which brought the matter to the trade dispute settlement process of GATT, claiming it was an illegal trade constraint (Esty 1994; Eglin 1999). The GATT decision ruled in favor of Mexico, which produced an immediate and very unfavorable reaction from environmentalists in the US, who felt the ruling unfairly removed an important protection for an endangered species.1 This invigorated and energized environmental groups, who were already wary of trade agreements. The responses by the organizations, individuals and others had a profound influence on both the trade and environmental communities and their approaches to trade, trade agreements and the environment (Eglin 1999). Among the ongoing procedures affected were the North American Free Trade Agreement (NAFTA), the Uruguay Round of GATT negotiations and its final agreement; later it was a factor in the organization of opposition to and scuttling of the World Trade Organization’s Seattle meeting, which was to launch the next round of trade liberalization talks (Naím 2000). While the tuna–dolphin ruling was unfavorable for trade restrictions based on environmental protection, a subsequent case – the shrimp–sea turtle dispute – reversed that ruling, at least to a limited extent (Charnovitz 2007; Hudson et al. 2003; Sampson 2000). This case was brought by a group of East Asian nations against the US as a result of a ban on the imports of shrimp caught using techniques that result in harm to sea turtles. Although the dispute panel ruled in favor or the complainants, the appeals panel largely reversed the ruling while calling on the US to enter into good faith negotiations to resolve remaining issues – the US was held to have applied the regulations in a discriminatory way but the ruling seemed to allow the ban if applied equitably (Sampson 2000). The US claimed victory as a result of the appeal panel’s ruling (USTR 2001b). Charnovitz (2007, p. 18), in commenting on the shrimp–turtle and other dispute panel environmental rulings, stated, “I believe that a new cycle has begun

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in international governance that will be characterized by greater attention to the environment.”

Including environmental provisions in FTAs One of the results of the tuna–dolphin decision was to reinforce the demands by environmentalists that such actions should be avoided in the future by including environmental provisions in future trade agreements, including the GATT agreements being negotiated under the Uruguay Round and NAFTA being negotiated by Canada, Mexico and the United States. Thus, environmental issues were brought into play and an intense debate about the appropriateness of incorporating the environment in trade agreements followed. This was, essentially, a debate between trade economists and environmentalists, although there were others on both sides, including other economists as well as an array of persons with an interest in either trade or the environment or both. Arguments opposing environmental provisions Support for freer trade is based largely on the view that trade leads to improvements in income and economic welfare for both trading parties (Bhagwati 2000; Weinstein and Charnovitz 2001). Krugman (1997, p. 113) echoes this by saying: “The economist’s case for free trade is essentially a unilateral case: a country serves its own interest by pursuing free trade.” Thus, trade economists have argued that the two issues should not be mixed, that trade and environmental agreements should be kept separate, as was typical prior to NAFTA – Bhagwati compares the attempt to use the WTO to solve environmental problems to trying to kill two birds with one stone, in which case you are likely to miss both (Bhagwati 2000; Frankel 2001). Of course, with a shot gun (modern technology) you might easily get both.2 Treaties and other legal instruments often address more than one issue. Bhagwati is a very strong free trade advocate, but recognizes many of the environmentally related problems and issues involved in the implementation of freer trade regimes, including those resulting from preferential or regional trade agreements; for a succinct presentation of his views see Free Trade Today (Bhagwati 2002). Nonetheless, he continues to view the proliferation of FTAs as harmful to the developing a free trade regime based on multilateralism and that the solving of environmental issues properly belongs in other fora. He even refers to environmental and other such issues in FTAs as trade-unrelated (Bhagwati 2008, pp. 71–81).

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Anderson (1998, pp. 243–45), when discussing “Why worry about the entwining of trade policy and social standards?”, questions the imposition of environmental (and other) provisions on developing nations as sovereignty issues while also recognizing the needs of the global commons such as endangered species. He reports three additional reasons for worry: 1) trade policy provisions are not the best measures for achieving environmental objectives; 2) such measures may actually be trade restrictions as those harmed by trade try to protect their economic situation; and 3) they are apt to lead to trade disputes with the potential for retaliation and counter-retaliatory measures – that is, trade wars. With respect to the first, it is maintained the less efficient trade measures waste resources, reduce growth and can even result in more environmental degradation. Despite continuing to object to environmental provisions in FTAs, Anderson does recognize a need to cooperate to achieve both freer trade and environmental improvements. The case for trade improving the environment follows from the view that improved incomes enable a country to invest in activities that improve the environment (Bhagwati 1993, 2000, 2002; Copeland and Taylor 2003a, 2003b; Grossman and Krueger 1991, 1995). This is related to the environment through the inverted Kuznets curve – that is, an upside down U – which indicates that, while pollution tends to worsen as countries start growing, after some level in per capita income is reached pollution will peak and then start to decline. This results, in part, from the fact that with higher incomes a country can afford to take measures to clean up the environment, while higher incomes cause citizens to start demanding a cleaner environment, especially with respect to air and water. Initially the income level was found to be about US$4,000 per capita, but subsequent studies have found varying levels with different pollutants. Trade, thus, is often deemed to be beneficial to the environment (see, e.g., Copeland and Taylor 2003a, 2003b, 2004; Dasgupta et al., 2002), although for CO2 there does not appear to be a turning point. In addition to the income-related arguments, it is contended that environmental regulations often inhibit or prohibit trade and tend to be nontariff trade barriers, which are not justified (Mann 2000). Including such measures in trade agreements would only aggravate the situation and interfere with the trend toward freer trade and enhanced economic well-being that the development of GATT in 1947 and the subsequent rounds have promoted. Thus, opponents to including environmental provisions assume that position in part because they see the measures as barriers to trade which would negate or lessen the benefits of free trade.

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25

Another argument made against including environmental measures in trade agreements is that they are not necessary because international environmental problems and issues are already being addressed by the multitude of multilateral environmental agreements (MEAs) that have been negotiated in the last few decades. The contention is that the MEAs are an effective means of addressing and improving the environment at the international level, while domestic environmental laws and regulations are adequate for handling localized pollution problems. Furthermore, each country is sovereign and must be left free to develop its own approaches to solving its environmental problems, especially since there are often unique problems and situations that can only be addressed locally. Arguments favoring including environmental issues Those favoring including environmental measures in FTAs (mostly, but not exclusively, environmentalists) argue that trade has important environmental impacts and, therefore, it is appropriate to deal with both issues in the same agreement (Esty 1994; Repetto 2000).3 Many of the opponents believe that free trade is detrimental to the environment and that freer trade will result in a “race to the bottom” – that is, that dirty industries will migrate to those countries with less restrictive environmental regulations as a way to reduce their costs and enhance their competitiveness (Brack 1995; Daly 1993; Ederington 2010; Rosenberg and Miller 2000). Furthermore, they assert that countries will be induced to lower or not enforce their environmental laws as a means to attract foreign direct investment (FDI) as a means to promote employment and development or to avoid losing their industrial base. Another argument is that the inclusion of environmental provisions in trade agreements allows a country to withstand pressure from industry to lower standards because international agreements require stricter standards (Ederington 2010). Although not all environmental organizations oppose trade agreements, a number have explicit policies opposing expanded trade efforts. For statements of four major environmental organizations see: Friends of the Earth (2001), National Wildlife Federation (2000), Sierra Club (2001) and World Wildlife Fund (2002a); see also Sampson (2000). Support for the use of trade measures to induce environmental protection is due to a perceived failure of alternative approaches, but this is a highly controversial issue; Grote and Kirchoff (2001, pp. 28ff) discuss this aspect of trade and the environment. Proponents of including measures in trade agreements also argue that the MEAs are not completely effective in protecting the environment

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and that, despite the large number of existing MEAs, they do not cover all types of damaging environmental processes or pollutants. They note, also, that not all countries, including the United States (see, e.g., Defenders of Wildlife 2010), are members of important MEAs and, therefore, are not bound by their provisions. In addition, they contend that many of the MEAs do not have adequate enforcement mechanisms such as that provided by the GATT/WTO dispute settlement process. Furthermore, although there has never been a GATT/WTO case involving an MEA, environmentalists fear that GATT/WTO rules and regulations will be used to overrule protections provided by the MEAs, as the US Marine Mammal Protection Act was overruled in the tuna–dolphin case (Eglin 1999; Irwin 2002). Discussion of environment in trade agreements There are potential conflicts between multilateral environmental and trade agreements, but they are often blamed on trade and/or policy failures. The various positions surrounding this argument are contained in the October 2000 Policy Forum, based on the Bhagwati (2000) paper, in the journal Environment and Development Economics (see Perrings, 2000, for a summary).4 The basic view of many free-trade proponents is that environmental regulations that inhibit or prohibit trade are not justified. They also see trade as promoting economic development and increased incomes which are, in their view, essential for implementing programs to improve the environment. However, some economists and others who generally support free trade also support including environmental issues in trade agreements, at least to a limited extent (see, e.g., Gray et al. 1996: Ederington 2010). This latter position may be taken, in part, because its protagonists believe that it may be easier to get agreement on reducing trade barriers than through separate agreements on improving the environment. Thus, including environmental provision in FTAs is an alternative to a much harder process of negotiating separate agreements on the environment. Some also think that it is essential to include environmental provisions, since procedures to protect the environment may lose in the trade dispute settlement process.5 More recently, Ederington (2010) reviewed the question and found that there were economic reasons for including the environment in trade negotiations with findings that tend to support the pollution haven hypothesis. He stated (p. 88): “Thus, a quick review of the economics literature on the theory of trade agreements indicates that international negotiation over environmental standards could potentially be mutually beneficial, even in the absence of transboundary pollution concerns.”

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Developing countries generally have tended to be leery of the movement to include environmental measures which they believe will discriminate again their products, but many now utilize some in their FTAs. Hoekman and Anderson (2000, p. 178; see, also, Ryan 2000) examine the issue from their viewpoint concluding: “Undoubtedly, developing countries will have to continue to argue their views against import restrictions on products produced by methods not approved by importing countries.” Huff (2000, p. 6) indicates that developing countries were upset by attempts to bring environmental concerns into the WTO because: “They fear that strict regulations regarding labour and the environment will allow developed countries to employ trade sanctions to restrict the flow of goods from developing countries into their markets.” Processes and production methods (PPM) are a major issue in the trade–environment debate. The basic trade practice under the GATT Technical Barriers to Trade Agreement (TBT) has been that it is only the final product that is being exported or imported that should be of concern – that is, if there is no difference in the product produced by one method versus another then there should be no difference in the way they are treated for trade purposes (Stevens 1994; see OECD 1994 for a discussion of several cases involving PPMs). There can be, under this interpretation, no discrimination with respect to their importation; both products should be treated the same with respect to either tariffs or nontariff barriers. Thus, if iron bars are produced by methods that result in large discharges of pollutants into the environment by, say, China, and by methods that result in relatively little pollution by, say, Germany, iron bars from the two countries should have equal access to all markets that import iron bars. PPMs are an issue that arose in both the tuna–dolphin and shrimp–turtle cases brought against the US under the GATT/WTO dispute settlement processes (Esty 1994; Eglin 1999). There were requirements under the US Marine Mammal Protection Act that prohibited the importation products that were the result of processes that harmed marine mammals, dolphins in the case of tuna and sea turtles in the case of shrimp. While the US lost in both cases, a subsequent ruling from the appeals process modified the final decision to some extent. Thus, while the exact nature of PPMs on trade is still unsettled, there seems to be some presumption that discrimination based on PPMs is generally prohibited. While there is no consensus on the treatment of environmental issues in trade agreements, the effects of NAFTA, the requirement that US agreements include environmental provisions, the inclusion of

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environmental issues in the WTO’s Doha Round negotiations and the EU’s emphasis on sustainable development in many of its trade agreements favor inclusion. Their inclusion in the agreements of several other countries and regions, including developing countries, discussed in the chapters on bilateral and regional agreements, act to assure that trade negotiation processes cannot ignore environmental issues, even though they may not get the prominence that was achieved in the NAFTA negotiation process or attain the importance or full objectives and effectiveness in protecting the environment that is the goal of many environmentalists. Lamy (2007a), the Director General of the WTO, in a speech to the UNEP, supported the inclusion of the environment in the Doha Round stating “trade, and indeed the WTO, must be made to deliver sustainable development”.

Multilateral environmental agreements MEAs have been the primary international approach, together with the United Nations Environmental Program (UNEP), to handling the world’s environmental problems and issues. While a number of MEAs predate the Stockholm Declaration (UNEP 1972), most have been developed since that date. The WTO website on MEAs indicates that there are more than 200 MEAS (see also Brack and Gray 2003). However, the UNEP website indicates that there are over 500 MEAs of which 320 are regional agreements (UNEP 2010) and the International Environmental Agreement’s database indicates that it contains some 1,538 bilateral, 1,000 multilateral and 259 other international environmental agreements – these include inactive as well as active agreements (IEA Database 2010; Mitchell 2005). The membership, organization, operating procedures, financing and effectiveness of the MEAs vary widely. The UNEP assists with the operation of MEAs and serves as a focus for international environmental governance. However, the system is highly fragmented. A 2009 conference in Belgrade reviewed the status of environmental governance and developed a set of recommendations for enhancing the process but little has been done to implement the procedures and governance and coordination remains problematic (UNEP 2009a, 2009b; see also Speth 2004). This does not mean that the MEAs are not effective mechanisms for helping protect the environment; they have contributed and will continue to contribute substantially to environmental protection throughout the world. However, due to the variability in the negotiation processes by which they were formed and a lack of coordination, consistency, implementation activities,

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enforcement mechanisms, financial support and membership coverage, they are not as effective as they could be. This has led to suggestions for the formation of a World Environmental Organization, WEO (Whaley and Zissimos 2002) or a Global Environmental Mechanism, GEM (Esty and Ivanova 2002). However, there does not seem to be strong support for such an organization. With respect to trade, a number of MEAs have specific trade obligations (STOs) and these are one subject of negotiations in the WTO’s Doha Round with concerns about the relationships of MEAs and the WTO, discussed more fully in Chapter 5 (UNEP 2007). Six of the MEAs with explicit trade obligations and that are important in the Doha negotiations are: the Convention on International Trade in Endangered Species (CITES), the Montreal Protocol on Ozone-Depleting Substances, the Basel Convention on the Transboundary Movements of Hazardous Waste, the Rotterdam Convention, the Stockholm Convention on Persistent Organic Pollutants (POPs) and the Biosafety Protocol of the Convention on Biodiversity (ICTSD 2004). While there have been no conflicts between MEA trade practices and WTO rules, at least no cases have been brought to either the GATT or WTO dispute settlement process, there is the potential for such conflicts (Neumayer 2002). MEAs are the primary way that international environmental problems have been and undoubtedly will continue to be addressed. Trade agreements have traditionally focused on the objective of making international trade more open. However, the interrelationships of trade and the environment and the clash between some environmental laws and regulations and trade rules have resulted in the integration of some environmental measures into many trade agreements as well as the inclusion of trade measures in a number of environmental agreements. The inclusion of environmental measures in trade agreements is the topic to be examined in the remaining chapters of this work.

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4 NAFTA’s Environmental Provisions

NAFTA negotiations between Canada, Mexico and the US had been initiated under the George H. W. Bush administration in 1990, but had not been completed prior to the 1992 presidential campaign. While some environmental provisions were in the August 1992 draft agreement due to concerns about and agitation for consideration of environmental issues, many environmental critics felt they were not adequate (Bailey 1992–93). As an approach to this issue the Bush administration proposed negotiating an environmental agreement in parallel with the trade agreement. NAFTA was sent to the Senate for ratification in December 1992, but not ratified before the change of administration in January 1993. President Clinton had been critical of the process during the 1992 campaign, especially with respect to a lack of both labor and environmental protections (Eglin 1999; Hufbauer et al. 2000). When the Clinton administration undertook negotiations for modifying, completing and implementing NAFTA, the environment received a more prominent role and numerous provisions were included, in the main text, but especially in an extensive side agreement; there also was a labor side agreement. The new environmental agreement was more directly related to the trade agreement than the separate, parallel path suggested by the Bush administration. While not going as far as many environmentalists wished, the agreements did set up a set of environmental objectives plus numerous provisions and mechanisms for carrying out and enforcing the environmental provisions. Thus, NAFTA became the first major trade agreement to include environmental provisions, provisions that are more extensive than most subsequent trade agreements with environmental provisions. Hufbauer et al. (2000 p. 3) say: “Overall the NAFTA experience demonstrates that trade pacts can simultaneously generate economic gains from increased trade; avoid the dismantling 30

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of existing environmental regimes, and improve environmental standards, especially with less developed partners.” Environmental provisions are contained in both the main agreement and the environmental side agreement. While those in the main agreement are important, the side agreement has the most far-reaching measures, including a set of institutions to carry out the environmental aspects of the agreement. However, even those in the main agreement have very important implications for environmental activities.

Main agreement The main NAFTA agreement has environmental provisions in its preamble and five chapters (1, 7, 9, 11 and 21). The preamble sets out the main purposes of the agreement and three of its 15 purposes relate to the environment, including: undertaking each activity “in a manner consistent with environmental protection and conservation”; promoting sustainable development and strengthening the development and enforcement of environmental laws and regulations. In Chapter 1, Article 103 gives precedence to the NAFTA agreement in the case of inconsistencies between it and the other agreement except for three multilateral environmental agreements and two bilateral agreements (Article 104 and Annex 104.1). The multilateral agreements are: the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), the Montreal Protocol on Substances that Deplete the Ozone Layer and the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal – all three countries are signatories of these three MEAs. The two bilateral agreements are the Agreement between the Government of Canada and the Government of the United States of America Concerning the Transboundary Movement of Hazardous Waste and the Agreement Between the United States of America and the United Mexican States on Cooperation for the Protection and Improvement of the Environment in the Border Area. The inclusion of the MEAs, according to Hufbauer et al. (2000), is recognition by Canada, Mexico and the United States of the legitimacy of trade provisions in MEAs as enforcement mechanisms. Chapters 7 (Section B) and 9 are concerned with sanitary/phytosanitary (SPS) measures and technical barriers to trade (TBT), respectively. While generally setting international standards as the appropriate guidelines, the SPS provisions in NAFTA allow the signers to utilize measures that are stricter than in other international agreements. Article 713, paragraph 3 states: “Nothing in Paragraph 1 shall be construed to

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prevent a Party from adopting, maintaining or applying, in accordance with the other provisions of this Section, a sanitary or phytosanitary measure that is more stringent than the relevant international standard, guideline or recommendation.” They are not, however, to be discriminatory or arbitrary between goods, are to be based on science and appropriate risk assessment procedures are to be used in establishing the measures. In addition, the measures should only be used to the extent necessary for the desired level of protection and cannot be used as disguised trade restrictions. Chapter 9 is concerned with TBTs and standards. Its importance for environmental measures is contained in Article 904, paragraph 2, to wit “Notwithstanding any other provision of this Chapter, each Party may, in pursuing its legitimate objectives of safety or the protection of human, animal or plant life or health, the environment or consumers, establish the levels of protection that it considers appropriate.” Each party to the agreement can establish protections that it considers appropriate to attain the degree of environmental protection it considers to be necessary provided that they are not discriminatory or are not unnecessary barriers to trade. Both chapters set limits on regulatory powers, but these tend to be more flexible than under GATT/WTO. For example, “necessary” is not to be considered least trade restrictive and the scientific basis of a measure is from the regulating authority not from a dispute panel (Hufbauer et al. 2000, p. 7). Also, unlike GATT, the burden of proof in cases brought to the dispute panel lies with the complainant rather than the country accused of the violation, a provision more in line with usual judicial practice. Chapter 11 concerns investment with a basic purpose of allowing investors of each party to the agreement equal footing with domestic investors as a way to encourage investment. However, it also contains provisions affecting environmental measures. Specifically, it allows each country autonomy in setting and enforcing its environmental laws and regulations and prohibits weakening environmental laws as a way to attract investment. These are in Article 1114 as shown below: Article 1114: Environmental Measures 1. Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns.

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2. The Parties recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. Accordingly, a Party should not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such measures as an encouragement for the establishment, acquisition, expansion or retention in its territory of an investment of an investor. If a Party considers that another Party has offered such an encouragement, it may request consultations with the other Party and the two Parties shall consult with a view to avoiding any such encouragement. The provisions of the second paragraph of this article have become one of the more common environmental provisions of trade agreements. Its purpose is to prevent the so-called race to the bottom where countries might be tempted to attract investment by having lax environmental provisions and/or not enforcing its environmental laws and regulations. Another environmentally related provision of Chapter 11 is one of the more controversial of those in the main agreement. This is because it allows a company, for example, to sue for damages if it thinks newly imposed environmental regulations have “taken” its property rights. Article 1110 deals with expropriation and compensation and requires that: 1. No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment, except (a) for a public purpose; (b) on a non-discriminatory basis; (c) in accordance with due process of law and Article 1105(1); and (d) on payment of compensation in accordance with paragraphs 2 through 6. It is the statement “or take a measure tantamount to nationalization or expropriation” that has caused concerns about this provision, since new environmental laws can be interpreted as tantamount to expropriation (Abbott 1999–2000; Freeman 2003–04; Hufbauer et al. 2000; Nogales 2002; Soloway 2000). Some features and rulings under these provisions have caused concern among environmentalists and others (Bottari 2001; Liptak 2004; Public Citizen 2001). A number of companies have

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brought disputes about environmental regulations to the NAFTA dispute settlement process, including those against Canadian, Mexican and US actions. According to Public Citizen (2009), as of January 2009 some 59 investor claims cases had been brought by investors against the three countries (Canada 23, Mexico 21, US 17), but not all involved environmental measures. Of these, six resulted in damages being assessed, 12 were dismissed and the others were either withdrawn or were still pending. None of the cases brought against the US resulted in damages, although some were still pending and some litigation costs were still being negotiated. However $18.6 million were awarded to investors in three Canadian cases (two on environmental issues) and $50.6 million was awarded in three Mexican cases (with the largest being $33.5 million), but this was due to taxes on high fructose corn that were not applied to Mexican sugar – only one involved an environmental issue. Part of the problem in the case of NAFTA was that the language was not precise (Echandi 2009). The expropriation and compensation article was included because of fears that Mexico might expropriate investors’ properties and the provisions were to provide investors assurances that their investments would be protected. Also, Article 1114 seemed to allow environmental, health and other regulations, but the language did not specifically exempt them from the earlier article. One result is that later trade agreements with investment chapters have tended to be more exact in their provisions. The US–Chile agreement, for example, explicitly states that environmental regulations will not be considered expropriation, stating in Annex 10D of the investment chapter: “Except in rare circumstances, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations.” Chapter 21 of the NAFTA agreement is on exceptions – that is, exceptions to prohibition of trade restrictions. One exception revolves around GATT Article XX which allows restrictions for the protection of human, animal and plant life and health as well as for the protection of natural resources. NAFTA does not contain specific exemptions for these purposes but incorporates GATT Article XX and specifies that the exceptions include measures to protect the environment. Specifically Paragraph 1 of Article 2101: General Exceptions states: GATT Article XX and its interpretative notes, or any equivalent provision of a successor agreement to which all Parties are party, are incorporated into and made part of this Agreement.

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The Parties understand that the measures referred to in GATT Article XX(b) include environmental measures necessary to protect human, animal or plant life or health, and that GATT Article XX(g) applies to measures relating to the conservation of living and nonliving exhaustible natural resources. The second part of the quoted paragraph makes it clear that environmental measures are included in the general exceptions, a stronger statement than contained in Article XX. It has become common to include similar provisions in many free-trade agreements in recent years.

The environmental side agreement While the environmental provisions in the main NAFTA agreement make it clear that environmental protection is an important objective of the agreement, several of the more important environmental aspects of NAFTA are contained in the environmental side agreement, the North American Agreement on Environmental Cooperation (NAAEC). In addition, the US and Mexico signed a Border Environmental Cooperation Agreement (BECA) in 1993 to handle border issues and to improve environmental conditions along the US–Mexican border. A primary purpose of the side agreement is to encourage cooperation among the three countries in respect to environmental issues related to trade as well as establishing an institutional mechanism to implement the environmental provisions. Basic provisions The NAAEC has a set of objectives as well as obligations that the three countries agreed to abide by. These are stated in Article 1 and are the following: (a) foster the protection and improvement of the environment in the territories of the Parties for the well-being of present and future generations; (b) promote sustainable development based on cooperation and mutually supportive environmental and economic policies; (c) increase cooperation between the Parties to better conserve, protect, and enhance the environment, including wild flora and fauna; (d) support the environmental goals and objectives of the NAFTA; (e) avoid creating trade distortions or new trade barriers; (f) strengthen cooperation on the development and improvement of environmental laws, regulations, procedures, policies and practices; (g) enhance compliance with, and enforcement of, environmental laws and

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regulations; (h) promote transparency and public participation in the development of environmental laws, regulations and policies; (i) promote economically efficient and effective environmental measures; and (j) promote pollution prevention policies and practices. Furthermore, the three countries adopted, in Article 2, the following obligations or commitments: Each Party shall, with respect to its territory: (a) periodically prepare and make publicly available reports on the state of the environment; (b) develop and review environmental emergency preparedness measures; (c) promote education in environmental matters, including environmental law; (d) further scientific research and technology development in respect of environmental matters; (e) assess, as appropriate, environmental impacts; and (f) promote the use of economic instruments for the efficient achievement of environmental goals. In addition they agreed to “consider implementing in its law any recommendation developed by the Council” and to “consider prohibiting the export to the territories of the other Parties of a pesticide or toxic substance whose use is prohibited within the Party’s territory”. They further agreed to notify the other parties, “either directly or through an appropriate international organization”, when a new regulation prohibiting or severely restricting a pesticide or toxic substance is promulgated. The NAAEC recognized that each country had the right to develop its own environmental laws and regulations, but also that each would “strive to improve those laws and regulations”. Article 5 indicated that each of the three nations would “effectively enforce its environmental laws and regulations through appropriate governmental action”. Approaches were to include appointing and training inspectors, monitoring compliance, investigating suspected violations, seeking assurance of voluntary compliance, releasing noncompliance information, issuing information on enforcement procedures, promoting environmental audits, record keeping and reporting, providing mediation and arbitration procedures, using licenses, permits and authorizations, initiating procedures to seek appropriate sanctions for violations and other procedures to prevent or cure violations. There are to be judicial or quasi-judicial proceedings to help insure that violations are appropriately sanctioned or remedied. Article 6 provides for private access to remedies – that is, that interested or affected parties can request that the appropriate authorities investigate alleged violations of environmental laws and regulations. The article also

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requires that persons with a “legally recognized interest under the law have access to appropriate judicial, quasi-judicial or administrative proceedings in enforcing environmental laws and regulations”. These can include the right to sue for damages, to seek sanctions or remedies such as monetary penalties, emergency closures, or orders to mitigate the environmental damages, request that the appropriate authorities take action to enforce environmental laws, or to seek injunctions when an individual suffers or may suffer losses, damages or injuries due to violations of environmental laws. Article 7 requires fair and open proceedings in adjudicating the complaints of those alleging environmental deficiencies. Environmental institutions To carry out the environmental provisions outlined above, a set of institutions were established. The most important is the Commission on Environmental Cooperation (CEC) to carry out the environmental provisions of the agreement. It consists of a Council with representatives from each country, a Secretariat located in Montreal, and a Joint Public Advisory Committee (JPAC) to provide a mechanism for inputs by citizens and nongovernmental organizations (NGOs). There also is, for Mexico and the US, a Border Environment Cooperation Commission (BECC) to identify and help correct infrastructure problems related to water supply, wastewater treatment and municipal solid waste needs on the US–Mexico border, and the North American Development Bank (NADB) to finance projects identified by the BECC Council. Council The Council consists of a cabinet or equivalent-level representative (or designated alternative) from each of the three countries. The Council establishes its own procedures and meets at least once a year or whenever any member requests a special meeting – its regular meetings are to be public. It can establish ad hoc or standing committees, working or expert groups and assign responsibilities to them, seek advice from individuals, organizations and experts, and take other actions needed to carry out its functions. Decisions generally are to be by consensus and are to be made public in most cases. The Council is the governing body for the CEC and has a number of functions, including being a forum for discussing environmental issues related to the NAAEC, overseeing the implementation of the Agreement, developing recommendations for its further elaboration, overseeing the Secretariat, addressing differences that might arise between the parties, approving the annual work program and budget of the Commission,

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and promoting and facilitating cooperation on environmental matters. It was mandated to review the agreement’s activities and progress at the end of four years. In addition, the agreement included a long list of environmental concerns and issues that the Council could address (see Appendix 4.1). It also was directed to cooperate with the NAFTA Free Trade Commission on environmental goals and objectives. Secretariat Most of the work of the CEC is done by its Secretariat, headquartered in Montreal. The Secretariat provides support – technical, administrative and operational – to the Council, plus other support that the Council may need or request. The Secretariat also develops and submits to the Council for approval its annual work program and budget. It carries out projects, provides information through publications, meetings, forums and its website, enables citizen input and considers submissions from any nongovernmental organization or individual citizen that alleges that a member country is failing to effectively enforce its environmental laws and regulations. Usually, these complaints involve some particular area, project on commercial activity that is affected by or is causing pollution or environmental damage. The Secretariat is headed by an executive director appointed for a three-year term and rotated between citizens of the three member countries, although an executive director can be appointed for one additional term. The Secretariat hires staff from the three countries to carry out its functions and programs – 22 staff members in addition to the executive director were listed on its website in May 2010. These included administrative related functions (controller, finance, council secretary and liaison personnel with JPAC and the Mexico Office), information and media services including editors for publications, members of the Submissions and Enforcement Unit, project coordinators for air/ PRTR, biodiversity, chemicals management and environmental trade, as well as a program manager for environmental law. The size of the staff is limited due to the restricted finances of the Commission. Joint Public Advisory Committee (JPAC) “JPAC was established as a cooperative mechanism to advise the Council in its deliberations and to advise the Secretariat in its planning and activities” (CEC website). It consists of 15 members, five from each party to the NAAEC. Its purpose is to advise the Council on matters of concern to the NAAEC and to be a source of information for the CEC Secretariat. Article 16, Paragraph 4 states, “The Joint Public Advisory Committee

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may provide advice to the Council on any matter within the scope of this Agreement.” Thus, its vision is to promote cooperation with respect to environmental or ecological protection and sustainable development. JPAC endeavors to ensure active public participation and openness in the actions of the CEC. It meets at least once a year and can meet periodically throughout the year and may hold meetings, forums or discussions with the public and concerned groups. Examples are the North American Workshop on Environmental Sustainability and Competitiveness and a Roundtable Discussion on the CEC’s Priorities for 2010 and Beyond. Budget and resources The annual budget of the CEC is made up of equal contributions of the three member countries, with each contributing $3 million (US dollars), an amount that has not changed since the inception of the Commission. With inflation, this means that the real value of its budget has declined substantially, which has materially affected what the Commission can accomplish. The annual expenditures are made in accordance with an annual work plan developed by the Secretariat and approved by the Council, with input from JPAC. Table 4.1 shows the breakdown of the 2004 budget. A favorable exchange rate meant that the amount in Canadian dollars was greater than the $9 million in US dollars and enabled a broad-based Table 4.1 2004 budget of the CEC Program area Conservation of biodiversity

Canadian $ 755,000

Environment, economics and trade

530,000

Law and policy

405,000

Pollutants and health Joint Public Advisory Committee (JPAC)

1,986,000 360,000

Articles 14/15 (citizen submissions)

351,000

Article 13 (Secretariat reports)

281,000

Administration, communications and other Total

7,082,400 11,751,500

Source: Commission for Environmental Cooperation (CEC), Ten Years of North American Environmental Cooperation: Report of the Ten-year Review and Assessment Committee to the Council of the Commission for Environmental Cooperation, Montreal, June 2004, p. 10.

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CEC program in its earlier years. However, unfavorable exchange rate developments in 2003 reduced the total from around C$15 million and forced a substantial realignment of the CEC’s budget, including the discontinuation of environmental project funding and reductions in several other areas (CEC 2004). Submissions on enforcement issues One of the significant innovations in the NAAEC is that it permits citizens (individuals or organizations) to make complaints when they believe that a country is not enforcing its environmental laws and regulations. Article 14 of the NAAEC states “The Secretariat may consider a submission from any non-governmental organization or person asserting that a Party is failing to effectively enforce its environmental law.” There are a number of conditions that the submission must meet to be considered, including that it should be by a person or group residing or established in the country where the complaint is made, be in the appropriate language, clearly identify the complainant, provide sufficient information to establish its validity, indicate that it has been submitted to the appropriate authorities with an indication of the response received, if any, and appear to be promoting enforcement rather than harassing industry (see Box 4.1). Box 4.1 Guidelines for submitting noncompliance complaints to the CEC The submission should, among other things: • Be written in Spanish, French or English • Not exceed 15 pages of typed, letter-sized paper, excluding supporting documents • Clearly identify the person(s) or organization(s) making the submission • The submission must clearly identify the environmental law(s) at issue • Provide sufficient information to be reviewed by the Secretariat • Include documentary evidence on which the submission may be based • Appear to be aimed at promoting enforcement rather than at harassing industry • Indicate that the matter has been communicated in writing to the relevant authorities • Include copies of relevant correspondence between the submitter and the authorities concerning the matters at issue in the submission • Be filed by a person or an organization residing or established in the territory of a Party Upon receiving a submission, the Secretariat will: • Notify the submitter of the progress of the complaint • Notify any minor errors that should be rectified by the submitter

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NAFTA’s Environmental Provisions 41 • Make its best efforts to take all actions necessary to process the submission in a timely manner If a submission does not meet the requirements of Article 14 and the Guidelines, the Secretariat will inform the submitter who will then have 30 days to revise the submission so that it conforms to the criteria set out in Article 14 and the Guidelines. If the revised submission still does not meet the requirements, the process will be terminated. Source: CEC website, http://www.cec.org/Page.asp?PageID=122&ContentID= 1389& SiteNodeID=210, accessed May 1, 2010.

The Secretariat, through its submission and enforcement unit, examines the submission to determine if it merits requesting a response from the affected party (country) based on the criteria listed above. If so, it is submitted to the appropriate authority in the country where the nonenforcement is alleged to be taking place. The affected party then has time, generally 30 days or 60 in exceptional circumstances, to respond to the complaint. The response is to indicate if the matter is under judicial or administrative review (if it is, the process is terminated) and may include information of any previous judicial or administrative reviews, whether the complainant has access to private remedies for the matter and other information the party considers relevant. If the Secretariat considers that the submission warrants a factual record it notifies the Council, which can order by a two-thirds vote that a factual record be made. To prepare the factual record, information furnished by the response, the submission and other relevant technical and scientific data or other information that is publicly available, submitted by interested nongovernmental organizations, individuals, JPAC, developed by the Secretariat, or by independent experts. A draft factual record is submitted to the Council and any party may provide comments on the accuracy of the draft within 45 days. After incorporating any such comments, if appropriate, the final factual record is submitted it to the Council, which may make it available to the public within 60 days following its submission. According to the CEC’s Registry of Citizen Submissions, as of May 1, 2010 some 74 submissions had been made since the first one in 1995 (CEC 2010a). Environmentalists and others have had mixed reactions to the CEC’s activities in regard to citizen submissions, with both praise for and condemnations of the process. Kibel (2010), in The Encyclopedia of Earth, states: Within the North American environmental community, there is wide range of views concerning the performance of the NAAEC

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citizen submission process. Some have praised the process for providing a useful “spotlight” on enforcement issues, while others have expressed frustration at the absence of conclusions and recommendations in factual records as well as the CEC Council’s attempts to restrict what enforcement issues the CEC Secretariat may consider in its preparation of factual records. Moreover, even when a factual record reveals a failure to effectively enforce environmental laws, Articles 14 and 15 of the NAAEC do not provide any mechanisms or sanctions to address such failure. This issue is discussed more fully in the chapter evaluating the environmental provisions of trade agreements. Other CEC activities The CEC, through the Council, Secretariat and JPAC, has carried numerous projects and activities to address environmental issues in North America. A substantial portion of these activities is involved in obtaining and providing information on environmental issues affecting North America. The CEC also has sponsored several conferences, forums, workshops, financed environmental projects and published several reports in both paper and electronic formats. An additional activity was the creation of an online environmental atlas, maps of the three countries that show environmental issues and problems in an interactive format – for example, the sites of industrial pollution. Environmental grants In the first several years of CEC operations, its budget was sufficient to permit the operation of an environmental grants program, the North American Fund for Environmental Cooperation (NAFEC). During its operation, between 1996 and 2003, 196 grants were made for a total of C$9.36 million. In 1996 and 1997, US$1.6 million were budgeted for NAFEC, enabling 35 grants in 1996 for C$2 million and 34 in 1997 for C$1.98 million. However, the budgeted amounts and grant totals dropped in subsequent years as inflation eroded the purchasing power of the fixed CEC budget. A 2002 internal evaluation of the program noted (CEC 2002, p. i): NAFEC has made a significant contribution to achieving the CEC’s goals and objectives. Stakeholder groups agree that NAFEC has made a significant contribution to achieving the goals and objectives of the CEC and its programs. The data in the report indicate that: 1) NAFEC

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generally supports capacity building among community groups; 2) NAFEC provides the CEC with a public constituency that informs policy-level programming at the CEC; 3) NAFEC promotes direct and indirect public participation within the CEC by encouraging grantees to take an active role in JPAC and other CEC processes; and 4) NAFEC creates a natural information clearing house to fill a North American-focused information–distribution gap. Among the impacts reported were changes in policy, network formation and protection of endangered species, although the grants covered a much wider set of issues. Grants were made to nongovernmental organizations (NGOs), community groups, academics and others. The report also noted that the program was becoming unviable due to decreased funding levels. It recommended a funding level of US$1 million for an effective and viable grants program. Consequently, the program was terminated after the 2003 funding period. Public participation One of the very important innovations in NAFTA and the NAAEC is the provision for openness, transparency and public participation in their processes. The preamble to the NAAEC has as one of its statements: “EMPHASIZING the importance of public participation in conserving, protecting and enhancing the environment”, and one of the objectives (h) is to: “promote transparency and public participation in the development of environmental laws, regulations and policies”. Thus, the CEC has developed guidelines and procedures for assuring public participation in most of its activities. The introduction to its web page on public participation states: Given the importance of public participation in conserving, protecting, and enhancing the environment, the CEC must implement appropriate mechanisms for distributing information, and to educate and consult with the public of North America on the activities of its three components: the Secretariat, the Council, and JPAC. To accomplish this, the CEC indicates that it must: provide information and public education, request input from stakeholders and any potentially affected public, circulate documents for comment and offer formal participation through structured public meetings, such as the annual Regular Session of Council and JPAC regular sessions. To help assure equity for all participants interpreters at all meetings

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will cover the three languages of the member states – English, French and Spanish. The CEC’s web pages also are available in the three languages, as are its publications. These informational, education and public-input activities are in addition to the citizen submissions, which also are a form of public participation enabled by NAAEC and the CEC.

US–Mexico border issues In addition to the direct NAFTA/NAAEC environmental activities, the Border Economic Cooperation Commission (BECC) and North American Development Bank (NADB) were established at the same time as NAFTA and NAAEC to help resolve environmental problems along the US–Mexico border. The BECC, located in Juarez, Mexico, and the NADB with headquarters in San Antonio, Texas, were established to help improve environmental conditions in the border region of the two countries and to advance the well-being of residents in both nations. The BECC is a bi-national agency set up by the Mexican and United States governments to help identify, evaluate and certify environmental infrastructure projects, a process that was to involve community participation. The NADB assists with the financing of projects approved by the BECC. The border area (see Figure 4.1) involved is a

Figure 4.1 Border area covered by BECC and NADB

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strip within 100 kilometers of the border, but in 2001 the area was expanded to include projects within 300 kilometers south of the border (Bravo Vera 1998; BECC 2010a; NADB 2010a). According to the BECC website: The Border Environment Cooperation Commission (BECC) and the North American Development Bank (NADB) were created in 1993 under a side-agreement to the North American Free Trade Agreement (NAFTA) for the purpose of enhancing the environmental conditions of the US–Mexico border region and advancing the well-being of residents in both nations. The institutions fulfill an essential role in effectively applying bi-national policies and programs that support the sustainable development of environmental infrastructure in the border region. The scope of their mandate and the specific functions of each institution are defined in an agreement between the two governments (“the Charter”), as amended in August 2004. BECC and NADB work closely with other border stakeholders including federal, state, and local agencies, the private-sector and civil society to identify, develop, finance and implement environmental infrastructure projects on both sides of the US–Mexico border. BECC focuses on the technical, environmental, and social aspects of project development, while NADB concentrates on project financing and oversight for project implementation. Both entities offer various types of technical assistance to support the development and long-term sustainability of these projects. Created as interdependent institutions, BECC and NADB function as a team, working with communities and project sponsors in the US–Mexico border region to develop, finance and build affordable and self-sustaining projects that address a human health or environmental need. Within this project development process, each institution is charged with specific responsibilities. The responsibilities of the BECC are to 1) certify the technical feasibility and environmental health impacts of project, 2) ensure transparency and promote community-based support for projects and 3) provide technical assistance for project development, while the NADB functions to 1) provide financing for project implementation, 2) offer guidance on financial issues and 3) provide technical assistance for project development and institutional strengthening. An important aspect of BECC operations is its public participation and capacity-building program, as is true for most NAFTA-related activities. Its stated purpose is

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to “provide a foundation for sustainable development along the border through efforts aimed at inspiring community-based support for a project, providing transparency in each border initiative and strengthening the institutional capacity of border communities and utility providers”. Thus, the public is involved in developing the projects sponsored by the BECC and financed by the NADB through community steering committees, public meetings, conferences, information and related activities. Furthermore, in 2008 the BECC worked with 20 new community steering committees and participated in 24 meetings on project activities (BECC 2010b). The priority sectors for infrastructure projects of the BECC and NADB are water supply, water conservation, wastewater treatment and municipal solid waste (NADB 2009). Much of the activity has focused on those sectors, but in 2000 the procedures were amended with an expanded mandate for additional sectors, including air quality improvement, clean and renewable energy, energy efficiency, industrial and hazardous waste, and public transportation added to loan eligibility. This expansion was a part of a set of revisions that resulted from dissatisfaction with the pace and breadth of the BECC/NADB activities (Bravo Vera 1998: Reed and Kelly 2000a, 2000b; Varady et al. 1996). In addition to loans, NADB also has grant programs, including the Border Environmental Infrastructure Fund (BEIF). NADB can provide grants for financing water treatment and wastewater treatment projects in either country (US Treasury 2003). However, this program has been 100 per cent financed by separate appropriations to the US Environmental Protection Agency (EPA). It also makes grants for solid waste disposal projects from retained earnings under its Solid Waste Environmental Program (SWEP) and for water conservation projects through a Water Conservation Investment Fund (WCIF). NADB funds technical assistance under its Institutional Development Cooperation Program and makes low interest loans through a Lower Interest Rate Lending Facility (LIRLF).

Appendix 4.1: CEC Council Article 10: Council Functions 2. The Council may consider, and develop recommendations regarding: (a) comparability of techniques and methodologies for data gathering and analysis, data management and electronic data communications on matters covered by this Agreement

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(b) pollution prevention techniques and strategies; (c) approaches and common indicators for reporting on the state of the environment; (d) the use of economic instruments for the pursuit of domestic and internationally agreed environmental objectives; (e) scientific research and technology development in respect of environmental matters; (f) promotion of public awareness regarding the environment; (g) transboundary and border environmental issues, such as the longrange transport of air and marine pollutants; (h) exotic species that may be harmful; (i) the conservation and protection of wild flora and fauna and their habitat, and specially protected natural areas; (j) the protection of endangered and threatened species; (k) environmental emergency preparedness and response activities; (l) environmental matters as they relate to economic development; (m) the environmental implications of goods throughout their life cycles; (n) human resource training and development in the environmental field; (o) the exchange of environmental scientists and officials; (p) approaches to environmental compliance and enforcement; (q) ecologically sensitive national accounts; (r) eco-labeling; and (s) other matters as it may decide.

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5 Environment and GATT/WTO

The General Agreement on Tariffs and Trade (GATT) was created in 1947 as a replacement for an international trade organization proposed in the Bretton Woods conference that also was responsible for the United Nations, World Bank and International Monetary Fund. The trade organization could not get approval and, hence, the GATT was developed with 23 nations as members (WTO 2010d). Environmental concerns had not been an important issue in the several rounds of GATT negotiations that preceded the Uruguay Round and probably would not have become a major issue then except for the concerns raised as a result of the Mexico–US tuna dispute that had ruled against the US restrictions on imports of tuna that had not been caught using dolphin safe procedures. However, environmental concerns had become an issue in 1971 as a response to the growing environmental movement and preparation for the Conference on the Human Environment held in Stockholm during June 5–16, 1972 (WTO 2010a). Olivier Long, Director General of GATT, then established the Group on Environmental Measures and International Trade (EMIT) to focus on issues of industrial pollution that might impact on free trade. This was during an era of environmental activism when the Environmental Protection Agency was formed in the US, along with legislation dealing with pollution. The clean air and water acts were being enacted due, in part, to the influence of Rachel Carson’s Silent Spring (Carson 1962). There was concern that the environmental movement might interfere with expansion of freer trade – that is, that environmental concerns might prevent further trade liberalization. Therefore EMIT was formed to help deal with that and other environmental issues. However, the environmental movement did not affect trade negotiations at that time. The group was not active and 48

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did not meet until called together in response to the crisis provoked by the tuna decision and the threat it posed for concluding the Uruguay Round (Eglin 1999; Esty 1994). Although direct, specific environmental provisions were not included in the GATT agreements, there were environmental implications in several parts of the agreements. The most direct was Article XX, General Exceptions. These were exceptions permitted to prohibitions on trade restrictions that included such things as to protect public morals and for articles produced with prison labor (Article XXI allowed exceptions for defense purposes). It also permitted exceptions for the protection of the health and life of plants, animals and humans (item b) and for the conservation of natural resources (item g) if the restrictions also apply to items for domestic production or consumption. Such restrictions, if used, were not to be “arbitrary or unjustifiable discrimination between countries where the same conditions prevail” and were to be legitimate – that is, were not to be “a disguised restriction on international trade”. The tuna–dolphin dispute involved interpretation of this exception. In addition, similar provisions in the SPS and TBT agreements also incorporated environmental concerns in GATT related activities (Steinberg 1997).

The tuna–dolphin ruling The United States, at the urging of environmentalists, had adopted the Marine Mammal Protection Act in 1972 and it had been amended in the 1980s. One provision prohibited the importation of tuna that had been caught in ways that killed dolphins, which often accompany and feed on schools of the fish (NOAA 2002). The encircling method of catching tuna resulted in the deaths of many of the dolphins and the prohibition was to discourage the practice and protect the dolphins. Mexico brought this to the trade dispute process of the GATT, claiming it was an illegal trade constraint under GATT (Colyer 2004; Esty 1994; Eglin 1999). The GATT appeals process ruled in favor of Mexico, which produced an immediate and very unfavorable reaction from environmentalists in the US who felt the ruling unfairly removed an important protection for an endangered species. This event invigorated and energized environmental groups, who were already wary of trade agreements. The responses by the groups, individuals and others had a profound influence on both the trade and environmental communities and their approaches to trade, trade agreements and the environment (Eglin 1999). Among the procedures affected were the North American

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Free Trade Area Agreement (NAFTA), the Uruguay Round of GATT negotiations, and its final agreement; it was a factor in the organization of opposition to and scuttling of the World Trade Organization’s Seattle meeting which was to launch the next round of trade liberalization talks. The forces unleashed have continued to be a factor in trade negotiations and in the inclusion of environmental provisions in trade agreements. While the tuna–dolphin ruling was unfavorable for trade restrictions based on environmental protection, a subsequent case – the shrimp– sea turtle dispute – reversed that ruling, at least to a limited extent (Charnovitz 2007; Hudson et al. 2003; Ranné 1999; Sampson 2000; USTR 2001b; Wilson 1999, 2001). This case was brought by a group of East Asian nations against the US as a result of a ban on the imports of shrimp caught under techniques that result in harm to sea turtles. Although the dispute panel ruled in favor of the complainants, the appeals panel largely reversed the ruling while calling on the US to enter into good faith negotiations to resolve remaining issues – the US was held to have applied the regulations in a discriminatory way but the ruling seemed to allow the ban if applied equitably (Sampson 2000). Ostry (2006) contends that environmentalists had succeeded at the end of the Uruguay Round and that the inclusion of environmental protection in the preamble of the Marrakesh Agreement was, at least in part, responsible for the appellate ruling which permitted unilateral trade rules that protect the environment. The US claimed victory as a result of the appeal panel’s ruling, although it was not an unequivocal victory (USTR 2001a). However, continued pressure finally resulted in further amendments to the Marine Mammal Protection Act to bring it into compliance with GATT/WTO provisions. As Wilson (2001, p. 15) states, it was “Only after the Latin American countries, which had apparently already triumphed in the GATT decision, negotiated a compromise with a coalition of moderate environmental groups did the Congress legislate to bring the United States into compliance with international law.”

Uruguay Round environmental response The tuna–dolphin dispute arose toward the end of the Uruguay Round of GATT negotiations and threatened to derail the process. This, along with other environmental developments, induced Arthur Dunkel, the Director General of GATT, at the behest of countries in the European Free Trade Area, to call a meeting of EMIT to try to mitigate the negative effects of the ruling. Meetings of EMIT resulted in a Chairman’s

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Report that concluded: 1) that its activities should consider only aspects of environmental policies that affect trade; 2) that there is no necessary contradiction between upholding the principles of multilateral trade and environmental protection; 3) that multilateral trade rules should not present an unjustified obstacle to environmental policy-making; and 4) that an open trading system can facilitate environmental protection (Nordström and Vaughan 1999, p. 10). While the Uruguay Round Agreements did not contain extensive environmental provisions, they recognized and made environmental improvements an objective, covering environmental issues in the preamble to the Marrakesh Agreement that established the WTO, as well as some environmental aspects in GATT’s Article XX, the Sanitary/ Phytosanitary (SPS) Agreement, the Technical Barriers to Trade (TBT) Agreement, Agriculture Agreement, Intellectual Property Agreement (TRIPS), General Agreement on Trade in Services (GATS) Article XIV, agricultural subsidies and countervailing measures sections (WTO 2010a). These indicate that domestic laws on the environment or to protect human, animal and plant life and health can be exceptions to prohibitions to trade barriers. Thus, according to a note prepared by the WTO Secretariat: “At the end of the Uruguay Round, Trade Ministers adopted the Decision on Trade and the Environment which established environmental and sustainable development in the WTO’s work” (Nordström and Vaughan 1999, p. 67). With implementation of the WTO agreement, the Committee on Trade and Environment (CTE) was established and given a mandate over the trade–environmental interface. This also set the stage for specific environmental negotiations in the next round of negotiations.

WTO negotiations In 2001, WTO members launched a new round (the Doha Round) of negotiations at the November Ministerial meeting in Doha, Qatar, which mandated the inclusion of environmental issues (WTO 2001). Environmental issues had become an important aspect of the GATT/ WTO process near the end of the Uruguay Round of negotiations when the GATT Director General called a meeting of the GATT Committee on Environmental Measures and International Trade (EMIT) to help mitigate the effects of the tuna–dolphin decision that threatened completion of the negotiations. Cameron (2007), however, maintains that environmental concerns had always been part of the GATT/WTO agenda, starting with the 1947 agreement where Article XX allowed

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exceptions to rules barring trade restrictions where these were to protect plant, animal and human life and health. In addition, environmental issues were relevant earlier in negotiations for the GATT Technical Barriers to Trade (TBT) and Sanitary/Phytosanitary (SPS) agreements. The first explicit negotiations on environmental provisions for the GATT/WTO agreements were mandated in the Doha Ministerial Declaration, which includes environmental concerns in a number of areas. These were divided into two main parts, the regular work of the CTE and negotiations under CTE special sessions (CTE-SS). The CTE regular session negotiations focus on Paragraphs 28 and 32: 32i on environmental provisions and market access, 32ii on relevant aspects of the TRIPS agreement – that is, on intellectual property rights – and 32iii on labeling requirements for environmental purposes. The mandate also includes Paragraph 51, trade, environment and development, and fisheries subsidization. The CTE-SS negotiations are outlined in paragraphs 31i, ii and iii, which consist of a much narrower and different set of issues than typical in bilateral and regional trade agreement negotiations (WTO 2001). Paragraph 31(i) concerns negotiations on the relationships between WTO rules and specific trade obligations (STOs) in multilateral environmental agreements (MEAs), 31(ii) involves developing procedures for information exchanges with the MEAs and observer status for MEAs and others at CTE meetings and 31(iii) is a directive to eliminate or reduce tariff and nontariff barriers to trade in environmental goods and services. The CTE has overall responsibility for the negotiations, although some specific aspects are under the purview of other negotiating areas – for example, the actual tariff levels are under Non-Agricultural Market Access (NAMA) and environmental services under the General Agreement on Trade in Services (GATS). The Director General has indicated that because of these negotiations and especially those on environmental goods the Doha negotiations could be considered as a green round – that is, one strongly oriented to the environment, although this seems to give them greater weight than they actually have (Lamy 2007b). As with several other issues in the Doha Round, the environmental negotiations have been controversial with substantial disagreements between the various members and groups and, hence, a failure to date to reach a consensus. CTE-SS negotiations The CTE-SS’s mandate was given by Paragraph 31 of the Doha Ministerial declaration and gives specific areas for the special sessions work, as follows:

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31. With a view to enhancing the mutual supportiveness of trade and environment, we agree to negotiations, without prejudging their outcome, on: (i) the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs). The negotiations shall be limited in scope to the applicability of such existing WTO rules as among parties to the MEA in question. The negotiations shall not prejudice the WTO rights of any Member that is not a party to the MEA in question; (ii) procedures for regular information exchange between MEA Secretariats and the relevant WTO committees, and the criteria for the granting of observer status; (iii) the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services.

We note that fisheries subsidies form part of the negotiations provided for in paragraph 28. Under Paragraph 31(i), determining how to handle relationships between WTO rules and STOs of multilateral environmental agreements, it is necessary to determine which MEAs to include as well as how to handle possible conflicts and other issues. The WTO (2007) indicates that at least 20 of the many MEAs have trade implications. However, there are disputes about what STOs are and, hence, which MEAs are relevant (ICTSD 2004). The Doha environmental mandate has a limited the scope for the negotiations, which has hampered those wishing to see stronger environmental provisions (Palmer and Tarasofsky 2007). Information exchanges and observer status for MEAs (paragraph 31ii) have also been somewhat contentious, but less so than the other issues. Provisions for information exchanges already existed and this part was left largely unchanged, but with proposals to extend and improve the process. Observer status has been limited due, in part, to the failure of the general Trade Negotiations Committee to address the issue, but also due to reluctance to allow broad participation by some members. The CTE-SS decided to allow observers at its special sessions on an ad hoc basis from the UNEP and six MEAs, although others had requested to participate – the Organization for Economic Cooperation and Development (OECD) also has attended some sessions (ICTSD 2003). The six are the Basel Convention on Transboundary Movement of Hazardous Waste, the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES), the Convention on Biodiversity (CBD), the Montreal Protocol on Ozone-Depleting Substances, the International Tropical

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Timber Organization (ITTO) and the UN Framework Convention on Climate Change (UNFCCC). For environmental goods, paragraph 31(iii), the purpose is to enhance the environment by freeing trade in relevant goods and services beyond the provisions for other types of products. In 2002, the CTE decided to shift negotiations on tariff levels for goods and services to the Negotiating Group on Non-Agricultural Market Access (NAMA) and Council on Trade in Services, but retained the issue of defining environmental goods which has occupied much of the CTE’s negotiating efforts. Since 2005–06, the CTE-SS has concentrated mainly on paragraph 31(iii) dealing with environmental goods. Some members, such as the EU, want green consumer goods to be included, but many others, especially many developing countries, objected because they feared this might involve processing and production methods which would be disadvantageous to them. Another issue was whether to approach the issue by defining environmental goods or to develop lists of environmental goods as in the OECD (see Howse and van Bork, 2006, for a discussion of the options). Thus, lists from OECD and APEC with various modifications have been suggested by a number of members. The developed country members and some others opted for a list of goods, but cannot agree on what to include in the list, although one list proposed by “friends of the environment” (mostly industrialized countries), has 153 products (Jha 2008). Many developing countries are suspicious of this approach based, in part, on single- versus multiple-use goods since some goods on the proposed lists can be used for purposes other than for environmental activities. India, for example, wants to limit the free import of environmental goods to those being used for specific environmental projects, since many goods could be used for other, nonenvironmental purposes, but this approach has been criticized by developed country members (Claro et al. 2007). The developing countries are concerned that most of the environmental goods are produced in the industrialized nations and see few opportunities to increase their exports under the proposed environmental goods liberalization scenarios. The negotiations also are confounded by countries’ special interests. Brazil, for example, wants alcohol for fuel included since its production processes, which utilize sugar cane, are less expensive than those produced in the US or EU, which are based on more expensive products such as corn. Some developing countries want to see organic products included. A list proposed by the Philippines at a February 2010 meeting included, among other things, products they produce, biodegradable

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mats and screens made from coconut fibers to prevent soil erosion (ICTSD 2010c). Theirs was the first list provided by a nonindustrialized country. At the same meeting Japan proposed including energy-efficient products such as hybrid cars, low-energy appliances, audiovisual products and other low-energy using products which they specialize in producing. They suggested that the negotiations should have a focus on energy efficiency. Saudi Arabia suggested a list that included several natural gas-related products since they are a major producer of natural gas. Singapore suggested inclusion of products such as catalyzers (industrial and auto), photosensitive semiconductor devices and motors used in wind turbines, among others, that it produces. CTE negotiations The CTE was established with the WTO and is charged with coordinating and evaluating environmental issues for the organization. Under the regular work of the CTE for the Doha negotiations, environmental aspects of trade are included in paragraphs 32 and 51 as well as fishing subsidies under paragraph 28 (ICTSD and IISD 2003). Fishing subsidies are handled in the rules negotiations where an objective is to reduce or eliminate overfishing which poses a threat to wild fish stocks (ICTSD 2006). The CTE mandate given at Doha is: 32. We instruct the Committee on Trade and Environment, in pursuing work on all items on its agenda within its current terms of reference, to give particular attention to: (i) the effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them, and those situations in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development; (ii) the relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights; and (iii) labeling requirements for environmental purposes.

Work on these issues was to include the identification of any need for clarifying relevant WTO rules. The Committee was to report to the Fifth Session of the Ministerial Conference, and make recommendations, where appropriate, with respect to future action, including the desirability of negotiations. The outcome of this work as well as the negotiations carried out under paragraph 31(i) and (ii) were to be compatible with the open and nondiscriminatory nature of the multilateral trading system, should not add to or diminish the rights and obligations of

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members under existing WTO agreements, in particular the Agreement on the Application of Sanitary and Phytosanitary Measures, or alter the balance of these rights and obligations, and were to take into account the needs of developing and least-developed countries. These negotiations, like many in the Doha Round, have been controversial with a failure, to date, to reach a consensus. Paragraphs 32(i), 32(ii) and 32(iii) are concerned with environmental measures and market access, relationships of trade aspects of intellectual property rights (TRIPS), the Convention on Biological Diversity (CBD) and environmental labeling. Paragraph 51 mandates that the CTE and Committee on Trade and Development (CTD) jointly identify and debate environmental aspects for sustainable development objectives. While initial discussions were held on 32(i), there has been little progress on these issues. The TRIPS council was to handle 32(iii) issues, but has concentrated on public health and geographic indicators negotiations (ICTSD 2004). Negotiations on environmental labeling have not progressed appreciably. A workshop was held on paragraph 52 issues (including trade and development, agriculture, fisheries, subsidies, environmental goods and service liberalization, intellectual property rights, and capacity building for development), but little progress has been made in actual negotiations. 2007 and later negotiations Negotiations were resumed early in 2007 after a hiatus in 2006 and the initial CTE-SS meeting again focused on information exchanges and observer status based on a US proposal (ICTSD 2007a). The US proposed annual meetings of the CTE and MEAs for exchanging information, permanent observer status for the MEA Secretariats that had been granted ad hoc status and assistance for developing countries to improve their trade and environment activities. Switzerland commented that the list should also include the UNEP and the EU suggested that the Secretariats of all MEAs be included. A brief discussion of free trade in environmental goods reiterated positions with DCs favoring a list of goods and LDCs expressing concerns about this approach. Much of the effort at that time was devoted to trying to reach agreement on what to include in the environmental goods, with an inability to reach a consensus due, in part, to the fact that many goods on the proposed lists have dual or multiple uses – that is, can also be used for nonenvironmental purposes. There also have been proposals such as Brazil’s request to include biofuels, Peru’s for organic foods and Kuwait’s for including natural gas as environmental goods (ICTSD 2007b).

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At a July 2009 meeting, the CTE discussed organic products and the effects of private standards on the ability of developing countries to know about and meet those standards in the face of their proliferation; private standards had been the topic of a workshop preceding the Committee meeting (WTO 2009). While the discussion was substantial, no actions were taken. Under Paragraph 32iii, eco-labeling was briefly discussed, with the EU commenting on efforts to assist developing countries with the process. Argentina noted that labeling for environmental purposes should be in accordance with TBT provisions. Discussions also were held on technical assistance, trade and climate change, and environmental and regional trade agreements. With respect to the latter, Canada presented its approach, which is to have a chapter in the trade agreement together with a separate environmental agreement to commit the parties to high levels of environmental protection and effective enforcement of environmental laws. Australia noted that their practice was to include environmental provisions on a case-by-case basis and noted the extensive nature of those in the Australia–US agreement. None of these resulted in specific proposals for inclusion in the proposed Doha agreements. The CTE-SS also has continued to meet and to discuss and negotiate about the items under its purview. The CTE-SS chair reported to the TNC for the March 2010 stocktaking and indicated progress in all three areas of paragraph 31 (Teehankee 2010). He indicated that members emphasize five issues with respect to paragraph 31i, including the importance of coordination at the national level with respect to implementing Special Trade Obligations (STO) of the MEAs based on a national experience sharing carried out by Committee members. STOs are in the Convention on International Trade in Endangered Species of Fauna and Flora (CITES), Montreal Protocol on Substances that Deplete the Ozone Layer, Basil Convention on Transboundary Movements of Hazardous Wastes and Their Disposal, Cartagena Protocol on Biosafety to the Convention on Biodiversity, Rotterdam Convention on the Prior Informed Consent Procedures for Certain Hazardous Chemicals and Pesticides in International Trade and Stockholm Convention on Persistent Organic Pollutants. Other issues are dispute settlement procedures in case of conflict between an MEA trade obligation and WTO trade rules, technical assistance and capacity building, and general principles that might include language in a preamble, or objectives, etc. However, none of these are at the stage of text preparation. The report indicated that the situation was more advanced for Paragraph 31ii, information exchanges with the MEAs and observer

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status for MEA representatives at CTE meetings. Information exchange proposals that are taking shape are for informational meetings with the CTE and document exchanges with future collaboration in capacitybuilding and technical assistance. However, the issue of observer status has not been finalized although there are proposals for permanent observer status for those who have taken part in the CTE meetings. For Paragraph 31iii, liberalization for trade in environmental goods, progress was indicated in identifying environmental goods of interest to members. Workshops were held in September 2009 and February 2010 and some tentative lists of goods have been made (a list is attached as appendix to the report). However, the approach to reduce or eliminate tariffs on the goods remains open. Some want immediate elimination of tariffs but others want delays, at least for developing countries and especially for the least developed. The CTE-SS chairman attributes progress to the ongoing negotiations and anticipates further gains: The final paragraphs of his report are (Teehankee 2010, p. 5): At this stage, it is clear that further broad-based engagement from Members will be necessary in order to get to a stage where we can start seeing the contours of an outcome under Paragraph 31(iii). With respect to the work of the CTESS in general, some progress has been made over the last year. Members will have to continue to work in a constructive spirit on all aspects of the Paragraph 31 mandate, with a view to achieving convergence and a coherent and substantially meaningful result that provides a win for trade, development and the environment. Another development regarding environmental goods is that the US, in April 2010, began pushing for completing an agreement for free trade in environmental goods (Drajem 2010; ICTSD 2010b). US Trade Representative Kirk indicated that it made sense to make trade in such goods more open. He also indicated that the process might move forward on its own – that is, outside the context of the WTO Doha Round negotiations. Such a deal could be similar to the WTO’s Information Technology Agreement (ITA), a 1996 deal that liberalized trade in information technology products that has generally been considered a success. US Trade Representative Kirk said that the US is talking with Canada, the EU and Australia about eliminating tariffs of environmental goods such as solar, wind and related energy technologies. To further this, the USTR Office has requested studies to determine the impacts

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of these types of measures on US industry and consumers. While the CTE-SS has continued to meet and various proposals have been put forward, little progress has been made on any of the topics within their purview (ICTSD 2010d). Recent activity has been focused on a list of 153 environmental goods, but opposition continues from developing countries who contend that the list favors developed countries and that proposed tariff cuts are relatively greater for developing countries although their rates would remain substantially higher than those of the developed nations (ICTSD 2011).

Doha Round negotiations status Part of the reluctance to make commitments on environmental issues might be due to the failure to reach agreements in the agricultural and nonagricultural goods (NAMA) negotiations, where major disagreements have continued to prevent a consensus being reached. In February 2008 and again in May, the Agricultural and NAMA Committee Chairs produced draft documents as bases for further negotiations (ICTSD 2008b, 2008g). However, these draft modalities did not produce a consensus with fundamental differences still existing with respect to tariff cuts, agricultural subsidies, special safeguards for developing countries and other issues (ICTSD 2008d, 2008f). Within this context, the environmental negotiations appear to have relatively low priority within the Doha proceedings (ICTSD 2007c). General negotiations continued, off and on, throughout 2009–10 with some progress as eight years of negotiations were completed (Bouët and Laborde 2009). However, there were no major breakthroughs as most countries were unwilling to make the types of concessions that would enable progress. Several groups have made calls for completion of the Round in 2010, including APEC, the G-20 and the WTO’s Director General. The seventh WTO Ministerial meeting was held in Geneva, Switzerland, November 30–December 3, 2009, and, while there was agreement that a conclusion to the Doha Round was necessary, little progress was made (ICTSD 2009a). The conference chair observed “Ministers reaffirmed the need to conclude the round in 2010 and for a stocktaking to take place early next year.” However, little, if any, progress was made at the stocktaking session held in March 2010 (ICTSD 2010a). Pascal Lamy, WTO Director General, stated “There is no denying the fact that we are not where we wanted to be by now,” but that: “Nobody is contemplating dropping the ball. Everyone is still very much committed to the mandate of the

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round and to its successful conclusion. That is the spirit which I have seen this week, and that is the most important message that you are sending to the world,” he told the meeting. However, that optimism was not displayed by others and some blamed the US for the lack of progress. Addressing the TNC after Lamy’s opening remarks, a delegate from one major emerging economy referenced Albert Einstein’s definition of insanity: “doing the same thing over and over again and expecting different results”. Some are very pessimistic, an Indian negotiator is reported to have said (ICTSD 2010b): “The potential for resolution of the Doha Round is nil. And if it isn’t happening this year, I don’t see it happening before 2014.” Others still want to see the process completed. The Cairns Group, important agricultural product exporters, said at their annual meeting in Punte del Este, Uruguay, that “concluding the Doha Development Agenda must remain the top priority for WTO members” (Cairns Group 2010). In the following year efforts have been made to revive the negotiations but with little progress. In February 2011, Director General Lamy stated that he was “encouraged by recent discussions among Senior Officials” but warned that “a major acceleration at all levels – multilaterally, plurilaterally and bilaterally – is needed”. He added that “the window of opportunity is still there, but it is narrowing every day” (WTO 2011).

Trade disputes and the environment In addition to the provisions in the GATT agreements and those being negotiated in the Doha Round, environmental issues have been and are being litigated in the GATT/WTO dispute settlement process – that is, through the Dispute Settlement Understanding (DSU) which is one of the Uruguay Round agreements (WTO 2010c; WTO Secretariat 2001). Ultimate authority, however, rests with the Dispute Settlement Body (DSB), a special meeting of all WTO members. Thus, the dispute process is an entirely internal process within the WTO. A dispute arises when one WTO member believes that another is violating one or more provisions of the WTO agreements. Members must first try to resolve disputes through negotiations, as called for in the DSU procedures (WTO 2010e): The DSU emphasizes the importance of consultations in securing dispute resolution, requiring a Member to enter into consultations within 30 days of a request for consultations from another Member. If after 60 days from the request for consultations there is

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no settlement, the complaining party may request the establishment of a panel. Where consultations are denied, the complaining party may move directly to request a panel. The parties may voluntarily agree to follow alternative means of dispute settlement, including good offices, conciliation, mediation and arbitration. If a dispute panel is established it hears evidence presented by the parties, with each being able to respond to the other’s charges and evidence. Other members may also enter into the process and, increasingly, amicus briefs from interested organizations and others also are being accepted. The panel then reaches a decision and sends a draft of its findings to each of the parties who can then respond to the findings. The panel can then endorse the report and it is made public. Either party can appeal to the Appellate Body. Once the process is complete and a party found to not be in compliance, it should notify the DSB of its intentions to correct the deficiency. Failure to do so can result in a demand for compensation or the party can impose tariffs on selected goods from the losing party. There often is a long and involved process after the final ruling. The following paragraphs are from the official DSU procedures (WTO 2010c): Panel procedures are set out in detail in the DSU. It is envisaged that a panel will normally complete its work within six months or, in cases of urgency, within three months. Panel reports may be considered by the DSB for adoption 20 days after they are issued to Members. Within 60 days of their issuance, they will be adopted, unless the DSB decides by consensus not to adopt the report or one of the parties notifies the DSB of its intention to appeal. The concept of appellate review is an important new feature of the DSU. An Appellate Body will be established, composed of seven members, three of whom will serve on any one case. An appeal will be limited to issues of law covered in the panel report and legal interpretations developed by the panel. Appellate proceedings shall not exceed 60 days from the date a party formally notifies its decision to appeal. The resulting report shall be adopted by the DSB and unconditionally accepted by the parties within 30 days following its issuance to Members, unless the DSB decides by consensus against its adoption. Once the panel report or the Appellate Body report is adopted, the party concerned will have to notify its intentions with respect to implementation of adopted recommendations. If it is impracticable

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to comply immediately, the party concerned shall be given a reasonable period of time, the latter to be decided either by agreement of the parties and approval by the DSB within 45 days of adoption of the report or through arbitration within 90 days of adoption. In any event, the DSB will keep the implementation under regular surveillance until the issue is resolved. While the tuna–dolphin case was one of the earlier and, along with the shrimp–turtle case, more famous disputes involving environmental issues, there are others that have impacts on the trade regime.1 Some of the other cases that are directly linked to the environment are the gasoline case (Venezuela and Brazil v. US), apple fire blight ban (US v. Japan), the GMO case (US, Canada and Argentina v. EU) and swordfish dispute (EU v. Chile). Some others are health cases that have environmental implications, including the asbestos dispute (Canada v. France) and the beef hormone dispute (US, Argentina and Canada v. EU). The asbestos case is clearly tied to the environment since asbestos in the environment produces the human health issue. The beef hormone case is less directly environmental since it is not clear that the hormones are a health problem (Anderson and Nielsen 2000; see also Hartigan 2009). The findings and results from the several cases mentioned in the preceding paragraph are varied, long and complex. This paragraph gives a brief summary of the overall trends and implications of the results of those disputes. First, they have been mixed with respect to upholding or negating the legitimacy of domestic environmental/health laws and regulations. In the tuna–dolphin and shrimp–turtle cases, as well as the gasoline case, the ruling was against US and its environmental laws, although the appellate ruling partially reversed the ruling and found that Article XX permitted the practice (banning shrimp imports) if applied in an equitable and least trade-distorting way. The French ban on asbestos was upheld on the basis of Article XX and the showing that asbestos was clearly harmful to the health and lives of people – some were critical of using Article XX instead of similar provisions in the Technical Barriers to Trade Agreement (TBT), which they contended would have made the ruling stronger (Troje 2000). The dispute panel ruled in favor of the US et al. in the beef hormone case and the EU later modified its procedures and began to permit the use of some GMO crops (Anderson and Nielsen 2000; Josling 2009; Sindico 2005). An issue in the GMO case was the appropriate use of science together with the precautionary principle – the EU had claimed the science was not conclusive and therefore it was appropriate to use a precautionary

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approach, but the approach was not upheld (Colyer 2006b). The EU and Chile reached an agreement in the swordfish case which allowed a limited number of EU vessels to use Chilean ports while working with Chile and others to help preserve swordfish stocks (European Union 2001; Orellana 2001). During the period since the tuna–dolphin ruling shocked and energized environmentalists, the WTO dispute settlement process has become more open to accepting barriers to trade that are designed to protect the environment. Environmentalists, however, cannot be certain that the rulings will be in favor of their position. Although the panels now allow NGOs and others to submit amicus briefs, some still view this process, which is carried out as an internal mechanism of the WTO, as being biased toward trade and prone to strike down environmental protections (see Peel 2001). However, when the measures are clearly designed to protect the environment (i.e., are not disguised trade barriers), the parties have attempted to negotiate and assist with compliance, the laws and regulations apply to all members and domestic producers equally, are shown to be necessary for protecting life, health or natural resources, and/or are backed by strong scientific evidence the restrictions can expect a fair hearing by the panel and appellate bodies.

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6 FTA Trade Provisions

This chapter lists and discuses the types and variations of environmental provisions contained in regional and bilateral free-trade agreements that have been negotiated in the years since NAFTA. Both will be referred to as free trade agreements (FTA) with RTA reserved for regional agreements – that is, those involving three or more countries in a specific geographic area. These provisions vary widely, from as little as a line or two in the preamble or an objective, inclusion as an exception to prohibited trade restrictions, provisions in one or more chapters or sections of the agreement (such as the investment chapter), a separate environmental chapter, or a separate environmental agreement that accompanies the trade agreement. The content of this chapter is based on analyses of FTAs in publications by Chaytor (2009), Colyer (2003a and b, 2004, 2006a, 2008, 2010), the OECD (2007), Less and Kim (2008), Less and Gigli (2008), Gigli (2009), Gallagher and Serrat (2010) and Bourgeois et al. (2007), as well as the several FTAs with environmental provisions and other relevant references. More detailed information on the various types of provisions and their respective FTAs are given in Chapters 7–10. Quotes from specific trade agreements are taken from the agreements available through the WTO’s RTA database or the OAS’s SICE database.

Why, what and where? The reasons that environmental provisions are included in trade agreements vary, but the main reason is that environmentalists demanded that they be included to protect the environment from perceived damages caused by trade together with a growing realization that trade and the environment are interrelated. This resulted in the United States 64

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having a requirement to include environmental provisions in all trade agreements to which it is a party as a result of the Trade Promotion Act of 2002 (TPA). Strong public support for environmental protection has induced others to favor environmental provisions, as in the EU’s emphasis on sustainable development. Finally, countries that have negotiated FTAs with the US, Canada and other countries promoting environmental considerations have become more familiar and comfortable with the issues and, thus, more supportive. There is a vast array of environmental activities that could be included in FTAs, but the list that is appropriate to include in an agreement is more limited. The US is required by TPA to include some provisions such as enforcement of environmental laws but often includes items that are not mandated. What is finally included is the result of the negotiating process and depends, in part, on the policies of the negotiators and the necessity to gain ratification of the agreement by legislators, as well as their commitment to environmental protection. There tend to be two types of provisions: 1) those aimed at protecting and promoting the environment and 2) those outlining environmental cooperation between the contracting parties. The environmental provisions can be located in various parts of an FTA. The two most common are in the preamble and the exceptions article. Other places include insertions inside chapters dealing with investment, agriculture, energy, sanitary/phytosanitary and/or technical barriers to trade sections, a separate chapter/section on the environment and/or in a side agreement of some type that may be separate but linked to the trade agreement. Provisions are frequently located in the investment chapter since investment is a desirable outcome and many think investors tend to be anti-environment, but it is not uncommon to use a combination of several locations. If the provisions are minimal or very specific it might be better to locate them in the topical section to which they are most relevant, but if they are extensive and complicated a separate chapter or a side agreement might be more appropriate. Ultimately, the provisions that are included in the document are of greater importance than their location.

Classification of environmental provisions There are various ways to classify the provisions incorporated into trade agreements including thematic content, location(s) in the agreement (or environmental side agreement), reasons for inclusion in the FTA, extent of the provisions, their specificity/generality, degree of commitment

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and enforcement, and various other schemes to rationalize the somewhat chaotic and varied approaches to integrating trade and the environment. Since each trade agreement is negotiated as a separate process, each has its own unique approach and set of provisions. Thus, although the basic negotiating team might be the same for, say, the US, the team from the other nation will have an influence on the content, language and other factors, giving each FTA a unique set of provisions. Those with the US since 2002 have to contain a minimum set of provisions set out by TPA requirements (see Chapter 7). Types of provisions There many different environmental provisions included in the growing number of FTAs that incorporate environmental issues. However, they can be categorized into the following relatively short list, based on the types of provisions that are used in the various FTAs in force: 1. Commitment to environmental protection, 2. Commitment to enforce environmental laws, 3. Recognition of right parties to develop own laws, i.e., national sovereignty, 4. Maintenance of environmental standards, 5. Cooperation on environmental issues and programs, 6. Capacity-building and technical assistance for environmental enhancement, 7. Relationships to WTO, MEAs and other FTAs, 8. Degree of and procedures for public involvement, 9. Dispute settlement procedures (separate from other aspects of the FTA), 10. Exceptions from prohibited trade restrictions for environmental protection, 11. Sector-specific provisions (agriculture, forestry, industry, tourism, etc.), 12. Environmental stewardship, 13. Voluntary approaches to environmental protection and 14. Institutional arrangements for implementation. There are a variety of forms and approaches to each of these environmental provisions as well as to what is included in any particular trade agreement; some may have only one, others have a few and some have several or nearly all on the list. This is not necessarily an exhaustive list. Other analysts might use other categories, either combining some

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categories or splitting some into two or more types – see, for example, OECD (2007, Box 1) or Bourgeois et al. (2007) for what they term a taxonomy of environmental provisions in free trade agreements (FTAs). Chaytor (2009) used a less detailed classification for environmental provisions in Economic Partnership Agreements between the EU and developing countries.1 The list developed for this chapter is a combination and redefinition of categories used by the OECD (2007), Less and Kim (2008), Less and Gigli (2008), Gigli (2009) and Colyer (2004, 2008, 2010).2 Each type of provision is described and illustrated, with examples from FTAs negotiated in the last couple of decades. Commitment to environmental protection The commitment to protect the environment generally consists of a pledge to protect the environment and/or promote sustainable development. Usually this is a part of the preambles and/or the objectives of the FTA and in a few cases is the only mention of the environment contained in the agreement. Examples from preambles include: Nicaragua–Taiwan (Preamble): Implement this Agreement in a manner consistent with environmental protection and conservation, promote sustainable development, and strengthen their cooperation on environmental matters; Protect and preserve the environment and enhance the means for doing so, including through the conservation of natural resources in their respective territories. Australia–Chile (Preamble): Implement this Agreement in a manner consistent with sustainable development and environmental protection and conservation. EC–CARIFORUM States3 (Preamble): Considering the need to promote economic and social progress for their people in a manner consistent with sustainable development by respecting basic labor rights in line with the commitments they have undertaken within the International Labour Organisation and by protecting the environment in line with the 2002 Johannesburg Declaration. (Objective): (a) Contributing to the reduction and eventual eradication of poverty through the establishment of a trade partnership consistent with the objective of sustainable development, the Millennium Development Goals and the Cotonou Agreement. US–Australia (Preamble): Implement this agreement in a manner consistent with their commitment to high labor standards, sustainable development, and environmental protection.

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Canada–Peru (Preamble): Undertake each of the preceding in a manner that is consistent with environmental protection and conservation, enhance and enforce environmental laws and regulations and strengthen cooperation on environmental matters. Peru–China (Preamble): Recognize that this Agreement should be implemented with a view toward raising the standard of living, creating new employment opportunities, reducing poverty and promoting sustainable development in a manner consistent with environmental protection and conservation. European Union–Chile (Preamble): the need to promote economic and social progress for their peoples, taking into account the principle of sustainable development and environmental protection requirements. Committing to implement a trade agreement in a manner to protect or enhance the environment in the preamble is an important recognition that the environment matters and that trade agreements could be carried out in ways that harm the environment. However, if an agreement does not go beyond that commitment, it has few real implications for environmental enhancement and many agreements do not go much beyond that pledge. Commitment to enforce environmental laws One of the environmental provisions introduced by NAFTA was a pledge by the three countries to enforce their environmental laws and regulations. This was, in part, due to the fear expressed by environmentalists who opposed the agreement that Mexico not only had weak environmental regulations but that they would not be enforced as a means to attract investment – that is, that there would be a race to the bottom (Bailey 1992–93). In addition to this commitment, an FTA may also indicate that each party has sovereignty and the right to develop and enforce its own environmental rules. These provisions might be in the investment chapter or article of the agreement, although they frequently are in a section that deals with the environment or in a side agreement on the environment when there is a more extended treatment of environmental issues. Examples include: Nicaragua–Taiwan: A Party shall not fail to effectively enforce its environmental laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the Parties, after the date of entry into force of this Agreement.

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Canada–Chile (Environmental Side Agreement): With the aim of achieving high levels of environmental protection and compliance with its environmental laws and regulations, each Party shall effectively enforce its environmental laws and regulations through appropriate governmental action. NAFTA: Canada, Mexico and United States (Environmental Side Agreement): With the aim of achieving high levels of environmental protection and compliance with its environmental laws and regulations, each Party shall effectively enforce its environmental laws and regulations through appropriate governmental action. US–Peru: A Party shall not fail to effectively enforce its environmental laws, and its laws, regulations, and other measures to fulfill its obligations under the covered agreements, through a sustained or recurring course of action or inaction, in a manner affecting trade or investment between the Parties, after the date of entry into force of this Agreement. The NAFTA and Canada–Chile provisions are nearly identical since, at the time they were negotiated (shortly after approval of NAFTA), it was thought that Chile would soon become a part of NAFTA and the Canada–Chile agreement was designed to fit into NAFTA as seamlessly as possible. The enforcement requirements are usually accompanied by provisions to assure that each party to the agreement has the right to develop its own laws and the procedures for assuring that the laws are carried out. Examples are given below: US–Peru: Recognizing the sovereign right of each Party to establish its own levels of domestic environmental protection and environmental development priorities, and to adopt or modify accordingly its environmental laws and policies, each Party shall strive to ensure that those laws and policies provide for and encourage high levels of environmental protection and shall strive to continue to improve its respective levels of environmental protection. The Parties recognize that each Party retains the right to exercise prosecutorial discretion and to make decisions regarding the allocation of environmental enforcement resources with respect to other environmental laws determined to have higher priorities. Accordingly, the Parties understand that with respect to the enforcement of environmental laws and all laws, regulations, and other measures to fulfill a Party’s obligations under the covered agreements, a Party is in compliance with subparagraph (a) where a course of action or inaction

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reflects a reasonable, articulable, bona fide exercise of such discretion, or results from a reasonable, articulable, bona fide decision regarding the allocation of such resources. NAFTA (Chapter 11. Investment): Recognizing the right of each Party to establish its own levels of domestic environmental protection and environmental development policies and priorities, and to adopt or modify accordingly its environmental laws and regulations, each Party shall ensure that its laws and regulations provide for high levels of environmental protection and shall strive to continue to improve those laws and regulations. Canada–Chile: Recognizing the right of each Party to establish its own levels of domestic environmental protection and environmental development policies and priorities, and to adopt or modify accordingly its environmental laws and regulations, each Party shall ensure that its laws and regulations provide for high levels of environmental protection and shall strive to continue to improve those laws and regulations. US–Morocco: Nothing in this Chapter shall be construed to empower a Party’s authorities to undertake environmental law enforcement activities in the territory of the other Party. The preceding provisions establish sovereignty and independence for the countries involved in the FTAs under consideration. A provision in the US–Morocco agreement makes it specific that neither party has the authority to try to enforce the laws of the other party. The potential loss of sovereignty has often been a concern of critics of trade agreements who fear control by perceived faceless trade bureaucrats, especially with respect to the WTO and its dispute settlement process (see, e.g., Lamb 2000; Palmeter 2005). Palmeter (p.77) indicates that “Many of these criticisms directly or indirectly invoke loss of national sovereignty as a concern. In particular there is a fear that the WTO, through its dispute settlement system, threatens the integrity of our laws dealing with the environment.” It might be noted that the provisions recognizing sovereignty also frequently contain language that encourages high levels of environmental protection and development of improved laws and regulations although with no mandate to change any laws. Maintenance of environmental standards The requirement that parties to an FTA maintain environmental standards is similar to that of the mandate to enforce their environmental laws and has a similar effect, but approaches the problem of attempting

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to attract investment by prohibiting lowering of standards or failing to enforce environmental laws and regulations. The purpose is to reduce the temptation by an FTA member to become a pollution haven with low costs associated with lax laws and law enforcement. While contributing to that end, the provisions generally do not attempt to harmonize the laws of FTA members nor to equalize costs of production, although Bhagwati (2008, pp. 74ff) seems to think that is the case. In some cases the agreements have wording nearly identical to that included in NAFTA. A few examples of this type of provision include: NAFTA: The Parties recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. Accordingly, a Party should not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such measures as an encouragement for the establishment, acquisition, expansion or retention in its territory of an investment of an investor. If a Party considers that another Party has offered such an encouragement, it may request consultations with the other Party and the two Parties shall consult with a view to avoiding any such encouragement. Mexico–Japan: The Parties recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. Accordingly, a Party should not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such measures as an encouragement for the establishment, acquisition, expansion or retention in its Area of an investment of an investor. If a Party considers that the other Party has offered such an encouragement, it may request consultations with the other Party and the Parties shall consult with a view to avoiding any such encouragement. United States–Morocco: Each Party recognizes that it is inappropriate to encourage trade or investment by weakening or reducing the protections afforded in domestic environmental laws. Accordingly, each Party shall strive to ensure that it does not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such laws in a manner that weakens or reduces the protections afforded in those laws as an encouragement for trade with the other Party, or as an encouragement for the establishment, acquisition, expansion, or retention of an investment in its territory. El Salvador–Taiwan: The Parties recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. Accordingly, a Party shall not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such

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measures as an encouragement for the establishment, acquisition, expansion or retention in its territory of an investment of an investor. If a Party considers that the other Party has offered such an encouragement, it may request consultations with the other Party, within the Committee of Investment and Cross-border Trade in Services. Chile–Brunei–New Zealand–Singapore (Trans-Pacific Economic Partnership Agreement – EPA): The Parties agree that it is inappropriate to relax, or fail to enforce or administer, their environment laws and regulations to encourage trade and investment. EFTA–Egypt:4 The Parties recognize that it is inappropriate to encourage investment by relaxing health, safety or environmental standards. The countries represented by this selection vary considerably, but the wording is similar in most provisions, although the Chile et al. and EFTA–Egypt FTAs have much shorter provisions and the El Salvador– Taiwan agreement has extra language about consultations. The FTAs with longer provisions generally have at least one member nation from the Americas and they probably were influenced by the NAFTA agreement. The inclusion of environmental provisions in the Mexico–Taiwan FTA is an interesting development since Mexico had been resistant to including environmental provisions after NAFTA due to having felt coerced in that situation (Alanis-Ortega and González-Lutzenkitchen 2002; Araya 2002; Colyer 2004). A related issue to the enforcement of environmental laws is the taking or expropriation issue that arose as a result of NAFTA’s Chapter 11 (Abbott 1999–2000; Freeman 2003–04), which allowed companies to sue for compensation from cost incurred to meet environmental regulations. Many FTAs have provisions about expropriation that require compensation if property is taken for a public purpose. However, since NAFTA a number of FTAs have contained a provision that specifies that activities required by businesses to comply with environmental laws and regulations cannot be considered to be expropriation. Some examples are: Nicaragua–Taiwan: Except in rare circumstances, nondiscriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations. US–Singapore (Investment Chapter): Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining, or enforcing any measure otherwise consistent with this Chapter that it considers

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appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns. CAFTA–DR–US (Annex 10-C): Except in rare circumstances, nondiscriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations.

Cooperation on environmental programs Cooperation on environmental efforts is a major component of the NAFTA environmental side agreement, the North American Agreement on Environmental Cooperation, and its implementing agency, the Commission for Environmental Cooperation. While no subsequent FTA has provisions for cooperation as extensive as NAFTA, many do have provisions to promote cooperative efforts of various types and degrees, all designed to promote environmental protection and conservation efforts. Examples are covered in the following excerpts from selected FTAs. Japan–Indonesia: The Parties shall promote cooperation under this Agreement for their mutual benefits in order to liberalize and facilitate trade and investment between the Parties and to promote the well-being of the peoples of the Parties. For this purpose, the Parties shall cooperate between the Governments of the Parties and, where necessary and appropriate, encourage and facilitate cooperation between the parties other than the Governments of the Parties, in the following fields: ... (i) environment. Nicaragua–Taiwan: 1. The Parties recognize the importance of promoting all possible forms of cooperation to protect and improve the environment and to promote the optimal use, conservation and sustainable development of their natural resources, taking into consideration their respective levels of development, technologies and financial resources. 2. The Parties agree to cooperate to protect, improve and conserve the environment, including natural resources. The objective of the Environmental Cooperation Mechanism (ECM) is to establish a framework for such cooperation among the Parties. The Parties recognize the importance of bilateral cooperation to achieve this objective. Japan–Philippines: The Parties shall cooperate with each other on the utilization of appropriate mechanism on the conformance with the

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importing Party’s safety and environmental standards, such as roadworthiness and vehicle emission standards, of used four-wheeled motor vehicles as may be agreed by the Parties, exported from the exporting Party. CAFTA–DR–US: The Parties agree to cooperate to protect, improve and conserve the environment, including natural resources. The objective of the Agreement is to establish a framework for such cooperation among the Parties. The Parties recognize the importance of both bilateral and regional cooperation to achieve this objective. EC–CARIFORUM States: The Parties recognize the importance of cooperating on environmental issues in order to achieve the objectives of this Agreement. The areas in which cooperation is to take place as well as the mechanisms for cooperation vary considerably, with some agreements merely stating that the parties will cooperate and giving little attention to the procedures which, in some cases, were to be developed later. Others give extensive details on the process. An example of this is the Nicaragua– Taiwan agreement where an Environmental Cooperation Mechanism is established and where activities can include a) exchanges of delegations, professionals, technicians and experts, b) conferences, seminars, workshops and training sessions, c) development of programs including applied research, studies and reports, d) partnerships and linkages with academia, industry, NGOs and governmental agencies, e) collection, publication and exchange of information on environmental issues and programs, f) financial assistance where appropriate and g) any other where cooperation is needed. The CAFTA–DR–US has a separate environmental cooperation agreement (ECA) with a Commission and Secretariat to facilitate the cooperation which covers a list similar to the Nicaragua–Taiwan agreement. Several other FTAs or ECAs have similar lists, although they vary in specific cooperative activities. The EC–CARIFORUM agreement contains cooperative provisions in several of its sections including agriculture, sanitary and phytosanitary matters, energy and tourism. It also contains a separate section on cooperation which lists the following areas for cooperative efforts: (a) technical assistance to producers in meeting relevant product and other standards applicable in markets of the EC Party; (b) promotion and facilitation of private and public voluntary and market-based schemes, including relevant labelling and accreditation schemes;

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(c) technical assistance and capacity-building, in particular to the public sector, in the implementation and enforcement of multilateral environmental agreements, including with respect to trade-related aspects; (d) facilitation of trade between the Parties in natural resources, including timber and wood products, from legal and sustainable sources; (e) assistance to producers to develop and/or improve production of goods and services, which the Parties consider to be beneficial to the environment; and (f) promotion and facilitation of public awareness and education programmes in respect of environmental goods and services in order to foster trade in such products between the Parties. The cooperation of the EU with the Caribbean states that comprise CARIFORUM is to help promote their economic development, but in a way that is sustainable, helps conserve natural resources and keep renewable resources protected and productive. This type of cooperation is especially important in trade agreements between more and lessdeveloped economies. Capacity-building and technical assistance The inclusion of capacity-building and technical assistance provisions in trade agreements is often included in FTAs between industrialized and developing or least-developed nations since they may lack the capacity, resources and expertise to create and implement effective environmental programs, including: EFTA–SACU:5 2. Conservation of the environment shall be taken into account in the implementation of assistance in the various sectors to which it is relevant. 3. Means of assistance may include: (a) exchange of information, transfer of expertise and training; (b) implementation of joint actions such as seminars and workshops; and (c) technical and administrative assistance. Taiwan–Nicaragua: Cooperation developed under the ECM may occur through capacity-building activities, consistent with Article 19.08, on the basis of technical and financial assistance programs. US–Morocco: The United States shall endeavor to provide Morocco with technical advice and assistance for the purpose of improving risk assessment techniques, simplifying and expediting customs

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procedures, advancing technical skills, and enhancing the use of technologies that can lead to improved compliance with laws and regulations governing importation. Building capacity and providing technical and financial assistance for developing and implementing environmental laws, regulations and programs are essential activities for improving environmental protection in many poorer nations which lack resources and expertise to do so effectively. Such assistance can provide a powerful incentive to gain acceptance of the environmental provisions which less-developed countries have tended to oppose as unwarranted intrusions accompanied by costly requirements (Hoekman and Anderson 2000; Huff 2000). Relationship to other agreements Many FTAs have a section that defines their relationship to other agreements, especially other trade agreements including the WTO and to Multilateral Environmental Agreements (MEA). Many give precedence to the WTO and to a list of MEAs, generally those to which all members are parties. However, some FTAs indicate that they have precedence in cases where there are conflicts. These clauses are of particular importance in the case of disputes about compliance since a party could contend that they are obligated by another agreement to act in a way that might be contrary to the provisions of the FTA where the other member is disputing the action in question. This is another situation that may have been influenced by similar articles in the NAFTA agreement. Some examples are: Canada–Peru: The Parties affirm their existing rights and obligations with respect to each other under the WTO Agreement and other agreements to which such Parties are party. In the event of any inconsistency between this Agreement and such other agreements, this Agreement shall prevail to the extent of the inconsistency, except as otherwise provided in this Agreement. In the event of any inconsistency between this Agreement and the specific trade obligations set out in the Multilateral Environmental Agreements (MEAs) referred to in Annex 103, such obligations shall prevail to the extent of the inconsistency, provided that where a Party has a choice among equally effective and reasonably available means of complying with such obligations, the Party chooses the alternative that is the least inconsistent with the other provisions of this Agreement. Peru–China: 1. The Parties affirm their existing rights and obligations with respect to each other under the WTO Agreement and any other agreements related to trade to which the Parties are party.

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2. In the event of any inconsistency between this Agreement and any other agreement to which the Parties are party, the Parties shall immediately consult with each other with a view to finding a mutually satisfactory solution in accordance with rules of interpretation of public international law. Nicaragua–Taiwan: 1. The Parties recognize that multilateral environmental agreements to which they are party play an important role in protecting the environment globally and domestically and that their respective implementation of these agreements is critical to achieving the environmental objectives of these agreements. The Parties further recognize that this Chapter can contribute to realizing the goals of those agreements. Accordingly, the Parties shall continue to seek means to enhance the mutual supportiveness of multilateral environmental agreements to which they are party and trade agreements to which they are party. 2. For greater certainty, nothing in this Chapter shall be construed to affect the existing rights and obligations of the Parties under other international environmental agreements, including conservation agreements, to which such Parties are party. US–Chile: The Parties affirm their existing rights and obligations with respect to each other under the WTO Agreement and other agreements to which both Parties are party. US–Australia: The Parties recognize that multilateral environmental agreements to which they are both party play an important role, globally and domestically, in protecting the environment and that their respective implementation of these agreements is critical to achieving the environmental objectives of these agreements. Accordingly, the Parties shall continue to seek means to enhance the mutual supportiveness of multilateral environmental agreements to which they are both party and international trade agreements to which they are both party. The Parties shall consult regularly with respect to negotiations in the WTO regarding multilateral environmental agreements. While some agreements spell out the precedence of either the current trade agreement or some other(s), many do not. However, wording such as in the US–Australia and Nicaragua–Taiwan agreements seems to give precedence to the others, since implementing those treaties is deemed critical, although alternative interpretations are possible. While the US–Chile provision is very short and direct, a later provision in the environmental chapter recognizes that the WTO environmental negotiations on the relationship of MEA-specific trade obligations could

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have an effect on the FTA and that they would consult on that matter on completion and ratification of the new WTO agreement. Public involvement Several of the recent trade agreements allow the involvement of the public in their environmentally related activities. This is especially true for agreements in which the United States is a participant. Public involvement is an attempt to improve the understanding and transparency of free-trade reform and environmental efforts, thus helping to alleviate opposition to the trade agreements. The US, together with Mexico and Canada, pioneered public involvement in trade and environmental matters with extensive requirements as part of NAFTA and the NAAEC. This was, at least in part, a reaction to GATT which critics accused of being a secretive organization without concern for public opinion (see, e.g., Raghavan 1994). While public participation requirements characterize most US trade agreements, they are less extensive than those for NAFTA. Japan–Indonesia: Each Party Shall: ... c) promote public awareness of environmental impacts of activities related to energy and mineral resources and of the scope for and the costs associated with the prevention or abatement of such impacts. Peru–Taiwan: As appropriate and in accordance with its law, each Party shall encourage the development and use of such mechanisms, which may include: (iii) sharing of information and expertise among authorities, interested parties, and the public concerning methods for achieving high levels of environmental protection, voluntary environmental auditing and reporting, ways to use resources more efficiently or reduce environmental impacts, environmental monitoring, and collection of baseline data; or (b) incentives, including market-based incentives where appropriate, to encourage conservation, restoration, and protection of natural resources and the environment, such as public recognition of facilities or enterprises that are superior environmental performers, or programs for exchanging permits or other instruments to help achieve environmental goals. Article 19.06 Environmental Affairs Committee ... 3. In order to share innovative approaches for addressing environmental issues of interest to the public, the Committee shall ensure a process for promoting public participation in its work, including by engaging in a dialogue with the public on those issues.

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Each Party shall provide for the receipt and consideration of public communications on matters related to this Chapter. Each Party shall promptly make available to the other Party and to its public all communications it receives and shall review and respond to them in accordance with its domestic procedures. EC–CARIFORUM States: The Parties and the Signatory CARIFORUM States commit to developing, introducing and implementing any measures aimed at protecting the environment and public health that affect trade between the Parties in a transparent manner, with due notice and public and mutual consultation and with appropriate and timely communication to and consultation of nonstate actors including the private sector(c) promote public awareness of environmental impacts of activities related to energy and of the scope for and the costs associated with the prevention or abatement of such impacts. US–Singapore: ARTICLE 18.5: OPPORTUNITIES FOR PUBLIC PARTICIPATION 1. To ensure the availability of opportunities for public participation in the discussion of matters related to the operation of this Chapter, and to facilitate the sharing of best practices and the development of innovative approaches to issues of interest to the public with regard to such matters, each Party shall develop or maintain procedures for dialogue with its public concerning the implementation of this Chapter, including: (a) the identification of matters to discuss at the meetings of the Joint Committee or the subcommittee described in Article 18.4; and (b) opportunities for its public to provide, on an ongoing basis, views, recommendations, or advice on matters related to the provisions of this Chapter. Such views, recommendations, or advice shall be made available to the other Party and the public. Some FTAs, such as the Nicaragua–Taiwan and US–Singapore agreements, have very extensive provisions for public participation in the environmental activities to be pursued under the aegis of the agreement. Some FTAs have provisions for public meetings or allow public comment on environmentally related activities or may authorize public committees or councils to provide inputs as in the case of NAFTA’s JPAC. The US–Central American–Dominican Republic agreement, for example, states “Each Party shall convene a new, or consult an existing, national consultative or advisory committee, comprising members of its public, including representatives of business and environmental organizations, to provide views on matters related to the implementation of

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this Chapter.” The EC–CARIFORUM States agreement also provides for a council to promote dialogue and cooperation on all aspects of economic, social and environmental issues applicable to the relationships between the EC and CARIFORUM States. Other FTAs, while providing for public participation, have few or no mechanisms to facilitate public involvement. The Japan–Indonesia agreement has a provision to promote public awareness applied to the energy aspects of the agreement, but does not have any provisions to indicate how or by whom the public is to be made aware. A similar provision is also contained in the energy section of the Japan–Brunei Darussalam agreement. In addition, many trade agreements with other environmental provisions simply do not mention public participation. Dispute settlement procedures Most FTAs have a chapter or article dealing with dispute settlement and disputes on environmental issues might be handled exclusively through that process. Others have separate procedures to deal with environmental issues as in the case of citizen complaints about lack of enforcement of environmental laws under NAFTA. In some cases the initial complaints might be handled in a separate process but if they are not settled by that procedure can then be taken to the formal dispute settlement process developed to handle other types of FTA disputes. An example of this is contained in the US–Peru agreement: Article 18.12: Environmental Consultations and Panel Procedure 1. A Party may request consultations with another Party regarding any matter arising under this Chapter by delivering a written request to a contact point designated by the other Party for this purpose. 2. The consultations shall begin promptly after delivery of the request. The request shall contain information that is specific and sufficient to enable the Party receiving the request to respond. 3. The consulting Parties shall make every attempt to arrive at a mutually satisfactory resolution of the matter and may seek advice or assistance from any person or body they deem appropriate in order to fully examine the matter at issue. If the matter arises under Article 18.2, or under both that Article and another provision of this Chapter, and involves an issue related to a Party’s obligations under a covered agreement, the Parties shall

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endeavor to address the matter through a mutually agreeable consultative or other procedure, if any, under the relevant agreement, unless the procedure could result in unreasonable delay. 4. If the consulting Parties fail to resolve the matter pursuant to paragraph 3, a consulting Party may request that the Council be convened to consider the matter by delivering a written request to the contact point of each of the other consulting Parties. The Council consists of senior-level environmental officials (or their designees) of the two governments. If the complaint cannot be resolved through this consultative process, a party can then take it to the general dispute settlement process. The US–CAFTA–Dominican Republic6 (US–CAFTA–DR) RTA sets up a procedure similar to that in NAFTA for citizen complaints that a party is not enforcing its environmental laws. US citizens, however, cannot avail themselves of this process since they can utilize the CEC procedures under NAFTA. The US–CAFTA–DR agreement has a provision to set up a roster of qualified persons to be used in setting up panels to hear the complaints. The US–Australia FTA has a joint Committee to attempt to resolve disputes, but if consultations fail the complaining party can utilize the treaty’s dispute settlement mechanism which operates in a manner similar to the WTO, but without an Appellate Body. The environmental chapter of the US–Oman agreement limits the use of the agreement’s dispute settlement mechanism to situations where a party has weakened its enforcement of environmental laws by the following provision: “Neither Party may have recourse to dispute settlement under this Agreement for any matter arising under any provision of this Chapter other than paragraph 1(a) of Article 17.2.” Paragraph 1(a) of Article 17.2 prohibits the parties from failing to enforce their environmental laws and regulations to attract investment. The Canada–Peru agreement has a short chapter on the environment and a separate environmental agreement that is complementary to the FTA. The environmental agreement provides for consultations to resolve disputes about interpretation of the agreement, but does not provide for a dispute settlement process. It states that: “Neither Party may provide for a right of action under its law against the other Party on the ground that the other Party has acted in a manner inconsistent with this Agreement.” The Nicaragua–Taiwan agreement provides for consultations on environmental matters but does not take the procedures further within the chapter on the environment, but the FTA has a chapter on dispute settlement where arbitration procedures

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are used and environmental disputes could be handled within those procedures. Exceptions One of the most common environmentally related provisions in trade agreements is an exception to the prohibition of trade restrictions for environmental protection. Article XX of the GATT agreement allows such exceptions for the protection human, animal and plant life and health as well as for the protection of natural resources and for other purposes not related to the environment or health. Many trade agreements state the exception by reference to Article XX. An abridged version – that is, the relevant parts for the environment – of Article XX follows: Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: b) necessary to protect human, animal or plant life or health; g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption. Several other FTAs tend to repeat the general wording of Article XX but specifically include the environment instead of or in addition to protecting natural resources. Some have devised their own wording for the exceptions, but cover the same topics. The following three provisions from their respective FTAs illustrate three types of methods of including nearly identical exceptions to prohibited trade restrictions. CARICOM–Costa Rica: For the purposes of Part Two (Trade in Goods), Article XX (General Exceptions) of the GATT 1994 and its interpretative notes, or any equivalent provision of a successor Agreement to which both Parties are party, are incorporated into and made part of this Agreement. China–New Zealand: 1. For the purposes of this Agreement, Article XX of GATT 1994 and its interpretative notes and Article XIV of GATS (including its footnotes) are incorporated into and made part of this Agreement, mutatis mutandis.

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2. The Parties understand that the measures referred to in Article XX(b) of GATT 1994 and Article XIV(b) of GATS, as incorporated into this Agreement, can include environmental measures necessary to protect human, animal or plant life or health, and Article XX(g) of GATT 1994, as incorporated into this Agreement, applies to measures relating to the conservation of living and nonliving exhaustible natural resources, subject to the requirement that they are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade in goods or services or investment. Turkey–Albania: This Agreement shall not preclude prohibitions or restrictions on imports, exports or goods in transit, justified on grounds of public morality, public policy or public security, the protection of health and life of humans, animals or plants and environment; the protection of domestic treasures possessing artistic, historic or archeological value; the protection of intellectual, industrial and commercial property, or rules relating to gold or silver or the conservation of exhaustible natural resources, if such measures are made effective in conjunction with restrictions on domestic production or consumption. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Parties. The exceptions under GATT Article XX were, in part, responsible for the controversies that arose in disputes such the US–Mexico tuna–dolphin case, since they seem to allow laws to protect the environment. There are, however, restrictions that apply to their use. GATT Article XX states: “Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade.” Sector-specific provisions Several FTAs have environmental provisions that apply to specific sectors of the economies involved. These include agriculture, fisheries, forestry, energy and tourism, especially in agreements where there is a separate chapter or article dealing with the sector. All of those sectors, except forestry, are included in the EC–CARIFORUM agreement. Energy is included in the Japanese agreements with Indonesia and Brunei Darussalam and forestry measures are a part of the US–Peru agreement.

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Japan–Brunei Darussalam: In pursuit of sustainable development and taking into account its obligations under those international agreements concerning environment to which it is a party, each Party shall endeavor to minimize, in accordance with its applicable laws and regulations, in an economically efficient manner, harmful environmental impacts of all activities related to energy in its Area. EC–CARIFORUM States: Cooperation [to obtain]: (c) Compliance with and adoption of quality standards relating to food production and marketing, including standards relating to environmentally and socially sound agricultural practices and organic and non-genetically modified foods. The Parties and the Signatory CARIFORUM States shall encourage compliance with environmental and quality standards applicable to tourism services in a reasonable and objective manner, without constituting unnecessary barriers to trade, and shall endeavor to facilitate the participation of the Signatory CARIFORUM States in relevant international organizations setting environmental and quality standards applicable to tourism services. US–Chile: To help reduce pollution from agricultural practices in Chile, the Parties will adapt and implement a training program for Chilean farmers and other workers to promote appropriate handling of chemical pesticides and fertilizers, and to promote sustainable agriculture practices. The Parties will work jointly to modify existing training programs to fit Chilean agricultural practices and customs. US–Peru: The Parties recognize that trade associated with illegal logging, and illegal trade in wildlife, including wildlife trafficking, undermine trade in products from legally harvested sources, reduce the economic value of natural resources, and weaken efforts to promote conservation and sustainable management of resources. Accordingly, each Party commits to combat trade associated with illegal logging and illegal trade in wildlife. The Parties recognize that good forest sector governance is critical to promoting the economic value and sustainable management of forest resources. Accordingly, each Party commits to take action under this Annex to enhance forest sector governance and promote legal trade in timber products. The forestry provisions in the US–Peru FTA are contained in an annex to the environmental chapter and were added after the Democratic Party regained control of Congress in 1996 and demanded that more attention be paid to environmental issues in US trade agreements. While the Peruvian agreement was ratified, those with Colombia and Panama are

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still pending. These issues will be explored more fully in the chapter on US trade agreements. Environmental stewardship and voluntary mechanisms A number of trade agreements have provisions for encouraging privatesector environmental activities. Included in these are provisions to promote environmental stewardship on the part of businesses and others. US–Chile: Recognizing the substantial benefits brought by international trade and investment as well as the opportunity for enterprises to implement policies for sustainable development that seek to ensure coherence between social, economic and environmental objectives, each Party should encourage enterprises operating within its territory or jurisdiction to voluntarily incorporate sound principles of corporate stewardship in their internal policies, such as those principles or agreements that have been endorsed by both Parties. The EC–CARIFORUM agreement has provisions that tend to require similar actions from investors, to wit foreign investment is encouraged but with restrictions such as: (c) Investors do not manage or operate their investments in a manner that circumvents international environmental or labor obligations arising from agreements to which the EC Party and the Signatory CARIFORUM States are parties. (d) Investors establish and maintain, where appropriate, local community liaison processes, especially in projects involving extensive natural resource-based activities, in so far that they do not nullify or impair the benefits accruing to the other Party under the terms of a specific commitment. Stewardship is only one of the approaches contained in FTAs to encouraging voluntary actions to protect environment. The Nicaragua–Taiwan agreement, for example, has the following provision: The Parties recognize that incentives and other flexible and voluntary mechanisms can contribute to the achievement and maintenance of environmental protection, complementing the procedures set out in Article 19.03. As appropriate and in accordance with its law, each Party shall encourage the development and use of such mechanisms.

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The document then lists several activities that could be undertaken voluntarily; an edited list includes the following voluntary activities: ●

● ●

● ●

● ●

partnerships involving businesses, local communities, nongovernmental organizations, government agencies, or scientific organizations, voluntary guidelines for environmental performance, sharing of information concerning methods for achieving environmental protection, voluntary environmental auditing and reporting, ways to use resources more efficiently or reduce environmental impacts, environmental monitoring and collection of baseline data and incentives to encourage conservation, restoration and protection of natural resources.

The United States and Central American plus Dominican Republic FTA has a similar provision for promoting voluntary environmental activities. US–CAFTA–DR: The Parties recognize that incentives and other flexible and voluntary mechanisms can contribute to the achievement and maintenance of environmental protection, complementing the procedures set out in Article 17.3. As appropriate and in accordance with its law, each Party shall encourage the development and use of such mechanisms. Its list of activities, however, is shorter but includes similar activities: partnerships, voluntary guidelines for environmental performance, sharing of information and expertise, and incentives – including market based incentives – for encouraging environmental protection and conservation. Institutional arrangements While none of the more recent trade agreements have institutional provisions for the implementation of their environmental provisions as extensive as contained in NAFTA and its side agreement, most have some set of institutions for their implementation – usually a committee or council of top-level officials (or their designees) from the participating nations. While not as extensive as NAFTA, the CAFTA–DR–US has a formal Commission, and a Secretariat, located in Guatemala, to

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implement its environmental provisions. The Canada–Chile agreement has two small secretariats, one in each country, using existing personnel to reduce the cost of implementing the environmental provisions. Frequently, the implementation of the trade aspects is carried out by trade officials, but in situations where there are extensive or separate environmental provisions, these are often the responsibility of environmental officials. There also might be a joint committee or council charged with responsibility for overseeing the agreement. Some of the institutional arrangements include: Nicaragua–Taiwan: Article 19.06 Environmental Affairs Committee 1. The Parties hereby establish an Environmental Affairs Committee comprising cabinet-level or equivalent representatives of the Parties, or their designees. Each Party shall designate an office in its appropriate ministry that shall serve as a contact point for carrying out the work of the Committee. 2. The Committee shall meet within the first year after the date of entry into force of this Agreement, and once every two years thereafter unless the Parties otherwise agree, to oversee the implementation of and review progress under this Chapter. US–Australia: (from Chapter 21) The Parties hereby establish a Joint Committee to supervise the implementation of this Agreement and to review the trade relationship between the Parties. (a) The Joint Committee shall be composed of government officials of each Party and shall be co-chaired by (I) the United States Trade Representative for the United States and (ii) the Minister for Trade for Australia, or their respective designees. (b) The Joint Committee may establish and delegate responsibilities to ad hoc and standing committees, working groups, or other bodies, and seek the advice of nongovernmental persons or groups. (Chapter 19 Environment: ARTICLE 19.5: INSTITUTIONAL ARRANGEMENTS AND PUBLIC PARTICIPATION) In carrying out its functions, the Joint Committee established under Chapter 21 (Institutional Arrangements and Dispute Settlement) shall consider matters related to the operation of this Chapter and the pursuit of the environmental objectives of this Agreement. The Joint Committee may establish a Subcommittee on Environmental Affairs comprising government officials of each Party, to meet at such times as they deem appropriate to discuss the

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operation of this Chapter. Each meeting of the Subcommittee normally shall include a public session. CAFTA–DR–US: (Article 19.1: The Free Trade Commission) The Parties hereby establish the Free Trade Commission, comprising cabinet-level representatives of the Parties, as set out in Annex 19.1, or their designees. EC–CARIFORUM States: (Article 227 Joint CARIFORUM-EC Council) A Joint CARIFORUM-EC Council is hereby established, which shall supervise the implementation of this Agreement. The Joint CARIFORUM-EC Council shall meet at ministerial level at regular intervals, not exceeding a period of two years, and extraordinarily whenever circumstances so require, if the Parties so agree. While the EC–CARIFORUM States agreement has a separate chapter and other extensive environmental provisions, it does not have a separate mechanism for implementing those provisions. The OECD (2007) noted that the proliferation of trade agreements in recent years has the potential to create problems in managing them, especially for developing economies which tend to have limited resources. According to the WTO’s RTA database, in May 2010, Mexico was in 14 FTAs, Chile had 12, Peru six, while most other developing countries had six or less – Brazil six, Egypt six, Indonesia seven, Nicaragua five. The least-developed countries do not belong to many trade agreements; most African countries are members of only two or three. However, if the environmental provisions are to be effective they need to be implemented and overseen, which takes resources and personnel.

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7 US Trade Agreements

Since NAFTA’s implementation, the United States has entered into several regional and bilateral free-trade agreements (see Table 7.1). Prior to NAFTA the US had only negotiated two bilateral agreements, those with Israel and Canada; the latter agreement was superseded by NAFTA. Neither of those had significant environmental provisions, although both the US–Israel and Canada–US (CUSTA) agreements incorporated Article XX of GATT. Bailey (1992–93) claims that dissatisfaction with the environmental results of CUSTA resulted in pressure to include environmental provisions in NAFTA. He says that after two years of experience some reports indicated that the agreement “resulted in a general undermining of safety standards, sustainable development, and environmental protection” (p. 849). Thus, environmental measures were incorporated in NAFTA upon its completion during the Clinton administration and they have been included in all subsequent US agreements, although their nature and extent vary considerably from one agreement to another.

Trade Promotion Act There was relatively little trade agreement activity by the Clinton administration after NAFTA was approved and implemented. There seemed to be little interest in bilateral agreements and fast-track authority was not renewed after expiring in 1994, although an agreement with Jordan was completed. This was also the period of implementation of the Uruguay Round of GATT and initiation of the WTO, with some attention being given to the next round. However, negotiations were initiated in 1994 for a Free Trade Area of the Americas (FTAA) (Colyer 2003c; Deere and

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Table 7.1 US regional and bilateral trade agreements Agreement

Date signed

Effective date

Provisionsa

Regional agreements: NAFTA

May 6, 1992

January 1, 1994

Yes

CAFTA–DR

August 5, 2004

March 1, 2006

Yes

January 1, 2005

Yes

Bilateral agreements: Australia

May 18, 2004

Bahrain

September 14, 2005

August 1, 2006

Yes

Chile

June 6, 2003

January 1, 2004

Yes

Israel

April 24, 1985

August 19, 1985

No

Jordan

October 24, 2000

December 17, 2001

Yes

Morocco

June 15, 2004

January 1, 2006

Yes

Oman

January 19, 2006

January 1, 2009

Yes

Peru

April 12, 2006

February 1, 2009

Yes

Singapore

May 6, 2003

January 1, 2004

Yes

Agreements signed and awaiting ratification: Colombia

November 22, 2006

NA

Yes

Korea

July 30, 2007

NA

Yes

Panama

June 28, 2007

NA

Yes

Note: a Environmental provisions other than in preamble or exceptions. Source: Elaborated from information in the WTO RTA database, http://rtais.wto.org/ UI/PublicMaintainRTA Home.aspx

Esty 2002). It was a very ambitious program that would have involved all of the Nations of the Americas except Cuba and integrated a number of trade pacts. Initially, the FTAA did not include environmental provisions, mainly because most of the Latin American countries were opposed to including nontrade issues (USTR 2001a). Nonetheless, after the Trade Promotion Act of 2002 was passed environmental issues were included in the draft agreement, since the US was required to protect the environment in all future trade agreements. However, despite continued strong support of several nations, negotiations were not resumed after a 2005 Ministerial meeting in Mar del Plata.

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In 2001 and beyond, the Bush administration made trade negotiations a major issue and put pressure on Congress to pass fast-track authority once again to facilitate the negotiation of new trade pacts including the FTAA and expected new WTO agreements. In 2002, PL 107 210, the Trade Promotion Authority (TPA) Act, was passed, but with several requirements that had to be met in new trade pacts. Under TPA, the US is required to include environmental objectives and provisions in trade agreements. It, of course, reestablished fasttrack authority under which Congress can only approve or disapprove a trade agreement – that is, it cannot change the negotiated provisions (Shiner 2002). TPA provisions require, among other things, that countries signing trade agreements with the US assure that their environmental laws are enforced (Audley 2004, p. 17). In addition, the agreements are to strengthen the capacity of US trading partners to protect the environment; promote the sale of green products and services; reduce or eliminate government practices or policies that unduly threaten sustainable development; establish consultative mechanisms to strengthen the capacity of US trading partners to develop and implement environmental and human health standards; conduct environmental reviews of trade agreements; respect the Doha Declaration on Trade-related Aspects of Intellectual Property Rights clarifying a developing country’s right to break patents during a public health crisis; and promote consideration of multilateral environmental agreements (MEAs) in negotiations on the relationship between MEAs and trade rules, especially as they are related to GATT Article XX. While these requirements might be considered onerous to some potential trade partners, they also made those who wanted to negotiate a trade pact with the US aware that these types of provisions could not be avoided. Thus, they have helped shape the nature of trade agreements entered into by the US since 2003, but there continued to be dissatisfaction with the process.

Congressional policy in 2007 The dissatisfaction was manifested after the Democrats regained control of Congress in 2006. To advance the trade agreements that had been negotiated and signed, the administration agreed to a revised trade policy, mainly dealing with labor, environmental and intellectual property provisions in future trade agreements. In a press release of the House Ways and Means Committee and a statement by the USTR, the policy with respect to the revised approach was given as follows (see

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Barnesrichardson.com 2007; America.gov 2007): A fully enforceable commitment that FTA countries adopt, implement and enforce in their laws and practice obligations under seven common major multilateral environmental agreements (Mesa), including the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and the Montreal Protocol, Provision to add additional, new common MEAs; The same dispute settlement mechanisms/penalties as other FTA obligations; A groundbreaking “conflict of laws” provision – where an FTA provision cannot be used to undermine the MEA obligation; [An] unprecedented provision allowing the US to investigate illegal logging of mahogany in-country, and stop questionable shipments at the border. Consequently, Trade Promotion agreements (the title used under TPA) with Colombia, Peru, Panama and South Korea were amended to comply with the new policy requirements. The agreement with Peru was then approved by Congress, but the others are still pending (in March 2011). Schmidt (2009, p.168), in discussing the result of the new trade policy, stated “the labor and environmental provisions in the US–Peru FTA have been elevated to core obligations that are now subject to the same dispute settlement procedures as other core obligations in the agreement”. The Korean and Colombian FTAs, however, were renegotiated by the Obama administration with revisions to the agreement completed in December 2010 and April 2011, respectively, although the environmental provisions were not affected.

Trade agreements All of the trade pacts to which the US is a signatory, except for the agreements with Israel and NAFTA, were negotiated and/or concluded under the Bush administration, although the agreement with Jordan was initiated by the Clinton administration. All of the agreements have, generally in the preamble, a statement that an objective is to protect the environment and each contains a chapter (or article) with specific environmental provisions. While all agreements address the environment, most are relatively weak compared with the NAFTA provisions, although the Australian, DR–CAFTA and Peruvian agreements are somewhat stronger than most of the others. Those completed after the

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Democratic Party regained control of Congress in 2006 have stronger environmental provisions than those completed and ratified between 2002 and 2006. All have basic provisions that each country has 1) the right to establish its own levels of domestic environmental laws, protection and priorities, 2) that each shall strive to improve those laws, 3) each is required to enforce its environmental laws, while each party also retains the right to exercise discretion with respect to investigatory, prosecutorial, regulatory, and compliance matters and 4) requires the participants recognize that is not appropriate to encourage trade or investment by weakening or reducing the protections afforded in domestic environmental laws. The environmental part of the agreement with Jordan is the simplest of all the recent US trade agreements, consisting of an article – less than one page in length – rather than a chapter as in other agreements. It contains just four paragraphs encompassing the four provisions listed above plus a definition of environmental laws. However, it must be realized that the agreement with Jordan was the first after NAFTA and was negotiated and implemented prior to the 2002 Trade Promotion Act – that is, before resumption of fast-track authority. It was undertaken by the Clinton administration; the start of negotiations was announced by King Abdullah and President Clinton in Washington on June 6, 2000 (Rosen 2004). Thus, the moving of the development of an article as a precursor to chapters in later agreements could be considered an improvement over a separate side agreement, as could the inclusion environmental matters in the dispute settlement process of the agreement instead of being a separate process as under the NAAEC of NAFTA. All other agreements have additional provisions, such as those represented by the following environmental chapter subheadings in the Australia–US Free Trade Agreement, which is fairly typical of those with countries other than those of the Americas: Article 19.1: Levels of Protection Article 19.2: Application and Enforcement of Environmental Laws Article 19.3: Procedural Guarantees and Public Awareness Article 19.4: Voluntary Mechanisms to Enhance Environmental Performance Article 19.5: Institutional Arrangements and Public Participation Article 19.6: Environmental Cooperation Article 19.7: Environmental Consultations Article 19.8: Relationship to Environmental Agreements Article 19.9: Definitions

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These provisions, thus, add encouragement for voluntary actions to improve the environment, encouragement of and mechanisms to permit public participation in environmental issues, promotion and development of methods for environmental cooperation, provide for consulting on environmental issues and recognize the relationships to international environmental and trade agreements to which both (all) parties are signatories. Some of the agreements have additional provisions – the Singapore and Chile agreements, for example, have a paragraph encouraging corporate stewardship of the environment. The environmental provisions with other countries in the Americas provide for an environmental council to receive complaints from citizens and groups that environmental laws are not being enforced, investigate the allegations, release findings with respect to the situation, and in some case adjudicate remedies. These councils have functions similar to the CEC in the case of NAFTA, although the institutional arrangements are different, being less extensive and less well financed than with NAFTA. Agreements completed after the Democrats regained control of Congress in 2006 have tended to have more rigorous environmental provisions. The agreement with Peru, for example, was amended to incorporate additional environmental provisions, including one to reduce illegal trade in timber (Villarreal 2007). Some environmental organizations still consider the provisions inadequate for enhancing the environment and promoting sustainable development, making them equal to trade as objectives in negotiating trade agreements (Blackwelder and Pope 2008). US–CAFTA–DR agreement The agreement with five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua) and the Dominican Republic was signed August 5, 2004 and entered into force March 1, 2006 after ratifications by the US and El Salvador, followed by Honduras and Nicaragua (March 1, 2006), Guatemala (July 1, 2006), Dominican Republic (March 1, 2007) and Costa Rica (January 1, 2009). It was originally being negotiated between the US and the Central American States as the Central American Free Trade Agreement (CAFTA), with the Dominican Republic added in later stages of the process. The trade agreement has a number of environmental provisions, including a chapter (17) on the environment. In addition, there are a number of side letters affecting the environment, the Agreement on Environmental Cooperation (ECA) and the Understanding Regarding the Establishment of a Secretariat for Environmental Matters, which

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is to administer the public submissions mechanism and the ECA, and to develop and implement environmental cooperation within a comprehensive framework. Within the main agreement and in addition to Chapter 17, the environment is covered in the preamble, the investment chapter and the exceptions chapter. The preamble conveys objectives to implement the agreement in ways consistent with protecting the environment, conservation, promoting sustainable development and strengthening cooperation on environmental issues, as well as enhancing the means for environmental protection, including the conservation of natural resources. The investment chapter contains three important provisions on the environment: 1) it states that “investment activity in its territory is undertaken in a manner sensitive to environmental concerns”; 2) that exceptions are permitted for measures to protect animal, plant and human life and health, including the environment (this is repeated in the exceptions chapter but is specific to investments in the investment chapter) and 3) that, except in rare cases, the imposition of environmental requirements cannot be considered an indirect form of expropriation. The exceptions chapter states that the provisions of GATT Article XX on exceptions are incorporated into the agreement with clarification to specify that environmental measures are included. Environmental chapter Chapter 17 on the environment contains the main environmental provisions of the US–CAFTA–DR agreement. These include those required by the Trade Promotion Authority Act, such as members agreeing to enforce their environmental laws, not to try to attract investment through a weakening of their environmental laws, etc. Additional provisions include those that have become common in US trade agreements since NAFTA, the ability of “interested persons” or citizens to request investigation of a party’s failure to enforce its environmental laws and of those with an interest in an environmental matter to have access to appropriate remedies, including the ability to sue for damages, seek enforcement of laws, obtain penalties for violations and/or injunctions to prevent further damages. The chapter’s provisions also indicate that the judicial, administrative or other procedures to address such matters should be fair, equitable and transparent. Another provision, one also becoming common in US agreements, is the establishment of voluntary mechanisms to enhance environmental performance – that is, to help protect and improve the environment. These can include partnerships of businesses, local communities, nongovernmental

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organizations, government agencies, or scientific organizations; voluntary guidelines for environmental performance; sharing of information and expertise concerning methods for achieving high levels of environmental protection; ways to improve resource efficiency; ways to reduce environmental impacts, environmental monitoring; collection of baseline data; and providing incentives to “encourage conservation, restoration, and protection of natural resources and the environment”. Article 17.5 establishes an Environmental Affairs Council composed of cabinet level or equivalent authorities or their designees to oversee implementation and monitor progress of the environmental provisions and its accompanying Environmental Cooperation Agreement. It also is to seek “appropriate opportunities for the public to participate in the development and implementation of cooperative environmental activities”. The Chapter requires that each party is to provide for the receipt and consideration of public communications on environmental matters. Each party to the agreement is to convene an existing or establish a new advisory committee with members from the public including various sectors of its economy and each is to take into account public comments relative to its cooperative environmental activities. Paragraph 1 under Article 17.7 (Submissions on Enforcement Matters) states: “Any person of a Party may file a submission asserting that a Party is failing to effectively enforce its environmental laws. Such submissions shall be filed with a secretariat or other appropriate body (secretariat) that the Parties designate.” The Secretariat was established with an understanding approved on February 18, 2005 (Understanding Regarding the Establishment of a Secretariat for Environmental Matters), which is under the Environmental Affairs Council and located within SIECA, the Secretariat for Central American Economic Integration in Guatemala City. Under the provisions anyone from the CAFTA countries and the Dominican Republic can submit complaints about their authorities failing to enforce their environmental laws – the US is not included since US citizens can submit complaints on failure by US authorities to enforce their laws to the CEC under NAFTA – that is, the NAAEC agreement. The procedures for submitting and processing the complaints are detailed in Articles 17.7 and 17.8, which are similar to those of the NAAEC described in Chapter 4. While recommendations for improving the party’s procedures can be made, there are no provisions for penalties or for sanctions of any type. One additional article, 17.11, provides for establishing a roster of persons who can serve as panelists for handling disputes that arise as a result of the submission process.

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Article 17, paragraphs 9 and 10, deals with environmental cooperation and consultations. Cooperation is more fully covered in the side Environmental Cooperation Agreement discussed below. Consultations are called for when one party perceives that another is not fulfilling its obligations under the environmental chapter. Consultations are to be held to resolve the issues and if they cannot a party can appeal to the Council to resolve the matter. The only environmental issue that can be taken to the dispute settlement procedures of the trade agreement is one arising from allegations that a party is not enforcing its environmental laws and then only after trying to resolve it through the consultation process of Article 17.10. The final article of the chapter, except for definitions, is concerned with relationships with environmental agreements. The FTA recognizes the importance of multilateral environmental agreements and notes that the provisions of the chapter and the ECA can contribute to achieving the objectives of the MEAs to which the parties are members. Environmental Cooperation Agreement The Environmental Cooperation Agreement (ECA) defines in considerable detail the types of environmental cooperation envisaged by the DR–CAFTA–US agreement, as well as the procedures and institutional arrangements for facilitating them. The agreement was completed February 18, 2005 and gives its objective as: The Parties agree to cooperate to protect, improve and conserve the environment, including natural resources. The objective of the Agreement is to establish a framework for such cooperation among the Parties. The Parties recognize the importance of both bilateral and regional cooperation to achieve this objective. In Article III, the modalities and forms of cooperation are defined and listed. Cooperation may either be regional or bilateral. Five types of cooperation are listed in the article, with a sixth allowing for any other type agreed to by the parties. The listed types are: a)

the exchange of delegations, professionals, technicians and specialists from the academic sector, nongovernmental organizations, industry and the governments, including study visits, to strengthen the development, implementation and assessment of environmental policies and standards;

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b) the joint organization of conferences, seminars, workshops, meetings, training sessions and outreach and education programs; c) the joint development of programs and actions, including technological and practical demonstrations, applied research projects, studies and reports; d) the facilitation of partnerships, linkages or other new channels for the development and transfer of knowledge and technologies among representatives from academia, industry, intergovernmental and nongovernmental organizations, and government to promote the development and/or exchange of best practices and environmental information and data likely to be of interest to the Parties; and e) the collection, publication and exchange of information on environmental policies, laws, standards, regulations, indicators, national environmental programs and compliance and enforcement mechanisms. An Environmental Cooperation Commission composed of governmental representatives from each country is established to oversee operations under the agreement. Its functions are listed as: 1) establishing priorities for cooperative activities under the Agreement; 2) developing a work program as described in Article V below in accordance with those priorities; 3) examining and evaluating the cooperative activities under the Agreement; 4) making recommendations and providing guidance to the Parties on ways to improve future cooperation; and 5) undertaking such other activities on which the Parties may agree. The Ministries associated with the environment are the relevant agencies for members of the commission in all the countries except the US, where the Department of State is the denominated agency. Decisions are to be by consensus. It is to have an open session during meetings to the extent possible and is to involve the public in the development and implementation of its activities. The agreement is not specific about resources and financing although indicating that “each Party shall assume the costs of its participation in the work of the Commission”. To implement the ECA an “Understanding Regarding the Establishment of a Secretariat for Environmental Matters under the Dominican Republic–Central America–United States Free Trade Agreement” was adopted on February 18, 2005. In this understanding, the Secretariat was to be located within the Secretariat for Central American Economic Integration (SIECA, its Spanish acronym) which is located in Guatemala City. Most of the funding for the Secretariat’s work is from the US Agency for International Development (USAID 2008).

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Criticisms of DR–CAFTA–US FTA Many environmentalists and others have been critical of the environmental provisions of US trade agreements. For example, in 2004 leaders of ten environmental groups sent a letter to Congress critical of the proposed environmental provisions of the DR–CAFTA–US agreement. The Friends of the Earth (nd), in a fact sheet on CAFTA, stated: Unfortunately, CAFTA’s environmental rules are inadequate and would not ensure that environmental protection in Central America is improved in a meaningful way. The agreement does not clearly require any country to maintain and effectively enforce a set of basic environmental laws and regulations. CAFTA also does not include an enforceable set of standards for corporate responsibility on environmental issues. Further, there is not even parity between enforcement of the existing environmental provisions and CAFTA’s commercial provisions. Many environmental organizations are critical of trade agreements and especially those between industrialized nations, such as the US or EU, and developing nations due to the unequal power of the parties – that is, they see the larger nations as forcing undesirable conditions on the developing country (see, e.g., Oxfam 2007). Some criticisms of environmental provisions stem, in part, from an unrealistic expectation of utilizing trade agreements to attain extensive environmental improvements that have not been attainable through domestic legislation and/or multilateral environmental agreements and treaties, as well as the view that increased trade nearly always has undesirable consequences for the environment. The criticisms included dissenting views by Rangel, Stark, McDermott and Neal in the US House of Representatives Committee on Ways and Means Report when the bill on DR–CAFTA–US agreement was approved and sent to the House for consideration. Their statement on the environmental chapter provisions follows (House of Representatives 2005, pp. 51–2): We also have reservations about the CAFTA Chapter on Environment, which includes only minimal commitments. The agreement includes no benchmarks for countries to meet in improving their environmental laws and practices, and instead requires only that the countries enforce their existing laws. In addition, although the CAFTA includes commitments by the countries to engage in cooperative activities to improve and conserve the environment, these obligations are largely

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rhetorical, as the CAFTA also includes no commitments for funding such activities. Sarkar (2009) summarizes the criticisms made by various groups and individuals against the environmental provisions of the agreement, which include the following: DR–CAFTA will lead to massive expansion of cruel and unsanitary “factory farms” in Central American countries and wipe out their traditional farming systems. This situation would result from the elimination of tariffs and sanitation requirements from US agricultural products and will allow massive imports of cheap meat and dairy products from the US. Further, as the Central American countries lack adequate water treatment facilities, the high volume of water needed to clean the “factory farms” would create a serious health hazard and environmental problems. DR–CAFTA provisions will also lead to deforestation and loss of habitat for a variety of migratory bird species and animals. Corporate investors could sue a country in international tribunals for huge compensation if they are not allowed to operate, even if their operation is destructive to the environment. The region lacks even the most basic environmental laws necessary to protect forests, water supply, sanitation and biodiversity. The DR–CAFTA will bring about massive changes in industrial and agricultural development, possibly worsening the environmental situation. Under DR–CAFTA, countries are only required to enforce their existing laws. However, there are many loopholes in that provision, such as countries may use their available enforcement funds according to their own priorities, hence, not be able to address some of their existing provisions. The recently appended Environmental Cooperation Agreement (ECA) fails to ensure anything more than the establishment of a multi-agency commission without even a required mandate for specific cooperative activities to improve environmental protection. Although DR–CAFTA establishes a citizen submission process to allege enforcement failures, it does not provide for any clear outcomes or actions to actually ensure that citizens of the region can achieve enforcement of environmental laws. Moreover, the citizen submission process’ [sic] lack of enforcement tools contrasts starkly

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with the monetary compensation that private investors can demand of governments under DR–CAFTA investor suit rules. It should be noted that although the criticisms include the possibility of investors suing for losses due to the effects of environmental laws and regulations on their profits, these types of regulations are specifically exempted in Chapter 17 from being considered expropriations, except in rare circumstances. Furthermore, Chapter 10 on investment has the following provision: “Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining, or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns.” Lewis (2006–07) argues that such criticisms are premature and that the experience with NAFTA indicates that the “toothless” types of environmental provisions can be effective in preventing a race to the bottom. US–Australia FTA The free-trade agreement between Australia and the United States was signed on May 18, 2004 and went into force January 1, 2005. As in other US FTAs, the preamble refers to environmental protection, to wit, that the parties are implementing the agreement “in a manner consistent with their commitment to high labour standards, sustainable development, and environmental protection”. The investment chapter contains two provisions on the environment; one states that nothing in the chapter is to prevent a party from adopting, maintaining, or enforcing any measure considered appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental concerns. A provision also establishes that environmental measures cannot be considered to be expropriation. The chapter on exceptions has the usual incorporation of GATT Article XX and notes that this includes measures to protect the environment. The environmental chapter has the usual provisions to encourage improvement in environmental laws, to enforce those laws, provide for access by affected persons to remedial action and not to weaken them to attract investment. Additional measures include encouragement of voluntary actions to improve the environment, encouragement of and mechanisms to permit public participation in environmental issues, promotion and development of methods for environmental cooperation, provides for consulting on environmental issues, and recognizes

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the relationships of international environmental and trade agreements to which both parties are signatories. Ranald (2006, p. 18) asserts that the Australian government agreed to include environmental measures only reluctantly and that the Bush administration did not support them, either, but they had to be included due the Trade Promotion Authority, passed by the Democraticcontrolled Congress in 2002, together with reenacting fast-track authority. Thus, most Australian FTAs do not contain environmental provisions, although the Australia–Chile agreement has a few environmental measures, including an objective in the preamble: investment provisions cannot prevent parties from adopting environmental measures, environmental measures are not indirect expropriations and it is noted that exceptions to protect animal, plant and human life and health include environmental measures. US–Peru FTA Negotiations for the agreement with Peru began in 2003 as part of a proposed Andean trade pact (Colombia, Ecuador and Peru), which subsequently was separated into agreements with each country, except that those with Ecuador were discontinued. The US–Peru FTA was signed April 12, 2006 and entered into force February 1, 2009. There was a delay between the signing and approval due to demands from the Democratic-controlled Congress that its environmental provisions should be strengthened and that it was necessary to renegotiate parts of the agreement with one factor being the development of the agreement on forestry. The preamble statement adds to the usual pledge of protection of the environment by including the promotion of sustainable development and strengthening environmental cooperation. Most of the other provisions are similar to those of the two agreements described above but with an annex to the environmental chapter on forestry. Those in the investment chapter, for example, are nearly identical to those in the DR–CAFTA and Australian agreements. Annex 18.2 lists the MEAs, as required by the policy agreed to with Congress; they are: (a) the Convention on International Trade in Endangered Species of Wild Fauna and Flora, done at Washington, March 3, 1973, as amended; (b) the Montreal Protocol on Substances that Deplete the Ozone Layer, done at Montreal, September 16, 1987, as adjusted and amended; (c) the Protocol of 1978 Relating to the International Convention for the Prevention of Pollution from Ships, 1973, done at London, February 17, 1978, as amended;

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(d) the Convention on Wetlands of International Importance Especially as Waterfowl Habitat, done at Ramsar, February 2, 1971, as amended; (e) the Convention on the Conservation of Antarctic Marine Living Resources, done at Canberra, May 20, 1980; (f) the International Convention for the Regulation of Whaling, done at Washington, December 2, 1946; and (g) the Convention for the Establishment of an Inter-American Tropical Tuna Commission, done at Washington, May 31, 1949. The chapter also provides for an Environmental Council and an Environmental Cooperation Agreement (ECA) similar to those in the DR–CAFTA–US agreement. Thus, a unique environmental feature of the Peru–US Trade Promotion Agreement is the annex on forestry, plus an Understanding Regarding Biodiversity and Traditional Knowledge. The Annex on Forest Sector Governance has a commitment by the two countries to combat illegal trade in logging and wildlife. Concerns about illegal logging were a factor in the US–Peru FTA, although the US has been providing assistance to developing countries to help eliminate the practice since 2003 (Sheikh 2007; Del Gatto et al. 2009). The forestry governance annex (Annex 18.3.4), thus, has binding provisions to combat the practice in Peru and has a number of measures to help improve Peru’s legal and institutional structure in forest and timber management. In carrying out these provisions, within 18 months of the agreement’s effective date, Peru must carry out a number of activities to improve its enforcement of laws with respect to illegal logging and wildlife trade. These are to include increasing the number personnel in national parks, timber concessions and forest regions; developing and implementing an anti-corruption plan for officials in the sector; providing for adequate criminal penalties and civil liabilities; developing and implementing a program for monitoring listed tree species; developing, implementing and financing a plan to conserve big-leaf mahogany and establish export quotas for the species – big-leaf mahogany is only to be harvested in native communities;1 and developing and strengthening regulatory aspects of timber management and harvesting. The parties are to work cooperatively to carry out those activities and to develop and implement capacity-building activities. It also specifies a verification system the two nations will follow to assure that the strategy is being effective. The understanding regarding biodiversity and traditional knowledge is much shorter than the forestry annex, consisting of only one page. In the understanding, the parties recognize the

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importance of the two topics, as well as their potential contributions to development. An important part of the understanding is: The Parties recognize the importance of the following: (1) obtaining informed consent from the appropriate authority prior to accessing genetic resources under the control of such authority; (2) equitably sharing the benefits arising from the use of traditional knowledge and genetic resources; and (3) promoting quality patent examination to ensure the conditions of patentability are satisfied. Wording in 1) is similar to the provisions of the Convention on Biodiversity (CBD) (Boza 2007–08). The understanding then specifies that the parties recognize that access to genetic resources and traditional knowledge can be handled through contracts and that the parties will seek ways to share knowledge. Other US FTAs The remaining countries with which the United States has free-trade agreements are Bahrain, Chile, Israel, Jordan, Morocco and Singapore. Of these, only the agreement with Israel does not have a separate section (chapter or article) devoted to environmental provisions, but it does have a simple statement that GATT’s Article XX is incorporated into the agreement (Article XX and XXI of the GATT are hereby incorporated into and made a part of this Agreement). It was completed in 1985, before NAFTA and before environmental concerns became a major issue in trade agreements, but a separate environmental agreement (Memorandum of Understanding) was signed in 1991. A freetrade agreement with Canada (CUSTA) also preceded NAFTA and had no environmental provisions other than Article XX, but was incorporated into or superseded by NAFTA. All of the other agreements were completed after the Trade Promotion Authority Act of 2002 and have environmental provisions as required by that act, although negotiations for both the Free Trade Area of the Americas (FTAA) and the US–Jordan FTA were initiated earlier. While there are variations among the agreements, there also is a common core and other similarities. All the agreements have basic provisions similar to NAFTA and as required by TPA, in that each country has the right to “establish its own levels of domestic environmental protection and environmental and priorities ... and shall strive to improve those laws”; each party is required to enforce its environmental laws while each party also retains the right to exercise discretion with respect

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to investigatory, prosecutorial, regulatory and compliance matters; and the participants are required to recognize that is not appropriate to encourage trade or investment by weakening or reducing the protections afforded in domestic environmental laws. The agreement with Jordan is, while not typical, one with little beyond the basic requirements, consisting of an article of less than one page (see Appendix 7.1 to this chapter). Most of the other agreements contain several other provisions; the agreement with Bahrain, for example, provides for administrative, quasi-judicial or judicial procedures that are fair and equitable, opportunities for public participation, encourages voluntary and/or market-based approaches to improving the environment, seeks ways and procedures for measuring environmental performance, provides for environment cooperation between the countries and allows for submissions when citizens/groups believe that the country’s environmental laws are not being enforced. Most, especially those in the Americas, also have provisions for an Environmental Affairs Council or joint committee to evaluate procedures, work to improve the environment and address other issues that arise during the agreement’s implementation. Most also have a provision that recognizes the primacy or at least need to consider multilateral environmental agreements to which both or all parties are members, including the environmental provisions of the WTO. The agreements with Chile and Singapore have provisions encouraging investors (and others) to incorporate environmental stewardship into their operations. Most also have, somewhere in the trade agreement or supporting documentation, a statement that environmental regulations cannot be considered to be indirect expropriation, a consequence of the ability for firms to sue for losses from the imposition of environmental regulations under Chapter 11 of NAFTA, although generally the statement will read “except in rare cases”. With the exceptions of Jordan and Singapore, all of the agreements covered in this section have extra documentation setting out procedures for environmental cooperation. For the agreement with Chile, this takes the form of an annex to the environmental chapter plus a separate Environmental Cooperation Agreement, while the others are some form of memorandum of understanding or joint statement in the case of Morocco. In general, the content takes the form of a statement of objectives, types of cooperation, a list of areas of cooperation, arrangements for public participation and procedures and institutional arrangements for carrying out the cooperation such as a committee, council or working group composed of government officials. The types

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of cooperation include exchanges of professionals and other specialists, conferences and other meetings, collaborative environmental projects, supporting linkages between academia, industry and government, sharing information, and other activities found to be appropriate. While the areas vary among the agreements, the following list from an annex to the Bahrain agreement is illustrative. It includes environmental laws and regulations, impact assessments, incentives and voluntary programs, air quality, public participation, protecting water resources, coastal protection and preservation of marine resources, protecting endangered species, and environmental technology and business. Some of the understandings/agreements have a reservation that the activities to be carried out under the agreement are subject to the availability of appropriated or other funds. The US–Chilean ECA further indicates that the activities might be funded through jointly financed activities where each party or institution finances its part of the activities, or the use of private institutions, foundations or public international organizations.

Pending agreements The agreements with Colombia, South Korea and Panama, negotiated by the Bush administration and modified after the agreement on new policy with Congress, have not yet been approved by Congress and, thus, have not entered into effect. The FTAs with South Korea and Colombia were renegotiated by the Obama administration and are being submitted for approval by congress. Their environmental provisions are similar to those in the Peruvian agreement except that none have a section on forestry. The Colombian agreement has a section on biodiversity and an annex on environmental cooperation; all have an annex with lists of covered MEAs for which they agree fulfill their obligations. The articles included in each agreement’s environmental chapter are listed in Table 7.2. They are similar in the three agreements except that the agreement with South Korea is shorter, lacking articles on submissions of citizen complaints that a party is not enforcing its environmental laws. While the wording varies somewhat among the three agreements, there are relatively few differences in the content and meaning of the provisions. All also contain similar provisions in their preambles, investment chapter and exceptions. The investment provisions have become very consistent, being that 1) nothing in the chapter is to prevent the parties from enacting laws to protect the environment so long as they are fair, consistent and not disguised barriers to trade, 2) that the parties are to assure that investments are made in ways sensitive to the

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Table 7.2 Environmental chapter articles in pending trade agreements Article or annex

Colombia

Panama

S. Korea

Levels of protection

18.1

17.1

20.1

Environmental agreements

18.2

17.2

20.2

Enforcement of environmental laws

18.3

17.3

20.3

Procedural matters

18.4

17.4

20.4

Voluntary mechanisms

18.5

17.5

20.5

Environmental affairs council

18.6

17.6

20.6a 20.7

Opportunities for public participation

18.7

17.7

Submissions on enforcement matters

18.8

17.8

Factual records and related cooperation

18.9

17.9

Environmental cooperation

18.10

17.10

20.8

Collaborative consultations and panel procedure

18.12b

17.11

20.9

Environmental roster

NA NA

NA

17.12

NA

Relationship to environmental agreements

18.13

17.13

20.10

Definitions

18.14

17.14

20.11

Annex on covered agreements

18.2

17.2

20-A

Annex on environmental cooperation

NA

17.10

NA

Note: a Institutional arrangements; b for Colombia 18.11 is biological diversity.

environment and 3) that laws to protect the environment cannot be considered expropriations of property. Although the Korean FTA was revised in negotiations completed in December 2010, the environmental provisions were not affected.2

FTAA provisions While there has been no activity on the Free Trade Area of the Americas since 2005 and it is not likely to be resurrected any time soon, it is still useful to examine its environmental provisions.3 When negotiations for an FTAA began under the Clinton administration, environmental provisions were not included. Although the United States was interested in including the environment in the talks, most of the other nations involved were opposed.

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Murillo Rodríguez (2000, p. 93), indicates: “The United States and, to a much lesser extent, Canada, have encouraged discussion of the trade and environment issue within the FTAA framework but have met with little success. The majority of Latin American and Caribbean countries have opposed its inclusion within the framework of the negotiations.” However, as negotiations continued under the Bush administration and after passage of the 2002 Trade Promotion Act, it became necessary to include environmental issues if the US was to remain a party to the agreement. Thus, a chapter (VI) was added to the third draft of the agreement. The chapter is very similar to those described in the preceding discussions of US trade agreements with articles on levels of protection, enforcement of environmental laws, opportunities for public participation, environmental cooperation, environmental consultations, procedural matters, measures to enhance environmental performance, and relationships to environmental agreements (plus an article on definitions). However, as stated by Public Citizen (2010), “The FTAA is currently in a long coma with no signs of life whatsoever for the past several years.”

Chapter conclusions The United States has been one of the leaders, together with Canada, in promoting the use of environmental measures in trade agreements since pioneering the effort with NAFTA. A large part of the effort originated with environmentalists, who feared the loss of hard-won environmental gains in domestic legislation. All of the agreements since NAFTA have included a number of environmental provisions in an environmental chapter and other parts of the agreement and in some cases an environmental side agreement of some form or other. The environmental measures have not been as strong or effective as many environmentalists had hoped for but have linked trade and the environment and raised the public’s awareness of those linkages and the need to address the issues. One result also has been that a growing number of other countries now take environmental issues into account in their own trade negotiations.

Appendix 7.1: The US–Jordan Environmental Article ARTICLE 5: ENVIRONMENT 1. The Parties recognize that it is inappropriate to encourage trade by relaxing domestic environmental laws. Accordingly, each Party shall

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strive to ensure that it does not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such laws as an encouragement for trade with the other Party. 2. Recognizing the right of each Party to establish its own levels of domestic environmental protection and environmental development policies and priorities, and to adopt or modify accordingly its environmental laws, each Party shall strive to ensure that its laws provide for high levels of environmental protection and shall strive to continue to improve those laws. 3. (a) A Party shall not fail to effectively enforce its environmental laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the Parties, after the date of entry into force of this Agreement. (b) The Parties recognize that each Party retains the right to exercise discretion with respect to investigatory, prosecutorial, regulatory, and compliance matters and to make decisions regarding the allocation of resources to enforcement with respect to other environmental matters determined to have higher priorities. Accordingly, the Parties understand that a Party is in compliance with subparagraph (a) where a course of action or inaction reflects a reasonable exercise of such discretion, or results from a bona fide decision regarding the allocation of resources. For purposes of this Article, “environmental laws” mean any statutes or regulations of a Party, or provision thereof, the primary purpose of which is the protection of the environment, or the prevention of a danger to human, animal, or plant life or health, through: (a) the prevention, abatement or control of the release, discharge, or emission of pollutants or environmental contaminants; (b) the control of environmentally hazardous or toxic chemicals, substances, materials and wastes, and the dissemination of information related thereto; or (c) the protection or conservation of wild flora or fauna, including endangered species, their habitat, and specially protected natural areas in the Party’s territory, but does not include any statutes or regulations, or provision thereof, directly related to worker safety or health.

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A substantial number of countries of the Americas, in addition to the United States, have free-trade agreements with each other, with countries from other continents, as well as being part of regional agreements. Canada and Mexico, the other parties to NAFTA, each have negotiated several FTAs although not all have significant environmental provisions – that is, those other than the exceptions related to GATT Article XX. With the exception of Mexico, countries that have negotiated trade agreements with the US or Canada have tended to include some environmental provisions in many of their other agreements, although Mexico has included provisions in some of its more recent FTAs. Historically, there were a number of regional agreements in Latin America aimed at economic integration, but until recently few have been effective at liberalizing trade to a significant degree and environmental measures were not a factor in their activities, although ALADI (Spanish acronym for Latin American Integration Association) did mention the environment as an area for potential further integration.1 It was only after NAFTA that Canada and Mexico (as well as the United States), followed by other hemispheric countries, became active in negotiating FTAs with, in some cases, environmental provisions.

Canadian FTAs Canada has entered into relatively few trade agreements compared to either the US or Mexico. However, the country has increased its activities and currently has a number of negotiations in progress – two were signed in 2008 (see Table 8.1). Canada has bilateral agreements with Chile, Costa Rica, European Free Trade Association (EFTA),2 Israel and Peru, as well as NAFTA. It signed the agreements with EFTA and Peru 110

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Table 8.1 Canadian free trade agreements in force in 2010 Environmental provisions

Agreement

Date signed

Date in force

North American FTAa

12/22/1992

1/1/1994

Yes

12/5/1996

7/5/1997

Yes

Costa Rica

4/23/2001

11/1/2002

Yes

European Free Trade Associationb

1/26/2008

7/1/2009

No

Israel

7/31/1996

1/1/1997

No

Peru

5/29/2008

8/1/2009

Yes

Chile

Note: a Canada, Mexico and United States; b Iceland, Liechtenstein, Norway and Switzerland.

during the 2008 meetings in Davos, Switzerland (Kanargelidis and Van Zeyl 2008; EFTA 2008). There are associated environmental side agreements with Chile, Costa Rica and Peru, but not with Israel or EFTA, although the latter contain the exceptions to trade rules that Article XX of GATT permits with the environment specifically mentioned. In addition, Canada has given early notice to the WTO of negotiations with Colombia, Jordan, CARICOM, Dominican Republic, Central America (El Salvador, Guatemala, Honduras and Nicaragua), Singapore, European Union and S. Korea – in addition the Canadian Foreign Affairs website lists an FTA signed with Panama. Draft texts of the Colombia, Jordan and Panama agreements are available. Canada completed its negotiations with Chile (and Israel) shortly after the completion of NAFTA, and its environmental side agreement is modeled after NAFTA, as stated specifically in the introduction to the agreement. There was an expectation that Chile would join NAFTA, but the expectation was not realized (see Gilmore 1994). As a result, most of the provisions of the side agreement are similar to NAFTA, making it extensive and detailed –that is, compatible with the NAFTA and its environmental side agreement. The Costa Rican side agreement is shorter and does not establish the same institutional framework such as a commission for its implementation, but instead sets up biennial or more frequent meetings to “review progress on implementation” (Article 7). Although less detailed than the agreement with Chile, the basic provisions are similar to those of the Canada–Chile agreement

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and resemble those in the US bilateral agreements with other countries in the Americas. The Canada–Peru FTA, completed in May 2008, has a short chapter (17) relating to the objectives of the separate environmental agreement. The latter has additional provisions promoting conservation and sustainable use of biological diversity and preservation of traditional knowledge. Thus, the NAFTA agreement has had a strong influence on the inclusion of environmental issues in trade agreements, at least with respect to many of those negotiated by the US and Canada. Article 5 of the Canada–Costa Rica environmental side agreement requires that the parties assure “persons with a legally recognized interest under its laws” have access to “administrative, quasi-judicial, or judicial proceedings”. The agreement designates, in Annex II, points of contact within the two governments for communications and for citizen inputs as permitted under Article 10 of the agreement. Citizens can make complaints about lack of enforcement of environmental laws and expect an investigation and response, but these are made to government agencies rather than an independent council – the Director of the Americas Branch, International Relations Directorate for Canada and the Office of the Vice Minister, Ministry of Environment and Energy for Costa Rica. Thus, the procedure is deficient although perhaps more efficient and less cumbersome. Pending agreements The draft agreements with Colombia, Jordan and Panama follow a similar pattern to the Costa Rican FTA, with short chapters on the environment which are complemented by side agreements. The Jordanian agreement is somewhat simpler in that it does not have an investment chapter and, hence, lacks some of the provisions contained in those chapters of the other two. The treatment of expropriation is somewhat different in the Colombia and Panama agreements, with the Columbia FTA having wording similar to NAFTA’s Chapter 11, to wit: “Neither Party may nationalize or expropriate a covered investment either directly, or indirectly through measures having an effect equivalent to nationalization or expropriation (hereinafter referred to as ‘expropriation’).”The article then goes on to indicate that property can be taken for a public purpose with just compensation. The provision, thus, could be interpreted as having some of the same impacts as the NAFTA provision, that investors could sue the government involved for losses suffered as a result of environmental regulations. Several more recent US FTAs have specifically stated that such measures cannot be considered as

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expropriations (except in rare cases). The Panamanian FTA has a clause similar to those in some US agreements, except it helps clarify what is meant by “rare cases”: [E]xcept in rare circumstances, such as when a measure or a series of measures is so severe in the light of its purpose that it cannot be reasonably viewed as having been adopted and applied in good faith, a non-discriminatory measure of a Party that is designed and applied to protect legitimate public welfare objectives, such as health, safety and the environment, does not constitute indirect expropriation.

Criticisms of Canadian FTAs Despite some relatively strong environmental provisions, and as is true in the United States and elsewhere, some environmentalists and others oppose Canada’s free-trade agreements as being harmful to the environment and/or argue that the environmental provisions when included are inadequate. One organization, for instance, made the following arguments after a meeting in Chile (Common Frontiers 1998): Free trade agreements have limited the power of the Canadian government to manage our natural resources, Free Trade Agreements have limited our ability to establish environmental and health standards, Free Trade Agreements have limited our access as citizens to decision makers (who are often further away), and Free Trade Agreements have increased the rights of corporations, giving them a bigger say. A more recent statement by the Canadian Environmental Law Association (CELA 2010) is that: The expansion of international trade regimes has made it more difficult for countries to develop new and more progressive laws and policies. The same pressures have contributed to rollbacks of existing laws and policies in the areas of participation in decision-making as well as environmental and health protection rules. There seems, however, little evidence that Canada cannot develop new and more effective environmental laws or that its laws have been weakened. Some of the concern remains with those of its trade agreement

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partners, but the provisions in both its investment chapters and environmental chapters and side agreements are designed to help avoid such problems.

Mexican FTAs Mexico has entered into a relatively large number of trade agreements since NAFTA (see Table 8.2). Until recently most did not have environmental provisions, due in part to having felt compelled by the addition of the NAFTA provisions, but the more recent FTAs have a few environmental measures, including in the preamble, exceptions and other locations; a couple of the earlier ones had some environmental measures. The agreement with Bolivia was the first one after NAFTA and has several provisions, including three statements on the environment or sustainable development in its preamble. It also refers to the environment in a chapter on standardization measures, stating that

Table 8.2 Mexican free trade agreements in force in 2010 Agreement

Date signed

Date in force

Provisionsa

North American Free Trade Agreementb

12/22/1992

1/1/1994

Yes

Bolivia

9/10/1994

2/28/1997

Yes

Chile

4/17/1998

8/1/1999

No

Costa Rica

4/5/1994

1/1/1995

Yes

European Union

7/1/2000

10/1/2000

Yes

European Free Trade Associationc

1/26/2008

7/1/2009

No

Israel

4/16/2000

7/1/2000

No

Japan

9/12/2004

4/1/2005

Yes

Latin American Integration Associationd

8/12/1980

3/8/1981

No

Northern Trianglee

6/29/2000

3/15/2001

No

Nicaragua

12/18/1997

7/1/1998

Yes

Notes: a environmental provisions other than in preamble or exceptions b Canada, Mexico and United States; c Iceland, Liechtenstein, Norway and Switzerland; d Argentina, Venezuela, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Paraguay, Peru and Uruguay (ALADI); e El Salvador, Guatemala and Honduras;.

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protecting the environment is a legitimate objective. With respect to investment, provisions hold that it is permitted to require investors to respect the environment and that the parties should not try to attract investment by attenuating their environmental laws and regulations. The agreement with Nicaragua states, in its preamble, that the agreement is to promote the development and applications of environmental laws and regulations and a short article (14–14) concerns the protection of the environment, especially with respect to the handling and disposal of dangerous substances and waste products. However, there are no other direct environmental provisions contained in the agreement. The EU–Mexico FTA has a short article (Article 34) agreeing to cooperate to prevent environmental degradation, promote conservation, to “develop, promote and spread information and experience on environmental legislation”, develop economic incentives, strengthen management, promote training and education, execute joint projects where appropriate and encourage social participation in environmental issues. The article on agricultural cooperation (21) mentions harmonizing environmental standards, while that on energy (23) envisions cooperation for “supporting the use of alternative renewable sources of energy which protect the environment”. The Japan–Mexico FTA has a provision (Article 74) that the parties will not weaken their laws to attract investment, while Article 147 provides for “Cooperation in the Field of Environment”. This is to include 1) exchange of information on policies, laws, regulations and technology, 2) promotion of capacity- and institution-building, 3) encouragement of trade of environmentally sound goods and services, and for encouraging investment in business alliances in environmental areas. In addition, there is a requirement that investors use technologies that help protect health and the environment. Public participation is encouraged: “The Government of each Party shall, in accordance with the domestic laws and regulations of the Party, endeavor to maintain public comment procedures.” Thus, it appears that while generally Mexico does not adopt environmental measures in its FTAs that are comparable to those of its NAFTA partners, it is moving in the direction of including of more extensive provisions.

Chile’s FTAs Chile has been very active in negotiating both bilateral and regional agreements in recent years, in addition to a few broad-based agreements

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Table 8.3 Chilean free trade agreements Chile FTAs with:

Date signed

In force

Provisionsa

Australia

7/30/2008

3/6/2009

Yes

Canada

12/5/1996

7/5/1997

Yes

China

11/18/2005

1/16/2006

Yes

Colombia

11/27/2006

5/8/2009

Yes

Costa Rica (Central America)

10/18/1999

2/15/2002

No

El Salvador (Central America)

10/18/1999

6/1/2002

No

India

3/18/2006

8/17/2007

No

Japan

3/27/2007

9/3/2007

Yes

Mexico European Union European Free Trade Area

b

GSTPc

4/17/1998

8/1/1999

No

11/18/2002

2/1/2003

Yes

6/26/2003

12/1/2004

No

4/13/1988

4/19/1989

No

Korea

2/1/2003

4/1/2004

Yes

Latin American Integration Associationd

8/12/1980

3/18/1981

No

Panama

6/27/2006

3/7/2008

Yes

Protocol on Trade Negotiationse

12/8/1971

2/11/1973

No

Trans-Pacific Strategic Economic Partnershipf

7/18/2005

5/28/2006

Yes

United States

6/6/2003

1/1/2004

Yes

Notes: a environmental provisions other than in the preamble and exceptions article; b Iceland, Liechtenstein, Norway and Switzerland; c Global System of Trade Preferences among Developing Countries; d Argentina, Venezuela, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Paraguay, Peru and Uruguay (ALADI); e Bangladesh, Brazil, Chile, Egypt, Israel, Korea, Republic of, Mexico, Pakistan, Paraguay, Peru, Philippines, Serbia, Tunisia, Turkey and Uruguay; f Brunei Darussalam, Chile, New Zealand and Singapore;.

prior to the 1990s, as shown in Table 8.3. There were three prior to the 1990s, all groupings of Latin American or developing countries that were relatively weak as FTAs and contained no environmental provisions.3 The environmental content of the FTAs have varied considerably, from very little, as in the India FTA, to very extensive, as in those with Canada and the United States – these latter two have been discussed previously in this chapter (Canada) and in Chapter 7 (United States).

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However, some of the other agreements have several environmental provisions, including that with Colombia which has a separate chapter on the environment, although the FTA with Panama has only preamble and exception provisions – surprisingly the Panama FTA’s preamble has three statements about protecting the environment but little else, although its exception paragraph does specifically include the environment. The Colombian environmental chapter gives its objectives as assuring that their commercial and environmental policies support each other, collaborating on the best form of sustainable use of their natural resources and protecting ecosystems with the goal of sustainable development. A set of principles declares that each party has the sovereign control of its natural resources and right to determine appropriate levels of protection, laws and regulations; that each will enforce its laws but will continue to improve those laws and levels of protection; and that they will endeavor to assure that they are in conformity with international measures related to multilateral environmental agreements. They also recognize that it is inappropriate to weaken their laws or enforcement to attract investment and that their legislation should allow for public participation and should be just, equitable and transparent. The remainder of the chapter is devoted to cooperation on environmental matters, with a long list of possible areas and forms of cooperation, including exchanges of information and experts, meetings and research, and structure for carrying out the cooperation with a council of high-level environmental officials to oversee the cooperative efforts. Areas of cooperation can include forestry, water resources, desertification, green markets, ecotourism, biodiversity, institutional strengthening, control of contamination, marine and coastal resources, watershed management, environmental education, public participation, etc. Several of the other FTAs have provisions that vary, although nearly all have a preamble statement that declares support for the environment as an objective of the FTA and most have an exceptions provision to the general prohibition on trade restrictions for protecting the environment. Some – for example, Australia and the EU, in addition to Canada and the United States – have extensive provisions for environmental cooperation. The FTA with the European Union, for example, contains elements for environmental cooperation in several areas, including ones in agriculture aimed at supporting environmental and other activities such as policies for sustainable agriculture, “social development to go hand in hand with economic development and protection of the environment”, and a specific article on environmental cooperation.4 The stated purpose of the cooperation on the environment

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is: “The aim of cooperation will be to encourage conservation and improvement of the environment, prevention of contamination and degradation of natural resources and ecosystems, and rational use of the latter in the interests of sustainable development.” Cooperation is to be in areas such as the relationship between poverty and the environment; the environmental impact of economic activities; environmental problems and land-use management; projects to reinforce Chile’s “environmental structures and policies; exchanges of information, technology and experience in areas including environmental standards and models, training and education; environmental education and training to involve citizens more; and technical assistance and joint regional research programmes”. The growing prevalence of environmental provisions in its FTAs led to the development of a commission to advise negotiators on environmental matters and to assist with the implementation of the provisions in trade agreements, especially those concerned with cooperation (Chile DIRECON 2010). Its functions include providing advice on the environment for the negotiators of FTAs, to those attending meetings of environmental commissions, councils, committees and other groups involved with environmental issues in FTAs, and to those attending meetings of international groups such as OECD and APEC. In addition, it is to provide input to assist in implementing environmental cooperation activities, monitoring those activities, developing new activities and suggesting ways to finance them.

Taiwan–Central America Taiwan has FTAs with several Central American countries, El Salvador– Honduras, Guatemala, Nicaragua and Panama (see Table 8.4). All have fairly extensive environmental provisions, although varying from one Table 8.4 Central American Country FTAs with Taiwan Country El Salvador-Honduras

Date Signed

Date in Force

Provisionsa

7/4/2007

1/3/2008

Yes

Guatemala

9/22/2005

1/7/2006

Yes

Nicaragua

6/16/2006

1/1/2008

Yes

Panama

8/21/2003

1/1/2004

Yes

Note: a Environmental provisions other than in the preamble and exceptions article.

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to the other. The agreements were, in part, an outgrowth of a 1997 economic agreement between Taiwan and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Although Panama was not part of that group, it was the first to sign a trade agreement with Taiwan; Costa Rica is the only one of the group to not negotiate an agreement with that nation. The FTA between Nicaragua and Taiwan is somewhat unique in that it is one involving a small country and another party which is not one of the strong demanders of environmental provisions, but has very extensive environmental provisions. These are similar in scope and wording to several of those negotiated by the US and Canada. The agreement was signed on June 16, 2006 after completion of the DR–CAFTA–US agreement and was, perhaps, influenced by those negotiations. The Nicaragua–Taiwan FTA has an environmental chapter (Chapter 19) and a number of provisions in other parts of the agreement, including those in the preamble and exceptions, with the latter specifically stating that the environmental measures are included and refers to both GATT Article XX and GATS (General Agreement on Trade in Services) Article XIV. There also are provisions in the initial chapter, in chapters dealing with SPS, TBT, labor and investment. Chapter 1, Initial Provisions, gives primacy to the CITES (trade in endangered species), Montreal Protocol (protecting the atmosphere from ozone depletion) and Basel Convention (dealing with hazardous wastes). The SPS and TBT chapters recognize the importance of the environment and its protection. The investment chapter establishes the principle that nothing in the chapter is to prevent the parties from activities to protect the environment and also establishes that environmental laws and regulations cannot be considered indirect expropriations. The environmental chapter contains provisions that each party has the right to establish and enforce its own environmental regulations, should seek to improve and will enforce them, will not weaken them to attract investment, encourages public participation in environmental activities including complaints about not enforcing their laws, establishes procedures for environmental cooperation, including an Environmental Cooperation Mechanism, and establishes procedures for handling disputes including consultations when a party believes the other is not complying with the agreement and with provisions and procedures similar to those found in the DR–CAFTA–US and other similar agreements. The agreements with the other Central American countries cover similar topics as in the agreement with Nicaragua, but are less extensive and detailed. The Panama–Taiwan FTA gives, in its preamble, the objective

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to promote “economic development in a manner consistent with environmental protection, conservation, and sustainable development”. Its TBT section allows considering of environmental and ecological factors when assessing risk of a product and considers the environment to be a legitimate objective in risk assessment. With respect to investment, a measure states that requiring a technology that protects the environment as well as health and safety is permitted, that nothing in the chapter prevents a party from adopting measures to protect the environment, and that they recognize that it is not appropriate to weaken environmental standards to attract investment. The treaty also adopts the exceptions of GATT Article XX and GATS Article XIV. The accord with Guatemala has an environmental purpose in its preamble, a measure requiring technologies to meet environmental requirements, and that the parties should not weaken their environmental and other regulations to attract investment. The FTA also contains a section on cooperation regarding the environment and natural resources which is to prevent environmental degradation, promote conservation, promote use of economic incentives, strengthen environmental measures, assist in training of human resources, develop joint research, encourage social participation and promote cleaner production systems. Finally, it provides for the same exceptions as in the Panama FTA. The FTA with El Salvador and Honduras is to promote economic development in a sustainable way that protects the environment and the parties also are to make their standards on meteorology compatible without affecting environmental protection. The investment chapter provides that the parties have the right to adopt environmental protection measures as long as they are not disguised barriers to trade and can require technologies by investors that meet environmental needs. The agreement also recognizes that it is inappropriate to relax its standards to attract investment and that required environmental measures do not constitute expropriation. It has exceptions similar to those in the preceding agreements.

MERCOSUR The Common Market of the South (MERCOSUR – Mercado Común del Sur) was formed in 1991 by Argentina, Brazil, Paraguay and Uruguay under the Treaty of Asunción. Since then Bolivia, Chile, Colombia, Ecuador and Peru have joined as associate members.5 After ten years of existence and several years of negotiations, the group approved a Framework Agreement on Environment of MERCOSUR. Negotiators of the agreement between the southern cone countries set up Work Sub-Group No. 6

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to deal with and develop an agreement on the environment (Agüero 2002). After several years the group arrived at an agreement which was signed June 21, 2001, then ratified by all the member states, and entered into force June 27, 2004 (MERCOSUR 2001, 2004). The agreement is relatively short, consisting of a preamble, four short chapters and an annex listing thematic areas of environmental relevance. Chapter I reaffirms the group’s commitment to the 1992 Rio principles, has a goal to implement those that have not been subjects of international agreements, seeks to coordinate sectoral policies, provides for free circulation of environmental goods and services, gives priority to treatment of the sources of environmental problems, promotes civil society participation in the treatment of environmental problems and encourages internalization of environmental costs. The objectives (Chapter II) are given as stainable development and protection of the environment through economic, social and environmental dimensions which are to contribute to improving the environment and lives of the area’s population. Chapter III sets up procedures for cooperation and harmonization; there is to be cooperation with respect to multilateral environmental agreements to which all members belong and potentially on a long list of environmental issues enumerated in an appendix to the document. While providing for work on environmental issues, no mechanisms for doing so are established. Chapter IV contains general provisions concerning dispute settlement, duration and entrance into force, and names Paraguay as the official depository of the agreement and related documents. Analysts have tended to agree that the environmental provisions in the MERCOSUR document are relatively weak (Blum 2000; Hochstetler 2003; Valente 2001). Brazil’s environmental laws and procedures were more advanced and stricter than those of the other three parties and it demanded a more comprehensive environmental program within MERCOSUR to, in part, level the playing field with respect to the competitive position of its exporters. However, the final document was much weaker although the pledge to harmonize within the block could result in improvements unless the decision becomes to harmonize downward. Finally, MERCOSUR has entered into FTAs with a number of countries, including the Andean Countries, Chile, India, Israel and Peru, but none of these agreements have environmental provisions.

Other FTAs There are a number of other FTAs that countries in South and Central America are members of, including one with very important

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environmental provisions. This is the EU–CARIFORUM States agreement. However, this follows a pattern more congruent with EU practices and will, therefore, be discussed in the next chapter. Peru has FTAs with China and Singapore which have significant environmental provisions. The Peru–China FTA has environmental protection in its preamble and, in an annex, has what is becoming a standard statement on expropriation: “Except in rare circumstances to which paragraph 5 applies, such measures taken in the exercise of a state’s regulatory powers as may be reasonably justified in the protection of the public welfare, including public health, safety and the environment, shall not constitute an indirect expropriation.” The other environmental provisions are concerned with cooperation on environmentally related issues, including agriculture, fisheries and forestry. The cooperation procedures are outlined in a memorandum of understanding. The Peru–Singapore FTA allows environmental measures affecting trade to be enacted if they are not discriminatory or disguised barriers to trade, permits measures to assure investments are made in ways sensitive to the environment and prohibits the consideration of environmental measures as indirect expropriation with a disclaimer that is becoming common in FTAs, except in rare cases.

Chapter conclusions While Latin American countries have often been opposed to including environmental provisions in trade agreements, several of their more recent FTAs have had environmental provisions even when the agreement is between each other. Brazil, for example, strongly opposed including such provisions in the FTAA, but was one of the demanders for stronger provisions in MERCOSUR. Negotiations with Canada, the EU and US have probably contributed to the willingness of several of the countries to be more open to considering environmental issues together, perhaps, with a realization of the potential benefits of putting environmental issues into pacts that are likely to result in environmental gains.

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9 European Trade Agreements

Most European trade agreements are with the two blocks, the EU and EFTA, although there are some independent countries with individual bilateral agreements including Albania, Boznia-Herzegovina, Macedonia (Former Yugoslav Republic of) and Turkey.1 Both the EU and EFTA are themselves trade agreements, although the European Union is much more than a trade block, since it involves a considerable degree of political integration, with a parliament and environmental legislation and policies. The concern here, however, is with the FTAs that the two blocks have signed with other countries or groups and with other European countries’ trade agreements. While the EU encompasses extensive environmental activities, these were not part of the original trade agreement but developed more recently with the more complete integration of member state activities (see, e.g., Steinberg 1997). Several of these are covered in the previous two chapters dealing with FTAs in the Americas and their provisions will not be repeated in this chapter.

European Union FTAs The EU has entered into more trade agreements than any other negotiating unit that sends notifications to the WTO – according to the WTO database. On August 1, 2010, the EU was a member of 29 FTAs (see Table 9.1). The EU is negotiating a number of additional agreements with early notifications of four (India, Ukraine, Canada and South Korea) to the WTO. The European Commission (EC) negotiates all trade agreements for the EU – that is, the individual members do not participate in separate FTAs. Some of the FTAs date to the 1970s, when the environment was not an issue in trade agreements. Even in later agreements the treatment of environmental issues has differed considerably 123

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Table 9.1 European Union free trade agreementsa FTA with:b

Date signed In force

Environmental provisionsc

Albania

6/12/2006

12/1/2006

Yes

Algeria

4/22/2002

9/1/2005

Yes

Andorra

6/28/1991

7/1/1991

No

Bosnia-Herzegovina

6/16/2008

7/1/2008

No

Cameroon

1/15/2009

11/1/2008

Yes

CARIFORUM States

10/15/2008

11/1/2009

Yes Yes

Chile

11/18/2002

2/1/2003

Cote d’Ivoire

11/26/2008

1/1/2008

Yes

Croatia

11/21/2001

3/1/2002

Yes

Egypt

6/25/2001

3/1/2002

Yes

Faeroe Islands

12/6/1996

1/1/1997

No

Former Yugoslav Republic of Macedonia

4/6/2001

6/1/2001

Yes

Iceland

12/19/1972

4/1/197

No

Israel

11/20/1995

6/1/2000

Yes

Jordan

Yes

12/24/1997

4/1/2002

Lebanon

6/17/2002

3/1/2003

No

Mexico

12/8/1997

2/1/2000

Yes

Montenegro

10/15/2007

1/1/2008

Yes

Morocco

2/26/1996

3/1/2000

Yes

Norway

4/14/1973

7/1/1973

No

Overseas Countries and Territories (OCT)

9/29/1970

1/1/1971

Yes

Palestinian Authority

2/24/1997

7/1/1997

Yes No

Serbia

4/29/2008

2/1/2010

South Africa

10/11/1999

1/1/2000

Yes

Switzerland and Liechtenstein

7/22/1972

1/1/1973

No

Syria

1/18/1977

7/1/1977

Yes Yes

Tunisia

7/7/1995

3/1/1998

Turkey

3/6/1995

1/1/1996

Yes

12/16/1991

4/1/2002

Yes

5/2/1992

1/1/1994

Yes

San Marino European Economic Area (EEA)c

Notes: a List does not include EC treaty or EC accessions; b EEA countries are Iceland, Liechtenstein and Norway (now in EFTA); c environmental provisions other than in the preamble or exceptions.

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with content varying from no environmental provisions to very extensive coverage of the environment, but there was an evolution toward a coherent and consistent policy in the first decade of the new century. De Gucht (2010, p. 4), European Commissioner for Trade, said of the agreements currently being developed: These agreements will not at all be identical. There is no identikit model agreement that the EU seeks to impose on partner countries. But with all our developing country partners, I strongly believe there is a mutual benefit in reciprocal (if not identical) market opening and intelligent rule-making that supports partners’ own development agendas. Going beyond tariffs to address issues vital to development such as investment, services and trade-related rules, while taking the particular development needs and situations of partners appropriately into account. The EU policies tend to focus on sustainable development and cooperation as mechanisms for the environmental component in their trade agreements. A part of the policy for trade agreements is to conduct sustainability impact assessments (SIAs) of all trade agreements, a procedure related to US environmental impact analyses. This topic, including US and Canadian environmental impact analyses, will be covered in Chapter 11. EU–CARIFORUM States FTA The FTA with the CARIFORUM States is one of several being negotiated with the African, Caribbean and Pacific (ACP) nations which formerly had nonreciprocal preferential access to the EU (Chaytor 2009). Sustainable development and environmental protection are important components of the agreement between the European Union (EU) and the CARIFORUM States, including a commitment to sustainable development in the Caribbean region.2 The environment is considered a very important part of this FTA, which is the first of the Economic Partnership Agreements (EPA) the EU is using to replace the trade preferences that European countries had long extended to a group of African, Caribbean and Pacific nations, many former colonies (ICTSD 2008a). The preamble of the agreement sets out the objectives of promoting environmental protection and sustainable development. An environmental chapter (Chapter 4 in Title IV, Trade Related Issues) is the main environmental part of the agreement, but there are numerous references to the environment in several other titles of the agreement.

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The agreement conforms to the policies developed by the EU in its Sustainable Development Strategy (SDS), first developed in 2001 and updated periodically since then (CEU 2009). The following statement engenders the principles of the SDS (EC 2006a): This challenge and the imperative for change were recognised by the European Council in Gothenburg in 2001 with the adoption of the Sustainable Development Strategy to which an external dimension was added in 2002 at the European Council in Barcelona. The principles and objectives of sustainable development – economic prosperity, social equity, environment protection and international responsibilities – were reaffirmed by the European Council in June 2005 when they adopted guiding principles for sustainable development and figured centrally in the discussions of European Heads of State and Government at Hampton Court in October 2005. Despite this policy, there is still considerable diversity in the environmental provisions of trade agreements, both past and present, of the European Union and its trading partners. The agreement with the CARIFORUM States is one that closely follows the SDS strategy. General provisions The environment is first mentioned in the preamble of the agreement and refers to promoting protection of the environment “in line with the 2002 Johannesburg Declaration”. In Part 1, the third article on sustainable development requires that environmental best interests be complied with during the development process, while Article 8 commits to enhancing CARIFORUM capabilities to enable it to meet international environmental standards. In the section on agriculture and fisheries, environmental considerations are to be used in development strategies. Article 8 also proposes cooperation in promoting an environmentally sound agriculture which encompasses organic farming and genetically modified products. Technical barriers to trade should be removed to facilitate trade, but essential environmental regulation is permitted. When a measure prohibiting importations is invoked for environmental protection, the other parties should be promptly notified. The investment section contains provisions prohibiting relaxing or not enforcing environmental standards to attract investment and instructs the parties to assure that investors adhere to and improve procedures to

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protect the environment. Services are covered in Article 83, which specifically permits the entry of environmental services suppliers. Article 116 states that the CARIFORUM States should conform to environmental standards with respect to tourism services. It also indicates that they should participate in relevant international organizations which set standards with respect to tourism. The agreement also envisions cooperation on innovations and renewable energy. The agreement establishes a consultative committee to promote discussions and cooperation in several areas, including the environment. A CARIFORUM–EC Consultative Committee is hereby established with the task of assisting the Joint CARIFORUM–EC Council to promote dialogue and cooperation between representatives of organisations of civil society, including the academic community, and social and economic partners. Such dialogue and cooperation shall encompass all economic, social and environmental aspects of the relations between the EC Party and CARIFORUM States, as they arise in the context of the implementation of this Agreement. Environmental chapter The chapter on the environment consists of eight articles – some repeat provisions in other parts of the agreement, such as the requirement (Article 188) that the parties not relax or alter their environmental standards to attract investment (which is also in the chapter on investment). The chapter cites the Cotonou agreement, which has similar provisions on the environment, and commits to upholding its provisions. It has an objective which commands that the “principles of sustainable management of natural resources and the environment are to be applied and integrated at every level of the partnership” and another on trade and the environment: The Parties reaffirm their commitment to promoting the development of international trade in such a way as to ensure sustainable and sound management of the environment, in accordance with their undertakings in this area including the international conventions to which they are party and with due regard to their respective level of development. The chapter objectives include conserving, protecting and improving the environment through trade agreements and promoting trade in ways that encourage sustainable management of the environment.

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Other provisions are similar to those in many FTAs, including that the parties to the agreement have the right to develop and implement their own environmental laws and regulations, but recognizes special needs of the CARIFORUM States, which are generally small, less-developed island economies with limited resources. Measures affecting trade taken to protect the environment must not be arbitrary or discriminatory – that is, not be disguised trade barriers. The parties also are urged to utilize international standards when they have not developed their own standards. Appropriate science should be used in developing measures to protect the environment (and public health) and they should follow the precautionary principle, use relevant international standards and guidelines, and all measures should be transparent (Article 187). Further provisions address consulting and monitoring aspects with respect to environmental measures and disagreements over their implementation. In disputes, when consultations do not resolve the disagreement either party can request the appointment of an expert committee to examine and make recommendations for resolution of the disagreement. The last part of the chapter sets out areas in which cooperation should be used in attaining the agreement’s environmental provisions. These include: (a) technical assistance to producers in meeting relevant product and other standards applicable in markets of the EC Party; (b) promotion and facilitation of private and public voluntary and market-based schemes including relevant labeling and accreditation schemes; (c) technical assistance and capacity building, in particular to the public sector, in the implementation and enforcement of multilateral environmental agreements, including with respect to trade-related aspects; (d) facilitation of trade between the Parties in natural resources, including timber and wood products, from legal and sustainable sources; (e) assistance to producers to develop and/or improve production of goods and services, which the Parties consider to be beneficial to the environment; and (f) promotion and facilitation of public awareness and education programs in respect of environmental goods and services in order to foster trade in such products between the Parties. The cooperation is to follow the same procedures for cooperation as in other areas of the agreement as outlined in Article 7. Other FTAs The EU’s other FTAs can be divided into three broad groups: those with no environmental provisions, those with a small number of

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environmental measures and those with fairly extensive coverage – of which the CARIFORUM agreement is an example, although the others generally have fewer than that agreement. Those with no provisions are generally the older FTAs but include a few of the newer ones, too. The older agreements, all from the 1970s, are Iceland (signed in 1972), Norway (1973), Syria (1977) and Switzerland and Liechtenstein (1972); the agreement with Overseas Countries and Territories (OCT) was signed in 1970 but has been revised (2001) and now has important environmental provisions. The newer agreements without provisions are with Andora (1991), Bosnia and Herzegovina (2008), Faeroe Islands (1996), Lebanon (2002) and Turkey (1995). The second category, those with few provisions, are FTAs with provisions only for cooperation on environmental issues, although some of these have extensive coverage of the cooperation while others have only brief coverage. The agreement with San Marino, for example, has only a brief paragraph: The Contracting Parties undertake to cooperate on matters relating to environmental protection and improvement with the aim of resolving the problems caused by contamination of water, soil and air, by erosion and by deforestation. They will pay special attention to the problems of pollution in the Adriatic Sea. Generally, however, the agreements propose cooperation in several areas, which might include agriculture, industry, energy, nuclear safety, transportation and sometimes tourism, fisheries, mining or other areas. Those with eastern European countries, formerly in the Soviet block, tend to emphasize environmental aspects of cooperation on transportation and sometimes energy, and nuclear safety, issues that are of particular significance for the environment in that region. Their agreements on cooperation include broad-based cooperative efforts for balanced development. The agreement with Albania is fairly typical as its introductory paragraphs spell out the objectives of cooperation (Title VII, Article 86): General provisions on cooperation policies 1. The Community and Albania shall establish a close cooperation aimed at contributing to the development and growth potential of Albania. Such cooperation shall strengthen existing economic links on the widest possible foundation, to the benefit of both Parties.

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2. Policies and other measures shall be designed to bring about sustainable economic and social development of Albania. These policies should ensure that environmental considerations are also fully incorporated from the outset and that they are linked to the requirements of harmonious social development. The following articles outline the various areas of cooperation with two specifically bringing in environmental cooperation, industrial cooperation (Article 86) and transportation (Article 106). These are followed by an article (108) on environmental cooperation: ARTICLE 108: Environment 1. The Parties shall develop and strengthen their cooperation in the vital task of combating environmental degradation, with the aim of promoting environmental sustainability. 2. Cooperation shall mainly focus on priority areas related to the Community acquis in the field of environment. FTAs with other eastern European countries have similar provisions, but often more detailed and covering additional areas of concern. The FTA with Macedonia (Former Yugoslav Republic of) goes further with provisions for cooperation in the industrial sector to promote its development and restructuring “under conditions to assure the environment is protected”; the transportation sector’s development in ways that improve environmental protection and reduce pollution; energy development for energy efficiency and utilization of renewable energy; nuclear safety with upgrades to laws and supervisory capacity, enhances radiation protection and handles nuclear waste effectively; and the agricultural and agroindustrial sectors to harmonize their standards with community standards. Additionally, in the section on environmental cooperation, the activities are to control environmental degradation and support sustainability through activities such as combating local, regional and cross-border pollution, development of strategies for global and climate issues, sustainable clean energy production and consumption, safety of industrial plants, safe handling of chemicals, waste reduction, recycling and safe disposal, implementation of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes, the environmental impact of agriculture, soil erosion and pollution by agricultural chemicals, the protection of forests and conservation of biodiversity, town and country planning, as well as cooperation within the framework of the European Environment Agency.

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Trade agreements with African and other developing economies have similar elements as those with Eastern Europe – that is, a strong emphasis on cooperation including environmental cooperation. But they also have an equally strong emphasis on sustainable development and some have aid as well as trade – that is, there are financing arrangements by the EU and other development funds. The Cameroon agreement has the following statement on financing: European Community financing pertaining to development cooperation between the Central Africa Party and the European Community supporting the implementation of this Agreement shall be within the framework of the relevant rules and procedures provided for by the Cotonou Agreement, in particular the programming procedures of the European Development Fund (EDF), and within the framework of the relevant instruments financed by the General Budget of the European Union. In this context, supporting the implementation of this Agreement shall be one of the priorities. The agreement discusses some alternative financing sources in another article of the agreement. A more specific statement is in the agreement with Overseas Countries and Territories: An amount B of EUR 61 million is allocated to the OCT with a per capita GNP not exceeding the Community’s GNP, in order to finance priority actions for social development and environmental protection, within the framework of the fight against poverty. Two of the African countries, Cameroon and Cote d’Ivoire, are ACP (African, Caribbean and Pacific) countries that have had special preferences in European trade policy although their agreements are not as strongly environmental as that of the CARIFORUM States. The Cameroon agreement has a chapter on sustainable development which alludes to a future Economic Partnership Agreement with Central Africa that will “ensure that sustainability considerations are reflected in all titles of the EPA and to draft specific chapters covering environmental and social issues”. While several of the agreements with the developing countries have articles on cooperation in agriculture and fisheries, some also have provisions on transportation and the environment is not given the same emphasis as in the Eastern European agreements. Another related group of EU partner FTA countries, at least geographically, are the Middle Eastern nations – Jordan, Israel, Lebanon,

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Palestinian Authority and Syria. Syria’s was an early FTA and its agreement does not have environmental measures and the Lebanese agreement does not mention the environment, but the others have cooperation components which include cooperation on or for environmental protection, improvement, etc. Most have provisions for cooperating on agriculture and energy – plus, in some cases, fisheries, tourism and social development – in ways that benefit the environment. Three more FTAs are those with Faeroe Islands, OCT group of small islands and countries and European Economic Area (EEA).3 The Faeroe agreement does not contain environmental provisions – these islands just west of Europe were Danish territories but now largely independent (Denmark is still responsible for defense and foreign affairs). The agreement with OCT, however, has extensive provision for cooperation including several environmental areas of cooperation. These cover areas similar to those discussed for other FTAs in this chapter. The agreement has a preamble and objective supporting environmental protection, a short chapter concerned with the environment and a short statement on cooperation. The goals are “(a) to preserve, protect and improve the quality of the environment; (b) to contribute towards protecting human health; (c) to ensure a prudent and rational utilization of natural resources”, which are to be achieved “based on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source, and that the polluter should pay”. Cooperation on the environment and other areas is to be within the cooperative framework of the community. Section conclusions The EU’s free-trade agreements contrast sharply with those by the US, Canada and other countries in the Americas, more for what they do not contain than what they do, as both sets have important measures on cooperation on environment, although the EU’s cooperative efforts tend to involve a wider array of topics. However, EU FTAs generally do not have preamble references to the environment (four do: Algeria, Cameroon, Cote d’Ivoire and EEA) and one, South Africa, has exceptions with wording similar to GATT Article XX, although the GATT article is not mentioned. The contrast is stronger with respect to other environmental provisions, especially those relating to investment. The EU agreements do not discuss the parties having the right to determine their own environmental laws and regulations nor, generally, to efforts to improve them, although some cooperative efforts are directed at the latter. Similarly, EU agreements generally do not have clauses where the parties agree not to weaken their laws or their enforcement to attract

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investment – there is relatively little on investment in the EU agreements. The US and Canada were strongly influenced by NAFTA and the pressures that led to including environmental and labor provisions in that agreement and its side agreement, as were other countries that have negotiated agreements with those two nations. Chaytor (2009, p. x) says of the EC–CARIFORUM agreement: They should seek to incorporate fairly detailed packages of technical assistance, capacity building and environmental co-operation measures in order to help their producers to make the necessary adjustments to meet the new environmental challenges presented by these regional trade agreements. In this way a more positive trade and environmental agenda may be possible that would include mechanisms to enhance market access while improving environmental performance in these countries. The C–EPA makes a start with this through its prioritisation of environmental goods and services and environmental technologies.

EFTA agreements The European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland) also has negotiated a substantial number of FTAs, several with same parties as the EU, but without those in sub-Saharan Africa. The EFTA trade agreements in force are shown in Table 9.2. EFTA’s trade policy, according to their web page, is: EFTA’s trade strategy has progressively evolved beyond the confines of the European continent. Since the late 1990s the EFTA States have “gone global” to maintain their competitive position in the world. Using EFTA, the Member States have created one of the world’s largest networks of free trade partners. The EFTA free trade agreement (FTA) network secures economic operators free access to markets of around 440 million consumers. It should be noted that while the EFTA countries pursue a policy of concluding free trade agreements, this does not deter them from giving priority to a well-functioning multilateral trade system under the auspices of the WTO. The two approaches, bilateral and multilateral, are mutually supportive. The main reason why Iceland, Liechtenstein, Norway and Switzerland use EFTA as their common vehicle for free trade negotiations is that, as a trade grouping, the EFTA countries carry

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Table 9.2 EFTA free trade agreements FTA with:

Date signed

In force

Provisionsa

Albania

12/17/2009

2/7/2011

Yes

Canada

1/26/2008

7/1/2009

No

EC–Iceland

12/19/1972

4/1/1973

No

Chile

6/26/2003

12/1/2004

Yes

Croatia

6/21/2001

1/1/2002

No

Egypt

1/27/2007

8/1/2007

Yes

Macedonia, Former Yugoslav Republic

6/19/2000

1/1/2001

No

Israel

9/17/1992

1/1/1993

No

Jordan

6/21/2001

1/1/2002

No

Korea, Republic of

12/15/2005

9/1/2006

No

Lebanon

6/24/2004

1/1/2007

No

Mexico

11/27/2000

7/1/2001

No

Morocco

6/19/1997

12/1/1999

No

Palestinian Authority

11/30/1998

7/1/1999

No

SACU (Southern African Customs Union)b

6/20/2006

4/1/2008

Yes

Serbia

12/17/2009

2/7/2011

Yes

Singapore

6/26/2002

1/1/2003

No

Tunisia

12/17/2004

6/1/2005

Yes

Turkey

12/10/1991

4/1/1992

No

Iceland–Faeroe Islands

8/31/2005

11/1/2006

No

Notes: a contains environmental provisions other than in the preamble or exceptions article; b SACU consists of Botswana, Lesotho, Namibia, South Africa and Swaziland.

more weight as economic players and are, thus, more interesting for potential trade partners. Despite this, an EFTA country might enter into an FTA that is outside the organization. Switzerland, for example, has an agreement with Japan. The FTAs entered into by EFTA since its decision to expand beyond Europe generally do not have very extensive environmental provisions,

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although most have at least one and generally two. An exception is the agreement with Chile discussed in the chapter on the Americas, although the Canadian and Mexican agreements fit the typical pattern of two provisions, preamble and exceptions. The two provisions found in most EFTA trade agreements are a goal to protect the environment stated in the preamble and exceptions to the prohibition of trade restrictions for environmental measures. The former varies considerably among the FTAs while the latter generally does not mention GATT Article XX, although having the same effect. A typical exception article, from the Macedonian agreement, is: ARTICLE 9 General exceptions This Agreement shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants and the environment; the protection of national treasures possessing artistic, historic or archaeological value; the protection of intellectual property; rules relating to gold or silver; or the conservation of exhaustible natural resources, if such measures are made effective in conjunction with restrictions on domestic production or consumption. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Parties. Some exceptions articles have a list similar to that in GATT’s Article XX, and some (Albania, Serbia and S. Korea) cite and incorporate Article XX. A few, mostly with developing countries, have additional environmental provisions covering investment, technical and/or financial assistance, or cooperation. The Egyptian and SACU agreements have a provision in their investment chapters that make the commitment not to weaken their laws to attract investment. The agreement with Singapore states: “Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure consistent with this Chapter that is in the public interest, such as measures to meet health, safety or environmental concerns.” The agreements with Albania and Serbia recognize “that it is inappropriate to encourage investment by relaxing health, safety or environmental standards”. The agreements with Egypt, SACU and Tunisia have chapters on technical and financial assistance that provide for assisting with improving the environment as one part of more general aid. The objectives are to

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facilitate implementation of the agreements, to enhance development in the three developing areas, and promote trade, while protecting or improving the environment. The efforts involving cooperation can include information exchanges, technology transfers, training, joint activities such as seminars and workshops, technical assistance, administrative assistance, and financial help including loans and grants. The chapter on assistance from the Tunisian agreement is reproduced as Appendix 9.1 of this chapter.

Other European FTAs Several European nations in addition the EU and EFTA have trade agreements with each other or with nations in other parts of the world (see Table 9.3). These only include FTAs that have been notified to the WTO, but also include non-WTO members which have FTAs with WTO member countries. Those not notified and FTAs by nonmembers with other nonmembers are not included in the analysis or this section of this chapter. Turkey’s FTAs Turkey has a number of bilateral trade agreements as well as those with regional or other groups, as shown in Table 9.3. However, none of the FTAs have very strong environmental provisions. Each of the agreements, however, has one nearly identical provision – allowing exceptions to trade restrictions to protect human, animal and plant life; a few specifically mention the environment. An example of the latter, from Georgia, follows: This Agreement shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants and environment; the protection of national treasures possessing artistic, historic or archaeological value; the protection of intellectual, industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between the Parties.

Ukrainian FTAs The majority of the trade agreements between the Ukraine and other states do not have any environmental provisions. Most of these FTAs

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Table 9.3 FTAs by other WTO European countries (non-EU and non-EFTA) Turkey with:

Ukraine with:

Moldova with:

ECa

Armenia

Armenia

Azerbaijan

CEFTAc

Belarus

CIS

ECO

b

EFTA Egypt

CEZ

PTNe

CISf

d

Kyrgyz Republic Ukraine

Albania

Georgia

Macedonia with:

Bosnia-Herzegovina

Tajikistan

CEFTA

Croatia

Kazakhstan

EC

Macedonia

Kyrgyz Republic

EFTA

Georgia

Macedonia

GSTPg

Israel

Moldova

Turkey

Montenegro

Russian Federation

Ukraine

Morocco

Turkmenistan

Georgia with:

Palestinian Authority

Uzbekistan

Armenia

Syria

Azerjiban

Tunisia

Switzerland with:

Kazakhstan

Serbia

Faeroe Islands

Russian Federation

Japan

Turkmenistan

Croatia with:

Ukraine

Turkey

Turkey

Notes: a European Commission; b Economic Cooperation Organization; c Central European Free Trade Agreement; d Common Economic Zone; e Protocol on Trade Negotiations; f Commonwealth of Independent States; g General System of Trade Preferences Groups are: the three are the General System of Trade Preferences (GSTP) with members: Algeria, Argentina, Bangladesh, Benin, Bolivia, Brazil, Cameroon, Chile, Colombia, Cuba, Ecuador, Egypt, Former Yugoslav Republic of Macedonia, Ghana, Guinea, Guyana, India, Indonesia, Iran, Iraq, N. Korea, S. Korea, Libya, Malaysia, Mexico, Morocco, Mozambique, Myanmar, Nicaragua, Nigeria, Pakistan, Peru, Philippines, Singapore, Sri Lanka, Sudan, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Vietnam, Venezuela and Zimbabwe; the Latin American Integration Association (LAIA or ALADI) with members: Argentina, Venezuela, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Paraguay, Peru and Uruguay; and Protocol for Trade Negotiation (PTN) with members: Bangladesh, Brazil, Chile, Egypt, Israel, S. Korea, Mexico, Pakistan, Paraguay, Peru, Philippines, Serbia, Tunisia, Turkey and Uruguay.

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are with former members of the Soviet Union. Of the five with environmental provisions, two have measures dealing with exceptions. One (with Macedonia) has a clause similar to those in the Turkey FTAs and one (Moldova) indicates that nothing should “hinder the Parties from taking any measures in compliance with Article XX GATT 1994”. Three of the agreements, those with Kazakhstan, Tajikistan and Uzbekistan, have provisions indicating that nothing in the agreement should prevent the parties from taking necessary actions to protect human, animal and plant life, protect the environment or conserve natural resources. Other FTAS One other European country’s FTA stands out, but not because of it is particularly strong in environmental provisions. The Switzerland– Japan agreement is a bilateral agreement between a member of EFTA and another country – it also has a separate agreement with the Faeroe Islands. Generally the EFTA members negotiate as a group (EU member states do not negotiate separately). The agreement does have a relatively unique provision, to facilitate trade in environmental goods and services, it states: The Parties will encourage trade and dissemination of environmental products and environment-related services in order to facilitate access to technologies and products that support the environmental protection and development goals, such as improved sanitation, pollution prevention, sustainable promotion of renewable energy and climate-change-related goals. This provision may have resulted from the ongoing Doha Round environmental negotiations where reducing or eliminating tariffs on environmental goods is one of the areas included. The Swiss agreement with the Faeroe Islands only has the exception for environmental protection to trade restriction prohibitions of GATT. Most of the other European nations with FTAs are in the eastern area and their agreements are similar to those of the Ukraine – that is, when they have environmental provisions they are for exceptions to trade restrictions for environmentally related measures or to clarify that nothing in the agreements prevents the parties from enacting and enforcing measures to protect the environment. The Georgia–Kazakhstan agreement has a provision similar to the Switzerland–Japan FTA to encourage

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trade in environmental goods, including its renewable energy and climate change aspects: The Parties shall encourage trade and dissemination of environmental products and environment-related services in order to facilitate access to technologies and products that support the environmental protection and development goals, such as improved sanitation, pollution prevention, sustainable promotion of renewable energy and climate-change-related goals. Thus, while several of the other European trade agreements contain one or two provisions on the environment, they do not make the environment a very important part of most of FTAs by countries other than those in the EU and, to a lesser extent, EFTA.

Appendix 9.1: EFTA–Tunisia assistance chapter CHAPTER VIII: ECONOMIC COOPERATION AND TECHNICAL ASSISTANCE ARTICLE 31 Objectives and Scope 1. The EFTA States declare their readiness to engage in economic cooperation and provide technical assistance to Tunisia, in accordance with their national policy objectives, in order to: (a) facilitate the implementation of the overall objectives of this Agreement, in particular to enhance trading and investment opportunities arising from this Agreement; (b) support Tunisia’s own efforts to achieve sustainable economic and social development. 2. Cooperation and assistance shall focus on sectors suffering from internal difficulties or affected by the process of liberalization of the Tunisian economy as well as sectors likely to bring the economies of the EFTA States and Tunisia closer together, particularly those generating growth and employment. ARTICLE 32 Methods and means 1. Cooperation and assistance shall be carried out, bilaterally or through EFTA programmes or a combination of the two.

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2. Parties shall cooperate with the objective of identifying and employing the most effective methods and means for the implementation of this Chapter. To this end they may coordinate efforts with relevant international organizations. 3. Conservation of the environment shall be taken into account in the implementation of assistance in the various sectors to which it is relevant. 4. Means of cooperation and assistance may include: (a) exchange of information, transfer of technology and training; (b) implementation of joint actions such as seminars and workshops; (c) technical and administrative assistance; (d) financial cooperation, such as preferential loans and development funds.

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10 Trade Agreements in ROW

There are numerous trade agreements in the rest of the world (ROW), some having important environmental provisions. These include those of Australia, New Zealand and several African and Asian countries, such as China, Japan, Korea, Indonesia, etc. Some of these, those with countries in the Americas and Europe, have already been examined. This chapter highlights a number of FTAs in these diverse areas of the world which have become very active in trade negotiations with some innovative approaches to the topic. Included in these are the Association of Southeast Asian Nations (ASEAN) and its associated Asian Free Trade Area (AFTA).

ASEAN FTAs The ASEAN nations are Brunei Darussalam, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Vietnam and Thailand. The association was formed in 1967 by Indonesia, Malaysia, Philippines Singapore and Thailand. Under ASEAN there are a number of implementing agreements including AFTA and several environmental agreements. The region is one of the more diverse ecologically and the organization has a very active environmental program carried out under the agreements dating to 1981. They are listed below: ●

●

● ●

ASEAN Declaration on the 13th session of the Conference of the Parties to the UNFCCC and the 3rd session of the CMP to the Kyoto Protocol (2007) Singapore Declaration on Climate Change, Energy and the Environment (2007) ASEAN Declaration on Environmental Sustainability (2007) Cebu Resolution on Sustainable Development (2006) 141

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142 ●

● ● ● ●

●

● ● ● ●

● ● ●

Green Trade Agreements

Agreement on the Establishment of ASEAN Centre for Biodiversity (2005) ASEAN Declaration on Heritage Parks (2003) Yangon Resolution on Sustainable Development ASEAN Agreement on Transboundary Haze Pollution (2002) Jakarta Declaration on Environment and Development (18 September 1997) Bandar Seri Begawan Resolution on Environment and Development (1994) Singapore Resolution on Environment and Development (1992) The Kuala Lumpur Accord on Environment and Development (1990) Jakarta Resolution on Sustainable Development (1987) Agreement on the Conservation of Nature and Natural Resources (1985) Bangkok Declaration on the ASEAN Environment (1984) ASEAN Declaration on Heritage Parks and Reserves (1984) Manila Declaration on the ASEAN Environment (1981)

In addition to the environmental activities among the member states, the association negotiates trade agreements with other nations, generally with Asian and Pacific nations. A 2010 agreement with Australia and New Zealand has three environmental provisions. One makes it legitimate for the parties to adopt and enforce laws and regulations to protect the environment as long as they are necessary and not discriminatory. A second establishes that environmental laws cannot be considered a form of indirect expropriation. The third lists the environment as one of several areas the parties will cooperate to achieve their objectives. The ASEAN–China FTA names the environment as a potential area for cooperation and has an exception clause that includes the protection of human, animal and plant life and health. Its agreement with Japan declares they “shall explore and undertake economic cooperation” in several areas, including the environment. It also incorporates GATT Article XX on exceptions and has a provision that nothing in the agreement prevents the parties from establishing laws or standards to protect the environment. The FTA with India has the exceptions article and has provisions for environmental cooperation.

APEC The group, Asia-Pacific Economic Cooperation (APEC), is not a freetrade agreement but has as one of its pillars support for freer trade, but

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also to support sustainable development. The group is composed of 21 Pacific Rim countries.1 As stated in its mission statement (APEC 2010): APEC is the premier Asia-Pacific economic forum. Our primary goal is to support sustainable economic growth and prosperity in the Asia-Pacific region. We are united in our drive to build a dynamic and harmonious Asia-Pacific community by championing free and open trade and investment, promoting and accelerating regional economic integration, encouraging economic and technical cooperation, enhancing human security, and facilitating a favorable and sustainable business environment. Our initiatives turn policy goals into concrete results and agreements into tangible benefits. At a 1997 meeting of the environmental ministers of the APEC members, the leaders pledged to make sustainable development an integral part of their activities. The actions were to consist of “a work program for sustainable development in APEC that includes the themes of the sustainability of the marine environment, cleaner production, and sustainable cities” (APEC 1997). They stated further that: “we urge that environmental considerations continue to be addressed as an important cross-cutting element of this initiative”. Among the areas environmentally related activities of APEC are: sustainable development, internalization of environmental costs, science and research, technology transfer, the precautionary approach, trade and the environment, environmental education and information, and financing for sustainable development (APEC 2002). However, APEC’s webpage describes the group as: APEC is the only inter governmental grouping in the world operating on the basis of non-binding commitments, open dialogue and equal respect for the views of all participants. Unlike the WTO or other multilateral trade bodies, APEC has no treaty obligations required of its participants. Decisions made within APEC are reached by consensus and commitments are undertaken on a voluntary basis. Thus, implementing its environmental, and other, activities depends on the voluntary actions of each of its member states.

Japan’s agreements Japan only became active in negotiating bilateral trade agreements in recent years – all of the agreements notified to the WTO are from 2004

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Table 10.1 Environmental provisions in Japan’s FTAs FTA with:

Year in Pream- Excep- Not force ble tions weaken 3

Right to Cooper- Other have Energy ation provisions 3

3

ASEAN

2008

Brunei Darussalam

2008

3

3

Chile

2007

3

3

Indonesia

2008

3

3

3

Malaysia

2006

3

3

3

3

3

3 3

3

Mexico

2005

3

3

3

Philippines

2008

3

3

3

Singapore

2004

Switzerland

2008

Thailand Vietnam

3 3

A

3

3

3

2007

3

3

2009

3

B 3 3

3

Notes: A. Allows requiring investors to use technologies that are environmentally sensitive; B. provides for trade in environmental goods and services.

or later (see Table 10.1). All of the FTAs have two or more environmental provisions. All have a provision that in one form or another invokes the exceptions that GATT Article XX with, in most cases, the environment mentioned in addition to protecting human, animal and plant life and health. All but three have provisions for cooperation on environmental issues but the nature and details of the cooperation vary considerably (see Table 10.1). Next in number (seven out of 11), is the agreement not to weaken laws or their enforcement to attract investment. Four have statements on the environment in their preambles, three indicate that the parties have the right to enact and enforce environmental laws and that nothing in the agreements negates that right, three have references to energy and two have other provisions. The countries with each type of provision are listed in Table 10.1. Definitions of the headings used in Table 10.1 are listed below. ● ●

●

Date in force: Year the agreement went into force. Preamble: Agreement has one or more phrases with reference to the environment or sustainable development as justification for the FTA. Exception: The agreement has an article or other provision that gives environmentally related reasons for allowing exceptions to the general prohibition on trade restrictions.

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●

●

●

●

145

Not weaken: The agreement has a provision where the parties commit to not relaxing their environmental laws or regulations to attract investment. Right to have: A measure that assures that the trade-related provisions do not prevent the parties from developing and/or enforcing their environmental laws. Energy: The agreement has one or more provisions that commit to developing energy in ways that prevent damage to the environment or a related provision linking energy and the environment. Cooperation: The FTA has provision(s) for cooperating to protect the environment. Other provisions: There are other environmental provisions, listed as footnotes to the table.

Several of Japan’s FTAs have provisions for environmental cooperation. These tend to be composed of a statement such as they “shall promote cooperation under this Agreement for their mutual benefits in order to liberalize and facilitate trade and investment between the Parties and to promote the well-being of the peoples of the Parties”, followed by a list of areas of cooperation including the environment, but little else. Details are to be worked out by trade and environmental or other officials. The agreement with Mexico, however, indicates specific procedures, including information and other exchanges, capacity- and institution-building, cooperation developing trade in environmental goods, and identifying opportunities for investment in the environmental field. The FTAs with Indonesia and Brunei Darussalam have important provisions concerned with energy – the FTA with Mexico also deals with energy but less extensively. The Brunei agreement is that the parties will attempt to minimize “harmful environmental impacts of all activities related to energy”. This to be accomplished by three activities: Each Party shall: (a) take account of environmental considerations throughout the process of formulation and implementation of its policy on energy; (b) encourage favourable conditions for the transfer and dissemination of technologies that contribute to the protection of environment, consistent with the adequate and effective protection of intellectual property rights; and

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(c) promote public awareness of environmental impacts of activities related to energy and of the scope for and the costs associated with the prevention or abatement of such impacts. The Indonesian agreement has similar provisions but also sets up a subcommittee for “discussing any issues related to this Chapter, including issues related to business environment, cooperation, energy security, and the development of an open and competitive market”. An agreement with India was signed in February 2011 and has similar provisions but also states that each party “shall ensure that its laws and regulations provide for adequate levels of environmental protection and shall strive to continue to improve those laws and regulations”. They further agreed to “take necessary measures to enhance public awareness of environmental policy”.

Australia and New Zealand Australia and New Zealand each have a few FTAs, including one with each other. These tend to be with countries in the Asia-Pacific region, although Australia has agreements with the United States and Chile, discussed in Chapters 8 and 9, respectively. Both countries have agreements with the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA), early 1980s agreements that only have the exceptions provisions.2 Australia’s free-trade agreements, except those with the US and Chile, have very few environmental provisions. Many have only one, the exception for protecting human, animal and plant life and health and the environment (or for conservation of natural resources). The words of these vary and may or may not mention the environment – where they do not, conservation of natural resource is usually specified. The agreement with Singapore has a couple of additional provisions. One states: Nothing in this Chapter shall prevent a Party from adopting or maintaining, in accordance with its international rights and obligations, which include ... mandatory requirements necessary to ensure the quality of its imports, or for the protection of human, animal or plant life or health, or the environment, or for the prevention of deceptive practices or to fulfil other legitimate objectives, at the levels it considers appropriate. Another provides that when “urgent problems of safety, health, consumer or environmental protection” arise, sector commitments given in annexes to the agreement can be suspended.

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New Zealand has trade/environmental policies that are designed to see that trade agreements encompass protecting the environment and promoting sustainable development. The following statement from the Ministry of the Environment summarizes the intent of the policy: Bilateral and regional free trade agreements play an important role in international trade. New Zealand’s free trade agreements seek to maintain high standards for environmental protection, support and promote sustainable development and build capacity to more effectively address environmental issues. The country’s policy with regard to FTAs, often called Closer Economic Partnership Agreements (CEP) but also known as Strategic Economic Partnerships (SEP) or Free Trade Agreements (FTAs), is outlined in its Framework for Integrating Environment Issues into Free Trade Agreements, which states: “The government’s aim is to harmonise its objectives for trade and for the environment, with both serving the overarching objective of promoting sustainable development.” Despite this policy, New Zealand’s FTAs do not have extensive environmental provisions, although they tend to have more than the Australian agreements described above. However, New Zealand has separate environmental agreements with several of its FTA partners. The FTAs with China, Singapore, Thailand and Trans-Pacific Strategic Economic Partnership3 all have one or two provisions in addition to the exceptions clause. The agreement with China has provisions for cooperation on environmental regulatory issues as well as on general issues of labor and environmental cooperation, with a memorandum of understanding developed to define the nature of the cooperation. A separate agreement with Hong Kong signed in 2010 has provisions in the TBT chapter for managing risks “to health, safety and the environment”, as well as provisions for cooperation tied to the China–New Zealand agreement. The Singapore FTA also has cooperation provisions, plus a provision in the SPS chapter that the requirements of the agreement “are not intended to affect the operation of any laws” nor “directed at matters affecting, inter alia, human health or safety, animal or plant life or health, or the environment”. Another provision (Article 44 Preservation of Regulatory Authority) maintains that each party retains its regulatory authority over the same matters – that is, human health and safety, animal and plant life and the environment. The agreement with Thailand has similar provisions, stating, among other things, that: “Each Party shall retain all authority under its legislation to take appropriate and timely measures for goods which pose an immediate risk to health, safety or the environment.”

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New Zealand’s environmental cooperation agreements are under the Ministry of the Environment, which lists active agreements: Singapore, Thailand, Trans-Pacific group, Malaysia (linked to the trade agreement) and a memorandum of understanding (MOU) on environmental cooperation with the Philippines (see also Gallagher and Serrat 2010). The agreements tend to be simpler and less detailed than, for example, those of the US. Although varying to some degree with respect content, each agreement has a preamble setting out general reasons for the agreement. Following is a section which lists commitments including maintaining high environmental standards, respecting the sovereignty of each party with respect to its own environmental laws and their enforcement, not to weaken or fail to enforce their laws to attract investment, to attempt to harmonize their laws with international standards, not to use environmental laws for protectionist purposes and to promote public participation and transparency; this section is abbreviated in the China agreement with just the recognition of sovereignty and that the purpose of environmental laws should be to achieve environmental objectives, plus the need for “clear and well understood sustainable development policies” and the need for broad consultation in formulating those policies. A subsequent section deals with areas of cooperation such as the following from the Thailand agreement: Cooperative activities may be in areas of environmental expertise and technology and natural resource management including but not limited to waste management, wetlands management, eco-tourism, water resources/watershed management, environmental remediation, climate change-related technologies, extended producer responsibility, biodiversity conservation, national park/reserve management, marine and coastal resources management, public participation in environmental management and environmental education. Cooperation on the environment, a function of the Ministry on the Environment, is an important aspect of New Zealand’s environmental agreements. The agreement with the Philippines lists the following areas of cooperation: sustainable management of the environment, air quality management, water quality management, toxic chemicals and hazardous and solid wastes management, restoration of degraded watersheds, river basins and wetlands, the conduct of research dealing with major river basins, and concerns affecting or dealing with climate change. As stated in the agreement with Thailand:

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These activities may be implemented through a variety of means, such as the exchange of best practice and information, joint projects, exchanges, visits, workshops and dialogue, including in relation to international environmental forums and matters. The funding of cooperative activities will be decided by the Participants on a case-by-case basis. Another section deals with implementation/institutional procedures with an environmental committee established in the Thailand, Malaysia and Philippine agreements and a coordinator or contact person in the others. Disputes or disagreements generally are to be handled through consultations, although in some agreements disputes about enforcement of environmental laws may be taken through the dispute settlement process. These are to develop, implement and oversee the environmental provisions as well as handling problems or complaints that arise. Subsequent sections deal with minor details that have little impact on the operation of the agreements.

Other Asian FTAs In recent years China has become active in negotiating bilateral trade agreements as well as ascending to the WTO. While not all have environmental provisions, many do, with environmental and other forms of cooperation being a significant activity in its trade agreements, which are listed in Table 10.2. However, except for the FTAs already discussed (ASEAN, Chile and Peru), none of the other agreements, including the bilateral agreements with New Zealand, Singapore and Pakistan, have significant environmental provisions. India participates in several bilateral and regional trade agreements (Afghanistan, Bhutan, Chile, Nepal, Singapore, Sri Lanka, S. Korea, plus MERCOSUR, APTA, SAFTA and SAPTA as well as agreements signed with Japan and Malaysia), but most do not have environmental provisions that go beyond the exceptions provision. The India–Singapore agreement has a set of provisions very similar to other agreements with Singapore discussed in this chapter, while the India–Malaysia agreements includes the environment as a public measure that the agreement cannot override. There also are several other ASEAN countries with FTAs, but few have significant environmental provisions. These include Pakistan’s FTAs with Malaysia, Singapore and Sri Lanka, none of which have environmental provisions beyond the preamble or exceptions articles. Similarly,

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Table 10.2 China’s free trade agreements Environmental provisionsa

FTA with:

Date signed

Date in force

ASEAN

11/4/2002

7/1/2003

YES

APTA

b

7/31/1975

6/17/1976

NO

Chile

11/18/2005

10/1/2006

YES

Hong Kong

6/29/2003

1/1/2004

NO

Macao

10/17/2003

1/1/2004

NO

New Zealand

4/7/2008

10/1/2008

YES

Singapore

10/23/2008

1/1/2009

YES

Pakistan

11/24/2006

7/1/2007

NO

Peru

4/28/2009

3/1/2010

YES

Notes: a Has environmental provisions other than preamble and exceptions; b Bangladesh, China, India, S. Korea, Laos and Sri Lanka.

the Krygyz Republic has a number of trade agreements, but without important environmental provisions. In addition to the bilateral agreements, there are number of regional agreements in the Asia-specific area, but only two with environmental activities, ASEAN and TransPacific Strategic Economic Partnership (although AFTA, the ASEAN FTA, does not have provisions within the basic agreement). A number of the regional agreements with their current membership and environmental provisions are listed in Table 10.3.

Africa and Middle East Other than the agreements discussed in the previous two chapters about European and American (US and other countries) agreements with African and Middle Eastern countries, few, if any, exist among the many countries of those two areas. However, there are several regional groupings in Africa and a few in the Middle East. Many of these do not have important environmental provisions, but a few of the African agreements have extensive environmental components, including the COMESA, EAC, SADC and ECOWAS regional agreements.

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Table 10.3 Some regional FTAs in the Asia-Pacific region Environmental provisions

Agreement

Members

Melanesian Spearhead Group

Fiji, Papua New Guinea, Solomon Islands and Vanuatu

None

Asia Pacific Trade Agreement

Bangladesh, China, India, Korea, Republic of, Lao People’s Democratic Republic and Sri Lanka

Exception

South Asian Preferential Trade Arrangement

Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka

None

South Asia Free Trade Association

Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka

None

South Pacific Regional Trade and Economic Cooperation Agreement

Australia, Cook Islands, Fiji, Kiribati, Marshall Islands, Micronesia, Federated States of, Nauru, New Zealand, Niue, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu

Exception

Pacific Island Countries Trade Agreement

Cook Islands, Fiji, Kiribati, Micronesia, Federated States of, Nauru, Niue, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu

None

Trans-Pacific Strategic Economic Partnership

Brunei Darussalam, Chile, New Zealand and Singapore

Preamble Exception Cooperation

ASEAN Free Trade Area

Brunei Darussalam, Myanmar, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia, Philippines, Singapore, Vietnam and Thailand

Nonea

Note: a Although the AFTA agreement has no environmental provisions, ASEAN has an active environmental program as discussed earlier in this chapter.

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The following regional agreements exist in Africa and the Middle East: Africa African Free Trade Zone (AFTZ) East African Community (EAC) Common Market for Eastern and Southern Africa (COMESA) Southern African Development Community (SADC) Southern African Customs Union (SACU) Economic Community of West African States (ECOWAS) West African Economic and Monetary Union (UEMOA) West African Monetary Zone (WAMZ) Middle East Greater Arab Free Trade Area (GAFTA) – June 1957[6] Gulf Cooperation Council (GCC) While varying in details, there are commonalities in their environmental approaches, especially the first two, which involve many of the same nations; however, these are less detailed than the ECOWAS agreement. The agreements have objectives of protecting the environment and natural resources and cooperative programs to accomplish those objectives. The objectives given in the ECOWAS agreement are: 1. Member States undertake to protect, preserve and enhance the natural environment of the region and cooperate in the event of natural disasters. 2. To this end, they shall adopt policies, strategies and programmes at national and regional levels and establish appropriate institutions to protect, preserve and enhance the environment, control erosion, deforestation, desertification, locusts and other pests. This tended to be followed by agreeing to cooperate on protecting the environment through common policies and programs and in some cases harmonization of their policies. The COMESA and EAC agreements followed with provisions dealing with handling or prohibiting disposal of toxic wastes in their territories and management of natural resources, including land, forest and fisheries resources. In the COMESA FTA, a technical committee (one of several) is to set up and assist with the cooperative efforts.

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The Middle Eastern agreements did not deal extensively with environmental issues, although the Gulf Cooperation Council (GCC) has a short article on environmental protection and provisions on energy and the environment, an important issue to oil producing states. This latter states: For the purpose of achieving integration between Member States in the fields of petroleum and minerals industries, and other natural resources, and enhancing competitive position of Member States, Member States shall adopt integrated policies in all phases of oil, gas, and minerals industries to achieve optimal exploitation of natural resources, while taking into account environmental considerations and the interests of future generations.

Chapter summary The Asia-Pacific area’s free-trade agreements vary considerably with respect to environmental provisions and activities, from no consideration given to environmental measures to extensive treatment in a few agreements. Overall, it seems that the Asian-Pacific agreements do not give the same emphasis to the environment as in the Americas and Europe, although those areas have considerable variation, too. The AsiaPacific FTAs do not have separate chapters on the environment as in the United States and some Canadian agreements, nor do they have the extensive treatment of cooperation as in some EU and many US agreements, although cooperative activities are important in several of the agreements. A large share of the agreements by a number of countries have only a single environmental provision, the exception from trade restriction prohibitions for purposes related to health, safety and the environment, a long-standing provision included in the General Agreement on Tariffs and Trade. Next in importance is a provision, stated in various forms, that assures that the trade agreement does not override the members’ own laws and their rights to establish and enforce those laws. African countries have not been active in negotiating bilateral agreements with each other although several have agreements with the EU and other nations. However, there are a few regional trade agreements that have important environmental provisions, often aimed at the protection of their natural resources including wildlife. These generally take the form of cooperation to help coordinate their activities and achieve protection of shared resources.

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11 Environmental Impact Analysis

Canada, the European Union and the United States all regularly conduct ex ante environmental impact analyses of their impending trade agreements, although using somewhat different approaches. Some other countries also carry out analyses to determine the impacts on the environment of their free-trade agreements – the OECD has recommended that environmental impacts of trade policies be reviewed (Alf et al. 2010). These assessments are an outgrowth of environmental impact analyses required since the United State’s 1969 National Environmental Policy Act (NEPA) for public sector projects and activities that can affect the environment (Salzman 2000). This experience led to a demand for environmental analysis during the NAFTA negotiating process where potential impacts on the environment were emphasized by critics of the trade agreement. A result was a number of analyses by economists and others to estimate the potential impacts of the agreement on the environment (see, e.g., Grossman and Krueger 1993). In fact, both the USTR and Canada prepared environmental reviews of NAFTA. Salzman (2000, p. 2), in commenting on the US review, said: The NAFTA review, for example, highlighted the likely environmental degradation caused by maquiladoras along the US–Mexico border and led to a separate Border Plan and funding mechanism for border area environmental problems. Concerns over potential race-to-thebottom pressures (i.e., pressure to lower environmental protections as an inducement for industry location) informed the NAFTA’s environmental side agreement. And these, in turn, led to the requirement that the Commission on Environmental Cooperation “consider on an ongoing basis the environmental effects of the NAFTA.” 154

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Despite this voluntary environmental review, a group of environmentalists (Citizen Action, Sierra Club and Friends of the Earth) sued the US to force a formal NEPA type of environmental assessment and the US was ordered to do a formal environmental review by the Washington, DC Federal District Court. However, the District Court ruling was overturned on appeal (Denniston and Cannon 1993; Charnovitz 1994).1 Canada and the US, as well as the EU, now conduct environmental reviews (impact analyses) of their trade agreements, Canada under a 2001 framework, the US under guidelines developed following the issuing of Executive Order (EO) 13141 in 1999, which mandated the reviews, and the EU under its Sustainable Development Strategy (DFAIT 2001; EC 2006b; USTR 2000). While the nature and procedures used for their analyses vary, they all seek to determine any harmful effects on the environment due to the trade pacts and to assist the negotiators in addressing potential problems during the process of finalizing the agreement or allowing their governments to take other appropriate actions to mitigate the negative effects.

Methodology The methodologies used for environmental impact assessments vary with the country carrying out the assessment, the particular trade agreement being analyzed, data needs and availability, time available to conduct the analysis and other factors. Determining anticipated environmental impacts is complex, demanding and difficult. The basic process involves determining the problems/issues to be analyzed, determining how to analyze the problems/issues, obtaining and refining the data needed for the analysis, carrying out the analysis and determining approaches for utilizing the results for negotiating the FTA and in mitigating any negative environmental impacts. The Canadian framework lists the process as consisting of 1) identifying the economic impacts of the trade agreement, 2) identifying likely environmental impacts due to the economic impacts, 3) assessing the significance of the environmental impacts and 4) identifying enhancement and mitigation options to be used to inform the negotiations. The EU’s process involves screening to determine which measures may be excluded due to not being significant, scoping to determine what should be assessed and what methods and procedures should be used, assessment to determine the environmental impacts associated with each measure, and determining “flanking measures” – that is, mitigation and enhancement analyses; the EU does this for economic, environmental and social impacts.

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The US process consists of determining the scope of the environmental review (identification of issues, determining information needs, ascertaining the scope of the agreement, ascertaining options for analysis and ascertaining reasonably foreseeable environmental impacts), selection and prioritization of issues, analysis of the environmental impacts and analysis of implications for environmental laws and regulations (this last procedure is unique to US analyses and is required by the Trade Promotion Act – although the New Zealand analyses also include regulatory impacts). Gallagher et al. (2001) summarize these processes as scoping the relevant categories of environmental outcomes to be included, assessment of the potential economic impacts and evaluation of the subsequent potential environmental ramifications due to the expected economic changes. The identification of the issues/problems/impacts to be analyzed consists of an iterative process of making an initial list based on factors in the proposed FTA and then obtaining input from affected agencies, experts, organizations and the public through various means, including meetings, web postings, written comments, etc. Once the factors to be analyzed are selected, the next step is to determine how and to what extent they will affect the environment. Determining the economic impacts varies from using simple direct projections based on historical data to development of highly complex economic models. Qualitative and quantitative methods can be used for determining the economic impacts. In either case, a baseline is needed from which to project the economic impacts. Normally this should be the set of conditions at the time the FTA goes into effect. Then the changes in policy variables, tariffs, nontariff barriers, etc. are introduced and the values of the appropriate economic variables, income, GDP or GNP, production, investments, etc. are determined for a future date (or dates) to determine what changes occur because of the changes in the policies, giving the economic impacts which are then used to determine the environmental impacts by use of knowledge about the relationships between the economic and environmental variables. These relationships usually have been determined by previous studies of the economic forces affecting the environment. While qualitative approaches were common during the early period of environmental assessments, quantitative approaches are now more commonly used. A computable general equilibrium (CGE) model is the more frequently used quantitative technique, with the Global Trade Analysis Project (GTAP) model tending to prevail among the several available models (Ackerman and Gallagher 2008; Böhringer 2004; Gallagher,

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Ackerman and Ney 2001; Hertel et al. 2003; Tsigas et al. 2002). According to Böhringer (2004, p. 10): The quantification of tradeoffs requires the use of numerical model techniques. There is simply no other way to think systematically and rigorously about the interaction of the many forces that interact in the economy affecting potential indicators of Sustainable Development. Compared to stylized analytical models, the numerical approach facilitates the analysis of complex non-linear system interactions and the impact assessment of structural policy changes. In the end, the decisions how to resolve potential tradeoffs must be taken on the basis of societal values and judgements. However, model-based analysis puts decision making on an informed basis rather than on fuzzy or contradictory hunches. The development and use of CGE models is a complex and involved process that will not be discussed here. The references cited above provide details on the models and their application in trade and environmental analyses. Gallagher et al. (2001) also provide a critique which outlines some weaknesses of using quantitative models, although there is no really good substitute if the procedures are used correctly. US environmental reviews Following NAFTA and as the US began negotiating additional trade agreements, the Clinton administration decided to require environmental analyses of future trade agreements through the mechanism of an Executive Order (no. 13141) issued by President Clinton on November 16, 1999. The policy for this was stated in the order as: The United States is committed to a policy of careful assessment and consideration of the environmental impacts of trade agreements. The United States will factor environmental considerations into the development of its trade negotiating objectives. Responsible agencies will accomplish these goals through a process of ongoing assessment and evaluation, and, in certain instances, written environmental reviews. The order further notes that the environmental reviews “are an important tool to help identify potential environmental effects of trade agreements, both positive and negative, and to help facilitate consideration of appropriate responses to those effects”. The US Trade Representative

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and Chair of the Council on Environmental Quality are to oversee the preparation of the environmental reviews, which are to focus on environmental impacts within the United States, but that in addition can examine global and transboundary impacts. All multilateral and bilateral agreements are to be reviewed. The reviews are to be: written, initiated through a Federal Register notice, outlining the proposed agreement and soliciting public comment and information on the scope of the environmental review of the agreement, undertaken sufficiently early in the process to inform the development of negotiating positions ... made available in draft form for public comment, where practicable, and made available to the public in final form. The Office of the Trade Representative and Council on Environmental Quality jointly developed guidelines for conducting the reviews. The Bush administration continued the Executive Order and the Trade Promotion Act (TPA) formalized the process as a legal requirement (Audley 2004; Shiner 2002). Guidelines The guidelines for conducting environmental reviews of trade agreements were developed by the Council of Environmental Quality (CEQ) and US Trade Representative (USTR) with consultations with other agencies, groups and the public and published in December 2000 (CEQ and USTR 2000). The USTR and CEQ jointly oversee the implementation of the Executive Order, while the USTR is responsible for conducting the environmental review (ER) through the Trade Policy Staff Committee (TPSC).2 To carry out the actual review an Environmental Review Group (ERG) composed of individuals with expertise in various aspects of environmental reviews from various Federal agencies is set up for each trade agreement to be reviewed. The purpose is to implement Executive Order 13141 and the focus is: The primary focus of the Order and these Guidelines is on the process for evaluating the environmental implications of certain major proposed trade agreements, which will be the subject of written environmental reviews (ERs). In addition, as recognized by the Order, the broader goal of sustainable development shall also be advanced through an ongoing process of assessment, evaluation and public consultation by responsible Federal agencies, even where no ER is conducted.

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In carrying out the review the analysts are to examine “reasonably foreseeable environmental impacts” using the following criteria: (a) The extent to which the agreement might affect environmentally sensitive media and resources and/or result in substantial changes in trade flows of products or services that could confer environmental harms or benefits; (b) The extent to which the agreement might affect US environmental laws, regulations, policies and/or international commitments; (c) The magnitude and scope of reasonably foreseeable environmental impacts; and (d) The magnitude of anticipated changes in trade flows. One purpose is to enable the negotiators to be able to adequately consider environmental factors in the process, but “while an ER shall be undertaken sufficiently early in the negotiating process to inform the development of negotiating positions, it shall not be a condition for the timely tabling of specific negotiating positions”. Early in the process of conducting the environmental assessment, there should be outreach and consultations to inform the process as stated in the guidelines: “When negotiation of the prospective trade agreement is first under consideration, USTR, through the TPSC, shall seek information regarding potential environmental concerns and benefits associated with the commercial practices and trade policies under consideration.” When “sufficient information exists concerning the scope of the proposed trade agreement” the formal environmental review process is initiated with an announcement in the Federal Register. This is to elicit input from the public regarding the scope of the environmental review. Input also is to be obtained from appropriate advisory committees and from other federal agencies. The following paragraph from the CAFTA–DR environmental review illustrates this process: The review of the FTA with Central America was formally initiated by publication of a notice in the Federal Register, which requested public comment on the scope of the review (see 67 Fed. Reg. 70475, November 22, 2002). The Administration also requested public comments on all aspects of the negotiations and held a public hearing to discuss issues raised in connection with the FTA, including environmental issues (see 67 Fed. Reg. 63954, October 16, 2002). Comments and testimony addressing environmental issues received in response to those notices were taken into account in the preparation of the

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Interim Review. The availability of an Interim Review of the FTA with Central America was announced in the Federal Register (see 68 Fed. Reg. 51822, August 28, 2003) and provided a further opportunity for public comments. The guidelines provide for “scoping” the agreement, a procedure that “involves the identification and prioritization of significant issues to be analyzed in depth in the written ER”. This requires “consideration of the environmental dimensions of the commercial practices and trade policies at issue, including ways in which the potential trade agreement can complement US environmental objectives”. The scoping process shall draw upon the knowledge of any agency with relevant expertise in the subject matter under consideration, as well as the views of Congress, the public, and advisory committees. Where matters affecting state, local and tribal government regulatory authority may be at issue, USTR shall consult with the Intergovernmental Policy Advisory Committee (IGPAC) and other appropriate sources of information. The prioritization of the issues to be analyzed depends on the following factors: 1. The perceived significance of potential environmental impacts. 2. The relative importance placed on a particular issue by governmental agencies, the public and/or advisory committees. 3. Availability of analytical tools capable of assessing environmental impacts at an adequate level of detail. 4. Existence of opportunities for building on, or incorporating by reference, work already performed or being performed elsewhere in the interagency process, so that the ER is not duplicative of other efforts. Once the issues are identified and prioritized they are analyzed to determine environmental impacts. The guidelines do not require a specific analytical procedure but recognize that each trade agreement is likely to be unique so that the analysis needs to be flexible. It is required that “The analysis shall entail an objective, rigorous assessment of the environmental issues under consideration, and shall be based on scientific information and principles, documented experience and objective data.” The process is to include

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analysis of implications for environmental laws and regulations and analysis of economically driven environmental impacts. The analysis is also to include identifying ways to mitigate harmful environmental impacts. Public participation is mandated by the guidelines. This is to include opportunities for public comment and input, consultations with advisory committees, Congress and others, public hearings and web postings, as well as other means of providing information. The time for public comment should be sufficient, normally at least 45 days when feasible. Generally, an interim review is developed and posted to be reviewed and commented on, and then a final ER is made official. All are available on the USTR website. Environmental reviews The US has conducted formal environmental reviews of all its trade agreements negotiated after Executive Order 13141 was issued in 1999. However, most of the reviews were conducted after the passage of the Trade Promotion Act (TPA) of 2002, which also mandated environmental reviews and established a number of requirements for new trade agreements which the environmental reviews examine. The legal framework for the reviews is summarized in the text of the reviews and the text from the CAFTA–DR FTA is reproduced in Appendix 11.1 attached to this chapter. It is a determinant of the content of the reviews. The first FTA reviewed under EO 13141 was with Jordan, but was prior to the TPA of 2002. The US–Jordan FTA was negotiated quickly due largely to foreign policy considerations and the ER stated: “This review was conducted under an atypical set of circumstances. These included a compressed negotiating timetable due to foreign policy objectives and minimal economic impacts in the United States.” The review examined 16 sectors that might be affected by trade with Jordan, but concluded that the agreement would have little overall effect on US imports, exports, production or employment. It also concluded that it would not have a significant impact on the environment, although conceding that there might be local effects but none that could be identified within the constraints of the negotiating process. The ER also considered potential transboundary and global effects, especially with respect to Jordan’s trade in endangered species and the effects on its fragile areas. The analysis found no “evidence that would suggest that the FTA provisions would have a significant negative environmental effect on Jordan’s record on trade in endangered species, or on migratory birds or protected areas”.

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All of the subsequent environmental reviews have a nearly identical finding with respect to the agreements environmental impacts on the US – that is, that there would be no significant impacts. The wording varies somewhat among the agreements, but the summary findings are similar, as shown for the following agreements: Bahrain: In this Final Environmental Review, the Administration has concluded that changes in the pattern and magnitude of trade flows attributable to the FTA will not have any significant environmental impacts in the United States. Australia: In this Final Environmental Review, the Administration has concluded that changes in the pattern and magnitude of trade flows attributable to the FTA will not have any significant environmental impacts in the United States. While it is conceivable that there may be instances in which the economic and associated environmental impacts are concentrated regionally or sectorally in the United States, we could not identify any such instances. Chile: In this Final Environmental Review, the Administration has concluded that changes in the pattern and magnitude of trade flows attributable to the FTA will not have any significant environmental impacts in the United States. While it is conceivable that there may be instances in which environmental effects are concentrated regionally or by sector in the United States, we could not identify any such instances. Colombia: In this Final Environmental Review, the Administration has concluded that changes in the pattern and magnitude of trade flows attributable to the CTPA will not have any significant environmental impacts in the United States. Based on existing patterns of trade and changes likely to result from provisions of the CTPA, the impact of the CTPA on total US production through changes in US exports appears likely to be small. As a result, the CTPA is not expected to have significant direct effects on the US environment. While it is conceivable that there may be instances in which the economic and associated environmental impacts are concentrated regionally or sectorally in the United States, we could not identify any such instances. Morocco: In this Final Environmental Review, the Administration has concluded that changes in the pattern and magnitude of trade flows attributable to the FTA will not have any significant environmental impacts in the United States. While it is conceivable that there may be instances in which the economic and associated environmental

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impacts are concentrated regionally or sectorally in the United States, we could not identify any such instances. Peru: In this Final Environmental Review, the Administration has concluded that changes in the pattern and magnitude of trade flows attributable to the PTPA will not have any significant environmental impacts in the United States. Based on existing patterns of trade and changes likely to result from provisions of the PTPA, the impact of the PTPA on total US production through changes in US exports appears likely to be small. As a result, the PTPA is not expected to have significant direct effects on the US environment. While it is conceivable that there may be instances in which the economic and associated environmental impacts are concentrated regionally or sectorally in the United States, we could not identify any such instances. Oman: In this Final Environmental Review, the Administration has concluded that changes in the pattern and magnitude of trade flows attributable to the FTA will not have any significant environmental impacts in the United States. While it is conceivable that there may be instances in which the economic and associated environmental impacts of the FTA are concentrated regionally or sectorally in the United States, we could not identify any such instances. Singapore: In this Final Environmental Review, the Administration has concluded that changes in the pattern and magnitude of trade flows attributable to the FTA will not have any significant environmental impacts in the United States. While it is conceivable that there may be instances in which environmental impacts are concentrated regionally or sectorally in the United States, we could not identify any such instances. This does not mean that the reviews were not significant nor that each one did not examine the environmental effects thoroughly, taking into account the provisions of the particular FTA and the country or countries involved. The amount of trade, even for the larger trading partners, is relatively small compared to total production in the US and therefore impacts on the overall environment are very small and may not be detectable. Thus, the findings also were that there would be only small, if any, effects on production and employment. The findings were that the agreements would not affect US abilities to enact, enforce and maintain its environmental laws. The findings generally were negative with respect to potential transboundary and global environmental effects, although potential problems were sometimes identified. In the Australia FTA, for example, potential threats from invasive species were found in

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the initial assessment. According to the ER, this led to the establishment of a new mechanism in the agreement for scientific cooperation to help resolve animal and plant health issues. Thus, at least in some cases, the environmental review process helped achieve one of its objectives, to inform the negotiating process, enabling improvements in the agreement. Another TPA requirement is for environmental cooperation and all of the agreements reviewed meet the requirement, as noted for the Morocco agreement: Finally, and as a complement to the FTA, the United States and Morocco signed a Joint Statement on Environmental Cooperation that will enhance the positive environmental consequences of the Agreement. In this Joint Statement the Parties agree to establish a Working Group on Environmental Cooperation that will develop a plan of action and set priorities for future environment-related projects. An early criticism of the reviews was that they concentrated on the impacts in the US, as was contemplated by Executive Order 13141. Thus, the later reviews have tended to devote more effort to examining the effects in partner countries. In the Peru review, for example, it was noted that in the near term the production and environmental effects in Peru would be small since the barriers to Peruvian exports were already low. In the longer term, expanded production and exports might produce harmful effects but currently that could not be determined. Also there might be beneficial effects because: The PTPA may have positive environmental consequences in Peru by reinforcing efforts to effectively enforce environmental laws, accelerating economic growth and development through trade and investment, promoting sustainable development of natural resources and disseminating environmentally beneficial technologies. The public submissions process established by the Environment Chapter has significant potential to improve environmental decision-making and transparency in Peru and to inform capacity-building activities.

Public participation Public participation in the environmental review process is mandated at both ends of the process – at the beginning to help assure that all the appropriate issues are addressed and at completion through comments on the interim review to improve the final product. The degree of

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participation has varied, both with respect to the agreement and time of comment. In the Bahrain review, for example, it was noted: There were no public comments on the scope of the environmental review. Public comments on the Interim Review drew attention to Bahrain’s current environmental problems associated with desertification, land degradation and pollution affecting the marine environment and encouraged consideration of opportunities to address these problems through cooperative activities in the context of the FTA. However, for the review of the Chile FTA, comments were received both at the beginning – that is, on the scoping process – and on the interim review. With respect to the first, the review noted: Public commentators identified a number of environmental issues in connection with the proposed FTA. The majority of these concerns related to the major natural resource and extractive industries that are central to Chile’s economy, including mining, fishing, forestry and agriculture. Some comments focused on possible impacts of the FTA on the environment in Chile. Others were concerned that differences between environmental regulations in the United States and Chile would lead to a competitive advantage for Chilean industrial and agricultural producers and fishers. Additional comments on these sectors expressed concern about measuring the marginal impacts of the Chile FTA in the context of other US agricultural policies and trade liberalization. Some 14 individuals, organizations and groups of organizations (a group of environmental organizations made a combined response) responded to the interim review (see list in Appendix 11.2).

Canadian EIAs Canada conducts environmental impact assessments (EIA) of trade agreements under its Framework for Conducting Environmental Assessments, which in turn is an offshoot of its 1999 Cabinet directive on environmental assessments. The procedures for the EIAs, conducted under the framework, are described as follows (DFAIT 2001, p. ii): The Government of Canada is committed to sustainable development. As part of this commitment and in keeping with the 1999

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Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, Canada will conduct Strategic Environmental Assessments of trade negotiations. This framework establishes the process and analytical requirements for conducting such assessments. A Strategic Environmental Assessment, referred to simply as an “environmental assessment” in this framework, is a systematic process of identifying and evaluating likely and significant environmental impacts of an initiative. The objective of such an assessment is to integrate environmental considerations into the decision-making process from the earliest stages of an initiative. The trade agreements’ basic purposes are to increase trade and improve the welfare of the trading partners. The government of Canada, however, does not see this as a conflict with its policy to protect the environment. The framework has the following statement in this regard (DFAIT 2001, pp. 1–2): The Government of Canada sees no contradiction between liberalized trade and environmental protection. Canada’s economy benefits immensely from international trade, with the value of exports representing 45 per cent of our gross domestic product. Potentially, trade liberalization can have a positive impact on the environment by improving the efficient allocation of resources, promoting economic growth, increasing general health and welfare and generating revenues that can be used for environmental improvement. Increased economic activity generated by trade liberalization can contribute to environmental problems if domestic policies are distorting, or if there is an absence of effective environmental policies and regulations. The EIAs in Canada are carried out under the direction of the Department of Foreign Affairs and International Trade (DFAIT) with the participation of other agencies, including Environment Canada and the Canadian Environmental Assessment Agency (DFAIT 2001, p. 6). The Department of Foreign Affairs and International Trade (DFAIT), in consultation with other federal government departments and agencies, will conduct environmental assessments of trade negotiations. An Interdepartmental Steering Committee, coordinated by DFAIT with representatives from relevant federal government departments and agencies will be responsible for ensuring that assessments

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are conducted for all new trade agreements in a consistent manner and in accordance with the process outlined in this framework. The procedures followed by Canada are similar to those of the United States, but do not include the assessment of regulatory impacts (Gallagher et al. 2001). According to the framework, there are two objectives to Canada’s EIAs: assisting with the negotiations and increasing public understanding of the process (DFAIT 2001, p. 4): ●

●

to assist Canadian negotiators integrate environmental considerations into the negotiating process by providing information on the environmental impacts of the proposed trade agreement. to address public concerns by documenting how environmental factors are being considered in the course of trade negotiations.

The assessment process consists of four steps, although each step involves carrying out several activities to be completed. The steps are (DFAIT 2001, p. iii): ●

● ● ●

Announce intent to conduct an EA (when trade negotiation announced); Prepare an Initial EA (released in advance of negotiation); Prepare a Draft EA (released at the start of negotiation); and Prepare a Final EA Report (released after negotiation concludes).

The preparation of the initial EA is probably the critical step as the subsequent drafts are modifications of the initial draft, based in part on inputs from reviewers of the earlier versions along with public comments and modifications made necessary due to changes in the trade agreement that occur during the negotiations. An Environmental Assessment Committee, under DFAIT, is formed to conduct the assessment, with membership varying with each FTA due to the differences in the member parties and specifics of the agreement; agency representatives are determined in part by the products and services affected by the agreement. While the procedures used will also be different with each FTA, each is to be conducted using the following four stages (DFAIT 2001, pp. 11ff):3 1. Identify the economic effects of the negotiation – The purpose of this stage is to identify the trade liberalization activity of the agreement under negotiation. This stage examines what the potential agreement

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would entail, the changes or new trade activity that could result, and the overall economic relevance to Canada. This helps determine the scope of analysis for the environmental assessment and to prioritize the issues to be assessed. 2. Identify the likely environmental impacts of such changes – Once the economic effects of the proposed trade agreement have been identified and characterized, the likely environmental impacts of such changes are identified. Consideration is given to potential positive and negative impacts. For the purpose of this EA, “environment” refers to the components of the Earth, which includes: land, water, and air (all layers of the atmosphere); all organic and inorganic matter; living organisms; and, the interacting natural systems that include components of the foregoing. The Framework calls for analysis of the most likely impacts on the Canadian environment. The Handbook demonstrates that there are two main factors that contribute to likelihood: exposure and probability. 3. Assess the significance of the likely environmental impacts – The identified likely environmental impacts are then assessed as to their significance. The Framework outlines various criteria in determining significance, including frequency, duration, permanency, geographical scope and magnitude, level of risk, irreversibility of the impacts, and possible synergies among the impacts. 4. Identify enhancement/mitigation options to inform the negotiations – The Initial EA Report, is intended to identify, in a preliminary fashion, the possible policy options or actions to mitigate potential negative impacts and/or to enhance potential positive impacts that may occur as a result of the proposed FTA. The framework does not set out an exact set of procedures to be followed since each trade agreement is unique and will require an approach tailored to its specific provisions and circumstances, as stated in the framework (DFAIT 2001, p. 1): This framework is intended to be flexible enough to be applied to current and any future trade liberalizing negotiations in the World Trade Organization (WTO), the Free Trade Area of the Americas (FTAA) and in bilateral Free Trade Agreements (FTAs). The framework notes that the process of assessing the environmental consequences of a trade agreement is different from doing an environmental analysis of a project, since an FTA is a policy instrument that

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is more difficult to assess than a physical project – that is, that (DFAIT 2001, p. 3): The difficulty in undertaking such a process involves dealing with a host of data limitations and uncertainties, timing issues and numerous other complexities not commonly associated with project-based environmental assessments. The Environmental Assessment Reports generally do not discuss the methodologies used although in some cases CGE models, such as those discussed in the methodology section of this chapter, are mentioned. Instead, judgments of possible effects seem to prevail. An example is the discussion of environmental impacts on Canadian agriculture in the Canada–Panama EIA: Agriculture: Regarding agricultural export growth and potential environmental impacts, the most significant changes in agricultural production are changes that affect land use (e.g. cropland under summerfallow, use of marginal lands) and changes in livestock numbers. While the reduction or elimination of tariffs could increase Canadian agricultural export flows to Panama, the significance of any environmental impacts would be minimal given that Canada’s agricultural exports to the Panama represent a very small share (0.07%) of Canada’s global agricultural exports. Even given very significant export growth, exports in this sector would still amount to a very small share of Canadian global exports and production. Further, Canada’s agricultural production is of relatively low intensity and, thus, any increase in domestic production in response to higher market demand in Panama for Canadian agricultural products is expected to have minimal environmental impact due to changes in livestock numbers and cropland products. Thus, as in the environmental analyses of the United States, the trade agreement of Canada with Panama is not expected to have significant environmental impacts and, where impacts might arise, existing procedures are seen as being able to mitigate negative impacts. The Executive summary of the assessment states: An FTA with Panama is expected to generate benefits for a range of Canadian stakeholders; however, the impact of an FTA in relation to the aggregate Canadian economy would be very modest. Any

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environmental impacts resulting from an FTA are expected to be of minimal significance and easily accommodated within Canada’s existing environmental regulatory regimes. In addition, the assessment sees potential benefits to the environment from factors associated with the trade agreement, to wit: There is a strong correlation between open markets, economic development and enhanced environmental protection. Liberalized, rulesbased trade and efficiently regulated markets are key building blocks for economic growth and development. In turn, public support for measures to protect the environment generally increases as incomes rise, and developed countries become better able to implement effective environmental policies, legislation and new institutions for the protection of the environment than are lesser-developed countries. Open markets also help to foster the development of new, more environmentally friendly technologies. Likewise, it is broadly accepted that liberalized trade and investment help to create the conditions for technology transfer. The summary findings of the environmental assessment for the Canada–Colombia and Canada–Peru FTAs were similar to those of the Canada–Panama agreement: Nevertheless, the economic effects of the Canada–Peru and Canada– Colombia free trade negotiations, while important, will be quite modest relative to Canada’s overall economic activity, and as a consequence the environmental impact is not expected to be significant. Therefore, the Initial Environmental Assessment of these negotiations did not anticipate significant environmental impacts on Canada. The results of the Final EA of the Canada–Colombia and Canada– Peru FTA negotiations confirm the findings of the Initial EA. The environmental impacts in Canada, as a result of the Canada– Colombia and Canada-Peru FTA negotiations, are not expected to be significant. The Government of Canada will continue to monitor trade flows in the sectors most affected by the Canada–Colombia and Canada–Peru FTA negotiations. The findings of the environmental impacts resulting from the EIAs are, thus, very similar to those of the US environmental reviews – that is, there is little or no effect on the environment within the country

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since the overall effect on production is not significant. Exports from Canada are expected to increase and therefore affect total output positively, but since each country’s imports are only a small percentage of Canada’s total output of the products, the change is not sufficient to have a noticeable impact on the environment, at least according the Environmental Assessments.

EU environmental reviews The environmental reviews of trade agreements carried out by the EU differ from those of the US and Canada in a number of respects. They are called Sustainability Impact Assessments (Trade SIAs), are carried out by nongovernmental agencies (consultants) and are more comprehensive in that they include economic and social dimensions as well as environmental impacts (the US and Canadian reviews also cover economic measures as a basis for determining environmental impacts, but do not emphasize the social dimension).4 The EU’s assessments also devote much more attention to the impact in the other countries, often with most of the SIA focused on the effects in the other country or countries. The EU developed its approach as a result of incorporating sustainable development procedures as an integral part of its trade policy in 1999 (EC 2006a). Consultants were used to develop procedures for carrying out the SIAs, which were first applied to the impending Doha Round of WTO negotiations. Experience with conducting the SIAs refined the process, which was documented in a handbook (EC 2006b). Because of the integration of economic, environmental and social analyses, the procedures were, in EC terminology, developed from scratch (p. 7):5 The methodological approach had to be developed from scratch as most impact studies had hitherto focused on either economic or environmental aspects. The aim with Trade SIAs was to integrate three dimensions – economic, environmental and social – combined to cover all aspects of sustainable development. The Commission contracted independent consultants to develop a methodology and to carry out a preliminary assessment of the WTO negotiations. Trade SIA is now enshrined in a broader commitment endorsed at the European Council at Gothenburg (2001). In 2002 the Commission published a Communication on Impact Assessment (COM 2002 276) by which it introduced a comprehensive regulatory and assessment framework for all policy areas, including trade. Trade SIAs remain,

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however, the most sophisticated form of impact assessment used by the European Commission. A set of nine principles have been developed to inform and help guide the sustainable impact analysis process (EC 2006b, p.15): 1. Trade SIAs should be carried out for all major multilateral and bilateral trade negotiations; 2. All three pillars of sustainability – economic, social and environmental – should be covered; 3. Impacts on third, i.e. non-EU, countries should be analyzed together with those on the EU; 4. Trade SIAs should be carried out in cooperation with third country partners; 5. Trade SIAs should be based on transparency and include external consultations. All stakeholders should be given an opportunity to take part in the analysis of issues and impacts; 6. Results of all Trade SIAs should be made public; 7. Trade SIAs should be carried out by external consultants selected by public tendering procedures. Consultants are independent. The EU stipulates only that they work in a transparent and rational manner and base their findings on scientific evidence; 8. The European Commission should set up an internal consultation process to guide consultants. A steering committee involving representatives of different Commission departments and EU negotiators should ensure the relevance of the Trade SIA process; 9. Coordination with EU Member State experts and Members of the European Parliament is also part of the Trade SIA process.

SIA procedures The European Union’s SIAs are carried out under a three-stage process: 1) Impact Assessment (IA), 2) Real Time Sustainability Impact Assessment (Trade SIA) and 3) Integration of Trade SIA results into policy-making. The IA is a preliminary analysis made prior to proposing negotiations for a trade agreement by the EC under the lead of its trade arm, DG Trade, and utilizing both internal and external consultations. The IA has two functions: to start the assessment process, including involving the relevant departments in the EC, and to make a preliminary identification of the impacts of the trade negotiations involved, including the environmental impact. A consultative group from the relevant departments

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is formed to conduct the IA. The IA emphasizes the factors that the external consultants for the Trade SIA should consider in carrying out that assessment. Terms of reference for the Trade SIAs are drafted based, at least in part, on the IA. The Trade SIA is carried out by external consultants financed by the EC and selected in an open bidding process based on the published terms of reference. It takes place during the negotiating process for the FTA and involves a preliminary assessment, sector studies and a Final Trade SIA. The detailed analysis includes screening, scoping, qualitative and quantitative assessments, flanking measures (enhancement and mitigation strategies) and possible ex post analysis and monitoring. The procedures are to involve consultations with various groups including the public through meetings at all phases of the study, possible local workshops and through direct communication with the consultants. The final step in the utilization of the Trade SIA is by the EC through DG Trade to develop position papers and inform the negotiations. The Handbook gives the following description of how the papers are prepared and used for policy purposes (EC 2006b, p. 13): After the presentation of Trade SIA results to the European Commission services and to the Civil Society, DG TRADE drafts position papers on Trade SIA findings which are submitted to an in-house consultation process involving other Commission departments. The papers set out the European Commission’s position on the findings of the Trade SIA, identify points of agreement and explain any disagreements. They may also add complementary analysis, flag lessons to be learnt, put forward ideas for technical assistance, or propose monitoring. The position papers should also identify concrete action to be taken in order to enhance the benefits of liberalisation both inside and outside the EU in the sectors under scrutiny or to mitigate negative effects. Such action may be in the trade domain or outside it, in areas such as aid, cooperation and technical assistance. The Trade SIA is conducted to cover all three of the pillars – economic, environmental and social factors – under the umbrella of sustainability. Environmental issues are important in several aspects of sustainable development. The sustainability environmental themes for the SIAs are biodiversity, environmental quality and natural resource stocks. The environmental aspects that might be examined include atmosphere (e.g., air quality), land, oceans, seas and coasts, fresh water, biodiversity and modes of production and consumption (e.g., waste disposal). Both

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qualitative and quantitative analyses are to be utilized in determining impacts. Quantitative approaches to determining economic impacts (which affect the environment) include econometric models, such as computable general equilibrium models and/or other economic models. In some cases, CGE models were deemed inappropriate due to the nature of the negotiations and economies involved, resulting in the use of partial equilibrium (PE) models or other approaches. In the analysis of the EU–ACP (Africa, Caribbean, Pacific) FTAs, both CGE and PE models were used (PricewaterhouseCoopers 2007), as shown below: For example, it was possible to employ a full computable general equilibrium (CGE) model in the Caribbean study to examine the potential impacts of an EPA on tourism services because that sector is such an important economic activity in the region, linked to many other sectors, and relatively complete data sets are available. On the other hand, when assessing the impacts of an EPA on the horticulture sector in Eastern and Southern Africa, the very small size of that sector vis a vis the economies in the region meant that a CGE model would not provide meaningful results and a partial equilibrium (PE) approach was employed. The expected economic impacts then have to be transformed into corresponding environmental impacts, in processes similar to those used in the US and Canadian environmental impact analyses. In one SIA (EU–ACP), for example, this involved the following process (PricewaterhouseCoopers 2007, p. 47): “Where issues cannot be modeled the methodology presents a series of variables that can be used, alone or in combination to ‘tease out’ potential impacts of trade-induced economic change on social and environmental sustainability, through a causal-chain analysis.” The variables used included “scale; products/services; structure; production practices; technology and knowledge; infrastructure; transportation; and, government revenue (with a focus on the erosion of tariff revenues), policies and regulation”. In the same SIA, a “Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis” also was utilized. Since the EU utilizes various consultants to conduct the Trade SIAs, the approaches and methodologies vary from one SIA to another. SIA results The EU has negotiated a number of FTAs since the Doha Round started and consequently has carried out several Trade SIAs (a list of those

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used for this analysis is given in Appendix 11.3). The environmental impacts in the EU receive relatively little attention in most of the SIAs, mainly because their economic impacts within the EU member states are expected to be small from each pact. An example is the EU–Chile SIA where considerable attention is given to the economic impacts in each of the EU members’ countries, but the environmental impacts section ignores the EU (PLANISTAT-LUXEMBOURG and CESO-CI 2002). In a section on environmental impacts, the SIA specifically excludes the EU, saying (EC 2006b, p. 77): “As the impact of the trade agreement on EU output is spread across many sectors and countries, as discussed in Section 16, only the Chilean side is investigated in this section.” However, in an earlier section the SIA stated (EC 2006b, p. 77): “While the impact on the EU economy of the Chile trade agreement is small in percentage terms, it is possible that for some countries and sectors, there may be a significant impact.” The EU–ACP SIA was prepared for several free-trade agreement negotiations between the Africa, Caribbean and Pacific (ACP) country groups (Table 11.1) to replace the previous agreements (EPA) that had provided preferential trade access with the EU countries. The final SIA (PricewaterhouseCoopers 2007) basically consisted of a set of recommendations for helping assure that the FTAs being negotiated adequately incorporate sustainability concepts. Although these were based on findings of potential negative economic, environmental and social impacts reported in sectoral and other studies, they were not detailed in the final report. Environmental impacts in the EU were given some attention in a few of the SIAs, including the following findings reported in their respective SIAs: MERCOSUR: Both positive and negative environmental impacts will arise, associated with the production changes. These will be localized and are expected to be small, and not significant in the context of an effective regulatory regime. Efforts to reduce EU greenhouse gas emissions through the use of biofuels to replace fossil fuels may be expected to benefit from a reduction of barriers to imports of Mercosur ethanol provided that these are sustainably produced. The opposite could occur if associated land-use changes in Mercosur were allowed to accelerate deforestation. Ukraine: This chapter summarizes the key environmental issues and potential impacts to be taken into account while negotiating the Ukraine–EU FTA. The overall magnitude of environmental impact for

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Mauritania

Greece

Finland

Liberia

Ivory Coast

Estonia

Mali

Guinea Bissau

Denmark

Germany

Guinea

Republic

France

Gambia

Ghana

Czech

Faso

Cap Verde

Burkina

Belgium

Cyprus1

Benin

Austria

Bulgaria

West Africa

EU-27

Sao Tomé & Principe

Gabon

Guinea

Equatorial

Republic of Congo

Democratic

Congo

Chad

Republic

African

Central

Cameroon

Central Africa

Table 11.1 EU and ACP Negotiating Groups

Sudan

Seychelles

Rwanda

Mauritius

Malawi

Madagascar

Kenya

Ethiopia

Eritrea

Djibouti

Comoros

Burundi

E & S Africa

Tanzania

Swaziland

South Africa

Namibia

Mozambique

Lesotho

Botswana

Angola

SADC a

St. Kitts & Nevis

Samoa

Papua N. G.

Palau

Haiti Jamaica

Niue

Nauru

Micronesia

Islands

Marshall

Kiribati

Fiji

Cook Islands

Pacific

Guyana

Republic Grenada

Dominican

Dominica

Belize

Barbados

Bahamas

Barbuda

Antigua &

Caribbean

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Nigeria

Senegal

Sierra Leone

Togo

Ireland

Italy

Latvia1

Lithuania1

Note: a SADC: Southern African Development Community.

United Kingdom

Sweden

Spain

Slovenia

Slovakia

Romania

Portugal

Poland1

Netherlands

Luxembourg Malta

Niger

Hungary

Zimbabwe

Zambia

Uganda

Trinidad & Tobago

Suriname

St. Vincent

St. Lucia

Vanuatu

Tuvalu

Tonga

Islands

Solomon

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the EU is assessed to be modest or negligible depending on the indicator. This difference in the significance between the EU and Ukraine is mainly related to the fact that the current GDP of the EU exceeds that of Ukraine by 100 times. Another defining factor is the difference in the level of environmental performance; Ukraine is lagging far behind the EU in energy and resource use efficiency, waste management, pollution abatement and public health indicators. Libya: Limited social and environmental impacts are expected in the EU from an FTA with Libya given the EU’s advanced social and environmental institutions and its comparative economic size. Korea: In terms of Environmental Impacts, the convergence in economic development levels is leading to greater commonality in societal concerns about protection of the environment between the EU and Korea. The implementation of the EU–Korea FTA is not foreseen to have significant adverse environmental effects since the projected expansion of trade is not predicted to utilize resources that are poorly managed or to increase production that will lead to expansion of pollution or other negative environmental externalities that are unregulated. Of course both the EU and Korea will need to enhance their environmental management and regulatory capacity in the future and cooperation in this area would be salutary. Nonetheless, positive economic impacts were expected on a sectoral basis (however, the 2011 conflict in Libya may negate the findings of the SIA). ●

●

Increased commercial opportunities for EU SMEs through reduced barriers to key service sectors, particularly in the energy, finance, tourism, construction and retail sectors. Greater energy security for EU consumers though enhanced integration with Libyan supplies.

One assessment, the EU–India SIA, finds that the impacts in both countries will be negligible, saying: “Overall, the expected environmental impacts for the EU and India are either insignificant or slightly negative.” The environmental impacts in the partner countries vary from potentially beneficial to very significantly negative if corrective actions are not implemented; actions such as those included in the ameliorative policy proposals. This results, in part, from the production changes being significant portions of their current output as well as from a lack

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of adequate environmental regulations and/or capabilities to enforce such regulations. One example of expected environmental effects is given in the Central American SIA: Loss of biodiversity and deforestation are existing large concerns in Central America, especially because a very large share of global biodiversity can be found in the region. As production changes expected in the forestry and wood products sector as a result of the AA [Association Agreement] are very small, no large direct effects on deforestation and biodiversity loss are expected from that source. However, the significant changes expected in land use allocated towards the expanding FVN [fruit, vegetable and nuts] sector, can pose a significant threat to forest-areas and biodiversity. This pressure on forests (and related biodiversity) can further induce illegal logging, posing an additional indirect threat not captured in the quantitative estimates. To counter these predicted negative impacts, pro-active measures are needed, both in terms of the trade and cooperation provisions of the Agreements; specific policy recommendations on how this can be done are made in the section below. As indicated, the agreement might be used to help ameliorate these negative effects: On the other hand, the AA can stimulate implementation of effective EU–Central America cooperation and policies on e.g. illegal logging and other deforestation issues, which can have positive effects in mitigating deforestation and biodiversity loss. In general, specific Sustainable Development provisions in the AA can stimulate the commitment to and implementation of international and multilateral environmental agreements (MEAs), thereby encouraging further progress on issues of international concern such as climate change, biodiversity and natural resources. Another example is the EU–Mediterranean FTA where the SIA reports the following for impacts for the Mediterranean countries: Mediterranean: Both positive and negative environmental effects in the EU are expected. Impacts on water resources, agricultural pollution and biodiversity are generally beneficial, while those on the agricultural value and amenity value of rural environments may be adverse.

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Similarly, both positive and negative environmental impacts are expected in Mediterranean partner countries. In the absence of preventive and mitigating measures, the main potential adverse impacts that have been identified are: ●

●

●

●

significant local impacts on water resources, soil fertility and biodiversity in areas of high existing stress; higher environmental stress in cities, resulting from declining rural employment and accelerated rural–urban migration; higher air pollution and coastal water pollution from greater international transport; higher waste generation from greater use of packaging materials.

This statement is from the executive summary of the SIA. As an example of more complete environmental effects, the full summary of the findings in the Mediterranean SIA are given in Appendix 11.4. These are for both global effects and the three SIA environmental themes: biodiversity, environmental quality and natural resource stocks. It should be noted that the effects are reported differently among the several SIAs that have been conducted since the start of the process in 1999. The EU–Andean Countries SIA takes a somewhat different approach, reporting the environmental effects for each of the three themes for separate activities (agriculture, industry and services), although a brief recap is given in the executive summary of the report, to wit: Section three of the report also identifies the economic, social and environmental sustainability impacts arising from the economic modelling. Potentially significant impacts in the EU and Andean countries arising from a trade agreement include: • Expansion of labour intensive agriculture, food processing and light industrial product manufacturing sectors • Deforestation and reduced biodiversity as a result of predicted expansion of agriculture and timber industries • Increased industrial, agricultural and mining discharges as a result of increased output in these sectors • Social conflict from expansion of mining, hydrocarbon extraction and logging activities in rural areas.

There is considerably more variation in the EU’s assessment documents than in those of either Canada or the US, each of which follows a more or less set pattern but with some differences due to variations in the FTAs and with modifications through time due to experience

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gained and as the techniques used became more sophisticated. The EU’s SIAs vary for the same reason but have an additional source, the use of different contractors for conducting many of the assessments, whereas the same governmental agencies were involved in the leadership of the Canadian and US assessments. The EU’s WTO SIA One of the first SIAs contracted by the EU was of the proposed WTO negotiations, which was initiated at the time of the round expected at the 1999 Seattle Ministerial meeting but applied to the Doha Round. This was undertaken by the Institute for Development Policy and Management, University of Manchester, which also was involved in developing the methodology for the SIAs (Kirkpatrick and George 2006). The expected environmental impacts in the EU and other developed countries were expected to be small and generally beneficial, the benefits arising from reduced agricultural production with increased imports. Where negative impacts might occur, they would tend to be offset by strong regulatory regimes. Environmental impacts in the developing countries would be mixed, but with net negative effects, including those due to increased agricultural production using more agrochemicals and adverse effects from increased transportation. Forestry sectors with weak governance also would tend to be adversely affected, with negative effects on biodiversity and soil erosion due to unsustainable harvesting methods. These could be ameliorated with adequate remedial activities including regulatory reforms, technical and other assistance, and phased-in liberalization to allow time for adjustment.

Other environmental reviews Although no other country has requirements for environmental reviews similar to the three (Canada, European Union and United States) discussed above in this chapter, some other countries do conduct such reviews. Chile, for example, conducted an analysis of its FTA with the US, finding that the resulting increases in output would produce an increase of less than 1 per cent in some emissions (Borregaard 2004). Others also examine the expected environmental and other impacts from trade agreements they are negotiating and independent reviews by academics or others are sometimes performed. This section examines an example of each: New Zealand’s ex ante reviews of its agreements and an independent review of a proposed Japan–Korea FTA.

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New Zealand New Zealand incorporates environmental concerns into its trade agreements under its Framework for Integrating Environment Issues into Free Trade Agreements. As part of the process on negotiations a National Interest Analysis (NIA) is prepared, which includes a summary of the environmental impacts; no information is given on the analyses used to arrive at the impacts except that extensive consultations – interagency as well as with the public – are held. In a typical NIA the environmental effects are examined for regulatory, product (composition), structure (technique) and scale effects. Exceptions were for: Australia, where there is no NIA as the FTA was completed in the 1980s; China, where a joint study report was issued; and Singapore, where the NIA had only a short statement on environmental effects: “The Agreement is intended to expand trade, raise living standards and create new employment opportunities. No negative social, cultural or environmental effects are foreseen.” The general approach to each of the four impact areas was to indicate what environmental impacts could be for each theme and then to relate these to the particular FTA, as stated in the Thailand NIA: “The potential environmental effects of bilateral free trade agreements are discussed in general and applied to the specific circumstances of the New Zealand/Thai CEP below in terms of their regulatory, product, structural and scale implications.” The typical finding in nearly all cases was that the FTA would not have significant environmental impacts on New Zealand due to either the relatively small economic impact or to the capability of the country’s environmental rules and regulations to handle any negative impacts. With respect to regulatory effects, the analyses indicated that there were provisions in the trade agreements that protected New Zealand’s right to control its environmental activities, as stated in the Thailand FTA: “New Zealand has in place policies and legislation to prevent or mitigate potential adverse environmental effects of all economic activities including those arising from trade agreements.” With respect to product (composition) impacts, it was found that the mix of products produced could change. One was that the country’s production and export of environmental goods could produce an effect beneficial to the environment. For the Thailand FTA, dairy production could increase to meet demands from Thailand and concern was expressed about the potential for dairy wastes to pollute water sources. However, the analysis discounted that potential by saying:

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While the benefits of dairy liberalisation in Thailand are very worthwhile for New Zealand, they are not expected to be of sufficient magnitude to prompt, on their own, a significant supply response from milk producers. The market opportunities that are created are thus likely to be met at least in the short term from existing production and, in any case all dairy production in New Zealand will be subject to existing regulation and other specific emissions into waterways. The structural effects, partly related to technology, can have negative impacts, but, in the FTAs signed by New Zealand, these are not expected to be significant, as stated in the Malaysia–New Zealand FTA: The MNZFTA is unlikely to have any discernable negative structural effects, given the degree of structural reform that New Zealand has experienced over the past three decades, natural resource and capacity constraints and the environmental management legislation already in existence. Since one of the expected effects of free trade is expanded output to help meet export demand, the scale effects are negative and tend to be harmful to the environment. However, the NIAs have generally concluded that these will be small and the nation’s environmental regime is adequate to compensate for these with ameliorative actions and the additional income can be used for environmental purposes, as stated in the ASEAN FTAs NIA: “Where an FTA augments growth in the New Zealand economy, this can have the positive effect of helping leverage additional financial resources, which can be used to address wider environmental concerns.” Of course, nothing in the FTA assures that the added income will be used for the environment. Proposed Japan–Korea FTA Kang and Kim (2004), in a paper at a conference on trade, poverty and environment, presented an analysis of the environmental impacts of a potential trade agreement between Japan and Korea – no agreement exists, but the WTO was notified of negotiations being undertaken. The analysis was limited to Korea and to air pollution from SOX NOX, TSP (particulates). A CGE model (GTAP) was used to estimate the economic changes – completely free trade was assumed. Air pollutants were calculated using coefficients determined by previous studies. It was found that Korean gross domestic product (GDP) would increase by 1.18 per cent (there were increases in agriculture, forestry and light industry,

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but decreases in heavy industry). The net results showed a decrease in air pollution by 3,919 tons of SOX, 6,133 tons of NOX and 2,351 tons TSP, despite a slight increase in industrial output of 0.187 per cent. The decrease was due to the change from heavier to lighter industrial production.

Critiques of environmental assessments Environmental assessments of trade agreements have generally met with praise, but also have been criticized for some perceived weaknesses and failures to utilize the results adequately during the trade negotiations. Bhagwati (2004, Kindle edition, 2nd sub head, 2nd paragraph; position 3133) has been critical in general, saying: “But to ask that a trade agreement’s environmental impact be assessed is like asking that the environmental impacts of the United States budget be examined and approved.” He also was critical of the CGE and other large models on which many analyses are based, but in another context used the results of a CGE model to bolster an argument for multilateralism v. PTAs (Bhagwati 2008, p. 56, note 5). The North American assessments have been criticized by, for example, Gallagher et al. (2001), while Kirkpatrick and George (2006), Richardson (2000) and Voituriez et al. (2006) have been among those finding fault with the EU’s SIAs. Some environmental organizations also have been critical of some aspects of the environmental analyses (WWF 2002a, 2002b). They have criticized the fact that the admitted purpose of FTA negotiations is to liberalize trade, rather than to protect people or the planet (Lucas 2002) The criticisms of the environmental assessments (and the broader SIAs) fall into four categories: 1) content or coverage of the reviews, 2) methodologies used to make the estimated impacts, 3) adequacy of involvement of others, including other public agencies, experts or professionals in the areas or relevance, the public generally and others and 4) utilization of the results of the assessment, both within and outside the negotiations. Content The criticism with respect to the content has two facets. One is due to the tendency, at least initially, of the US and Canada to focus on domestic impacts of the FTA and to ignore the impacts in the partner country(s). The second is the limited number of environmental variables included in the analyses. Gallagher et al.’s (2001) review of North American environmental assessments has the recommendation to “increase the number of environmental variables that are assessed”,

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although their paper did not enumerate the ones that should be included. The EU’s SIAs, for example, generally examine three environmental themes (there also are three each for the economic and social analyses) – biodiversity, environmental quality and natural resource stocks. Each of these is comprised of several dimensions and data may not exist or be obsolete for some of the variables. Generally, the time and resources available for an assessment are limited and the analysts generally must prioritize to include the more important variables, a process that is enhanced by early consultation with the public, experts, agency personnel and others. Methodology The methodological criticisms tend to focus on a small number of issues. One problem is that to assess the impacts of the FTA the analysts must know what the parameters of the agreement are – that is, how much will tariffs and other barriers be modified, what will be permitted with respect to investment, services and other dimensions of the agreement. However, if the assessment is to inform the negotiations, it must occur fairly early in the process; some academic and nontrade institutions assume completely free trade to make the initial assessment, but those made by or for the negotiating parties generally make some assumptions based on screening and scoping operations – that is, on initial estimates of the FTA’s content. The assessment process then is divided into stages with an initial assessment made fairly early in the process, an intermediate stage after some of the decisions have been made and a final assessment made after the negotiations are complete; sometimes there is just an initial and final assessment. Another methodological issue is the economic analysis that must precede the environmental analysis since many of the environmental impacts flow directly from the anticipated economic changes. Early assessments were often made on a simple ad hoc basis, but the later analyses have become more complex and usually employ some type of econometric model to estimate the economic changes, commonly a computable general equilibrium model, although partial equilibrium models may also be used (see Böhringer 2004 or Hertel et al. 2003 for discussions of CGE models in trade analysis ).6 Gallagher et al. (2001, pp. 12–13) object to an overreliance on CGE models because of “high information costs and lack of transparency; controversial assumptions regarding model relationships; and the inability to capture ‘non-trade’ aspects of trade liberalization”. Kirkpatrick and George (2006) report similar deficiencies.

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Finally, there is the need to translate the economic impacts into environmental effects. This can be done by deriving the environmental impacts from the expected economic changes where the relationships have been previously determined. Kirkpatrick and George (2006) discuss using a causal-chain analysis where known; alternatively, assumed relationships can be used to translate the economic impacts into their environmental equivalents. Some recent assessments have used models to determine the environmental impacts. Participation The Canadian, US and EU approaches to environmental assessment of FTAs all provide for obtaining inputs from the public, other agencies, organizations, experts and others in the assessment process. Public participation and consultations with experts and others have two functions – to provide input to improve the process and to involve and inform the public as a means to make the process more transparent and improve public support and acceptance of trade liberalization; the GATT process was often considered to be secretive and therefore to cause antagonism to the trade liberalization process. However, despite a more open approach, the procedures have been criticized as inadequate. Kirkpatrick and George (2006, p. 237) suggest seven ways to improve the process: 1) publicize widely, 2) use electronic media, 3) use existing stakeholder networks, 4) attend and present stakeholder fora, 5) consult NGO publications, 6) establish an advisory committee and 7) publish feedback on contributions and action taken. Utilization One of the major criticisms of environmental assessments of FTAs is that they are not adequately used by the trade negotiators (Kirkpatrick and George 2006; Voituriez et al. 2006). An NGO statement at a conference on the SIA handbook (CIEL 2006) said: On 21–22 March 2006 the European Commission organized the EU TRADE Sustainability Impact Assessment (SIA) Stocktaking Conference. The two-day discussions focused to a great extent on the question of whether trade SIAs were, in fact, feeding into policy making. The Center for International Environmental Law (CIEL) and many other participants were of the view that SIAs were either being carried out too late – so that the results could not possibly feed into the welladvanced or closed negotiations – or, where the timing of the SIA

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was more adequate, the SIAs were simply not translated into policy choices, making the SIA irrelevant for the negotiations. However, there is evidence that the environmental analyses are sometimes used in to assist with further negotiations. Discussion Kirkpatrick and George (2006) explain the perceived disconnect between the assessments and negotiations as being due to the need for EU’s trade negotiators to focus on the primary purpose of the negotiations – trade liberalization. They say (p. 331): “If the development of a negotiating position were done publicly, it would reveal the hand of the negotiator and weaken their hand.” Fundamentally, criticisms arise from different views of the primary purpose of the FTA negotiations with one group – the negotiators – viewing the process as one to liberalize trade and the second group – their critics – seeing a trade pact as having the goal of promoting sustainable development and/or protecting the environment. Further, many of the trade pacts of Canada, US and EU have significant environmental provisions, as reported in Chapters 7–9. These include provisions, within the FTA, in a side agreement or separate environmental agreement, to promote improvements in the environments of partner countries, especially when the FTA is with a developing country, through technical and, often, financial assistance. An example is from the position paper of the EC commenting on the EU–Central American FTA (EC 2010a, p. 7): As is clear from the analysis of the various areas, in order to have an Agreement which contributes positively to Sustainable Development, the liberalisation process will need to be accompanied by appropriate flanking and, when necessary, mitigation measures taken by each Party in accordance with its specific needs and circumstances. For these reasons, the Commission has from the beginning of the negotiations foreseen the Cooperation part as an integral part of the Agreement with strong links to the Trade part so as to allow that cooperation among Central America and the EU can be channelled in this direction whenever opportune. However, the agreement does not appear to have been modified to take the explicit findings of the SIA into account, although it is difficult to determine if the initial assessment or other inputs from the SIA process had an impact on the final form of the FTA.

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The position paper for the EU–Ukraine SIA, however, indicates that the findings will be used in negotiating the trade agreement and/or in its implementation (EC 2009a, p. 9): “The Commission services take note of the study’s recommendations. The main findings will be considered in the ongoing negotiations as well as in the future implementation of the FTA.” The negotiation of an FTA is a dynamic process, with the negotiators modifying their approach, not only with the individual FTA based on partner country differences, but also on what has been learned in previous negotiations, the SIA findings, the positions of the partner country negotiators, public comments and other factors. Both current and previous environmental reviews and the evolving understanding of what sustainable development encompasses affects the content of any given FTA. Despite attempts by the EU to promote an understanding of the SIA process and its uses, much skepticism remains as indicated by a World Wildlife Fund (2002b) discussion of the conference mentioned above. Many are not convinced of the value of SIAs. Some question the EU’s motivation in conducting SIAs and saw the move as a cynical attempt to justify protectionist measures under the mantle of sustainable development. Despite criticisms, Canada, the EU and US remain committed to conducting analyses of their trade agreements. Alf et al. (2 010) compared the US and EU approaches and believe that, while both of the parties have similar goals, they could benefit from examining each other’s approach since “experiences will create synergies across the Atlantic and help achieve this objective more quickly”.

Appendix 11.1: Legal context for trade negotiations (from CAFTA–DR–US FTA) A. The Trade Act of 2002 The Trade Act of 2002 (Trade Act) establishes a number of negotiating objectives and other priorities relating to the environment. The Trade Act contains three sets of objectives and priorities: (i) overall trade negotiating objectives; (ii) principal trade negotiating objectives; and (iii) promotion of certain priorities, including associated requirements to report to Congress. Overall environment-related trade negotiating objectives include: 1. ensuring that trade and environmental policies are mutually supportive and to seek to protect and preserve the environment and

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enhance the international means of doing so, while optimizing the use of the world’s resources (section 2102(a)(5)); and 2. seeking provisions in trade agreements under which parties to those agreements strive to ensure that they do not weaken or reduce the protections afforded in domestic environmental and labor laws as an encouragement for trade (section 2102(a)(7)). In addition, the Trade Act establishes the following environment-related principal trade negotiating objectives: 1. ensuring that a party to a trade agreement with the United States does not fail to effectively enforce its environmental laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the parties, while recognizing a party’s right to exercise discretion with respect to investigatory, prosecutorial, regulatory, and compliance matters and to prioritize allocation of resources for environmental law enforcement (sections 2102(b)(11) (A) (B)); 2. strengthening the capacity of US trading partners to protect the environment through the promotion of sustainable development (section 2102(b)(11)(D)); 3. reducing or eliminating government practices or policies that unduly threaten sustainable development (section 2102(b)(11)(E)); 4. seeking market access, through the elimination of tariffs and nontariff barriers, for US environmental technologies, goods and services (section 2102(b)(11)(F)); and 5. ensuring that environmental, health or safety policies and practices of parties to trade agreements with the United States do not arbitrarily or unjustifiably discriminate against US exports or serve as disguised barriers to trade (section 2102(b)(11)(G)). The Trade Act also provides for the promotion of certain environmentrelated priorities and associated reporting requirements, including: 1. seeking to establish consultative mechanisms among parties to trade agreements to strengthen the capacity of US trading partners to develop and implement standards for the protection of the environment and human health based on sound science and reporting to the Committee on Ways and Means and the Committee on Finance (“Committees”) on the control and operation of such mechanisms (section 2102(c)(3));

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2. conducting environmental reviews of future trade and investment agreements consistent with Executive Order 13141 and its relevant Guidelines, and reporting to the Committees on the results of such reviews (section 2102(c)(4)); and 3. continuing to promote consideration of multilateral environmental agreements and consultation with parties to such agreements regarding the consistency of any such agreement that includes trade measures with existing exceptions under Article XX of the GATT 1994 (section 2102(c)(10)).

Appendix 11.2: Responders to the draft environmental review of the US–Chile FTA State of Alaska, Office of the Governor American Lands Alliance, Ancient Forest International, Asia Pacific Environmental Exchange, Coast Range Association, Greater Kansas City Fair Trade Coalition, Klamath Forest Alliance, The Edmonds Institute, Native Forest Network, Siskiyou Project, and Southern California Conference of Social Justice Coordinators American Lands Alliance, Center for International Environmental Law, Consumer’s Choice Council, Defenders of Wildlife, Earthjustice, Friends of the Earth, National Wildlife Federation, Natural Resources Defense Council, Pacific Environment, Sierra Club, and World Wildlife Fund John Bullock, Attorney Centro Austral de Derecho Ambiental CORMA, the Chilean Timber Association Corporacion Chilena de la Madera A. G. Emergency Committee for American Trade Global Development and Environment Institute, Tufts University and Center for Planning and Research on the Environment Humane Society of the United States and Humane Society International Senator Sheila Kuehl, State of California National Association of Manufacturers

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United Fisherman of Alaska United States Council for International Business

Appendix 11.3: European Union SIAs reviewed for this chapter Sustainable Impact Assessment (SIA) of the trade aspects of negotiations for an Association Agreement between the European Communities and Chile, December 2002. Contractors: PLANISTAT-LUXEMBOURG and CESO-CI. Sustainability Impact Assessment (SIA) of the negotiations of the trade agreement between the European Community and the Countries of the Cooperation Council for the Arab States of the Gulf (GCC), May 2004. Contractor: PricewaterhouseCoopers and Center for European Policy Studies. Sustainability Impact Assessment of Proposed WTO Negotiations, June 2005 Contractor: Impact Assessment Research Centre, Institute for Development Policy and Management, University of Manchester (prepared by Colin Kirkpatrick and Clive George). Sustainability Impact Assessment of the EU-ACP Economic Partnership Agreements – Key Findings, Recommendations and Lessons Learned, May 2007. Contractor: PricewaterhouseCoopers, Trade Sustainability Impact Assessment for the FTA between the EU and Ukraine within the Enhanced Agreement, May 2008. Contractors: ECORYS Nederland BV and Case. Trade SIA of the Association Agreement under Negotiation Between the European Community and MERCOSUR, June 2008. IARC, Institute for Development Policy and Management (IDPM), University of Manchester, Chaire Mercosur, Copenhagen Economics, ECOSTRAT Consultants–Brazil, GRET (Groupe de Recherche et d’Echanges Technologiques), Land Use Consultants, Natural Resources Institute, University of Greenwich, and WISE Development (Women in Sustainable Enterprise Development). Sustainability Impact Assessment of the Euro-Mediterranean Free Trade Area, November 2007. Contractors: Institute for Development Policy and Management, University of Manchester (IDPM), Bocconi University, The International Centre for Advanced Mediterranean Agronomic Studies (CIHEAM), Centre International des Technologies de l’Environnement de Tunis

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(CITET), Deloitte & Touche, Sustainable Emerging Markets, Overseas Development Institute (ODI), and United Nations Economic and Social Commission for Western Asia (ESCWA). Trade Sustainability Impact Assessment of the EU–Korea FTA: Final Report, May 2008. Contractors: IBMN Belgium, DMI, TAC, and TICON. Trade Sustainability Impact Assessment of the Negotiations of a Partnership and Cooperation Agreement between the EU and China – Final Report, May 2008 Contractors: Emerging Markets Group and DEVELOPMENT Solutions. Trade Sustainability Impact Assessment for the FTA between the EU and the Republic of India, May 2009. Contractors: ECORYS Nederland BV, Cutts International, Centre for Trade and Development. Trade Sustainability Impact Assessment of the FTA between the EU and ASEAN, June 2009 Contractors: ECORYS Nederland BV, Institute for International Development and Economics, CES, Mekong Economics, and Rajah and Tanh LLP. EU–Andean Trade Sustainability Impact Assessment, July 2009. Contractors: Development Solutions, CEPR, University of Manchester. Trade Sustainability Impact Assessment of the Association Agreement to be Negotiated between the EU and Central America, September 2009. Contractors: ECORYS Nederland BV, Corporate Solutions, and Centro de estudios para el desarollo rural. Trade Sustainability Impact Assessment (SIA) of the EU–Libya Free Trade Agreement, October 2009. Contractors: Development Solutions, CEPR, MEC International Ltd, University of Manchester.

Appendix 11.4: Environmental impacts reported in the EU–Mediterranean SIA Global environmental effects The assessment indicates an overall adverse impact on climate change and global biodiversity, arising primarily through the influence on greenhouse gas emissions of increased transport and changed consumption patterns in MPCs, and pressures for increased agricultural production in biologically sensitive areas in MPCs. These scale effects, which arise from increased trade and increased production and consumption, can in principle be countered by technology or regulatory

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effects. In itself, the EMFTA scenario that has been assessed does not include measures which will strengthen these positive effects sufficiently to counter the adverse ones. The study does however indicate an overall economic gain, part of which could be directed towards parallel actions to mitigate the expected impacts. 3.3. Environmental impacts Biodiversity For agricultural liberalization the short term effects on biodiversity will be mixed, with beneficial impacts where production declines and adverse pressures where production rises. The positive and negative impacts do not cancel. In the EU the overall effect is small, and in MPCs it is significantly adverse unless mitigated. Effects in both directions will be most significant in areas where water scarcity or land conversion are already causing pressure on biodiversity. In the longer term, the adverse pressures from increasing production will be partially countered by greater resource efficiency from more competitive agricultural techniques. The impact of south-south liberalization will be similar to that for EU-MPC liberalization but smaller. Small effects may occur from liberalization of services and industrial goods but these are not expected to be significant in relation to more general pressures. Environmental quality For industrial products significant beneficial impacts are expected in the short term in most of the MPCs, for those aspects of air quality, water quality and land degradation that are associated with industrial pollution. The greatest effects are expected in Egypt, and to a lesser extent Morocco and Tunisia. If domestic production falls rapidly the impacts could be large, and smaller but still significant if the economic impacts are effectively mitigated. Long-term beneficial impacts are also expected, as expanding industries adopt more environmentally efficient production techniques. The benefits will be partially dependent on factors such as the willingness of producers to modernize, their access to management and technical expertise on more efficient, cleaner production systems, and regulators’ responses to the opportunities presented. For agriculture mixed effects on water pollution are expected in the short term. In the longer term, competitive pressures are expected to lead to greater intensity of production, with greater agro-chemical pollution. An increase in rural–urban migration will also lead to longer term adverse effects on urban environments, unless managed by appropriate policies and infrastructural investments. Services liberalization

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is expected to help increase the use of environmentally efficient management techniques and technologies in MPCs, and add to the pressures on MPC governments to improve environmental regulation and enforcement. This will provide a fairly small addition to the promotion of such techniques by international agencies. Liberalization of distribution services is expected to lead to goods being sourced from a wider area, with consequent adverse impacts on local pollution and climate change associated with increased transport. Changes in packaging techniques may have adverse impacts on waste generation, requiring stronger regulation to encourage recycling. Similar effects are expected for south–south trade liberalization, but in most areas the impacts will be smaller than for liberalization with the EU. The overall impact on climate change will be adverse, particularly in the long term. This arises primarily from increased international transport and the influence of the EMFTA on consumption patterns in MPCs. Natural resource stocks For industrial products both short and long-term effects are expected for industrial energy consumption and water usage, with similar variations between countries. The benefits will depend partially on the introduction of energy-efficient technologies and water use control techniques such as reuse, separation of waste streams and flow monitoring, and the extent to which regulators take advantage of the opportunities to strengthen regulation. For agriculture little overall change is expected in water abstraction or land conversion, with positive and negative effects occurring from production decreases and increases. In the longer term, the pressures will be adverse if the goal of greater economic growth in MPCs is achieved. For south-south trade liberalization pressures on water and other natural resource stocks are expected to be reduced in the short term, through greater efficiency in regional utilization. In the longer term, the effect of liberalization on accelerating economic growth will have adverse effects, unless countered by stronger regulation. The impact for services liberalization is not expected to be significant in relation to other resource pressures.

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12 Impacts of Environmental Provisions

The previous chapter examined the expected impacts of the agreements on the environment, an ex ante analysis. This chapter explores ex post analyses – that is, analyses of the actual impacts with an emphasis on those emanating from the environmental provisions in the trade agreements. It should be noted that many of the trade agreements discussed in the preceding chapters are recent and little time has passed to allow environmental impacts to be manifested. Some, however, have relatively long histories and have been the subject of several studies. NAFTA is an example of the latter and it has been the subject of numerous studies, including those carried out by or for the NAAEC. Consequently, the first part of this chapter examines its environmental consequences in some detail. The remainder of the chapter will survey available information about the environmental impacts of other FTAs for which information is available.

Impacts of US FTAs NAFTA, the first US FTA with environmental provisions, and its impacts have been the subject of numerous studies since its inception, including more than 60, as of 2006, under the auspices of the Council on Environmental Cooperation (CEC) of the North American Agreement on Environmental Cooperation (NAAEC), which also oversees the environmental provisions of NAFTA (Carpentier 2006). There have been several other studies and evaluations by individuals, institutions and organizations in fields as varied as economics, ecology, law, political science and environmental studies, including those by Deere and Esty (2002), Gallagher (2004, 2006), Hufbauer et al. (2000), Hufbauer and Schott (2005) and Wold (2010). This section will briefly discuss the 195

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findings on the impacts of NAFTA on the environment and then examine the effects of the environmental provisions in the NAFTA agreement and its environmental side agreement. NAFTA’s environmental impacts Carpentier1 (2006) summarized the environmental effects of NAFTA based largely on some 50 studies carried out under the auspices of the CEC. She concluded (p. 259) “environmental effects have been neither very bad nor very good and are policy dependent”. Early in its program the CEC developed a framework for assessing the environmental impacts of NAFTA and many of the 60 studies were conducted within that framework (CEC 1999). Based on criteria developed to prioritize its work, the CEC emphasized agriculture (cattle feedlots in the US and Canada and corn in Mexico) and the energy sectors of all three countries, although studies of several other sectors were also carried out. Based on the analyses, according to Carpentier (2006, p. 263) it was found that “given the complexity of the analysis, trying to delineate the effects of specific trade accord” was extremely difficult. When changes could be determined, it was found that 15–25 per cent could be attributed to NAFTA since its inception. A major problem in the analyses was data availability, including a lack of baseline data for measuring the subsequent changes. However, there are significant environmental findings, both positive and negative. Among the environmental fears expressed about NAFTA was that it would result in a race to the bottom due to pollution havens, and attempts by all three nations to maintain their competitive advantage; the primary fear was due to perceived lax environmental standards and enforcement in Mexico. The evidence indicates that this did not occur. One case of a pollution haven was found, but it involved the disposal of toxic wastes from the US in Canada due to “a widening gap between the two countries in the costs to industry of regulatory compliance” (Carpentier 2006, p. 265). This caused the CEC to monitor toxic wastes more closely and Canadian provinces to review their regulations. There was a considerable increase in agricultural trade with mixed environmental effects in the agricultural sectors of the US and Mexico. One of the effects was increased corn imports by Mexico from the US, which tended to displace some production by small-scale farmers in Mexico with consequent social and other effects. The increased corn production in the US to meet this demand appears to have had negative environmental effects, with increased use of fertilizers and pesticides as well as an additional pressure on aquifers supplying water

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for irrigation. However, increased tomato production in Mexico occurred with improved technologies, including drip irrigation that increased yields substantially and reduced acreages while, according to Carpentier, reducing production and pressure on “environmentally stressed Florida”. Carpentier (2006, p. 268), based on Ackerman et al. (2002), finds that NAFTA “may have also contributed to more environmentally degrading practices in the cattle, beef and corn sectors in Canada and the United States”. Mexico’s post-NAFTA agriculture uses more fertilizers and pesticides, but also has increased environmentally friendly organic production for export markets. Environmental results on the industrial side also have been mixed. Carpentier reports (2006, p. 266): “NAFTA appears to have led to increases in particulate matter, carbon monoxide (CO), sulfur dioxide (SO2), nitrous oxide (NO2), and volatile organic compound (VOC) emissions from three sectors: petroleum; base metals; and transportation equipment ... Other sectors saw decreases or marginal increases in these pollutants.” Gallagher (2006, p. 130) indicates that Mexican firms in the sectors “other chemicals, iron and steel and non-ferrous metals” are cleaner than their counterparts in the United States, but dirtier for other sectors. However, he also indicates that overall air pollution has increased since NAFTA went into effect. He further states (p. 130): “Although there are indications of reductions in pollution intensity in a handful of Mexican industries, such indications are not evident across Mexican industry as a whole.” Gallagher (2004, p. 82) indicates that environmental degradation cost Mexico $36 billion a year from 1985 to 1999, while economic growth produced only $9 billion per year. Hufbauer and Schott (2005, p. 168), however, argue that the environmental costs were only $1.4 billion per year, 10 per cent of the increase in GDP – but still an increase in environmental costs. In addition, the increased trade means increased transportation, mostly by truck, with increased greenhouse gas emissions, especially at the US–Mexico border. Carpentier (2006, p. 268) reports: “Local infrastructure improvements have not kept pace with the changes. This has resulted in truck transport congestion at borders and related engine idling, adding to the pollution. Border communities have also been affected by added noise pollution and other environmental pressures.” Sierra Club and Holbrook-White (2000) and Tejeda-Honstein et al. (2000) both reported considerable increases in air pollution from the increased transportation due to trade flows ascribed to NAFTA along the US–Mexican border – truck crossings, for example, rose from less than a million to over 1.3 million per year at Laredo. A study for the

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Texas Department of Transportation (Villa et al. 2007, p. 1) indicates that: “Between 1994 and 2005, the number of northbound trucks crossing the Texas–Mexico border increased from 1.8 million to 3.2 million annually, resulting in increased pressures on the transportation highway corridors and crossings within Texas.” There would have been nearly as many going south, plus there are many empty trucks that return after delivering their loads in either Texas or Mexico. There are similar increases in US–Canada traffic – rising from 2 million in 1994 to 3.2 million in 1998 (Fernandez 2010). Fernandez (2008, 2010) indicates that changes in policies have helped alleviate the transportation impacts. In an econometric analysis she found that the policy variables reduced pollution, although the number of trucks caused increased emissions. Trucks with newer engines are less polluting and policies that reduce waiting time at the border crossings reduce the amount of pollutants generated at the crossings. Improved technologies, better regulations and/or their enforcement, and increased incomes, could be trade factors that contribute to improvements in the environment. In some cases there have been improved technologies with Carpentier (2006) noting that firms that export to the US tend to use environmentally friendlier technologies than their counterparts that produce only for the domestic market. There also appear to have been improvements in Mexico’s environmental laws, regulations and enforcement. However, Carpentier notes (p. 269): “Scant empirical evidence supports the hypothesis that, in the near term, increased incomes associated with trade liberalization correlate with increased resources for environmental authorities or improved policies to ensure sustainable use of resources.” Impacts of NAFTA’s environmental provisions NAFTA’s environmental provisions are discussed in Chapter 4 and are implemented through the NAAEC’s Commission on Environmental Cooperation (CEC). This section discusses the environmental activities of that organization to help evaluate the effectiveness of environmental provisions in FTAs. It should be noted that no other FTA has the same type of institutional structure or finances for implementing their environmental provisions, although several have various types of administrative provisions for implementing, monitoring and fostering cooperation. The CEC has a broad set of objectives (see Box 12.1), but its activities can be divided into the following categories: promoting environmental cooperation between Canada, Mexico and the United States; administering and implementing the environmental provisions

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of NAFTA and NAAEC; monitoring environmental conditions in the member states, providing information about environmental conditions, promoting public participation in environmental matters, and handling and evaluating citizens submissions on alleged failures of their governments to enforce their environmental laws.

Box 12.1 Objectives of the North American Agreement on Environmental Cooperation Article 1: Objectives The objectives of this Agreement are to: (a) foster the protection and improvement of the environment in the territories of the Parties for the well-being of present and future generations; (b) promote sustainable development based on cooperation and mutually supportive environmental and economic policies; (c) increase cooperation between the Parties to better conserve, protect, and enhance the environment, including wild flora and fauna; (d) support the environmental goals and objectives of the NAFTA; (e) avoid creating trade distortions or new trade barriers; (f) strengthen cooperation on the development and improvement of environmental laws, regulations, procedures, policies and practices; (g) enhance compliance with, and enforcement of, environmental laws and regulations; (h) promote transparency and public participation in the development of environmental laws, regulations and policies; (i) promote economically efficient and effective environmental measures; and (j) promote pollution prevention policies and practices.

Environmental laws One of the potential effects on NAFTA’s environmental provisions is on the laws and regulations of the member states and one of the fears was that they would be weakened to attract investment and jobs. However, that did not happen. Neither Mexico nor the other members weakened their environmental controls. The worry was mainly with Mexico’s approach, as it seemed to have the most to gain in terms of attracting industries from the US (or Canada). Mexico had, in fact, been strengthening its laws before NAFTA and continued to do so. It had amended its constitution in 1987 to give the Federal Government the power to regulate the environment (Gonzalez and Gastelum 1999). In 1988, the country passed its General Law of Ecological Equilibrium and Protection of the Environment (Ley General del Equilibrio Ecológico y Protección

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al Ambiente (LGEEP)) (Hufbauer and Schott 2005). It strengthened the law in 1996 and reorganized its environmental agency to form the Environmental and Natural Resources Secretariat. Then in 1998, Mexico passed a constitutional amendment which stated “every person has the right to an environment suitable for his development and welfare”. Gonzalez and Gastelum (1999, p. 8) conclude with the following: During the past decade, Mexico has taken steps to balance industrial expansion with environmental protection through the amendment of existing Laws, such as the Amendment, and the decentralization of environmental functions by delegation to the state governments. Current laws place emphasis on Sustainable Development, and state governments take more responsibility for environmental protection than ever before. Businesses in Mexico must now abide by strict and rigorous environmental laws. As Mexico enters the 21st century, a legal and governmental framework exists to protect its environment while continuing industrial progress. Laws alone do not protect the environment without adequate enforcement and, despite improvements, there still appears to be some doubt as to the adequacy of enforcement in Mexico. While programs, including voluntary activities, seem to have promoted improvements, especially among large business enterprises, enforcement among medium and smaller enterprises appears deficient (Hufbauer and Schott 2005). Environmental grants During the first few years of NAFTA, the CEC made grants through the North American Fund for Environmental Cooperation (NAFEC) for environmental projects, but this activity was dropped after 2003 as funds became limited as a result of the erosion of the fixed budget of the CEC due to inflation. From 1995 through 2003, 196 grants totaling C$9.36 million were awarded. They covered a wide variety of topics, including biodiversity, green goods and services, energy, health and air quality. Among the criteria for the awards were that they should be community-based, address a specific issue or problem, reflect cooperation, strengthen the capacities of local people, organizations or institutions, emphasize sustainability and leverage additional support. The ten-year evaluation of the CEC (CEC 2004, p. 42) found that the “NAFEC has played an important role in capacity development, promoting general community participation, particularly in Mexico, and in expanding CEC’s constituency.”

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Environmental information The CEC has devoted substantial efforts to developing and disseminating environmental information, including the environmental effects of NAFTA described above. In addition to its website (www.cec.org), which contains a vast amount of information, the CEC has developed a long list of publications of various kinds including reports, background papers and brochures. They include two types (CEC website): General outreach products that are “intended to support broad awareness of the overall purpose, operations, and results of the CEC.” Program support products which “are developed to complement the activities and outputs of individual projects in the form of brochures, fact sheets, media and other announcements, and/or website content.” An example of a general type of report is The American Mosaic, which was produced because the CEC is to “periodically address the state of the environment in the territories of the Parties”. It reviews the general environmental situation in the three member countries, described by the CEC as follows: This report describes a wide variety of environmental trends and conditions across North America. The breadth and diversity of the subject are astounding: from tiny invasive zebra mussels to global greenhouse gases measured by the teragram; from the last remaining vaquita porpoises to vast expanses of boreal forests and marine ecosystems; from invisible molecules of toxic chemicals to the all-too-visible smog and haze that blanket our cities from time to time. Other topics include biodiversity conservation, pollutants and health, environment and trade, marine ecoregions, green markets and shadegrown coffee. The program’s support products include the following: Biodiversity Conservation, documentation on the CEC’s projects to enhance the efforts to protect endangered species and their habitats; DDT, documents on DDT in Canada, the United States and Mexico; Electricity and the Environment, papers developed for the Secretariat Report; Enforcement and Compliance, documents on the laws that protect air, water, natural resources, wildlife and public health; Environment, Trade and Sustainability, papers on issues such as groundwater, electricity,

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agriculture, green purchasing and climate change; Environmental Effects of Trade, papers developed for the symposia held in 2000, 2003, 2005 and 2008; Grasslands Conservation, activities carried out to build a strategy to inform and guide cooperative efforts related to grasslands conservation throughout the three North American countries; Green Building, drafts, reports and papers on building in a more green way in North America; Pollutants and Health, papers on air quality, sound management of chemicals and a register of pollutant releases and transfers; Renewable Energy, works to encourage deployment of renewable energy in North America; and Sustainable Coffee, papers, drafts, and summaries on organic, shade-grown and fairtrade coffee. Another significant source of environmental information on the NAFTA countries is the CEC-developed Environmental Atlas, an interactive map showing environmental problem areas and other information on the CEC website.2 The CEC (2001) describes the atlas as maps that: “are unique in that they harmonize geographic information across North America’s political boundaries to depict significant environmental issues at a continental scale”. The atlas consists of a set of base maps (political divisions, lakes and rivers, oceans, elevations, river sheds, precipitation, population density and places) and four sets of environmental maps (terrestrial ecosystems, marine ecosystems, pollution and waste and human influences). Estimating environmental impacts An important component of determining the environmental impacts of trade was four symposia, each focused on the aspects of the environmental effects of NAFTA. According to the CEC website: “The CEC held in April 2008 its Fourth North American Symposium on Assessing the Environmental Effects of Trade, which concentrated on the services sector.” The previous three symposia were held in 2000, 2003 and 2005. The first one (2000) focused on the impacts of NAFTA on freshwater, fisheries, forests, hazardous wastes and domestic environmental laws. The 2003 symposium examined the environmental impacts of NAFTA in the energy and agricultural sectors, while the 2005 symposium assessed the environmental impacts of investment and economic growth. For these events the CEC solicited papers based on research under its framework from academics, NGOs and others. Many of these followed the CEC’s 1999 Analytic Framework for Assessing the Environmental Effects of the North American Free Trade Agreement, a set of procedures developed to assess the environmental impacts of NAFTA. These were the sources used for Carpentier’s (2006) evaluation

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of the environmental impacts of NAFTA discussed in a preceding section of this chapter. CEC projects The CEC has a number of environmental projects that it carries out to further its objectives. Under its 2005–10 strategic plan the CEC chose three broad priorities for its work: information for decision-making, capacity-building, and trade and the environment. Included in the information category were projects on mapping (described above), developing information on the state of the environment in North America and reporting on the CEC’s achievements under its multiyear program. During recent years it has carried out numerous projects concerned with chemicals, conservation, environmental law and its enforcement, protected species and sustainability. Other projects were completed in preceding years under previous strategic plans and a plan for the 2010–15 period is under development. The research for these projects is conducted by CEC staff, consultants and others. Citizen submissions When citizens of one of the three NAFTA countries (or civil organizations such as NGOs) perceive that the government is not enforcing environmental laws under either Article 14 or 15, they can file a complaint with the CEC as described in Chapter 4. Through July 2010, some 75 citizen submissions had been received by the CEC, 27 from Canada, 39 from Mexico and 14 from the United States (see Appendix 12.2).3 There were 14 active cases at that time – see Appendix 12.1 for a summary of one submission and response. It should be noted that the CEC has no enforcement mechanism if it is found that a government is not enforcing its laws; it can make recommendations for alleviating deficiencies found in the factual record. However, the CEC can ask for the government to respond to the allegations in a submission, as well as the alleged violator and others, which means that some scrutiny is needed to respond effectively and if a factual record is developed and later released (requires a two-thirds majority vote of the Council) some type of response might be required. The prospect of citizen challenges about enforcement of environmental laws might also keep officials more alert to possible environmental violations. Hufbauer et al. (2000, p. 34), in commenting on the Cozumel case,4 stated: After the Cozumel factual record was compiled, the Council did not make any recommendations to the Mexican government. Despite

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the lack of action by the Council on this matter and the initial disregard of the record by the Mexican government (which permitted the work to continue), this submission yielded some positive results: it prevented the construction of larger tourism infrastructure; it pushed President Zedillo to declare Cozumel Island a protected natural area; it created a precedent for reform of the law of environmental impact; and it involved civil society in ecological regulation of the island. To date, of the 75 submissions, 16 have resulted in the issuance of factual records, although some of the 14 active submissions can still result in factual findings. Frequently the submissions have been rejected because they do not meet the criteria of Article 14. Among the 75 are several with more than one submission, either due to being resubmitted by the same submitter or by different persons or groups. Submitters have 30 days to respond – that is, correct their submission when the CEC determines that it does not meet the criteria under Article 14. If the submission is corrected, the CEC then generally asks for a response from the party alleged to be failing to enforce its laws and together with other information determines if the submission merits developing a factual record. The CEC Council determines by two-thirds vote if the factual record should be developed, and upon its completion whether it should be published. Public participation Important aspects of the CEC are openness, transparency and public participation. The Joint Public Advisory Committee (JPAC) is the main, but not the only means of involving the public in the activities of the CEC. JPAC is composed of five citizens from each of the three member countries and advises the CEC Council on matters within the scope of the NAAEC. It also serves as a source of information and advice for the CEC Secretariat. JPAC meetings generally are open to the public and the committee frequently asks for input from the public. An example is the email request for comments on the 2010–15 CEC strategic plan: “The Joint Public Advisory Committee (JPAC) wants to hear the opinions, comments and suggestions of the citizens of North America regarding the proposed 2010–2015 Strategic Plan of the Commission for Environmental Cooperation (CEC).” A similar request is posted on the CEC website, where JPAC states: “Based on comments received from the public, JPAC intends to provide formal advice to Council on the proposed 2010–2015 Strategic Plan.”

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The CEC has developed a framework and guidelines for public involvement in the affairs of the organization, as indicated below (CEC 2010b): Given the importance of public participation in conserving, protecting, and enhancing the environment, the CEC must implement appropriate mechanisms for distributing information, and to educate and consult with the public of North America on the activities of its three components: the Secretariat, the Council, and JPAC. The main principles of public participation are to: ●

●

●

●

●

Increase public understanding of the CEC’s role, mandate, and program and budget Provide the public with a means to interact constructively with the CEC Distribute reliable, timely and useful information on the work of the CEC Promote opportunities for the participation of the public in all of the three countries Enhance the understanding of both the CEC and the public by including those sectors of the public that are not active participants

To approach public participation in its broadest sense, the CEC must: ● ● ● ●

Provide information and public education Request input from stakeholders and any potentially affected public Circulate documents for comment Offer formal participation through structured public meetings, such as the annual Regular Session of Council and JPAC regular sessions

The framework public participation must be flexible and promote inclusiveness in order to be open to the economic, social and cultural differences among the three countries and to the requirements of the different activities of the CEC. To ensure transparency, the following information should be available simultaneously in English, French and Spanish, on the CEC website as well as in hard copy upon request to the CEC Secretariat: ●

●

All relevant documents appropriate for public involvement in CEC activities The CEC annual program and budget

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●

Project descriptions or details of programs addressing opportunities for public participation Information on official activities under the CEC work program.

BECC and NADB As of March 31, 2009, the North American Development Bank (NADB) had helped finance 70 projects in the US and 74 in Mexico (NADB 2010a). The total project costs in the US were $1,180.7 million, of which the Bank was funding $496.86 million and $392.28 had been disbursed. In Mexico these totals were $3,173.05 million, with the Bank providing $1,243.18 million and $996.42 million being disbursed. On December 31, 2009, there were 74 active loans with at total value $455.97 million, with $353.05 disbursed. The grant totals were: Border Environmental Infrastructure Fund (BEIF) with 78 grants for $532.67 million, with $500.21 million disbursed; Solid Waste Environmental Program (SWEP), with 15 grants for a total of $8.79 million and $7.76 million disbursed; and Water Conservation Investment Fund (WCIF), with 27 grants totaling $79.99 million and $72.2 million disbursed. The bank financed a record amount of loans in 2009, as well as making a significant number of grants, according to its 2009 annual report (NADB 2010b, p. 3): The North American Development Bank (NADB) concluded 15 years in operation in 2009 with record levels of financing for the implementation of environmental infrastructure projects, primarily driven by the unprecedented growth of its loan portfolio. The Bank set a record high in lending for the third consecutive year with US$211.9 million in loans contracted during the year, a sum which represents 46% of all loans contracted since inception. As a result of this strong growth, the Bank also reached another significant institutional milestone, surpassing the US$1 billion mark in total project financing. In addition to loans, NADB also provided US$6.4 million in grants across all of its grant programs for a total of US$218.3 million in financing contracted in 2009 for 14 certified projects. Furthermore, US$185.9 million in total loans and grants were disbursed during the year to the sponsors of 60 different projects benefitting 63 communities along the border. Significant strides were also achieved in project implementation with 22 projects completing construction and 11 breaking ground for construction. Altogether, these 33 projects will contribute to a cleaner and healthier environment for more than three million border residents.

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The loans were made in five environmental sectors: clean energy, solid waste, air quality, storm drainage and water/wastewater. In addition to the loans and grants, NSDB provides technical assistance to help enhance the creditworthiness of potential borrowers. In 2009, the NADB described this activity as follows (NADB 2010b, p. 13): During 2009, ten studies were completed, including the final designs for paving works in Nuevo Laredo, Tamaulipas, and for the sanitary landfill and transfer station in Nogales, Sonora. In addition, technical assistance totaling US$402,250 was approved for three projects under development, as well as for project management support for the implementation of the sanitary landfill project in Ascensión, Chihuahua. The NADB, thus, has become an important source for financing infrastructure along the US–Mexico border. Its companion institution, the Border Environmental Cooperation Commission (BECC), which screens and approves projects that NADB finances, indicated in its 2009 annual report (BECC 2009, p. 6) that 90 per cent of the border residents had benefits from the BECC-NADB projects, where it states: Since its inception, the BECC has worked in cooperation with its sister institution, the North American Development Bank (NADB), and many other border stakeholders to advance the development and implementation of environmental infrastructure projects in the US–Mexico border region. The more than $3.2 billion of infrastructure investment developed with BECC’s participation has directly benefitted approximately 12 million people with new or improved services for water, wastewater, and/or solid waste management as well as air quality improvements related to new road pavement and other emission reduction efforts. This progress has led to an overall improvement in the environmental and human health conditions of both nations, in and beyond the defined border region. An important part of its mission is to involve, work with, and enhance the capabilities of border communities and residents. Thus, in 2008 the BECC reported sharing knowledge and expertise at 50 border forums, assisted with 20 projects steering committees and held 26 public meetings about those projects.

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Critique of CEC activities The ten-year evaluation of the CEC (CEC 2004) and its activities generally found the institution’s performance to be favorable, but also found a number of deficiencies, including a need to more fully engage the environmental Ministers of the three countries to increase its support and effectiveness, in part, by becoming more engaged in its activities. Other requisites are for the CEC to interact more fully with indigenous groups and academics, sharpening its programs to reflect and carry out its higher priority areas, focusing on integrating capacity-building activities and establishing an adequate funding base, which currently depends almost entirely on the fixed funding of the three member states. Gallagher (2004, p. 74) alleges that the CEC is “ill equipped to help solve Mexico’s environmental problems” due at least in part to a lack of manpower and resources. However, the organization has made significant contributions in addressing some environmental problems and issues. Wold (2008–09, p. 251) believes that the CEC has not lived up to expectations, saying “the NAAEC itself has sputtered, a victim of the very independence that Canada, Mexico and the United States expressly and tacitly gave it”. He asserts that, consequently, the US has not included provisions such as a “quasi-independent” secretariat in subsequent FTAs. Future environmental provisions should focus on “scale effects of trade liberalization”. Hufbauer et al. (2000) criticized the CEC for a lack of interaction with NAFTA’s Free Trade Commission – a situation that has been addressed to some extent – and for not being involved with environmentally related trade disputes, those processed through the NAFTA dispute settlement procedures. They make suggestions for improving the institution’s performance, including limiting its activities, because of its low resource base, to areas where it can be more effective. The suggestion was to focus on 1) using its investigatory power to draw attention to important environmental problems and 2) becoming a reliable source of improved environmental data for North America. Additionally, the CEC should better handle citizen submissions as a way to improve “lagging environmental enforcement” (p. 58). Impacts of other US FTAs Most other US trade agreements have environmental provisions, generally including environmental cooperation, although the mechanisms and institutions for cooperation vary considerably. Those with other countries in the Americas tend to be more extensive than those with countries in other parts of the world, as are the financing of cooperative

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efforts. The impacts of the environmental provisions for a few selected FTAs are discussed in this section. CAFTA–DR FTA The FTA between five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua), Dominican Republic and the United States, commonly referred to as CAFTA–DR Free Trade Agreement, was signed in 2004 and entered into effect in 2006, although Costa Rica did not ratify it until 2009. Its companion Environmental Cooperation Agreement (ECA) was signed in February 2006. The Organization of American States (OAS 2009) evaluated progress on the ECA in 2009 and found a number of issues, including slowness in organizing all the components, difficulty in coordinating activities in a diverse set of economies, lack of a USAID office in Costa Rica and a break in relations between the US and Honduras due to the ouster of the sitting president.5 Some difficulties faced in implementing the ECA are described by the following statement (OAS 2009, pp. 65–6): A complex map emerges of a large number of implementers at the regional and national level with different modalities of cooperation. Inter-agency coordination of activities has been difficult, especially in terms of priority-setting at the political and technical level. The coordination of the environmental cooperation has been conducted in a more ad hoc fashion. Findings suggest that it is quite difficult for the POCs [government point of contact] to conceptualize and fully understand this context. An earlier assessment by the US Agency for International Development (USAID 2008, p. vii) had similar findings, reporting: From the outset, implementing the Environmental Cooperation Program has posed significant challenges. First, most of the six countries have recently suffered political turmoil and are in different stages of economic development. This has made implementing technical assistance programs to harmonize environmental management across the countries a difficult and even daunting task. Second, even though assistance by the US Government and international donor agencies to help the countries take advantage of CAFTA–DR long predates the signing of the agreement, country-level “buy-in” to the overarching Environmental Cooperation Program – as well as activities managed by USAID – was not evident at the time of the assessment.

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The report also indicated that having three US agencies involved – the State Department, USTR and USAID – added problems, as managing “by committee has often put agencies at odds”. The approach was to “use an informal process to solicit proposals from government agencies, a select group of NGOs, and public private partnerships to address and implement activities” and “US Government agencies to implement projects directly”. However, through time many of the problems have been resolved and implementation has proceeded. The ECA operates through a Commission (high-level officials of all the governments), Council (environmental representatives of the parties) and a Secretariat. Although the ECA indicated that resources would be supplied by the members, most financing is obtained from the US Agency for International Development. A 2010 report indicates the amount of financing to date (CAFTA–DR 2010): To date, the United States has committed over $63 million to fund cooperative activities under the CAFTA–DR ECA Work Plan. The Administration allocated $18.5 million of fiscal year 2006 funds, $19.3 million of fiscal year 2007, $14.8 million in fiscal year 2008 funds and $10 million in fiscal year 2009 funds, to cooperative environmental projects with CAFTA–DR countries. It might be noted, however, that the funding decreased after the first two years. The Secretariat for Environmental Matters (SEM) has a number of functions, including responding to citizen submissions on nonenforcement of environmental laws, training and capacity-building; assessments, studies and analyses; demonstrations, publications and facilitation of linkages; seminars, conferences and other exchanges; and outreach and education. The goals of environmental cooperation are listed as (USDOS 2009): ●

Compliance with CAFTA–DR Environment Chapter obligations to: 1. Ensure that their environmental laws and policies provide for and encourage high levels of environmental protection; 2. Effectively enforce their environmental laws; 3. Ensure that judicial, quasi-judicial, or administrative proceedings are available to sanction or remedy violations of environmental laws; and 4. Improve implementation of, and compliance with, multilateral environmental agreements (MEAs);

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●

●

Improved protection and conservation of the environment, including natural resources; Transparency and public participation in environmental decisionmaking; A culture of environmental protection and compliance with environmental laws through, among other things, the promotion of economic opportunities, voluntary measures to enhance environmental performance, and job creation.

The CAFTA–DR administration has developed five cooperation themes for efforts of a regional nature; there also are several bilateral efforts involving the CAFTA–DR countries. The themes with one example of each are listed below (CAFTA–DR 2010, pp. 1ff): Theme A: Institutional Strengthening for Effective Implementation and Enforcement of Environmental Laws. EPA has trained over 500 environmental compliance inspectors, prosecutors, and enforcement personnel in the CAFTA–DR region. Trained individuals are now training local inspectors, investigators, police officers, prosecutors, and environment ministry officials to strengthen effective enforcement of environmental laws Theme B: Biodiversity and Conservation. The US Department of the Interior (DOI) worked in partnership with the CITES Secretariat to develop long-term, sustainable regional training to decrease trafficking of illegal wildlife and to protect biodiversity. As a part of this effort, DOI updated a comprehensive regional reference book of CITES listed species and distributed 500 copies to CAFTA–DR countries, meeting the CITES requirement that each country maintain a complete list of CITES species within its borders Theme C: Market-based Conservation. Rainforest Alliance worked with cacao, coffee, and banana farmers on environmentally friendly farming practices to increase their market shares and income from products. Throughout the entire CAFTA–DR region, over 100,000 hectares and 4,000 farms received Rainforest Alliance Certification.

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Theme D: Improved Private-Sector Environmental Performance. World Environment Center (WEC) is working in El Salvador, Guatemala, Costa Rica and Nicaragua through partnerships with Coca-cola, Marriott, and Wal-Mart to promote private partnerships that encourage the use of cleaner production practices throughout their supply chains. WEC is working with their small and medium size suppliers to promote energy and water conservation, implementation of environmental management systems, resource assessments, and waste, raw material and emissions reductions. Theme E: Implementation of Specific Obligations under CAFTA–DR. The CAFTA–DR Parties established a Secretariat for Environmental Matters to receive and process submissions from the public alleging that a CAFTA–DR Party is failing to enforce its environmental laws effectively. The Secretariat is currently up and running and has received eleven submissions from the public thus far. The Secretariat is also undertaking an aggressive outreach campaign to disseminate information on submissions and environmental enforcement. The single example given under each theme is only illustrative; there are multiple entries under each theme indicating that environmental progress is being made. Of course, the funding from USAID and a permanent secretariat are major factors in this progress. The US Environmental Protection Agency (EPA) is another implementing agency and contributor to environmental improvements in the CAFTA–DR countries. In partnership with USAID it is contributing to building environmental capabilities in the member countries, listing the following areas where work is being done to (EPA 2010a): ●

●

●

strengthen countries’ environmental management systems, including strengthening institutional and legal frameworks; increase compliance and implementation of Multilateral Environmental Agreements; & provide technical assistance to enable countries to develop and enforce environmental laws, regulations, and policies.

The agency cites accomplishments including establishing the first regional air quality focal point network, providing air quality monitoring equipment, training for inspections, criminal enforcement, wastewater

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inspections, hazardous materials handling, customs and environment, environmental impact assessment review and implementation of some of the basic elements of wastewater regulation in two countries. Citizen submission procedures follow a similar pattern to those of the CEC but are still under development by the SEM. The Business Roundtable (2010) describes the process: DR–CAFTA creates a citizen submission process that allows any citizen of a DR–CAFTA country to file a complaint that a country is not enforcing its laws. The procedure requires parties to respond to citizen allegation and provides for an environmental secretariat to develop a factual record of the allegation. These provisions are similar to those found in the North American Free Trade Agreement environmental side agreement, and this is the first time they have been included in the text of the agreement. An early case is illustrative of the potential although it appears not to have followed the full process due to a prompt response by the government involved. The CAFTA–DR website gives the following as an example of a citizen submission: A public submission to SEM alleged that the Government of the Dominican Republic was failing to enforce domestic laws intended to protect the endangered Hawksbill sea turtle – in particular that street stalls, souvenir shops and the like continued to sell ornamental Hawksbill tortoiseshell products. The submission and sparked action by the country’s Secretariat of the Environment and Natural Resources: It seized hundreds of tortoise shell articles from commercial establishments, and is now working with the petitioner on an educational campaign for locals and tourists. Jones (2008, p. 179) gives further details of the submission and the DR’s response to the allegation: The Humane Society International filed the first of these submissions under CAFTA–DR on May 8, 2007, alleging that “by failing to complete a comprehensive inventory of products made from sea turtles as required by domestic law, the Dominican Republic is failing to effectively enforce sea turtle protection laws prohibiting the sale of products manufactured from endangered sea turtles that were captured and killed in the country after July 31, 2001.” On December

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5, 2007, the CAFTA–DR Secretariat for Environmental Matters determined that Humane Society International’s submission met the terms of the citizen submission requirements in Article 17.7.4, and formally requested that the Dominican Republic submit a response to the points raised in the submission. The registry of citizen submissions (http://tusaa.org/) indicates that in 2008 SEM was instructed to develop a factual record for the case, but there is no indication that it has been completed. The registry indicated that on August 9, 2010 four additional petitions had been received from citizens/organizations alleging failures by El Salvador (1), Guatemala (2) and Honduras (1) to enforce their environmental laws. All have been found by SEM to comply with the criteria and responses requested from the corresponding governments. The four cases cover a broad area of environmental situations including improper construction natural gas facilities in an urban area, construction of a highway in a protected national park, failure to protect an important lake from development of an oil well, and deforestation for development. In addition, a SEM Facebook entry (August 2010) indicates an additional submission: The SEM has received a new submission (CAALA-10/008 MIXCO NATIONAL HOSPITAL), filed by the Community Development Council of Monte Real in which they assert that Guatemala is failing in the implementation of its environmental law because the construction of the National Hospital of Mixco will destroy a green area preserved for them. CAFTA–DR projects and activities have encouraged public participation in its other environmental activities. The CAFTA-DR website lists several activities that involve civil society in environmentally related activities including: In May of 2008, high school students at the Lincoln School in San Jose, Costa Rica designed a strategy for convincing their government to treat waste water using Chrysopogon zizanioides, a perennial grass that works as a natural filter. This was part of a two day environmental congress named ECO-1. The School, with funding from the State Department’s Ocean Environment and Science Bureau (OES), brought over 270 kids from 45 different schools from all over Costa Rica to participate in a two day workshop on how

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to engage with their national and local governments on environmental matters. In Guatemala, the Dominican Republic, and Nicaragua the NGOs Helvetas (Guatemala), Alianza (DR), and Promoción y Desarrollo Empresarial (Nicaragua) organized mass media campaigns to inform the public of opportunities for involvement in environmental decision-making and enforcement. Thus, while the environmental cooperation efforts started slowly due a number of problems and issues including the delay of some members ratifying the agreement, it has been able to undertake and complete numerous activities that directly benefit the environment and to involve civil society in several of those efforts, including bringing pressure to more effectively enforce their environmental laws and regulations. The Chile FTA and ECA Under the US-Chile FTA, an Environmental Affairs Council was established to oversee implementation of the provisions of its environmental chapter, while the Environmental Cooperation Agreement (ECA) set up a Joint Commission for Environmental Cooperation to develop and monitor work plans for cooperative efforts. About every two years meetings are held to develop the plan and review progress. A joint meeting of the two groups was held in Washington on January 20, 2010, to develop a work plan for 2009–11 and review progress. The communiqué from the meeting (USDOS 2010a) indicated that progress was reported but gave no information on the nature of the progress (see Appendix 12.3). It was indicated that reports were given by “representatives from the US Environmental Protection Agency (EPA) and the US Department of State, as well as representatives from non-governmental organization partners, Conservation VIP and the Environmental Law Institute”. The report also indicated that much of the meeting was open to the public. The work plan for environmental cooperation established the following priority areas (USDOS 2010b): 1. Strengthening effective implementation and enforcement of environmental laws and regulations: Exchange information and experiences on environmental legal and regulatory regimes; enforcement and compliance policies, tools and practices; and approaches to environmental monitoring, that contribute to strengthening the effectiveness of implementation of environmental laws and regulations in the United States and Chile.

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2. Encouraging development and adoption of sound environmental practices and technologies, particularly in business enterprises: Encourage enterprises to develop and adopt sound environmental practices and technologies, and to show that doing so not only benefits the environment, but can be done in a manner consistent with maintaining international competitiveness. 3. Promoting sustainable development and management of environmental resources, including wild fauna and flora, protected wild areas, and other ecologically important ecosystems: Promote the conservation and protection of the environment, the prevention of pollution and degradation of natural resources and ecosystems, and the rational use of natural resources, in support of sustainable development. 4. Civil society participation in the environmental decision-making process/Environmental education: Share experiences in promoting public participation in the decision-making process regarding environmental matters, and enhance openness and transparency in regulatory and program implementation. Exchange knowledge and experiences regarding environmental education strategies and programs, with a principal focus on basic and community-level education. The work plan indicates good intentions with respect environmental improvements but depends on how the plans are implemented, which, in turn, generally are functions of financial support for the activities. The US EPA, as in CAFTA–DR, is one of the agencies that has been involved in the cooperative efforts in Chile. It reports carrying out activities under the 2007–08 work program, including the following (EPA 2010b): the Work Plan provides for information exchange and collaboration on other issues, including critical issues in children and women’s environmental health. Under this area of work, EPA’s Office of International and Tribal Affairs (OITA) has worked with EPA’s Office of Children’s Health Protection and Environmental Education (OCHPEE) to help establish a Pediatric Environmental Health Specialty Unit (PEHSU) in Chile. EPA played a leadership role in implementing 7 of the 8 cooperation projects listed in the FTA. As of July 2008, all 7 projects have been completed. Furthermore, CONAMA (2010), the Chilean National Commission on Environment, indicates that efforts include activities in the areas of

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developing a public registry of emissions and contaminant transfers, a workshop on training for compliance with environmental legislation and resolution of conflicts, information exchanges and a trip to the United States to study alternatives to ethyl bromide, a gas harmful to the ozone layer and used in fruit and vegetable processing. The State Department’s Bureau of Oceans and International Environmental and Scientific Affairs indicates that they have implemented cooperative environmental projects with “our other FTA partners, including Chile, Morocco, Jordan, Bahrain, Oman and Singapore”, but provides no details on their website (http://www.state.gov/g/oes/env/trade/index.htm). The Environmental Law Institute (ELI) was listed as participating in the 2010 joint meeting of the Chilean environmental council and commission as a participant in the cooperative programs in Chile. It has indicated that it had been invited to participate in training workshops as reported on its website (ELI 2010): Under the 2003 US–Chile Free Trade Agreement, the US and Chile made a precedent setting commitment to cooperate on environmental enforcement and to promote civil society participation in these cooperative activities. The US Departments of State and Justice and the Chilean government invited ELI to assist in fulfilling these commitments. The First Judicial Capacity Building Workshop on Environmental Matters was held in Santiago in April 2006 and covered: an introduction to environmental law, Chilean and US environmental institutions, the Chilean environmental legal framework, international environmental treaties, sectoral environmental laws, environmental enforcement mechanisms, procedural issues in managing litigation, constitutional issues, restoring damage to the environment, claims for compensation, and the rule of law. Similarly, Conservation VIP was involved in cooperative efforts in the Torres Del Paine National Park in Patagonia, Chile (Conservation VIP 2010). The Conservation VIP website indicates that as consequence it has been invited to work on a park in Santiago: Based on the success of Conservation VIP volunteer project in Chile’s Torres del Paine National Park, the US State Department, Chile’s Foreign Ministry and the Santiago Metropolitan Park Department

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asked Conservation VIP to organize and lead a volunteer project in the Forest Nature Center ... a first. (http://conservationvip.org/Santiago/ The Park.html) There were activities in 2006 which included a Forestry and Wood Processing Capacity Building Program with a workshop in Concepción on pollution prevention and management, a tour of the US to study sustainable forest management, a training course on “Financial Assurance for Hardrock Mine Reclamation” and a study tour on mining reclamation and related topics. The US Government Accountability Office (GAO) evaluated the effectiveness of four environmental cooperation agreements associated with FTAs, including Chile (GAO 2009).6 They reported accomplishments including improvements in the country’s environmental laws and an upgrading of CONAMA with a view of its becoming a Ministry. A Minister for the Environment was created at that time and the Ministry of the Environment was formed in July 2010 (CONAMA 2010). There also was progress in promoting public participation in environmental decision-making. The report indicated (GAO 2009, pp. 55–6) “strengthening effective implementation and enforcement of environmental practices and technologies, promoting sustainable development and management of environmental resources, including wild fauna and flora and protected wild areas, and facilitating civil society participation in the environmental decision-making process”. However, while the FTA and ECA indicated cooperation in areas such as mining, forestry and agriculture, the report noted (p. 56) “after initial implementation workshops and information sessions, little has been done in these areas”. There also appears to have been laxity in enforcement due, at least in part, to the fact that CONAMA lacked enforcement authority. A lack of resources was a main factor in the relatively low rate of implementing the activities outlined in the agreements. Cooperation in the US–Peru FTA On January 17, the governments of the US and Peru held the first meeting of the Environmental Affairs Council under the environmental chapter of the US–Peru FTA. During the meeting implementation of the environmental provisions of the chapter and its forestry annex were discussed (USDOS 2010c). As a relatively new activity, implementation of both the FTA and its corresponding ECA are just beginning. The two governments established the Environmental Affairs Council which will report to the Free Trade Commission of the FTA regarding

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implementation of the environmental chapter, Implementation of the Environmental Cooperation Agreement also was reviewed at the meeting which involved public participation. In addition, the Peru–US Environmental Cooperation Commission (PECC) has developed a draft of a work plan for 2009–10 (PECC 2010). It includes the following long-term goals: ●

●

●

●

Compliance with obligations in the Environment Chapter and Annex on Forest Sector Governance of the United States Peru Trade Promotion Agreement (TPA): (1) to ensure that the Parties’ environmental laws and policies provide for and encourage high levels of environmental protection; (2) to effectively enforce the Parties’ environmental laws; (3) to ensure that judicial, quasi-judicial, or administrative proceedings are available to sanction or remedy violations of environmental laws; (4) to combat trade associated with illegal logging and illegal trade in wildlife; and (5) to enhance forest governance and promote legal trade in timber products. Improved protection and conservation of the environment, including natural resources; Increased transparency and public participation in environmental decision-making; Promotion of a culture of environmental protection and compliance with environmental laws through, among other things, the promotion of economic opportunities, voluntary measures to enhance environmental performance, and job creation.

This work will involve institution and policy strengthening to improve compliance with and enforcement of environmental laws, biodiversity conservation, improved forestry management, enhanced transparency and public participation in environmental policies, development of community-based activities and improvements in productive sector functions. The plan then sets out several specific activities to be undertaken. Other FTA/ECA impacts All of the other FTAS of the United States have environmental provisions and generally environmental cooperation agreements, except the US–Israel agreement, although a separate environmental agreement was signed with Israel in 1991. The US Government Accountability Office (GAO) analyzed the effectiveness of the environmental provisions of four FTAs of four widely varying countries, Chile, Jordan, Morocco and

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Singapore (GAO 2009). The GAO study did not include results from the environmental cooperation agreements which, while separate, were part of the FTA negotiation process. The study noted gains such as the “establishment of an environmental ministry and a 400-strong environmental law enforcement force in Jordan, partly due to US assistance” (p. 8). While finding that the countries had improved their environmental laws and achieved other environmental gains, there were significant deficiencies relative to the aims of the environmental provisions. This was especially so for enforcement of environmental laws, with the exception of Singapore. The study also found that the FTAs had produced some negative environmental impacts, giving the impact of apparel production on Jordan’s water and pollution from salmon farming and other resource-intensive exports in Chile. The study observed that the US agencies involved had failed to develop a systematic method of monitoring the environmental activities arising from the cooperative activities and a failure to establish reliable funding for the activities and projects proposed for achieving improved environmental conditions in the partner countries. Audley (2003, p. 3), in another context observed: The US is developing a bad habit of making commitments to enhance environmental protection without including any new resources. For example, three free trade agreements – US–Jordan, US–Chile, and US–Singapore – include parallel commitments to provide technical assistance and establish a cooperative trade and environment agenda; as yet, none of these commitments includes new funds. The State Department disagreed with some of the GAO findings with respect to the deficiencies. In a letter included with the report they say (p. 162): “We believe that the meaningful reforms enacted as a result of the FTA process in Morocco, Jordan and Chile are significant achievements not adequately recognized by the report.” The GAO report has specific findings for each of countries examined and these will be reviewed briefly except for Chile, which was covered above. Singapore is the most developed of the four and is more of a city state than a nation. The findings were that Singapore’s environmental laws are adequate and are strictly enforced. However, it tends to be a location for transshipment of many products and has been criticized for a failure to adequately enforce rules about trade in endangered species under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). According to officials at the Ministry

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of Environment, in 2006 the Singapore Endangered Species (Import and Export) Act was amended to increase penalties for violations of the Act. Morocco amended its environmental laws both before and after approval of the FTA. According to the US embassy in Morocco (GAO 2009, p. 57), “in January 2003, the Moroccan parliament approved three important environmental laws: a general framework law on environmental protection, a law requiring environmental impact assessments, and an air pollution law”, as well as laws on waste management and disposal and coastal zone management which might have been influenced by the FTA. However, the report indicates that enforcement remains a problem (GAO 2009, p. 57): Officials from the Ministry of Environment said inconsistency on how environmental laws are enforced creates several challenges. They explained that enforcement of laws is left to the local and regional governments and that, at the national level, jurisdiction for environmental laws lies across several agencies or law enforcement entities. The officials said that there is no consistency on how local governments or law enforcement agencies implement the laws. The report credits Jordan with changes to strengthen its environmental laws (pp. 54–5). The Ministry of the Environment was created and Royal Rangers established to enforce environmental laws. However, Jordan also has enforcement problems, with only 25 inspectors to cover a quite vast territory. Its judges also lack environmental experience and training, although this problem is being addressed, in part under the FTA’s cooperation provisions. Australia is a developed country with an environmental cooperation agreement with the United States. While exchanges and joint efforts to promote public participation are part of the program, a substantial part is devoted to collaboration in providing assistance to developing countries in the environmental matters (USDOS 2004). The cooperative effort is partly described by the following statement from the press release at the signing of the ECA: To further advance the collaboration and cooperation between the United States and Australia, the Governments intend to consult regularly to review ongoing cooperative activities, identify priority areas for potential future cooperative activities, and to the extent appropriate, review other matters related to this statement. In particular,

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the Governments intend to consider bilateral collaborative efforts to assist third countries build capacity.

Section conclusions The effectiveness of the environmental provisions in trade agreements negotiated by the United States varies considerably. Positive environmental contributions included improvements in the environmental laws and regulations of partner countries, training and capacity-building for environmental officials including enforcement, numerous projects to improve the environment in specific sectors, and improvements in public participation and environmental knowledge. However, lack of effectiveness is frequently noted in enforcement of environmental laws and in carrying out cooperative activities due to limited resources. There also seem to be deficiencies in respect to monitoring and documentation of activities. It is often difficult to obtain information on the activities associated with specific bilateral FTAs. The exceptions seem to be NAFTA and CAFTA–DR where funding has been more reliable and where permanent institutions were established to carry out, analyze and monitor the environmental activities.

Canadian environmental cooperation In addition to NAFTA, Canada has trade agreements with three countries in the Americas that include environmental provisions: Chile, Costa Rica and Peru. These involve environmental side agreements to promote cooperation. The agreement with Chile was the first after NAFTA and was negotiated with the view that Chile might join NAFTA and, hence, the agreement was made compatible with that agreement. Thus, it has extensive provisions and institutions to carry out the provisions. The Costa Rica and Peru FTAs also have strong environmental components but are less extensive than those of the Chilean agreement. Impacts of the Canada–Chile FTA The FTA and corresponding environmental agreement between Canada and Chile were signed in 1997 and consequently have a relatively long record of accomplishments. They are implemented through a commission and support elements: The Commission is composed of a Council, a Joint Submissions Committee and a Joint Public Advisory Committee. The Commission

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is supported by two National Secretariats, Canadian and Chilean, established in each country. In establishing the secretariats, it was agreed to use existing institutions in each country in order to keep bureaucracy and maintenance costs to a minimum. The secretariats were incorporated into existing institutions for efficiency and cost considerations. The activities of this FTA/ECA are well documented, with work plans, annual reports and other documents on the Canadian website for the activity (http://www.ec.gc.ca/ can-chil/ default.asp?Lang=En). An outcomes statement from the 2010 meeting of the Canada–Chile Commission for Environmental Cooperation (2010) lists the more recent accomplishments under the cooperative efforts of the two countries and states: Since 2004, the Canada–Chile model of cooperation has continued to be a positive and effective arrangement to address shared environmental concerns. Officials have found that multiple-phase cooperative initiatives have been mutually beneficial and ensured the attainment of results. Terms of reference will continue to be systematically applied for each project and further work will be undertaken to ensure consistency in project completion and public information sharing. These operational improvements are intended to provide greater accountability and transparency in the implementation of projects. Among the recent accomplishments were bird-banding to study migratory species between Chile and Canada (41 species were identified), capacity-building for enforcement of protected species in Chile, cooperation to improve parks management, cooperation and exchanges to improve management and technologies for pulp and paper effluents and development of a strategy to protect the pink-footed shearwater, a migratory bird species. Work will continue on activities that were interrupted by the massive earthquake in Chile: As part of the 2010–12 work program, both countries will conclude work which was initiated but postponed due to the February 2010 earthquake in Chile (Pulp and Paper Effluent Research and Pink-footed Shearwater projects) and pursue new initiatives in the areas of migratory species, biodiversity and conservation, contaminated sites, chemicals management and information management.

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The Joint Public Advisory Committee (JPAC) met with the commission and provided input on transparency and public participation in environmental management. In addition, a registry of citizen submissions that Chile is not enforcing its environmental laws is maintained (complaints against Canada are made under the CEC created by NAFTA). Five citizen submissions have been processed that included a hydro project in Patagonia, a wood-chip and panel manufacturing plant, a copper-mining operation, failure to consult public for an air quality plan in the metropolitan area, and construction of a coastal highway. One is still active, one was terminated after the submitters failed to resubmit and for three it was decided that no factual record was required after receiving the government’s responses. Many other activities have been carried out since the FTA and ECA went into effect. Using the 2005 annual report as an example the following is a list of projects/activities discussed in that report (Canada– Chile Commission for Environmental Cooperation 2005): ●

● ●

● ● ● ●

● ● ●

Examined the Canadian enforcement data system to determine if it could be adapted to use in Chile – found possible but would need substantial modification. Continued work on study of migratory birds. Continued developing procedures for the public in Chile to participate in environmental impact assessments. Worked on development of a pollutant release and transfer registry. Development of an environmental information system (web based). Enhanced capacity of NGOs in environmental issues. Instituted a permanent round table to work on trade and environmental issues. Held a workshop on carbon credits. Held a forum on health and the environment. Worked on developing an air quality index for Chile.

The budget for the activities reported above was C$73,500 with C$46,500 from Canada and C$27,000 from Chile; in addition it was estimated the in-kind contributions of the two governments were C$100,000 to C$130,000. One interesting project involved international cooperation between Canada, United Kingdom, France and the United States and worked on establishing an Environmental Valuation Reference Inventory (EVRI) for Chile:

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The EVRI is an Internet database of empirical studies on the economic value of environmental benefits and human health effects. It was developed as a tool to help policy analysts use economic valuation for policy applications such as cost-benefit analysis, damage assessment and green accounting. Costa Rica FTA/ECA The FTA and ECA between Canada and Costa Rica entered into force in late 2002 and the Canadian website for environmental cooperation reports activities for 2003 and 2005 as follows: July 5th–16th 2004 – Fact Gathering Mission on Innovative Instruments of Environmental Management. June 11th 2004 – First Public Meeting of the Parties under the Canada– Costa Rica Agreement on Environmental Cooperation. June 9th and 10th 2004 – Canada and Costa Rica Public Workshop and a Government Round Table Discussion on Trade and Environment. March 24th 2004 – Environment Canada Sponsoring a Detailed Study of Costa Rica’s Chemical Management Capacity. December 4th and 5th 2003 – Canada and Costa Rica Hold a Consultative Workshop on Pollutant Release and Transfer Registers. Although the website indicates that it was updated March 29, 2010, it contains no additional information on implementation activities. Peru environmental cooperation The Canada–Peru FTA and ECA entered into force in 2009 and, thus, are just being implemented. The first meeting of the Canada–Peru Committee on the Environment (2009) was held in Lima on November 24–25, 2009. The meeting was primarily devoted to administrative procedures and deciding initial cooperative efforts. The budget is to be shared equally between the two parties and work is to begin on the initial five-year plan. The initial cooperative efforts are to be on the following areas: restoration of degraded ecosystems, systemizing environmental information, integrated chemicals management, and “restoration of degraded ecosystems was identified as the priority for a project in the short term (by March 31, 2010)”. EU environmental cooperation The European Union has an extensive array of FTAs (called Economic Partnership Agreements), many with environmental provisions,

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especially for environmental cooperation. The agreement with the CARIFORUM States has extensive provisions for cooperation on the environment and sustainable development, but several others also encompass environmental cooperation, including the FTA with Mexico.

EU–CARIFORUM cooperation Cooperative efforts under the EU–CARIFORUM agreement began shortly after its completion with development of a “road map” to follow in its implementation. Another example is illustrated by a report by Caribbean Regional Negotiating Machinery (CRNM 2008)7 to the ACP ministers which stated: The CARIFORUM–EC Regional Preparatory Task Force (RPTF) continues to implement its work programme of overseeing the execution of a comprehensive set of studies. These studies are aimed at assisting in providing the EC and other potential donors with a better understanding of the region’s needs, translating the cooperation provisions of the EPA into concrete and actionable sector programmes destined for any potential donor, detailing timing and activities required in order to allow the region to fully implement the commitments in the Agreement. Efforts are being made to accelerate the work of the Task Force. This applies to all the activities of the FTA, including those on sustainable development and the environment. Among related activities is the EU’s participation and partial financing of United Nations Environmental Program on training of CARICOM members in “Capacity Building related to Multilateral Environmental Agreements (MEA) in African, Caribbean and Pacific (ACP) Countries”. This project is to do the following (UNEP 2009, p. 2): The overall objective of the Project is to strengthen and enhance the endogenous capacity of Caribbean ACP countries to effectively implement and comply with MEAs and related commitments thereby resulting in sound management of the environment and natural resources. Although the Dominican Republic is not in CARICOM it is included as a member of CARIFORUM States, as stated in the project document (UNEP 2009, p. 23): “the Dominican Republic is also achieved through the CARIFORUM and through the CARICOM Secretariat Directorate which addresses CARIFORUM matters”.

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Steps to implement the roadmap were taken at a July 2009 meeting of the CARIFORUM States and the EU (CARICOM Secretariat 2009, p. 1). The purpose of the meeting was stated as: The central purpose of the Meeting was to discuss the Roadmap on regional integration and cooperation, which sets out the region’s priorities, resource requirements and implementation mechanisms, including the use of resources of the 10th European Development Fund (EDF). At the meeting it was agreed that funds would be made available for projects that were ready for implementation. In this context, “the release stated, it was agreed that those projects flowing from the roadmap, and which are ready, could be considered for European Development Fund”. These represent positive steps toward achieving the FTA’s objectives, but the agreement is still being implemented. The Secretary General of CARICOM (Mr Edwin W. Carrington), in addressing the meeting, noted that “approximately Euro 72 million or approximately US$100 million will be provided” for CARIFORUM purposes and that, in addition, the UK has “pledged an initial sum of 5 million pounds” for the Caribbean Aid for Trade Trust Fund (Carrington 2009). During the economic summit of the EU and Latin American and Caribbean countries in Madrid in May 2010, the EU’s Trade Commissioner De Gucht and Caribbean leaders held a meeting of the Joint Council of the EU–CARIFORUM Economic Partnership Agreement (EC 2010b). The following statement represents the current status of the agreements implementation and indicates that much work remains: As the benefit of trade agreements comes not from negotiating them, but from putting them into practice, the Joint Council took important procedural steps to ensure the effective implementation of the Agreement. The Agreement’s institutions including at the ministerial level – the Joint Council, and its committees, are key to make the EPA work in practice and to ensure that it can be a tool for the sustainable development of the Caribbean region. Thus, while holding promise for substantial environmental benefits, the EU–CARIFORUM FTA and most if its provisions for environmental cooperation are just beginning to be realized. In this regard the EC (2009b) has indicated that support will include the “Caribbean Regional

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Indicative Programme (CRIP) for the period 2008–2015”. Support includes the following: a)

Technical Assistance Facility (TAF) – Funds under the TCF will be used to facilitate and support the implementation of the CRIP and other EDF programmes. The projects that will be financed under the proposed TCF 10th EDF will support the CARIFORUM including through the provision of short to medium term TA/consultancy for the main stages of the project cycle. It may also include institutional/ capacity assessments of potential implementation partners. Audits and evaluations of other projects will be financed through this initiative whenever they cannot be financed out of the project itself or where it is convenient or efficient to combine a number of audits/evaluations of related interventions. The cost of this TCF component will be 2,250,000€. b) Training Support for Project and Programmes (TSSP) – will finance various educational actions such as seminars or consciousness-raising activities prior to or during the formulation of a project or programme – for example a workshop on Project Cycle Management workshop of stakeholders in a sector identified in the CRIP. The cost of this TCF component will be 350,000€. c) Conferences and Seminars (CS) – these include either: (a) more general short term training activities for ACP officials and/or nontate actors on topics related either to the priorities of the ACP–EU Partnership Agreement or to EDF or other EU administrative and financial procedures and (b) participation by ACP officials or nonstate actors in international meetings or seminars on development or trade themes. The latter are organized by bodies or organizations other than the Commission (including UN bodies). The cost of this TCF component will be 250,000€. This represents a substantial amount of support which, however, includes activities other than the environment within the context of sustainable development. It also recognizes that the €1 million annually will be inadequate once the roadmap is fully operational, but expects additional funds from EU member states, including the UK and German development agencies.

Other EU cooperation Many of the EU’s FTAs have provisions for cooperation on the environment as well as economic and social issues. Actual cooperation is

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frequently carried out by the European Development Fund and also by the individual members’ development agencies. One FTA involving cooperation is with Mexico, where the EU is spending some €55 million earmarked for cooperation with Mexico in the EC (2007) country strategy plan. This was to be on three thematic areas: 1) social cohesion and support to related policy dialogues, 2) sustainable economy and competitiveness and 3) education and culture. While the environment is not a theme it is included under sustainable economy and is a cross-cutting issue. In addition, some individual countries of the EU have environmental activities in Mexico. In 2007 Germany, for example, pledged €4 million for projects on environmental management and renewable energy/energy efficiency in Mexico (BMZ 2007). The EU has cooperative activities that include environmental projects in many other countries, as do the member countries. The EU is financing a firewood project in Chile to help provide fuel for homes and improve forest management (EC 2010c). The EU’s contribution to the project is €3.4 million, 73 per cent of the cost.

Other FTAs and ECAs As outlined in Chapters 8, 9 and 10, several other FTAs have important environmental provisions, including environmental cooperation either as part of the main FTA or in a separate Environmental Cooperation Agreement associated with the FTA. Many of these are recent agreements and there has been relatively little time to determine the impacts of the provisions, although cooperative efforts are being implemented. These generally do not set up an administrative structure to carry out the cooperation, as in the cases of the NAFTA and CAFTA–DR agreements, but leave the details of the cooperation to be determined by future efforts of the parties involved. Sometimes the cooperation is carried out by development agencies – especially where one party is industrialized and the other a developing nation – and elsewhere by creating special mechanisms to carry specific projects or activities. Japanese cooperation Japan has signed several FTAs that involve environmental cooperation and a few that do not, all that date from 2007 and later. It has environmental cooperation agreements with Asian parties, including ASEAN, Brunei Darussalam, Indonesia, Malaysia, Philippines and Vietnam, plus, outside of Asia, with Mexico. Japan has long funded cooperative environmental activities through official development assistance, the Japan International Cooperation Agency (see, e.g., JICA 2001). Examples

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of cooperation that will take place as a result of the trade agreements include Malaysia, where the countries’ leaders “confirmed that both sides would cooperate for the success of the 16th Session of the Conference of the Parties (COP16) to the UN Framework Convention on Climate Change”, announced the “Japan–Malaysia Cooperation Initiative for Environment and Energy”, and would work together on the Conference of the Parties to the Convention on Biological Diversity, to be hosted by Japan (JMOFA 2010). Cooperation with ASEAN includes the following activities: combating illegal logging, preventing forest fires and reforesting degraded lands; fighting transboundary haze pollution; collaborating on capacity-building programs for sustainability, and cooperation in conducting feasibility studies for the Japanese “Green Aid Plan” for environmental protection and energy conservation (ASEAN 2010). In 2007, Japan and Indonesia announced an ambitious plan to cooperate to reduce greenhouse gas emissions to combat global warming, for reforestation on degraded lands, initiation of a campaign to promote public awareness of environmental issues, improving energy efficiency and developing energy infrastructure (JMOFA 2007). Thus, the Japan Bank for International Cooperation (JBIC) is assisting with a loan for an environmentally more friendly power plant: it is environmental since: “power generating facilities in this project adopt new technologies that produce fewer CO2 emissions than the conventional ones” (JBIC 2010). Brunei Darussalam is cooperating on climate change (Cool Earth 50) and developing the Bio-Diversity Centre in Kuala Belalong for research in the fields of biodiversity and conservation (Yul 2007), while for Vietnam the countries announced an “intention that the two Governments would cooperate to promote 3Rs (Reduce, Reuse, and Recycle) and sound waste management in Vietnam in the context of the 3R Initiative” (JMOFA 2006). JBIC (2008) has lent Vietnam funds for a power plant that encompasses the clean development mechanism (CDM) to save energy and reduce pollution. Japan’s cooperation with Mexico also involves CDM projects, indicating that “Mexico has the third highest number of registered CDM projects in the world” (Japan Journal 2006). New Zealand cooperation New Zealand has environmental cooperation provisions for FTAs that include China, Thailand, Singapore, Brunei, Chile, Philippines

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and Malaysia (NZ Ministry for the Environment 2009). In Thailand, workshops on air quality and climate change were held during July 2009. Cooperation with China included a workshop at the Institute of Agro-Environment and Sustainable Development, Chinese Academy of Agricultural Sciences in Beijing on the identification of soil sources, by land-use, contributing sediment to the aquatic environment. Work with Chile involved studying carbon footprinting in the marketplace with a two-day workshop in Wellington conducted by government officials and a program of meetings and site visits with Landcare, Zespri and other New Zealand businesses working on carbon footprinting, plus a New Zealand–Chile Seminar on Renewable Energy in October 2009 where presentations were made “from New Zealand government departments on New Zealand’s energy profile, capabilities, legislative frameworks and policies”. The NZ Ministry of the Environment (2011) lists the following recent cooperative efforts: Education for Sustainabilty – Teachers from Singapore, Chile and Brunei attended a workshop on education for sustainability from 2–9 November 2008. The workshop was hosted by the Enviroschools Foundation in New Zealand. The teachers shared and explored ideas on education for sustainability, and on future professional exchange. The workshop was supported by MfE as a cooperation activity under the P4 Environment Cooperation Agreement. Geothermal Energy – A group of Chilean government officials attended and presented at the New Zealand Geothermal Association Workshops in Taupo from 10–15 November 2008. For further information on the workshop please see http://www. nzgeothermal.org.nz/. Thailand – A series of cooperation activities on water management, transport (bio fuels), climate change, and environmental legislation are planned for late 2008 and early 2009. Of particular interest to New Zealand is Thailand’s progress in developing transport biofuels.

Summary of impacts The review of the impacts of environmental provisions in free-trade agreements shows mixed, but generally positive results. Provisions directed at general concepts such as each party having the right to

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develop and enforce its own laws and regulations have probably been neutral (but necessary for those concerned about sovereignty), while those agreeing to enhance and enforce those laws appear to have made some positive contributions to enhancing the environment, although adequate enforcement remains an issue in several countries. The provisions that countries not relax or lower their standards to attract investment and that allow exceptions to prohibitions on trade restrictions for protecting the environment and health etc. also appear to have been positive factors in maintaining and developing strong environmental standards. However, those like Chapter 11 in NAFTA that open a country to possibly requiring compensation for losses from stronger regulations may have had negative influences, although leading to provisions in many newer FTAs that specifically provide that environmental regulations cannot be considered expropriation – that is, a taking of property that requires compensation. Overall the environmental provisions in FTAs appear to have had positive consequences for the environment. The provisions for cooperation on environmentally related programs have led to beneficial activities and programs in many of the countries that are parties to such provisions, especially in developing countries that often lack the resources or political will to carry out effective programs designed to improve environmental conditions. Very effective cooperative efforts have been carried out as result of the cooperation agreements associated with FTAs in several countries. The more successful programs generally have been associated with establishing effective institutions to carry out the efforts and the provision of resources to mount effective cooperative efforts. Of course it takes willing governments, public participation and concerned organizations (NGOs) to assure effective cooperation. It also is much easier to develop improved laws and regulations than to enforce them. Thus, cooperation often involves the training of personnel for agencies involved in environmental programs and their enforcement, as well as for the administrative and judicial branches that are required to back up enforcement with penalties for violators. Public participation is a key to effective environmental programs and polices and cooperative efforts often focus on ways to involve the public in policy-making, a process that tends to be educational about the environment and the need for concern with environmental issues. This includes provisions for citizen submissions that governments are failing to enforce their environmental laws. Although often

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Table 12.1 FTA Environmental Scorecard Measure

Result

Regulatory Effects

Tie

Multilateral Environmental Agreements

Lose

Competitiveness Effects

Win

Attract Investment/Citizen Submissions

Win

Scale Effects

Lose

Adequate and Improved Laws

Lose

Transparency (in Dispute Settlement)

Tie

Amicus Curae Briefs

Tie

Policy Making–International

Lose

Policy Making–National

Win

Advisory Committees (Environmental Reps)

Lose

Source: Derived from Wold (2010).

criticized because the agencies that process the complaints have no enforcement powers, they do focus attention on enforcement issues and make the agencies involved more aware of potential enforcement problems. Wold (2010) examined the record of environmental provisions in trade agreements and tended to be critical of the overall results, although recognizing some gains. He developed a “scorecard” for successes and failures based on the objectives of environmentalists. His results are summarized in Table 12.1. His scores for 11 categories of environmental efforts were three wins, five losses and three ties (Wold 2010, p. 349). A major defect in the environmental provisions is that they do not address scale effects – that is, the environmental effects from increases in output due to freer trade. He believes (Wold 2010, pp. 349–50) that the US should focus on scale effects by, at least in part, not negotiating trade agreements with countries that are not ready from the viewpoint of their ability to address “changes deriving from the FTAs” including environmental changes. He is also critical of the USTR’s office for not including more environmentalists on its several advisory committees.

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Appendix 12A.1: Summaries of submission and response: Minera San Xavier (2007) Summary of the matter addressed in the submission: The Submitter asserts that Mexico is failing to effectively enforce its environmental laws with respect to the authorization of an open-pit mining project in the town of Cerro de San Pedro, San Luis Potosí. In submission SEM-07–001 (Minera San Xavier), the Submitter asserts that in April 2006 the Secretariat of the Environment and Natural Resources (Secretaria de Medio Ambiente y Recursos Naturales-Semarnat) violated a Mexican court ruling by authorizing – for a second time – the gold and silver mining project by Minera San Xavier, the Mexican subsidiary of Canadian company Metallica Resources Inc. The Submitter asserts that in 2000 it successfully filed an appeal that led to a judicial decision canceling the original authorization and requiring Semarnat to consider guidelines established by the court. The Submitter asserts that Semarnat failed to comply with the court’s ruling in reauthorizing the project. Summary of the response provided by the Party: In its response, Mexico states that an administrative tribunal determined that Semarnat’s authorization was compliant with the court order. Concerning the assertion of alleged failure to enforce the law in authorizing the project, Mexico explains that the project is conditional to the implementation of environmental impact mitigation programs; it states that the project meets the siting restrictions and asserts that the EIS contains correct figures on water availability and the project’s use of explosives. Mexico emphasizes that in issuing the authorization it observed the principle of sustainable development, but argues that the precautionary principle is not binding because it has not been incorporated into the General Ecological Balance and Environmental Protection Act (Ley General del Equilibrio Ecológico y la Protección al Ambiente-LGEEPA). In accordance with Article 14(3)(a) of the North American Agreement on Environmental Cooperation (NAAEC), Mexico requested that the Secretariat proceed no further in processing the submission, asserting that the matter is the subject of pending judicial and administrative proceedings. Furthermore, it requested that the information provided by Mexico in this regard be kept confidential. Names and citations of the environmental laws in question: Ley General del Equilibrio Ecológico y la Protección al Ambiente (LGEEPA); Reglamento de la LGEEPA en Materia de Impacto Ambiental (RIA); Reglamento de la LGEEPA en Materia de Residuos Peligrosos (RRP) Submitter(s): Pro San Luis Ecologico, A.C.

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Appendix 12A.2 Citizen submissions to CEC (alphabetical order) Registry of citizen submissions

Nation

Year

Disposition

Final*

AAA Packaging

Canada

2001

Did not meet Article 14 criteria

T

Aage Tottrup

Canada

1996 Did not merit requesting a response

T

Air Pollution in suburban Canada Montreal

2008 Did not meet Article 14 criteria

T

Alberta Tailings Ponds

Canada

2010 Analyzing submission

A

ALCA-Iztapalapa

Mexico

2006 Did not meet Article 14 criteria

T

ALCA-Iztapalapa II

Mexico

2003 Factual Record Published

FR

Aquanova

Mexico

1998 Factual Record Published

FR

BC Hydro

Canada

1998 Factual Record Published

FR

BC Logging

Canada

1997 Factual Record Published

FR

BC Mining

Canada

2000 Factual Record Published

FR

Biodiversity

Canada

1998 Factual Record Published

FR

CEDF

Canada

1997 Did not meet Article 14 criteria

T

Coal-fired Power Plants

US

2004 Requested info for factual record

A

Coronado Islands

Mexico

2005 Request for FR not approved T

Cozumel

Mexico

1996 Factual Record Published

FR

Crushed Gravel in Puerto Peñasco

Mexico

2005 Recommended not to dev factual record

T

Cytrar I

Mexico

1998 Recommended not to dev factual record

T

Cytrar II

Mexico

2001 Council not to dev factual record

T

Cytrar III

Mexico

2003 Recommended not to dev factual record

T

Dermet

Mexico

2001

Did not meet Article 14 criteria

T

Devils Lake

Canada

2006 Did not meet Article 14 criteria

T

Devils Lake

US

2006 Did not meet Article 14 criteria

T

Continued

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Appendix 12A.2 Continued Registry of citizen submissions

Nation

Year

Disposition

Final*

Drilling Waste in Cunduacán

Mexico

2007

Under other judicial proceedings

T

El Boludo Project

Mexico

2002 After responses withdrawn T

Environmental Pollution Mexico in Hermosillo

2004 Did not meet Article 14 criteria

T

Environmental Pollution Mexico in Hermosillo

2005 Merits factual record

A

Ex Hacienda El Hospital

Mexico

2006 Submitters request withdrawal

T

Ex Hacienda El Hospital II

Mexico

2006 After response recommend A factual record

Ex Hacienda El Hospital III

Mexico

2006 After response recommend A factual record

Fort Huachuca

US

1996

Gasoline spill in Tehuantepec

Mexico

2006 Did not meet Article 14 criteria

T

Great Lakes

US

1998

After response did not rec. factual record

T

Guadalajara

Mexico

1998

Did not meet Article 14 criteria

T

Hazardous waste in Arteaga

Mexico

2004 After response did not rec. Factual Record

T

Home Port Xcaret

Mexico

2003

Did not meet Article 14 criteria

T

Iona Wastewater Treatment

Canada

2010

Undergoing analysis

A

Jamaica Bay

US

2000 Did not meet Article 14 criteria

T

Jetty construction in Cancun

Mexico

2008 Did not meet Article 14 criteria

T

La Ciudadela Project

Mexico

2008 Under review, information requested

A

Lake Chapala

Mexico

1997

Did not meet Article 14 criteria

T

Lake Chapala II

Mexico

2003

Developing factual record

A

Withdrawal after response

T

Continued

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Appendix 12A.2 Continued Registry of citizen submissions

Nation

Year

Disposition

Final*

Logging Rider

US

1995

Did not meet Article 14 criteria

T

Los Remedios National Park

Mexico

2006 After responses, not rec. factual record

Los Remedios National Park II

Mexico

2009 Reviewing after corrections A to submission

Metales y Derivados

Mexico

1998

Factual Record Published

FR

Methanex

US

1999

No action due to pending judicial review

T

Mexico City Airport

Mexico

2002 Recommended not pursue factual record

T

Migratory Birds

US

1999

Factual record published

FR

Minera San Xavier

Mexico

2007

Recommended not pursue factual record

T

Molymex I

Mexico

2000 Did not meet Article 14 criteria

T

Molymex II

Mexico

2000 Factual record published

FR

T

Montreal Technoparc

Canada

2003

Factual record published

FR

Mount Orford Park

Canada

2007

Did not meet Article 14 criteria

T

Neste Canada

US

2000 Did not meet Article 14 criteria

T

Oldman River I

Canada

1996

After responses fact rec. not T rec.

Oldman River II

Canada

1997

Factual record published

Oldman River III

Canada

2004 Did not meet Article 14 criteria

Ontario Logging

Canada

2002 Factual record published

FR

Ontario Logging II

Canada

2001

Factual record published

FR

Ontario Power GenerationCanada

2003

After responses, fact record T not rec.

Ortiz Martínez

Mexico

1997

Revised submission did not T meet criteria

Pulp and Paper

Canada

2002 Factual record published

FR T

FR Continued

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Appendix 12A.2 Continued Registry of citizen submissions

Nation

Year

Quebec Automobiles

Canada

2004 Requested information for factual record

A

Quebec Hog Farms

Canada

1997

T

Quebec Mining

Canada

2009 Did not meet Article 14 criteria

T

Río Magdalena

Mexico

1997

Factual record published

FR

Seal Hunting

Canada

2007

Revised submission did not T meet criteria

Disposition

After responses /council rejected P. R.

Final*

Skeena River Fishery

Canada

2009 Developing factual record

A

Species at Risk

Canada

2006 Receiving data for factual record

A

Spotted Owl

US

1995

Did mot request response from party

T

St Clair River

Canada

2007

Did not meet Article 14 criteria

T

Sumidero Canyon

Mexico

2010

Did not meet Article 14 criteria

T

Tarahumara

Mexico

2000 Did not meet Article 14 criteria

T

Transgenic Maize in Chihuahua

Mexico

2009 Response received, considering P. R.

A

Wetlands in Manzanillo

Mexico

2009 Submission under consideration

Note: * T = terminated; A = open case; FR = factual record published

Appendix 12A.3 Joint Communiqué of the United States–Chile Environmental Affairs Council and Joint Commission for Environmental Cooperation January 20, 2010 Washington, DC, United States of America The Governments of the United States and Chile convened today the fifth meeting of the United States–Chile Environmental Affairs Council

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(EAC) and the third meeting of the Joint Commission for Environmental Cooperation (JCEC) in Washington, DC. The EAC was chaired by Mr Alvaro Sapag, Executive Director of the Chile’s National Commission for the Environment (CONAMA), Mr Mark Linscott, Assistant United States Trade Representative for Environment and Natural Resources, Office of the United States Trade Representative and Mr Daniel Reifsnyder, Deputy Assistant Secretary for Environment and Sustainable Development, Bureau of Oceans, International Environmental and Scientific Affairs, US Department of State. The JCEC was co-chaired by Mr Waldemar Coutts, Deputy Director for the Environment, Chilean Ministry of Foreign Affairs and Mr Daniel Reifsnyder. Participants in the meeting included officials of the US Department of State, the Office of the United States Trade Representative, US Department of Justice, the National Oceanic and Atmospheric Administration, the US Environmental Protection Agency, the US Geological Survey, the US National Science Foundation and the US Forest Service. Chilean participants included officials of the Directorate for the Environment, Antarctic and Maritime Affairs of the Ministry of Foreign Affairs and CONAMA. The EAC reviewed progress made by Chile and the United States in ensuring effective implementation of, and compliance with, the obligations in the Environment Chapter of the FTA. Chile and the United States began discussions on the importance of developing a plan to monitor implementation and compliance with FTA obligations and will begin to take steps to further this joint effort over the next several months. Representatives of the Trade and Environment Policy Advisory Committee (TEPAC), a USTR advisory committee discussed their experiences in providing advice on trade and environmental policies. CONAMA highlighted the recent establishment of a Chilean Ministry of the Environment and explained how this new government body will bolster the Countries’ continued implementation of the FTA Environment Chapter. The JCEC heard reports detailing the status of cooperative environmental projects. Representatives from the US Environmental Protection Agency (EPA) and the US Department of State, as well as representatives from nongovernmental organization partners, Conservation VIP and the Environmental Law Institute, described the projects they are implementing and how these projects benefit the environment and citizens of the United States and Chile. Both the JCEC meeting and a significant portion of the EAC meeting were open to the public, exemplifying our mutual commitment to

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a transparent, open, and participatory process. Today’s meetings provided an opportunity for the public to learn about the ways in which the United States and Chile are cooperating to preserve and protect the environment and to ask questions about and to provide input on environmental cooperation work programs. Chile and the United States signed a new Work Program which lays out a road map for US–Chile environmental cooperation through 2011. The new Work Program identifies long-term goals to: (1) strengthen effective implementation and enforcement of environmental laws and regulations; (2) encourage development and adoption of sound environmental practices and technologies, particularly in business enterprises; (3) promote sustainable development and management of environmental resources including wild fauna and flora, protected wild areas, and other ecologically important ecosystems; and (4) encourage civil society participation in the environmental decision- making process and environmental education. The Work Program also identifies priority areas for future cooperation. Today, the United States and Chile reaffirmed our strong commitment to work together to preserve and protect the environment. Our cooperative environmental work tangibly demonstrates that trade and environmental protection can be mutually supportive.

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13 Summary and Outlook

The last two decades have been characterized by the proliferation of regional and bilateral trade agreements with the basic objective of reducing barriers to trade between the member parties of the agreements. The process has accelerated with the failure of the multilateral Doha Round of negotiations to reach agreement. Since the pioneering effort by the NAFTA negotiations to include other issues in both the main FTA and corresponding side agreements, the inclusion of environmental provisions in FTAs has become fairly typical. The incorporation of environmental issues in the NAFTA agreement was a necessary concession to environmentalists to help pave the way for ratification of the agreement, since there was widespread opposition to a trade agreement with Mexico based on fears of a race to the bottom and job losses in the case of both the labor and environmental provisions. During this time period, the early 1990s, the Uruguay Round of the GATT negotiations was also being concluded and led to concessions as well, although not in the GATT agreements except for an objective; instead a permanent Committee on Trade and Environment (CTE) was created, helping to establish environmental issues in trade regimes and making them integral in the newly created World Trade Organization (WTO) and subsequent Doha Round of multilateral negotiations.

Summary The proliferation of trade agreements and the inclusion of environmental provisions within them were controversial when first discussed – see the 1993 Scientific American debate between Bhagwati and Daly – and remains a contentious topic for many free trade advocates, as well as environmentalists (Bhagwati 2008). Free-trade economists generally 241

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oppose the inclusion of what they term “trade-nonrelated provisions” in trade agreements (many also oppose the rise of bilateral and regional FTAs, which they see interfering with or being inimical to the multilateral trade system of GATT/WTO). They see gains in economic welfare – that is, increased incomes, resulting from freer trade – which are perceived as a precursor to environmental improvements since higher incomes are presumed to lead to increases in demand for a cleaner environment. The Kuznet’s environmental curve (EKC) is a manifestation of this effect as people’s incomes rise. Bhagwati (2008), in particular, opposes the inclusion of environmental provisions in trade agreements as detracting from the effectiveness of liberalizing trade. He prefers to see these matters, which he labels “trade-unrelated” issues, approached as separate policies with environmental issues being addressed by the Multilateral Environmental Agreements (MEAs) and trade issues nearly exclusively by the WTO, although unilateral liberalization of trade is also acceptable. He realizes that there can be down sides to trade but prefers to see them addressed by appropriate policies when they arise (which may be too late). He maintains (Bhagwati 2008, p. 72): “it is noteworthy that the PTAs among the poor countries are almost never characterized by the inclusion of such trade-unrelated issues”. Inclusion of environmental provisions is often viewed as protectionist especially by developing nations. While largely true of an earlier era, developing countries now often include some environmental measures in trade agreements, even those among themselves, as shown in Chapters 8–10. Many environmentalists, on the other hand, have assumed that trade is harmful to the environment and fear that trade rules are being stacked against the environment, as in the case of dispute settlement under GATT/WTO rules. This resulted, in part, from the dolphin–tuna case brought by Mexico against the US, where the Marine Mammal Protection Act was used to prohibit imports of tuna caught in ways that harmed dolphins and which the US lost. Thus, many environmentalists see trade policy as attempting to make environmental laws and regulations subservient to trade rules. While rulings in subsequent cases have been more favorable to environmentalists, the fear remains that WTO dispute settlement rulings can overturn hard-won legislation to protect the environment. Additionally, environmentalists tend to see trade as producing results that are harmful to the environment, generally because they observe that many nations that benefit from free-trade rules do so by allowing practices that harm the environment. Fundamentally, many environmentalists believe that the trading

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systems developed under GATT/WTO, NAFTA and other trade agreements do not adequately protect the environment and that it is not only legitimate but necessary to combine trade and environmental regimes to assure that the environment is protected. There is also a belief that, while very beneficial, the many-faceted multilateral environmental agreements (MEAs) are no match for the singular trade governance of the WTO, although the growth of the bilateral and regional trade agreements is challenging the once-dominant trade regime that GATT presented and which was the major force in the growth of trade and globalization trends during the last half of the twentieth century – that is, in the post-World War II era. Much of the controversy concerning trade and the environment revolves around the environmental effects of trade and the challenges to contentions of some free-trade advocates that trade produces unambiguous benefits for the environment. Studies of trade and the environment have shown that the effects of trade on the environment for a particular trade policy – for example, a free trade agreement – cannot be determined on an a priori basis but will be determined by a number of interacting factors, including the environmental policies of the trading partners. Trade effects can be either positive or negative, depending on the interactions of scale, composition and technique effects, although there also are potential effects not accounted for by those three influences (Copeland and Taylor 2004). “Scale” refers to increases in volume of production (consumption) and, with other things equal, will always have negative environmental effects as larger volumes of production are associated with larger volumes of waste to be disposed of in the environment. “Composition” refers to the mix of goods or services produced (consumed) and changes in the mix can have either positive or negative effects, depending on whether more or less polluting goods are in the final mix. “Technique” refers to the methods of production (consumption) which can be more or less polluting – while we tend to think of newer techniques being less polluting, this is not always the case. In addition to the three effects listed above, trade can have other effects, including pollution from transportation of traded products (sometimes included in scale effects), negative impacts on biodiversity and the spread of invasive species that can travel with the products being traded, in the ballast of ships transporting the products, or by hitchhiking in various other ways. The existence of appropriate environmental legislation combined with strong enforcement is generally the key to whether the net environmental impacts will be positive or negative. While adequate environmental policies can mitigate the unfavorable environmental

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effects of trade, there is never an assurance that the appropriate policies will be in place or developed rapidly enough to offset the damages from trade-associated changes in production and consumption. In addition, enforcement is often inadequate, especially in developing countries with limited resources, both limited human capacity and restricted financial resources, and where corruption can be a factor (although corruption is not limited to developing countries). Despite strong arguments against proliferation of bilateral and regional trade agreements, the movement has gained traction and now a very large share of the world’s nations are members of one or more such agreements. Several factors have contributed to this movement. One is the success of the EU and its predecessor organizations as an integrated economic system. While other groups of nations in Latin America, Africa and Asia have tried to emulate the European success, few have succeeded – although more recent ones are more successful in stimulating trade, as, for example, NAFTA. Another factor is the inability of the GATT/WTO process to achieve more significant cuts in trade barriers, especially among the group of larger developing countries; bilateral or regional negotiations are often able to make more significant cuts, as in the case of NAFTA. The slowness in reaching a consensus in the Uruguay Round and the inability to conclude the Doha Round have also contributed the use of alternative approaches to expanding trade. Finally, when the major players in developing and supporting the multilateral approach (the EU and, especially, the US) joined in the use of FTAs, important psychological barriers to FTAs were broken. In addition, a strict interpretation of GATT Article XXIV seems to have been abandoned, making implementation of trade agreements easier, as there appear to be no significant obstacles to negotiating and implementing FTAs other than getting the parties involved to agree on the contents and details of the agreement. Opposition to including environmental provisions in FTAs also seems to have diminished greatly, despite continued opposition by Bhagwati (2008) and some other free-trade advocates, as well as some developing countries. Several of the latter now include environmental provisions in their FTAs even when among themselves, as in MERCOSUR, Chilean agreements and even some of Mexico’s FTAs. Thus, a growing number of recent FTAs have environmental provisions, although they might just be an objective in the preamble or an article to repeat GATT’s Article XX, which permits exceptions for environmentally related purposes to the GATT rules prohibiting trade restrictions. Most go well beyond that, with environmental provisions ranging from a few basic

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points to complete chapters and frequently side or related environmental agreements. Environmental issues also are a part of the Doha Round of negotiations, although of a relatively limited nature compared to the environmental provisions in many FTAs. The environmental provisions included in FTAs vary widely but might be categorized into three broad types: general provisions, environmental cooperation procedures and institutional arrangements for carrying out the environmental provisions. The more general types of provisions can include a commitment to environmental protection, commitment to enforce environmental laws, commitment to strengthen environmental laws, recognition of the right parties to develop their own laws, maintenance of environmental standards including not weakening laws or enforcement to attract investment, relationships to WTO, relationships to MEAs and other FTAs, exceptions from prohibited trade restrictions for environmental protection, sector-specific provisions (agriculture, industry, mining, energy, tourism), environmental stewardship, exempting environmental laws from being considered expropriation and dispute settlement procedures (in addition to those for trade disputes). Environmental cooperation can take a number of forms and may involve various degrees of commitment. Some FTAs have an article on cooperation that commits the parties to cooperate and often gives an extensive list of areas of cooperation but leaves the details to be worked out later. Others may set up a more detailed program and provide for a mechanism to carry out the cooperative efforts. The implementing agency also varies but often has the environmental ministry (agency) or the foreign affairs ministry in charge or has shared responsibilities. They may be administered or funded by the country’s aid agency (in the case of developed countries). Often multiple agencies are involved in carrying out the cooperative efforts, including justice, commerce, forestry, agriculture, tourism, energy etc., as well as the foreign and environmental affairs agencies, NGOs and others, including the private sector. The administration of the cooperative efforts and other environmental measures takes various forms, from complex to simple arrangements or sometimes, for the environmental provisions, none at all since there may be very little to administer. There is considerable variation even among agreements made by the same country as, for example, those by the United States. Agreements often allow for consultations when one party believes the other is not carrying out its obligations. For administrative purposes, the most detailed agreements may set up secretariats,

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as was done in NAFTA, CAFTA–DR, and Canada–Chile (two small units one in each country). A frequent arrangement consists of a commission of high-level officials for overseeing the effort with a council or committee of lower-level officials more directly involved in the agreement’s environmental implementation. Others may have a point of contact appointed by each party to the FTA who functions as the individual for the other party to contact with respect to implementation and other matters. In FTAs with few environmental provisions, they may be handled by those concerned with general issues, such as trade issues. Disputes may be handled by special mechanisms developed just for those issues or through the regular dispute settlement mechanism of the agreement, if one exists; some do not provide for a mechanism to settle environmental disputes or limit the types of disputes to, for example, those related to nonenforcement. Ex ante environmental impact analyses are made by several countries, especially by Canada, the European Union and United States; the US and Canada are required to make the assessments and the EU does so as a matter of policy. These are made to help guide negotiations in ways that consider the environmental consequences and to help in designing policies or actions to help mitigate any negative impacts. The process often involves making an initial assessment based on the expected contents of the FTA, a revision as the details of the agreement become known and a final assessment based on the completed FTA. The usual procedure is to estimate the economic impacts expected based on changes in production and consumption and then to determine expected environmental impacts. While both quantitative and qualitative methods may be used, the tendency is to use economic models to estimate the economic impacts – often a computable general equilibrium model, although partial equilibrium models may also be used. The environmental impacts can then be estimated based on known relationships from past studies between economic changes and the environment. The US and Canada make separate environmental impact analyses from those for labor and other analyses, while the EU makes sustainability impact analyses (SIA) that simultaneously examine economic, social and environmental impacts. The usual approach ignores some potential environmental impacts such as effects on biodiversity or from invasive species, which are not incorporated into the economic models, although they may be evaluated by qualitative approaches. Ex post analyses have shown that the impacts of trade on the environment have been mixed and have found that trade is neither automatically good nor bad for the environment. This has been shown for NAFTA,

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which has been subject to extensive analyses by both the Commission on Environmental Cooperation, a NAFTA agency and by other analysts (Carpentier 2006). These analyses have demonstrated that the pollution haven hypothesis, that Mexico would attract polluting industries, was not correct, although there were significant changes in production and consumption in all three parties to the agreement. The studies also have demonstrated that the policy context is important in determining the extent and nature of the environmental impacts – that is, that appropriate environmental laws and regulations and their enforcement can mitigate much of the negative impact that the economic changes due to trade produce. Since the purpose of including environmental provisions in trade agreements is to help protect and improve the environment, it is important it determine if those provisions have been effective in achieving those two objectives. It is difficult to determine the impacts of the general provisions such as pledges to not weaken environmental protection to attract investment or to improve efforts directed at protecting the environment since many factors interact to determine the current environmental status. However, there appears to be no evidence of countries becoming pollution havens after entering into free-trade agreements with those kinds of provisions. There is some evidence of countries strengthening their environmental laws after agreeing to do so in US FTAs, although often there were other factors involved that affected legislation (GAO 2009). There has been a general movement to strengthen environmental laws in many nations as awareness of degradation has grown and as citizens have become more active in demanding environmental protection, both individually and as members of environmental groups. The provisions for citizen information, inputs and participation in FTA provisions are evidence that this movement engenders greater activism, concern and awareness as promoted by the FTA negotiations around environmental issues. Thus, one of the impacts has been to focus attention on trade-related environmental issues as well as the environment generally. The cooperation provisions of the FTAs and accompanying ECAs have had very significant impacts in a number of participating nations. First, there have been numerous environmental projects in developing countries financed by funds provided through the FTA, related funding from assistance agencies or other government agencies, including the developing countries’ own funds or private funding from NGOs, foundations and others. Many agencies and groups have participated in these activities, which have included forestry

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improvement and management, agricultural production and processing, fisheries, national parks, endangered species and migratory birds, pulp and paper effluent research and treatment technologies, water resources, waste management and disposal, hazardous materials, and other environmental issues. A significant portion of the cooperative efforts has been on information exchanges, environmental technology, capacity-building for implementing and enforcing environmental laws or other environmentally related activities, and citizen participation in environmental policy. The latter includes citizen submissions regarding their governments’ failures to enforce or follow their environmental laws and regulations, a provision initiated in NAFTA and included in several subsequent agreements, especially in those by Canada and the United States. An important aspect of cooperation is often training and capacitation for environmental activities related to enforcement of environmental laws including the judiciary, as well as enforcement officials. Related activities might also include equipping laboratories and training of technicians for conducting tests such as air and water quality as well as detecting pollutants such as heavy metal in effluents. Important factors affecting the efficacy of cooperative efforts are their implementation and financing. The procedures seem to be more effective when there is a permanent and specialized agency, such as the secretariats for the NAFTA, CAFTA–DR and Canada–Chile FTAs. More typically, the FTA/ECA will provide that the funding is to come equally from the parties or is simply left to be determined along with details of the cooperative efforts. Aid from the developed partner countries assistance agencies, such as USAID or the European Development Fund, may be involved in financing and implementing some aspects of the cooperation, as might be other government agencies such as, for the US, the Environmental Protection Agency, Department of Agriculture, Forest Service, State Department (through its Bureau of Oceans, International Environmental and Scientific Affairs), etc. Often the agreements provide that a commission, council or committee, usually of high-level officials, be appointed to implement the environmental cooperation agreement. These meet once a year, more frequently if needed, to review progress and make plans for future activities – often developing a work plan for future activities. The reports of these activities generally provide few details on the accomplishments, although some are informative. There often is just a press release that indicates that results were presented and discussed, but without details. Additional information may be available on websites dedicated to a particular ECA, those of government agen-

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cies involved in implementing cooperative activities, or those of NGOs participating in the cooperative efforts. However, little or no information exists for the environmental impacts of many of the FTAs with environmental provisions, which severely hampers judging their effectiveness.

Conclusions One of the major conclusions of studying free-trade agreements that include environmental provisions is that there is increasingly a tendency to incorporate environmental issues in trade agreements, from the proposed new multilateral agreement being negotiated in the Doha Round through nearly all of those of major economies such as Canada, European Union and United States, but also within several between developing nations that once opposed including environmental issues in their agreements. While opposition still exists among some countries and among some free-trade economists, it appears to be a trend that will not be reversed in the near future. The continuing impasse in the Doha multilateral negotiations is spurring development of bilateral and regional FTAs and growing concerns about environmental degradation help promote the inclusion of measures to assist in mitigating those effects. The tuna–dolphin decision by a GATT dispute review panel alerted environmental activists to a perceived danger to hardwon environmental victories and resulted in continued pressure on trade negotiators. Although some subsequent rulings have been more favorable to environmentalist positions, many continue to see trade as a threat to their concerns about environmental protection. Environmental provisions have important impacts on improving environmental conditions in members of the FTAs, especially when the agreement is between more- and less-developed partners. The lessdeveloped countries often lack the resources, will or motivation to adequately address environmental issues when they have very important economic and social problems that need urgent attention. In a study comparing air quality due to transportation in the US and developing countries Marcotullio et al. (2005, p. 143) concluded: Our results imply that relative to the US experience, developing countries face greater environmental challenges at a time when there are fewer economic resources available to address them. We expect this tension to be particularly problematic for countries that are not growing economically. Waiting to respond to environmental issues

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may be disadvantageous, because challenges can become more complex over time. Thus, addressing environmental problems earlier in the development process can be more effective than waiting until the problems are more severe by delaying until incomes to rise sufficiently to provide the resources as implied by the environmental Kuznets curve. FTAs help provide the resources, technology, training and motivation through a concerned citizenry, so that environmental degradation problems can be addressed earlier or in some cases avoided Environmental provisions have had favorable impacts on the environments of affected countries, although not to the extent environmentalists might have expected. Several countries have strengthened their environmental laws, initiated new environmental agencies or strengthened existing agencies, enhanced their enforcement capabilities although enforcement remains a weakness in some countries, and developed improved environmental monitoring including both air and water quality regimes. Efforts have been made to enhance biodiversity, protect endangered species, reduce illegal logging, improve the management of forests and other natural resources, strengthen management of national parks and other protected areas, improve agricultural practices and carry out many specific environmental projects. Many of the FTAs contain provisions for public involvement and implementing these provisions has helped increase public knowledge, understanding and support of trade agreements and their environmental provisions. This includes citizen submissions on nonenforcement, which opens an avenue for the public to pressure governments to more adequately enforce environmental laws; they also help to focus attention on weaknesses in laws and enforcement mechanisms. A major weakness in many of these efforts is a lack of resources to more adequately implement environmental activities – a weakness addressed by many FTAs. Cooperative endeavors are outlined in FTAs or more frequently in their side agreements or separate, although connected, environmental cooperation agreements. These have provided resources, environmental information and education, training and capacitation of environmental officials and private-sector participants, enhanced enforcement capabilities and facilities, and implemented specific environmental projects by governments and private-sector agencies such as NGOs. However, many FTAS or ECAs do not provide resources to carry out the cooperation; it is left to the implementing groups to develop specific cooperation plans, obtain partners to implement them and find financial resources to

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fund the activities. Resources come from various agencies of their own and partner countries, including aid agencies, as well as from private sectors sources such as foundations, NGOs and corporations. However, the lack of secure funding tends to limit the cooperative efforts associated with a number of FTAs. There also is some lack of transparency. For example, press releases from the US State Department report on meetings of ECA commissions and/or councils and indicate that reports of progress were presented, but do not indicate what the progress was or give links to where the reports might be found, nor do searches of the agencies and most organizations involved, with the exception of the US Environmental Protection Agency. Although not a provision in FTAs, ex ante environmental assessments play a significant role in the FTA negotiation and implementation process and are induced by environmental concerns about trade. These assessments can help determine the provisions and cooperative activities to be included in the FTA or ECA. Generally, the analyses have found that there would be few impacts in industrial partners to the FTA, but more significant impacts in the less-developed partners. The increased trade is relatively small compared to the totals in the developed country and, thus, would be expected to have only minor impacts. A deficiency in this process is that it tends to examine the overall impacts and does not consider their spatial characteristics – while the overall impacts might be minor they could be devastating in particular locations. Another deficiency is that each FTA is examined in isolation from all the others and, while the individual impact might appear minor, the cumulative effects of several FTAs could be significant. Another conclusion is that environmental provisions in trade agreements are not adequate to fully address significant international environmental problems and that most of that burden falls on the numerous multilateral environmental agreements (MEA). Opponents of including environmental provisions in FTAs often argue that the many MEAs are sufficient, as well as the appropriate place to address such problems, but proponents fear that dispute panel rulings could negate the specific trade obligations (STO) contained in several MEAs, although there have never been any disputes involving trade and an MEA. The shear magnitude of many environmental problems precludes their being handled effectively by trade agreements, especially bilateral and regional agreements, although they can address more limited issues that are more directly tied to the effects of trade and can use cooperative arrangements to improve capacities to implement more effective environmental policies and projects. Nonetheless, MEAs are the more appropriate

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venue for handling most international environmental problems, a fact recognized by provisions in many FTAs.

Implications The trend toward including environmental provisions in trade agreements appears certain to continue as more countries buy into the movement. Once a nearly exclusive agenda item for Canada and the United States, they have now been joined by the European Union, Japan and numerous other nations, including several developing countries. When negotiations for the Free Trade Area of the Americas began in the mid1990s only the US and Canada favored including environmental issues in the agreement, but now several Latin American counties routinely have such provisions in their agreements, even some of those with each other. The provisions will continue to encompass measures to protect against weakening rules to attract investment, pledges to strengthen environmental laws and their enforcement, assurances that the environmental laws are exempt from GATT/WTO rules prohibiting trade restrictions, efforts to involve public participation in the environmental policy, promotion of stewardship by the private sector and cooperation to strengthen all of those activities while maintaining the rights of each country to develop and enforce its own environmental laws and regulations. Resource limitations, inadequate institutional mechanisms for implementation, lack of monitoring and deficiencies in documenting environmental achievements, however, prevent the full realization of the potentials of the environmental provisions in FTAs. If, for example, the potentials of the cooperation provisions are to be realized they will need to be assured of adequate and assured funding as well as strong mechanisms for their implementation. Cooperation agreements that have those characteristics and are relatively well financed can point to significant achievements as with NAFTA and CAFTA–DR, which have significant funding although even theirs are limited – NAFTA’s CEC, for example, receives $9 million a year which permits it to carry out important programs but its significance declines as inflation decreases its purchasing power. Most environmental cooperation agreements do not receive separate funding but are supported by the agencies charged with their implementation which may or may not permit adequate levels of activities. Despite this, there are indications that cooperative activities are occurring under a number of the FTA/ECAs that have been implemented in recent years.

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The relatively poor documentation of the accomplishments under the cooperative efforts for several of the FTAs also has implications, at least for continued public support for including environmental provisions in trade agreements. The CEC has been exemplary in documenting its activities through its website and by other means. The CAFTA–DR secretariat also documents many of its activities. Canada provides good information on cooperative activities in Chile but less so for some other FTAs – very little information is provided for the FTA with Costa Rica, leaving the inference that little has been accomplished. The US State Department frequently issues press releases on the meetings of councils/commissions for some of its ECAs and indicates that reports on accomplishments were given but without details or links to the reports or to the cooperative activities including results. Such relatively simple modifications could be beneficial for understanding and achieving support for the environmental activities of FTAs. The use of environmental assessments, as in the EU sustainability impact analyses, is a useful tool that can both assist in negotiating the final terms of an FTA, especially the environmental provisions, and in developing strategies to mitigate any anticipated negative impacts on the environment. However, the analyses may not be used to the extent they could be since the negotiations tend to focus on trade issues. Furthermore, a frequent finding, at least for the developed countries that tend to utilize the assessments, is that the environmental impacts are not significant since the FTA affects production or consumption only to a small extent. This ignores two factors: that the results are for the entire economy and there can be important localized effects and that while the impacts from each FTA might be small, the cumulative effects can be significant if a nation engages in several trade agreements. The first implies that the analyses should include the spatial effects to isolate any localized negative impacts. The second indicates that a country might need to examine the environmental impacts of its overall trade regime to determine if there are important environmental consequences other than those associated with a single FTA. A final implication could be that the environment is very important and the factors affecting it include trade. Thus, it is legitimate to incorporate environmental provisions in trade agreements as one means to help prevent environmental degradation and to contribute positively to environmental improvement. However, this approach should not be conducted in isolation from other endeavors to improve environmental conditions, including the multilateral environmental agreements, domestic environmental laws and private-sector approaches,

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including NGOs, corporations and private citizens. There is a need to coordinate efforts and help assure that these are not duplicative and wasteful of resources. Attempts should be made to assure that the various approaches to environmental issues are complementary. The recognition of the roles and importance of the MEAs and assuring that they are implemented are included in many recent FTAs is a recognition of this and a step in the right direction.

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Notes 1 Introduction 1. References are not given for most of the material in this chapter since it is basically a summary of the topics covered in the following chapters, which will be fully documented. 2. While environmental provisions are a relatively minor part of FTAs, they and other trade-related matters, such as labor, are becoming important aspects of many trade agreements. For a more general discussion of the trade agreements negotiated in recent decades see Lynch (2010).

3

Background Issues

1. Although Mexico won the dispute, it did not attempt to enforce the ruling and the US negotiated with tuna-fishing nations to protect the dolphins. As a consequence, the estimated number killed declined from over 139,000 in 1988 to around 2,000 in 1998 (NOAA 2002). However, the Marine Mammal Protection Act was amended in 1995 to make it comply with the GATT dispute panel ruling. 2. Most economists and other free trade advocates recognize that there are potential conflicts between multilateral environmental and trade agreements. They often blame these problems on trade and/or policy failures. 3. Many environmentalists and environmental organizations oppose free trade agreements and have been part of the protests that erupted in and that have plagued subsequent international meetings and trade liberalization efforts. For statements of four major environmental organizations see: Friends of the Earth (2001), National Wildlife Federation (2000), Sierra Club (2001) and World Wildlife Fund (2002a); see also Sampson (2000) and Naím (2000). 4. While Bhagwati is a very strong free trade advocate, he recognizes many of the problems and issues involved in the implementation of freer trade regimes, including those resulting from preferential or regional trade agreements. In addition to the paper cited (Bhagwati 2000), see also his book, Free Trade Today, for a succinct presentation of his views (Bhagwati 2002), as well as his In Defense of Globalization (Bhagwati 2004). 5. The development of ISO 14000 standards on the environment may offer a long-run approach to handling environmental issues in international trade since these will provide a common set of standards for industries to utilize in developing and implementing environmentally appropriate procedures (UNCTAD 2001). Schaper (2000, p. 34) indicates that there was a large increase in ISO 14000 certified firms during the 1990s, especially in Argentina, Brazil and Mexico.

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5

Notes

Environment and GATT/WTO

1. The trade disputes are documented on the WTO’s dispute settlement website: http://www. wto.org/english/tratop_e/dispu_e/dispu_e.htm

6 FTA Trade Provisions 1. Chaytor (2009, pp. 3–11) uses the following four categories: 1) scope of environmental provisions, 2) environmental cooperation, 3) reference to international environmental agreements and 4) national laws on environment, but with various topics under each. For example, under “scope” are: references to sustainable development, natural resources and the environment, other thematic areas and general exception clauses. National laws include enforcement where the parties: “agree not to encourage trade or foreign direct investment to enhance or maintain a competitive advantage by: (a) lowering the level of protection provided by domestic environmental and public health legislation; (b) derogating from, or failing to apply such legislation.” 2. Less and Kim (2008), Less and Gigli (2008) and Gigli (2009) are updates to the OECD (2007) publication, a comprehensive analysis of environmental provision in FTAs. 3. The EC (or European Union) consists of the following nations: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Finland, Italy, Cyprus, Latvia, Lithuania, Luxemburg, Hungary, Malta, Netherlands, Poland, Portugal, Romania, Slovenia, Slovakia, Sweden and the United Kingdom. The CARIFORUM States are Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, Saint Christopher and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Suriname and Trinidad and Tobago. 4. EFTA consists of Iceland, Norway, Switzerland and Liechtenstein. 5. SACU (Southern African Customs Union) is composed of Botswana, Lesotho, Namibia, South Africa and Swaziland. 6. CAFTA consists of the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

7 US Trade Agreements 1. Big-leaf mahogany is listed by the Convention on International Trade in Endanger Species (CITES) as an endangered species and the activities are to include a strategic plan for its management and preservation, including the financing of the activity. 2. TEPAC (Trade and Environmental Advisory Committee) noted, in its report on the agreement, that the language with respect to expropriation could be confusing since it included a provision allowing some types of indirect expropriation. However, the final part of that section stated that environmental measures could not be considered expropriations except in rare circumstances (TEPAC 2007). 3. A number of factors have contributed to the failure of the FTAA negotiations. First is the sheer magnitude of the project, with some 34 countries

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Notes 257 with differing situations with respect their economies and other factors; second is the nature of the negotiations with a situation similar to that which has prevented convergence in the Doha Round of negotiations with US and developing countries taking strong and mutually inconsistent positions, and finally there was a change in leadership in a few Latin American countries with strong left-leaning governments in Venezuela and Bolivia, who took strong anti-American positions (the strong opposition to the Iraq war could also have contributed to a deterioration of trust).

8

FTAs in the Americas

1. Asociación Latinoamericana de Integración (ALADI) consists of Argentina, Bolivia, Brasil, Colombia, Chile, Cuba, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela. It was created by the Treaty of Montevideo in 1960, which also created the Latin American Free Trade Association (LAFTA) originally including Argentina, Brazil, Chile, Mexico, Paraguay, Peru and Uruguay, but now with the 12 members listed above for ALADI. 2. The European Free Trade Area (EFTA) consists of Iceland, Liechtenstein, Norway and Switzerland. 3. The three are General System of Trade Preferences (GSTP), Latin American Integration Association (ALADI), and Protocol for Trade Negotiation (PTN). See Table 9.3 for membership in these organizations. 4. The Chile–EU FTA has extensive provisions for cooperation covering many areas in addition to environmental cooperation. Title I of the agreement is concerned with cooperation (Title IV is on trade). The agreement, thus, is much broader than just trade. 5. Venezuela was to become a full member in 2006 but its membership has not been approved by one of the members (Paraguay) due, at least in part to the antiAmerican attitude of Venezuela’s president, Hugo Chávez (Fast Facts 2007).

9

European Trade Agreements

1. See Chapter 6, Note 3. 2. See Chapter 6, Note 3. 3. Original OCT members, as listed on the WTO RTA database, were French Polynesia, French Southern Territories, Netherlands Antilles, New Caledonia, Saint Pierre and Miquelon and Wallis and Futuna Islands. Current members are: Anguilla, Aruba, British Indian Ocean Territory, Cayman Islands, Falkland Islands (Islas Malvinas), French Polynesia, French Southern Territories, Greenland, Mayotte, Montserrat, Netherlands Antilles, New Caledonia, Pitcairn, Saint Helena, Saint Pierre and Miquelon, South Georgia and the South Sandwich Islands, Turks and Caicos Islands, Virgin Islands, British [Virgin Islands] and Wallis and Futuna Islands.

10

Trade Agreements in ROW

1. APEC is composed of the following countries: Australia, Brunei, Canada, Indonesia, Japan, Republic of Korea, Malaysia, New Zealand, Philippines,

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Notes

Singapore, Thailand, United States, Chinese Taipei (Taiwan), Hong Kong, China, People’s Republic of China, Mexico, Papua New Guinea, Chile, Peru, Russia and Vietnam. 2. SPARTECA consists of the following countries: Cook Islands, Fiji, Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, New Zealand, Niue, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu. 3. The Trans-Pacific Strategic Economic Partnership includes Brunei Darussalam, Chile, New Zealand and Singapore.

11 Environmental Impact Analysis 1. The case was Public Citizen v. Office of US Trade Representative, filed by the organizations Public Citizen, Sierra Club and Friends of the Earth in the District Court of Washington, DC (782 F. Supp. 139 (1992)). Judge Richey ruled in favor of the plaintiffs on January 7, 1992 and ordered a NEPA-style EIS. However, the government appealed and the Circuit Court reversed the opinion in a ruling decided September 24, 1993 (5 F. 3rd 549 (1993)). The plaintiffs had filed an earlier suit, in 1991, but it was dismissed as they did not have standing. 2. The TPSC is the: “Trade Policy Staff Committee (TPSC), established under section 242 of the Trade Expansion Act of 1962, as amended, 19 USC section 1872, is the principal staff-level mechanism for interagency decision making on US trade policy. The current participants in the TPSC process with respect to the implementation of these Guidelines include all agencies with relevant environmental, economic and foreign policy expertise.” 3. The descriptions of each stage are taken from the initial environmental assessment of the Canada–Panama FTA. 4. The United States does carry out other analyses, including labor impacts, as well as considering other factors through a series of advisory committees. 5. The claim of developing the SIA methods from scratch should be viewed skeptically, since the approaches used by Canada, the US and others were factors in the development of the EU’s assessment procedures; see, e.g., Kirkpatrick and George (2006, p. 326) who say “The initial methodology for SIA of trade agreements was developed in early 1999 ... building on earlier North American experience of assessing the environmental impacts of trade policy.” 6. Several different CGE models are available and have been used. These include GTAP, Berkeley, Michigan, Baylor, US Model and RUNS (Gallagher et al. 2001).

12

Impacts of Environmental Provisions

1. Chantal Carpentier, at the time of the article, was head of the Economy and Trade Program of the CEC. 2. The interactive atlas is located on the CEC website at http://www.cec.org/Page. asp? PageID=924&SiteNodeID=495 3. The CEC maintains a registry of submissions wherein a complete record of each citizen submission is fully documented. See http://www.cec.org/Page. asp?PageID=751&ContentID =&SiteNodeID=250&BL_ExpandID=

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Notes 259 4. “The Submitters alleged that the appropriate authorities failed to effectively enforce environmental laws during the evaluation process of the project ‘Construction and Operation of a Public Harbor Terminal for Tourist Cruises on the Island of Cozumel, State of Quitana Roo’.” See http://www.cec.org/Page. asp?PageID=924Site NodeID=543 5. The OAS (2009, p. 4) reported: “The suspension of Honduras from the exercise of its right to participate in the OAS, and the decision of the US Government to suspend development aid for Honduras, including support for CAFTA-DR environmental standards has caused significant delays in the execution of programs and has considerably affected regional programs.” 6. The GAO report was prepared by Nathan Associates but heavily edited by GAO and published as a GAO document. 7. The Caribbean Regional Negotiating Machinery was the office in charge of trade negotiations for CARICOM. It is now the Office of Trade Negotiations (OTN).

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References 279 US Trade Representative (USTR). “Environment and the FTAA: Public Summary of the U.S. Position.” http://www.ustr.gov/regions/whemisphere/ftaa.shtml, accessed October 12, 2001a. US Trade Representative (USTR). “U.S. Wins WTO Case on Sea Turtle Conservation.” http://www.ustr.gov/releases/2001/10/01-87.pdf, accessed October 29, 2001b. US Treasury. “North American Development Bank (NADBank).” http://www. ustreas.gov/ offices/international-affairs/intl/fy2003/tab10_nadb.pdf, accessed May 3, 2010, 2003. Valente, Marcela. “Mercosur: Integration, Environment and Pragmatism.” http://www.tierra america..net/2001/00408/iaritculo.shtml, 2001, accessed May 23, 2010. van Veen-Groot, Daniëlle B. and Peter Nijkamp. “Globalization, Transport and the Environment: New Perspectives for Ecological Economics.” Ecological Economics 31 (1999), 331–45. Varady, Robert G., David Colnic, Robert Merideth and Terry Sprouse. “The U.S.–Mexican Border Environment Cooperation Commission: Collected Perspective on the First Two Years.” Journal of Borderland Studies (University of Arizona) 11:2 (Fall 1996). Villa, Juan C., Dan Middleton, Jeffery E. Warner, Jolanda Prozzi and Jorge Prozzi. “Integration and Consolidation of Border Freight Transportation Data for Planning Applications and Characterization of NAFTA Truck Loads for Aiding in Transportation Infrastructure Management: First Year.” College Station, TX: Texas Transportation Institute, Texas A&M University, December 2007. Villarreal, M. Angeles. “U.S.–Peru Economic Relations and the U.S.–Peru Trade Promotion Agreement,” CRS Report for Congress RL34108. Washington, DC: Congressional Research Service, 2007. Vilos-Ghiso, Silvana J. and Diana M. Liverman. “Scale, Technique and Composition Effects in the Mexican Agricultural Sector: The Influence of NAFTA and the Institutional Environment.” Research Paper presented at the Third North American Symposium on Assessing the Environmental Effects of Trade, Montreal, November 30–December 1, 2005. Voituriez, Trancrède, Paul Ekins, Hernán Blanco, Ingmar Von Homeyer and Dirk Scheer. “Making Trade Sustainable Impact Assessment More Relevant to Trade Negotiations.” Impact Assessment and Project Appraisal 24:4 (December 2006), 335–42. Water Encyclopedia. “Oil Spills: Impact on the Ocean.” http://www.waterebncyclopedia.com/ Oil-Sills-Impact-on-the-Ocean,html, accessed March 16, 2010. Weinstein, Michael M. and Steve Charnovitz. “The Greening of the WTO.” Foreign Affairs 80:6 (November–December 2001), 147–56. Whaley, John and Ben Zissamos. “Making Environmental Deals: The Economic Case for a World Environmental Organization”, in D. Esty and M. Ivanova (eds), Global Environmental Governance: Options & Opportunities. New Haven: Yale School of Forestry and Environmental Studies, 2002. Wilson, Graham K. “Dolphins and Tuna, Shrimp and Turtles: An American Tale or Policy Making Goes Global?” La Follette Institute for Public Policy, University of Wisconsin, 1999, http://www.lafollette.wisc.edu/fav=cultystaff/ wilson/dolphins_and_tuna.htm, accessed March 8, 2010.

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280 References Wilson, Graham K. “Globalization, Internationalization and U.S. Interest Groups.” A Paper for the Annual Convention of the Midwest Political Science Association, Chicago, Illinois, April 2001. Wold, Chris. “Evaluating NAFTA and the Commission on Environmental Cooperation: Lesson for Integrating Trade and Environment in free Trade Agreements.” St Louis University Public Law Review 28 (2008–09), 201–52. Wold, Chris. “Taking Stock: Trade’s Environmental Scoreboard after Twenty Years of ‘Trade and Environment’.” Wake Forest Law Review 45 (2010), 319–54. World Wildlife Fund (WWF). “Balanced Process, Balanced Results: Sustainability Assessments and Trade.” Washington, DC, http://www.ems.org/ftaa/sustainabilityassessments.pdf, accessed March 8, 2002a. World Wildlife Fund (WWF). “Changing the Balance of Trade: A Seminar on Sustainability Assessments of EU Trade Policy”. Brussels, July 9–10, 2002b. World Wildlife Fund (WWF). “Problems: Ocean Pollution.” http://wwf.panda. org/about_our _earth/blue_planet/problems/pollution/, accessed August 31, 2010. World Trade Organization (WTO) “Committee on Regional Trade Agreements.” Geneva, WT/L/127, February 7, 1996. World Trade Organization (WTO). “WTO Report: The Need for Environmental Cooperation.” World Trade Organization, Press Release 8 October 1999, http:// www.wto.org/english/ tratop_e/envir_e /stud99_e.htm World Trade Organization (WTO). “Draft Ministerial Declaration.” WT/MIN(01)/ DEC/W/1, November 14, 2001. World Trade Organization (WTO). “Transparency Mechanism for Regional Trade Agreements.” Geneva, December 18, 2006. World Trade Organization (WTO) “Existing Forms of Cooperation and Information Exchange between UNEP/MEAS and the WTO.” TN/TE/S/2/ Rev.2, Geneva, http://docsonline. wto.org /DDFDocuments/t/tn/te/S2R2.doc, 2007. World Trade Organization (WTO). “Committee on Trade and Environment: Report of the Meeting Held on 10 July 2009.” http://docsonline.wto.org/ GEN_highLightBottom. asp?qu=+%28+%40meta%5FSymbol+W..., August 31, 2009. World Trade Organization (WTO). “Early Years: Emerging Environment Debate in GATT/WTO.” http://www.wto.org/english/tratop_e/envir_e/hist1_e.htm, accessed May 4, 2010a. World Trade Organization (WTO). “Understanding on the Interpretation of Article XXIV of the General Agreement on Tariffs and Trade 1994.” http://www.wto. org/english/tratop_e /region_e/regatt_e.htm#understanding, accessed August 17, 2010b. World Trade Organization (WTO). “Legal Texts: the WTO Agreements: Understanding on Rules and Procedures Governing the Settlement of Disputes.” http://www.wto.org/english/ docs_e/legal_e/ursum_e.htm#Understanding, accessed May 8, 2010c. World Trade Organization (WTO), “The GATT Years: from Havana to Marrakesh.” http://www. wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm, accessed September 1, 2010d.

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References 281 World Trade Organization (WTO). “A Summary of the Final Act of the Uruguay Round.” http://www.wto.org/english/docs_e/legal_e/ursum_e. htm#Understanding, accessed September 22, 2010e. World Trade Organization (WTO). “Lamy Calls for Acceleration of Negotiations.” http://www.wto.org, Geneva, February 22, 2011 WTO Secretariat. The WTO Dispute Settlement Procedures, 2nd edition. Cambridge, UK: Cambridge University Press, 2001. Yul, H. M. “Call To Uphold Brunei’s Green Image.” http://my.opera.com/Brunei_ Darussalam/ blog/?startidx=120, 2007.

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Author Index Abbott, Frederick M., 33, 72 Ackerman, Frank, 13, 155–7, 197 Adams, Heather, See Anderson Agüero, Raquel, 121 Alanis-Ortega, Gustavo, 75 Alf, Lisa, 154, 188 America.gov, 92 Andersen, Mark C., 17 Anderson, Kym, 19, 24, 27, 62, 76 Anríquez, Gustavo, 7 Araya, Mónica, 72 Arrow, Kenneth, 19 Asia Pacific Economic Cooperation (APEC), 143 Assmann, Claudia, See Alf Association of Southeast Asian Nations (ASEAN), 230 Audley, John, 91, 158, 220 Bailey, James E., 30, 68, 89 Baldwin, Richard, 20 Barnesrichardson.com, 97 Batra, Ravi, 9, 14 Bauer, Marianne, See Alf Beghin, John, 13 Beladi, Hamid, See Batra Bhagwati, Jagdish, 5, 19–20, 23–4, 26, 71, 184, 241–2, 244 Blackwelder, Brent, 94 Blanco, Hernán, See Voituriez BMZ, See Federal Ministry for Economic Cooperation and Development Böhringer, Christoph, 156–7, 185 Bolin, Bert, See Arrow Border Environmental Cooperation Commission (BECC), 46, 207 Borregaard, Nicola, 181 Bottari, Mary, 55 Boudjelas, S., See Lowe Bouët, Antoine, 13, 59 Bourgeois, Jacques, 64, 67 Boza, Rafael T., 104

Brack, Duncan, 25, 28 Bravo Vera, Gonzalo, 45–6 Browne, M., See Lowe Buendía, Braulio, See Del Gato Buck, Eugene H., See Corn Business Roundtable, 213 Cairns Group, 60 Cameron, H., 51 Canada Department of Foreign Affairs and International Trade (DFAIT), 153, 165–9 Canada-Chile Commission for Environmental Cooperation, 223–4 Canada-Peru Committee on the Environment, 225 Canadian Environmental Law Association (CELA), 113 Cannon, Carl M., 153 Cardona-Carrizalez, Juan M., See Tejeda-Honstein Caribbean Regional Negotiating Machinery (CRNM), 226 CARICOM Secretariat, 227 Carpentier, Chantal L., 195–8, 202, 247 Carrington, Edwin W., 224 Carson, Rachel, 48 Center for International Environmental Law (CIEL), 186 Charnovitz, Steve, 22–3, 59, 155 Chaytor, Beatrice, 64, 67, 125, 133 Chile Dirección de Relaciones Económicos Internacionales (DIRECON), 118 Claro, Edmundo, 54 Clinton, William J., 30 Colnic, David, See Varady Colyer, Dale, 49, 63–4, 67, 87 Comisión Nacional del Medio Ambient (CONAMA), 216, 218 283

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284 Author Index Commission for Environmental Cooperation (CEC), 39–42, 196, 200, 202, 205, 208 Common Frontiers, 113 Cooper, Richard N., 20–1 Copeland, Brian R., 7–8, 12–13, 24, 243 Corn, M. Lynne, 44, 116 Costanza, Robert, See Arrow Council of Environmental Quality and U.S. Trade Representative (CEQ and USTR), 158 D’Antonio, Carla M., 12, 15 DFAIT, See Canada Department of Foreign Affairs and International Trade Daly, Herman E., 19, 25, 241 Dasgupta, Partha, 24 Dasgupta, Susmita, See Arrow Dawar, Kamala, See Bourgeois De Gucht, Karel, 125, 227 De Poorter, M., See Lowe Deere, Carolyn L., 89, 195 Defenders of Wildlife, 26 Del Gatto, Fillipo, 103 Denniston, Lyle, 155 Drajem, Mark, 58

Fernandez, Linda, 198 Fischer, Eric, See Corn Flores, Regina, See Anderson Folke, Carl, See Arrow Frankel, Jeffrey, 13, 23 Frasca, Ralph, See Batra Freeman, Elyse M., 33, 72 Friends of the Earth, 25, 99, 255n3.3 Gallagher, Kevin P., 13–14, 64, 148, 156–7, 167, 184–5, 195, 197, 208, 258n11.6 GAO, See US Acountabilty Office Gastelum, Maria E., 199–200 George, Clive, 181, 185–7, 191 Gigli, Simone, 64, 67, 256n3.2 Gilmore, David, 111 Gonzalez, George R., 199–200 González-Lutzenkitchen, Ana K., 72 Gray, Denice, 26 Gray, Kevin. 28 Greenpeace International, 10 Grossman, Gene M., 8–9, 24, 154 Grote, Ulrike, 25 Gundlach, Eric R., 10

Echandi, Roberto, 34 Ederington, Josh, 25–6 Eglin, Richard, 22, 26–7, 30, 49 Ekins, Paul, See Voituriez Environmental Law Institute (ELI), 217 EPA, See US Environmental Protection Agency Espinosa, J. Andres, 12 Esty, Daniel C., 22, 25, 27, 29, 49, 90, 195 European Commission (EC), 126, 171–2, 175, 187–8, 227, 229 European Free Trade Association (EFTA), 111 European Union (EU), 63 Evans, Edward A., 15 Evenett, Simon J., See Bourgeois

Halle, B., See Cameron Hartigan, James C., 62 Hayes, Miles O., 10 Hertel, Thomas W., 157, 185 Hin Keong, Chen, See Del Gato Hite, Diane, See Hudson Hochstetler, Kathryn, 128 Hoekman, Bernard, 19, 27, 26 Holbrook-White, Shelia, 15, 197 Holling, C.S., See Arrow Hope, Bruce, See Anderson House of Representatives, 99 Howse, Rob, 54 Huang, Haixiao, 7 Hudson, Darren, 22, 50 Hufbauer, Gary C., 30–3, 195, 197, 200, 203, 208 Huff, Karen, 27, 76 Hummels, David, See Hertel

Fast Facts, 256n8.5 Federal Ministry for Economic Cooperation and Development (BMZ), 229

IEA Database, 28 International Centre for Trade and Sustainable Development (ICTSD), 29, 53, 55–6, 60, 125

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Author Index Irwin, Douglas A., 26 Ivanic, Maros, See Hertel Ivanova, Maria, 20 Jaafar, Abdul, See Hudson Jansson, Bengt-Owe, See Arrow Japan Bank for International Cooperation (JBIC), 210 Japan International Cooperation Agency (JICA, 227 Japan Journal, 230 Japanese Ministry of Foreign Affairs (MOFA), 230 Jha, Veena, 54 Jones, Davis, 213 Josling, Timothy E., 62 Kanargelidis, Greg, 111 Kang, Sang In, 183 Kari, Fatimal, See Hudson Keeney, Roman, See Del Gato; Hertel Kelly, Mary, 46 Keong, Chin Hin, See Del Gato Kibel, Paul S., 41 Kim, Jae Joon, 183, 256n6.2 Kirchoff, Stefanie, 25 Kirkpatrick, Colin, 58, 181, 184–7, 191 Krissoff, Barry, See Gray, Denice Krueger, Alan B., 8–9, 24, 254 Krugman, Paul, 25 Laborde, David, 59 Labys., Walter C., 7 Lamb, Henry, 70 Lamy, Pascal, 28, 52 Laplante, Benoit, See Dasgupta Less, Cristina T., 64, 67, 256n6.2 Levin, Simon, See Arrow Levine, Jonathon M., 12, 15 Lewis, Bradley N., 101 Lindo, Enrique, See Claro Liptak, Adam, 33 Liverman, Diana M., 8, 13 Lovell, Sabrina J., 17 Low, Patricia, 20 Lowe, S., 11 Lucas, Caroline, 184 Lucas, Nicolas, See Claro Lynch, David A., 5

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285

Mann, Howard, 24 Marconini, Marco, See Claro Marcotullio, Peter J., 249 Marshall, Julian D., See Marcotullio Matsushita, Mitsuo, 20 Mejia-Valezquez, Gerado M., See Tejeda-Honstein Melendez-Ortiz, R., See Cameron MERCOSUR, 121 Merideth, Robert, See Varady Mevel, Simon, See Bouët Middleton, Dan, See Villa Miler, Karl-GSran, See Arrow Miller, Michael L., 25 Mitchell, Ronald, 28 MOFA, See Japanese Ministry of Foreign Affairs Monkelbaan, Joachim, 9–10 Morrison, Doug, See Pimentel Murillo Rodriguez, Carlos, 108 NADB, See North American Development Bank Naím, Moisés, 22 National Invasive Species Council (NISC), 11 National Oceanic and Atmospheric Administration (NOAA), 22, 49, 255n3.1 National Wildlife Federation, 25, 255n3.3 Neumayer, Eric, 29 Ney, Luke, 157 Nielsen, Chantal Pohl, 62 Nijkamp, Peter, 9–10, 14 NISC, See National Invasive Species Council NOAA, See National Oceanic and Atmospheric Administration Nogales, Francisco S., 33 Nordström, Håkan, 13, 19, 51 North American Development Bank (NADB), 46, 206–7 NZ Ministry for the Environment, 231 OAS, See Organization of American States OECD, See Organization for Economic Co-operation and Development

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286 Author Index Office of Technology Assessment, U.S. Congress (OTA), 16 Olson, Lars J., 99 Orden, David, See Roberts Orejas, Diana, See Hufbauer Orellana, Marcos, 63 Organization for Economic Co-operation and Development (OECD), 27, 64, 67, 88, 256n3.2 Organization of American States (OAS), 209, 259n12.5 Ortiz-von Halle, Bernado, See Cameron Ostry, Sylvia, 50 OTA, See Office of Technology Assessment, U.S. Congress Oxfam, 99 Palmer, Alice, 53 Palmeter, David, 70 PECC, See Peru Environmental Cooperation Commission Peel, Jacqueline, 63 Perrings, Charles, 26 Peru Environmental Cooperation Commission (PECC), 219 Pimentel, David, 11, 16 PLANISTAT-LUXEMBOURG and CESO-CI, 175 Pope, Carl, 94 Powell, Mark, See Anderson PricewaterhouseCoopers, 174 Prozzi, Jolanda, See Villa Prozzi, Jorge, See Villa Public Citizen, 33–4, 108 Raghavan, Chakravarthi, 78 Ranald, Patricia, 102 Ranné, Omar, 50 Rawson, Jean, See Corn Reed, Cyrus, 46 Repetto, Robert, 25 Richardson, Sarah, 184 Roberts, Donna, 18 Rolan-Hoist, David, See Beghin Rose, 13 Rosen, Howard, 93 Rosenberg, Robin L., 25 Rubio, Luis, See Hufbauer Ryan, Daniel E., 27

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Salzman, Jim, 154 Sampson, Gary P., 22, 25, 50, 255n3.3 Sarkar, Shyamalandu, 100 Schaper, Marriane, 255n.3.5 Scheer, Dirk, See Voituriez Schmidt, Andrea R., 92 Schott, Jeffrey J., 20, 195, 197, 200, 214 Serret, Ysé, 64, 148 Sheikh, Parvaze A., 103 Shiner, Josette, 91, 158 Sierra Club, 15, 25, 197, 255n5.3 Sindico, Francesco, 62 Smith, V. Kerry, 12 Soloway, Julie A., 33 Speth, James G., 28 Sprouse, Terry, See Varady Steinberg, Richard H., 49, 123 Stevens, Candice, 27 Stone, Susan F., 17 Sugathan, Mehesh, See Claro Tarasofsky, Richard, 53 Taylor, Robin, 7–8, 12–14, 24, 243 Teehankee, Manuel A. J., 57–8 Tejeda-Honstein, Dzoara D., 15, 197 Thinkquest.org., 10 Trade and Environmental Policy Advisory Committee (TEPAC), 256n7.2 Troje, Suzanne, 62 Tsigas, Marinos E., 157 U.S. Agency for International Development (USAID), 98, 209 U.S. Department of State (USDOS), 210, 215, 218, 221 U.S. Environmental Protection Agency (EPA), 216 U.S. Government Accountability Office (GAO), 218, 220–1, 247 U.S. Trade Representative (USTR), 22, 50, 90, 155, 158 U.S. Treasury, 46 United Nations Conference on Trade and Development (UNCTAD), 255n3.5 United Nations Environmental Program (UNEP), 28–9, 226

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Author Index Valente, Marcela, 121 van Bork, Petrus, 54 van der Mensbrugghe, Dominique, See Beghin van Veen-Groot, Daniëlle B., 9, 14 Van Zeyl, Elysia, 111 Varady, Robert G., 46 Vaughan, Scott, 13, 19, 51 Villa, Juan C., 198 Villarreal, M. Angeles, 94 Vilos-Ghiso, Silvana J., 8, 13 Voituriez, Trancrède, 184, 186 Von Homeyer, Ingmar, See Voituriez

287

Weinkopf, Jenny, See Alf Weinstein, Michael M., 23 Whaley, John, 29 Wheeler, David, See Dasgupta Williams, Eric, See Marcotullio Wilson, Graham K., 50 Wold, Chris, 195, 208, 233 World Trade Organization (WTO), 21, 48, 51–2, 57, 60–1 World Wildlife Fund (WWF), 10, 184, 255n3.3 WTO Secretariat, 60 Yul, H.M., 230

Wang, Hua, See Dasgupta Warner, Jeffery E., See Villa Water Encyclopedia, 10

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Zissamos, Ben, 29 Zuniga, Roldolfo, See Pimntal

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Subject Index Africa, 3, 6, 133, 152–3, 174–6, 244 African Free Trade Zone (AFTZ), 152 African FTAs, 88, 131, 141, 150, 152, 244; environmental provisions, 150, 152–3; list of FTAs, 152; See also EU, US; individual country FTAs African, Caribbean and Pacific Countries (ACP), 125, 131, 174–6, 226 agriculture, 17, 183; cooperation on, 74, 117, 122, 129, 131–2, 218; environmental impacts, and, 130, 165, 169, 180, 183, 193–4, 196–7, 202, 245; GATT agreement on, 51; WTO negotiations, 56 air pollution, 10, 14, 180, 183–4, 197, 221, 235 Albania, 83, 123–4, 129–30, 134–5, 137 Algeria, 124, 132, 137 Andean trade pact, 102 Andorra, 129 Animal and Plant Health Inspection Service (APHIS), 17 animal and plant life and health, 34, 51, 82, 136, 138, 142, 144, 146–7 Argentina, 57, 62, 114, 116, 120, 137 ASEAN 141, 149–51; environmental programs, 141–2, 151; ASEAN– Australia–New Zealand FTA, 183; ASEAN–China FTA, 142; ASEANJapan FTA, 144, 229, 230; members, 141 Asian Free Trade Area (AFTA), 141, 149–51 Asia-Pacific Economic Cooperation (APEC), 54, 59, 118, 142–3 Asia-Pacific Region, 6, 143, 146, 151 Australia, 11, 16, 58, 90, 93 Australian FTAs, 141, 146; ASEAN, 142; Chile FTA, 67, 102, 116–17, 146; environmental provisions, 57, 93, 117; New Zealand FTA, 21, 182;

Singapore FTA, 146; SPARTECA FTA, 146, 151; US FTA, 57, 67, 77, 81, 87, 101–2, 146, 162–3, 217 Bahrain, 90, 104–6, 162, 165, 217 barriers to trade, See non–tariff trade barriers Basel Convention, 29, 31, 53, 119, 130 Bhagwati–Daly debate, 19, 25, 241 Biosafety Protocol of the Convention on Biodiversity, 29 Bolivia, 114, 116, 120, 137 border area, US-Mexico, 31, 44, 154; Border Economic Cooperation Commission (BECC), 37, 44–6, 206–7; Border Environmental Cooperation Agreement (BECA), 35; Border Environmental Infrastructure Fund (BEIF), 46; Location of, 44; North American Development Bank (NADB), 37, 44–6, 206–7 Bosnia and Herzegovina, 124, 129, 137 Brazil, 11, 20, 54, 62, 88, 114, 116, 120, 122, 137, 191 Bretton Woods, 3, 47 Brunei Darussalam, 72, 80, 83–4, 116, 141, 144–5, 151, 229–31 Bush, George H.W., 30 Bush, George W., 91–2, 102, 106,108, 158 CAFTA-DR-US FTA,90, 94–97, 229; citizen submissions, 80, 100, 106, 210, 213–14; criticisms of, 99–101; environmental assessment, 159–61, 188–90; environmental cooperation, 97–8, 247; impacts, 209–15; public participation, 95–6, 98 Cairns Group, 60 Cambodia, 141, 151

289

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290

Subject Index

Cameroon, 124, 131–2, 137, 176 Canada-Chile Commission for Environmental Cooperation, 223–4 Canada, Doha negotiations, 57–8 Canada-US Trade Agreement (CUSTA), 21, 62, 65, 89, 104 Canadian environmental impact assessments (EIA), 3, 125, 165–7; Cabinet Directive, 166; Criticisms of, 186; Comparisons with EU and US, 171; findings on impacts, 169–71, 174, 196; framework for, 155, 166–9; objectives, 167; procedures, 166–9, 181 Canadian environmental provision’s impacts, Administration of, 87, 223, 248; Chile cooperation impacts, 222–5, 246, 248, 253; Chili citizen submissions, 22–3; Costa Rica FTA, 222, 225, 253; NAFTA, 196–9, 201, 208, 235–38, 248; Peru cooperation, 225 Canadian FTAs, 5–6,23, 65, 110–13, 135, 155; countries with, 111, 112–13; criticisms of, 113–14; environmental provisions, 68–70, 76, 78, 81, 87, 104, 108; EFTA FTA, 110–11; FTAA, 108; Israel FTA, 110–11; pending agreements, 112–13 capacity building, 17,43, 45, 56–7, 66, 75, 103, 128, 133, 164, 203, 208, 210, 217–18, 222–6, 226, 230, 248 Caricom, 82, 111, 226–7 CARIFORUM States, 74, 79–80, 84–5, 88, 122, 124, 226–7; See also EU CARIFORUM FTA Carrington, 227 Chilean FTAs, 88, 113, 115–18, 137, 151; Australia, 67, 102, 156; Canada, 69–70, 87, 110–11; China, 150; Colombia, 116–17; countries with (list), 116; effectiveness, 218–20; EFTA, 134–5; environmental impacts, 215–18; environmental provisions, 14, 67–70, 72, 84–5, 87, 94, 102, 105, 115–18, 135, 139; environmental reviews, 162, 165, 175, 181, 190–1;

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EU, 68, 91; Japan, 144; MERCOSUR, 120–1; Mexico, 114; Panama, 116–17; public participation, 117, 218; US, 14, 77, 84–5,90, 94, 104–5 Chile, trade disputes, 62–3 China, 27 China’s FTAs, 141, 149–51; ASEAN, 142; Chili, 116; cooperation, 142, 149, 230–1; countries with (list), 150; environmental provisions, 68, 76, 82, 122, 142, 147–8; EU, 192; New Zealand, 82, 147–8, 182, 230–1; Peru, 68, 76, 122 CITES, 29, 31, 53, 57, 92, 119, 211–12, 220 citizen submissions, See Canada–Chile FTA, NAFTA, CAFTA–DR–US FTA Clinton, William J., 30, 89, 92–3, 107, 157 Colombian FTAs, 84; ALADI (LAIA), 114, 116, 137; Andean Pact, 102; Canada FTA notified, 111–12, 170; Chile FTA, 116; environmental cooperation, 107; environmental provisions, 92, 106–7, 117; environmental reviews, 162, 170; MERCOSUR associate member, 120; US pending, 84, 90, 92, 106–107 Commission on Environmental Cooperation (CEC), See North American Agreement on Environmental Cooperation Committee on Trade and Environment (CTE), See Doha Round negotiations Committee on Trade and the Environment, Special Session (CTE-SS), See Doha Round negotiations Common Market for Eastern and Southern Africa (COMESA), 150–2 composition effects, See environmental impacts of trade Convention on Biodiversity, 29, 53, 57, 104 Convention on International Trade in Endangered Species, See CITES cooperation on environment, See specific country FTAs

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Subject Index Costa Rica FTAs, CAFTA-DR, 94–8, 209; Canada, 110–12, 202, 225, 253; Caricom, 82; Chile, 116, 119; Mexico, 114; Taiwan, no FTA, 119 Cote d’Ivoire, 124, 131–2 Cotonou agreement, 67, 127, 131 Croatia, 124, 134, 137 Cuba, 19, 90, 114, 116, 137 customs union, 20, 134, 152 Daly, 19, 241 Darussalam, See Brunei Darussalam Davos, 111 Decision on Trade and the Environment, 51 Denmark, 132, 176 disguised restriction on trade, 49, 82–3, 135–6 Dispute Settlement Body (DSB), 1, 60–2 dispute settlement procedures, 57, 66, 80–1, 92, 97, 208, 245 dispute settlement, GATT/WTO, See trade disputes Doha Ministerial Declaration, 52–3 Doha Round, 1, 2, 5–6, 13, 19, 21, 28–9,51, 53, 56, 58, 60, 138, 171, 174, 181, 241, 244, 249 Doha Round Environmental Negotiations, 6, 13, 21, 28, 50–9; CTE, 1, 51, 52, 55–8, 241; CTE-SS, 52–7, 59; environment and development, 51–2, 55–6, 58, 60; environmental goods and services, 52–4, 56–9; environmental provisions and market access, 52, 54–6; fisheries subsidization, 52–3,56; intellectual property rights, 51–2, 55–6; information exchanges with MEAs, 52–3, 56–8; observer status, 52–3, 56–8; relationships with STOs of MEAs, 57, 251 dolphins, 1, 22, 27, 49, 242 Dunkel, Arthur, 50 East African Community (EAC), 152 Economic Community of West African States (ECOWAS), 150, 152

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291

EFTA, See European Free Trade Association Egypt, 72, 88, 116, 124, 124–5,137, 193 El Paso, 15 El Salvador, 71–2, 111, 114, 116, 118–20, 209, 212, 214 El Salvador- Honduras-Taiwan FTA, 71–2, 118–19 endangered species, 22, 24, 31, 43, 47, 49, 53, 57, 106,109, 119, 212, 229–31; See also CITES energy, 112; cooperation on, 74, 115, 127, 129, 132, 230, 245; efficiency, 46, 53; FTA provisions, 65, 78–80,83–4,130, 144–6, 153, 245; in SIAs, 178, 194; renewable, 46, 58, 115, 130, 138–9, 202, 229, 231; Singapore declaration on, 141; use in transportation, 14 Environmental Affairs Council, 105, 107; CAFTA–DR-US, 96; Chile–US, 215, 239–40; Peru-US, 218 environmental benefits, 7, 225, 227 Environmental Cooperation Agreements, 148, 218–20, 229, 250, 253 environmental cooperation See individual FTAs environmental damages, 2, 9, 37 environmental goods, 52–4, 56, 58–9, 75, 121, 128, 133, 138–9, 144–5, 182; environmental impact analyses, 154, 181; Chile, 181; Japan-Korea, 181, 183; New Zealand, 181–4; See also Canadian Environmental Impact Assessments, EU Sustainability Impact Assessments, US Environmental Reviews environmental impact analyses, critiques of, 184; content, 184–5; general, 187–8; methodology, 185–6; participation, 486; utilization, 186–7 environmental impacts of trade, 2, 7; composition effects, 7–8, 12–13, 182, 243; scale effects, 7–9, 12–13, 174, 183, 192, 208, 233, 243;

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292

Subject Index

technique effects, 8–9, 12–13, 182, 243; transportation effects, 9–10, 174; pests and invasive species, 11–12 environmental Kuznets curve (EKC), 13, 24, 242, 250 environmental labeling, 47, 52, 55–7, 128 Environmental Protection Agency (EPA), 46, 211–12, 215–16, 240 environmental provisions in FTAs, 64; location in FTAs, 65; reasons against, 23–5, 27, 29; reasons for, 25–6, 64–5; types of,65–9; See also individual country FTAs environmental side agreements, 3, 65, 68–9, 108, 187, 241; Canadian FTAs, 111–12, 114; NAFTA, 1, 4–5, 30–1, 35, 45, 73, 86, 93, 133, 154, 196, 213, 222, 25; See also Environmental Cooperation Agreements Environmental Valuation Reference Inventory, 224–5 EU CARIFORUM FTA, 4, 122, 124–5; environmental cooperation, 74, 84; Council, 80, 88, 127; disputes, 128, environmental chapter, 127–8; environmental provisions, 67, 74, 79, 83, 86, 126–7; financing, 13, 227–8; road map, 226; sustainable development, 126; Technical Assistance Facility, 228; Training/ capacity building, 128, 133 EU Environmental Cooperation, 228; Chile, 229; CARIFORUM, See EU CARIFORUM FTAs; EU-Mexico, 229 EU FTAs, 123, 136, 138–9; contrasts with US and Canadian FTAs, 132–3; environmental cooperation, 125–32, 135–6, 139–40,156, See also EU-CARIFORUM FTAs; environmental provisions, 126–7; impacts, 225–9; partner countries (list), 124; sustainable development emphasis, 125–8; See also EU CARIFORUM FTA EU sustainability impact assessments (SIA), 171, 246; consultants,

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use of, 171–4; critiques of, See environmental impact analysis, critiques of; economic and social aspects, 171–5, 178, 180; findings, 174–5, 178–81, 192; principles of, 172; procedures, 171–4; SIA Handbook, 171, 186; SIAs reviewed, 191–2, 192–4; WTO SIA, 181 Europe, other FTAs, 136; FTAs (list), 137; environmental provisions, 136, 138–9; Switzerland-Japan, 138–9; Turkey’s FTAs, 136; Ukrainian FTAs, 136, 138 European Commission (EC), 3, 75, 80, 85, 123–4, 125, 128, 137, 171–3, 186–7 European Development Fund (EDF), 131, 227–8 European Free Trade Association (EFTA), 6, 123, 136, 138; EFTA members, 124, 133, 37; EFTA’s trade policy, 133–4; EFTATunisia cooperation, 139–40; environmental provisions, 72, 75, 134–6, 139; partner countries, 110–11, 134 European Union, See EU exceptions to prohibited trade restrictions, 65, 95, 106, 114, 117, 135, 138, 144, 146–7, 149, 232, 245; Article XX, 3, 34–5, 49, 51–2, 82–3, 95, 110–11, 119–20, 132, 138, 142,144, 190, 244; other exceptions, 82–3, 102, 132, 136; See also individual FTAs expert committee, 128 experts, use of, 37, 41, 74, 117, 156, 172, 184–6 expropriation, 72, 112; environmental laws not, 34, 72, 95, 101, 105, 112–13,120, 122, 142, 232, 245; NAFTA, 33–4,72; See also individual FTAs externalities, 8, 178 Faeroe Islands, 124, 129, 132, 134, 137–8 Fish and Wildlife Service, USDA, 13 Fisheries, 52–3, 56, 83, 122, 126, 129, 131–2, 152, 202, 248

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Subject Index

293

Florida, 12, 197 Food and Agriculture Organization (FAO), 15 Foreign Affairs and International Trade Canada (DFAIT), 5, 166–7 foreign direct investment (FDI), 25 forestry, 86, 103, 106, 165, 219; Agreement on, 102; cooperation on, 117, 122, 218, 246, 247; deforestation, 13, 100, 129, 152, 175, 179–80, 214; fires, 230; FTA impacts on, 179, 181, 183, 218; illegal logging, 84, 92, 103, 179, 219, 230, 250; management/ governance, 219; protection, 219; reforestation, 230 Free Trade Area of the Americas (FTAA), 89–91, 104, 107–8, 122, 168

institutional provisions See specific FTAs intellectual property and TRIPS, 51–2, 55–6, 83, 91, 135–6, 143 International Monetary Fund, 348 International Trade Organization (ITO), 3 International Tropical Timber Organization (ITTO), 54 invasive species,2, 12, 17, 201; costs of, 15–17; definition, 11; environmental impacts, 8; environmental reviews, in, 163–4; examples of, 11; numbers, 11, 15; SPS/TBT and, 17–18; trade and, 15, 17, 18, 243, 246 Israel, 21, 89–90, 92, 104, 110–11, 114, 116, 121, 124, 131, 134, 137, 219

GATT negotiations, See Uruguay Round, Doha Round General Agreement on Tariffs and Trade (GATT), 1–3, 5, 19, 24, 48, 78, 89, 241–4; GATT Article XX, See exceptions to prohibited trade restrictions; GATT Article XXIV, 3, 20 General Agreement on Trade in Services (GATS), 3, 20, 51–2, 62–3, 119–20 Georgia, 136–7 Georgia-Kazakhstan FTA, 138–9 Guatemala, 86–7, 94, 96, 111, 114, 118–20, 209, 212, 214–5 Guatemala–Taiwan FTA, See Taiwan– Central America FTAs

Japanese FTAs, 141, 143, 252; environmental cooperation, 142, 144–6, 229–30; environmental impacts, 181, 183–4; environmental provisions, 71, 73–4, 78, 80, 84, 115, 138, 144; partner countries, 114, 116, 134, 137–8, 144, 146, 149, 252; partner countries, list, 144; MOFA, 5; WTO negotiations, 55; trade disputes, 62 Japan-Korea FTA, proposed, 181, 183–4 Johannesburg Declaration, 67, 126 Joint Public Advisory Committee (JPAC), 37; Canada–Chile FTA, 224; NAAEC, 37–9, 41–3, 204–5 Jordan, 89; Canadian FTA, pending, 111–12; EFTA FTA, 134; EU FTA, 124, 131; US environmental impacts, 217, 219–21; US environmental review, 161; US FTA, 90–4, 104–5, 164–5, 108–9 Juarez, Mexico, 44

Hawksbill sea turtle, 213 hazardous waste, See Basel Convention Honduras, 94, 111, 114, 118–20, 209, 214 Hong Kong, 147, 150 Iceland, 114, 116, 124, 129, 133–4 India, 137; WTO negotiations, 19, 54; FTAs, 116, 121, 123, 142, 146, 149–51; SIAs, 178, 192 Indonesia, 73, 78, 80, 83, 88, 137, 141, 144–5, 151, 229–30

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Korea, Republic of, 141, 151; APTA, 127, 150; Canada, 111; Chile, 116; EFTA, 134–5; environmental impacts, 178, 183–4; EU, 122–3; GSTP, 127; India, 149; 149; Japan, proposed, 181, 183–4; SIA, 192; US pending, 90, 92, 106–7

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Subject Index

Krygyz Republic, 150 Lamy, 59–60 Laos, 141, 150 Laredo, Texas, 15, 197, 207 Latin American Integration Association (ALADI), 110, 114, 116, 137 Lebanon, 10, 124, 129, 131, 134 legal basis of FTAs, 201 Liechtenstein, 111, 114, 116, 124, 129, 135

potential for, 29, 251; Doha Round and, 52; FTA provisions on, 31, 66, 76, 78, 92, 97, 102, 106, 179, 210, 226, 245; information exchanges with WTO, 52, 56–7; Numbers of, 26, 28; observer status at WTO CTE meetings, 52, 56–7; Specific Trade Obligations (STO) in, 29, 52–3, 56–7, 251; Trade Promotion Act and, 91; UNEP role in, 28 Myanmar, 137, 141, 151

Macao, 150 Macedonia, 123–4, 130, 134, 137–8 Malaysia, 137, 141, 144, 148–9, 151, 183, 229–31 Marine Mammal Protection Act, 22, 26–7, 49–50, 242 Marrakesh agreement, 50–1 MERCOSUR, 120; associate members, 120; environmental agreement, 121; environmental SIA, 175, 191; environmental provisions, 120–2, 244; members, 120; MERCOSUR FTAs, 121, 149; regional trade agreement, 5; Treaty of Asunción, 120 Mexican FTAs, (non-NAFTA), 114, 137; cooperation, 115, 145, 226, 229–30; environmental provisions, 114–15, partner countries, 114–16, 124, 134, 144; See also NAFTA Middle East, 6, 150–1 Migratory birds, 161, 224, 237, 248 Minera San Xavier, 254, 237 Montenegro, 124, 137 Montreal Protocol on OzoneDepleting Substances, 29, 31, 57, 92, 102, 119 Morocco, GSTP,137; EFTA, 134; environmental cooperation, 164, 217; environmental impacts, 220–1; environmental review, 162–3; EU, 124, 193; Turkey, 137; US FTA, 70–1, 75, 90, 104–5 most favored nation (MFN), 20, 29 Multilateral Environmental Agreements (MEA), 28; Adequacy of, 2, 25–6, 242–3, 251–2; disputes,

NAFTA cooperation, See North American Agreement on Environmental Cooperation NAFTA’s environmental impacts, 42–3, 195, 202–3; agriculture, 196–7, 202; BECC and NADB activities, 45–6, 206–7; CEC responsibility, 195; citizen submission, 203–4, 208, 235–8; environmental information, 43, 201–2; environmental grants, 42–3, 200; environmental laws, 198–202; industrial sector, 197–8, 200; pollution haven, 196, 247; public participation, 199, 200, 204–6; projects, 203 NAFTA’s environmental provisions, 1, 3–5, 15, 23, 27–8, 30; Bush and Clinton impacts on, 30; Chapter 11, 32–3,70, 72, 105, 112, 232; citizen submissions, 38–9, 40–2; commitment to enforce laws, 32; environmental side agreement, 4, 30–1,35, 37; institutions, 37–9, 44–6; not to relax laws to attract investment, 32–3; public participation, 36–9; regional trade agreement, 4; tuna–dolphin case, effects on, 27–8 National Invasive Species Council (NISC), 11, 15 New Zealand environmental reviews, 182; Framework for Integrating Environment Issues, 182; general approach, 182; findings, 182–3; National Interest Analysis (NIA), 182; regulatory,

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Subject Index product structure and scale effects, 156, 183 New Zealand FTAs, 21, 141; Closer Economic Partnership Agreements, 147; environmental cooperation, 147–9, 230–1; environmental cooperation agreements, 147–8; environmental provisions, 72, 82, 142, 147–9; institutional arrangements, 149; partner countries, 116, 146, 149–51; trade and environmental policies, 147 New Zealand, invasive species, 16 Nicaragua FTAs, 88; CAFTA-DR-US, 44, 209, 212, 215; Canada, 111; GSTP, 137, exico, 114–15; Taiwan, 67–8, 71–5, 77, 79, 81, 85, 87, 118–19 non-governmental organizations (NGOs), 37, 63; CAFTA-DR-US, 210, 215; Canada-Chile FTA, 224; CEC, NAFT, 37, 43, 203; environmental assessments, 186, 202; environmental cooperation, 232, 245, 247, 249, 250–1, 254; Nicaragua-Taiwan FTA, 74; See also specific NGOs nontariff trade barriers, 3, 24, 25; See also Technical Barriers to Trade (TBT) North American Agreement on Environmental Cooperation (NAAEC), 35; border issues, 44–5; budget and resources, 39–40; citizen submissions, 40–2; basic provisions, 35–7; critique if CEC activities, 208; environmental grants, 42–3; environmental impacts, 36; environmental information, 43; environmental institutions, 37–9, 44–7; environmental projects and activities, 38; objectives, 35; public participation, 43–4, 78 North American Development Bank (NADB), See border area North American Free Trade Agreement, See NAFTA

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295

North American Fund for Environmental Cooperation (NAFEC), 42–3, 200 Norway, 111, 114, 116, 124, 139, 133 nuclear safety, 129–30 Obama administration, 92, 106 oil spills, 10 Oman, 81, 90, 163, 217 Organization for Economic Cooperation and Development (OECD), 5, 13, 53–4, 154 Organization of American States (OAS), 5, 209; SICE, 64 Overseas Countries & Territories (OCT), 124, 129, 131–2 Pakistan, 6, 117, 149–51 Palestinian Authority, 124, 132, 134, 137 Panama’s FTAs; Canada FTA, pending, 111–13; Canada, environmental impact results, 169–70; Taiwan FTA, 118–20; US FTA, pending, 84, 90, 92, 106–7 Peru and WTO environmental goods, 56 Peru’s FTAs, 58; Annex on Forestry, 102–3; environmental cooperation, 218–19, 222, 225; environmental provisions, 4, 68–9, 76, 78, 80–1, 83–4, 90, 82, 94, 102–4, 110–12, 114, 116, 122, 137, 149–50; environmental reviews, 163–4, 170; MERCOSUR, 120–1; number of, 68; partner countries, 111, 120, 122; TPA and, 92; US FTA approved, 92 pesticides, 57, 84, 196–7 pests, 19, 15, 17, 152 Philippines, 73; environmental cooperation, 73, 148, 229–30; environmental provisions, 144; oil spills, 10; partner countries, 73, 116, 137, 141, 144, 151; WTO negotiations on environmental goods, 54–5 pollutants, 8–10, 13–14, 24, 26–7, 29, 39, 47, 57, 109, 183, 197–8, 201–2, 248

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296

Subject Index

pollution haven hypothesis, 13, 26, 71, 196, 247 precautionary principle, 62, 128, 143, 243 processes and production methods (PPM), 27 proliferation of trade agreements, 20, 23, 88, 241, 244 public participation, See NAFTA, NAAEC; individual FTAs race to the bottom, 2, 25, 33, 68, 101, 154, 196, 241 regional trade agreements (RTA), 5, 20–1, 23, 52, 57, 64, 81, 90, 133, 149, 153, 243–4 rest of the world (ROW), 6, 141 Rotterdam Convention, 29, 57 RTA database, 3, 5, 64, 88, 90 SACU, See Southern African Customs Union San Antonio, Texas, 44 San Marino, 124, 129 sanitary/phytosanitary (SPS), 3; FTA SPS provisions, 31, 65, 119, 147; GATT/WTO Agreements, 3, 17, 49, 51–2; Invasive species and pest control, 17 Saudi Arabia, 55 scale effects, See environmental impacts of trade Secretariat for Central American Economic Integration (SIECA), 96, 98 Serbia, 155, 190 shrimp-sea turtle dispute, See trade disputes SICE database, 5, 64 Sierra Club, 155, 190 Singapore, 141; early notification for Canada FTA, 111; environmental cooperation, 147–8, 220–1; environmental goods in WTO negotiations, environmental impacts of FTA, 217, 220–1; environmental provisions in FTAs, 72, 79, 94, 104–5, 122, 134–5, 144, 146–7, 149; environmental reviews,

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163, 182; partner countries, 90, 116, 134, 137, 141, 144, 146, 149, 150–1 Singapore Endangered Species (Import and Export) Act, 221 South Africa, 10, 124, 132, 134, 176 South Korea, See Korea, Republic of Southern African Customs Union (SACU), 75, 134–5, 152 Southern African Development Community (SADC), 150, 152, 176–7 Sovereignty, 24, 66, 68, 70, 148, 232 special safeguards, 59 specific trade obligations (STO), 29, 52–3, 57, 251 Stockholm Convention on Persistent Organic Pollutants (POPs), 29, 57 Stockholm Declaration, 28, 40 sustainable development, 3, 28, 51, 91, 143, 234; CUSTA undermining of, 89; environmental cooperation, 35, 118, 226–8; environmental reviews/assessments, 158, 164–6, 171, 173, 187–8, 144; FTA/ECA objective, 39, 45–6, 84–5, 125–6, 131, 148; FTA environmental provisions and, 31, 67–8, 73, 84–5, 125–6, 131, 148; NAFTA undermining, 89; SDS of EU, 3, 28, 65, 125–6; trade policies and, 143, 147; WTO negotiations and, 28, 56 sustainability impact assessments (SIA), See EU sustainability impact assessments Switzerland, 111; EFTA members, 111, 114, 116, 133; non–EFTA FTA provisions, 124, 29, 134, 137–8, 144; WTO negotiations, 56; WTO Ministerial Meeting, 59 Syria, 124, 129, 132, 137 Taiwan, 119; environmental cooperation, 74–5; environmental provisions, 67–8, 71–3, 77–9, 81, 85, 87, 119; partner countries, 78, 118 Tariffs, 125; common for Customs Unions, 5; environmental reviews, 156, 169, 185, 187; FTA effects on,

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Subject Index 100; legal aspects of GATT for FTAs, 20; no discrimination based on PPMs, 27; penalty in trade disputes, 61; reducing/eliminating for environmental goods, 58, 138 Technical Barriers to Trade Agreement (TBT), 51; environmental aspects of GATT agreement, 3, 27; exceptions (GATT), 49,52; FTA provisions for, 31–2, 119–20, 147; labeling and, 57; PPMs and, 27; trade disputes and,62 technique effects, See environmental impacts of trade Thailand, 141; environmental cooperation, 148, 230–1; environmental provisions in FTA/ ECAs, 144, 147–9; environmental reviews of FTAs, 182–3; partner countries, 117, 141, 144, 147, 151 tourism, 245; citizen submissions involving, 204; cooperation on, 129, 148; ecotourism, 117; environmental reviews and, 174, 178; provisions in FTAs, 66, 74, 83–4, 129, 132, 245 toxic substances, 10, 36, 109, 148, 152, 196, 201 trade disputes, GATT/WTO,60, 62; Appellate Body, 61; Article XX and 83; dispute panels, 61; Dispute Settlement Body (DSB), 60–1; Dispute Settlement Understanding (DSU), 60–1; environmental cases, 62; environmental provisions as potential cause of, 24; findings and implications, 62–3; procedures, 61–3; shrimp turtle case, 27, 22, 27, 50, 62; tuna-dolphin case, 1, 22–3, 26–7, 48–51, 62–3; See individual FTAs for their dispute settlement provisions Trade Promotion Act of (TPA), 65, 89, 93; environmental provisions required, 65–6, 91, 104, 164; environmental reviews required, 156, 158, 161, 202; FTAs named Trade Promotion Agreements, 92

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297

Trans-Pacific Economic Partnership, 72, 116, 147, 148, 150–1 transportation in FTAs, 130–1; cooperation on, 129–30; in SIAs, 174, 181 transportation effects, See environmental impacts of trade TRIPS, See intellectual property and TRIPS Tuna-Dolphin Case, See trade disputes Tunisian FTAs, environmental cooperation, 139; environmental provisions, 135–6, 138; partner countries, 116, 124, 134, 137; SIA findings about, 193 Turkey’s FTAs, 123, 136; environmental provisions, 83, 129,136; partner countries, 116, 124, 137 US Department of Agriculture (USDA), 15, 17, 248 US environmental reviews, 91, 161, 181; comparison with other reviews, 155, 170; criticism of the reviews, 164; See also environmental impact anqlyses, critiques of; findings of reviews, 161–4, 170; legal framework, 155, 157, 161; methodology, 155–7; NAFTA, 154; procedures, 158–61; public participation, 161, 164–5, 190–1; transboundary and global effects, 158, 161, 163 US FTAs (non-CAFTA and NAFTA), 89; Congressional impact on, 89–92; effectiveness, GAO report, 218–21, 247; environmental cooperation, 93–8; environmental impacts, 208–22; environmental provisions, 92–7; partner countries (list), 90; pending agreements, 92, 106; TPA requirements, 91; See also NAFTA’s environmental provisions, US-CAFTA-DR FTA impacts, US-Chile FTA’s environmental impacts US-CAFTA-DR FTA, 94; criticisms, 99–101; environmental chapter,

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298 Subject Index 95–7; environmental cooperation, 97–8; impact analysis, 159–61; legal context, 188–90; ratification of, 94 US-CAFTA-DR FTA impacts, 209; building environmental capabilities, 210, 212; citizen submissions, 95–6; environmental cooperation, 948; financing, 98, 210; implementation issues, 209–10; public participation, 211, 214, 216–18 US-Chile FTA’s environmental impacts, 25; environmental cooperation, 215–16, 218; GAO report on effectiveness, 218; information exchange and collaboration, 215–18; park conservation activities,217–18; training workshops, 217–18; work plans, 215 US-Israel MOU on Environment, 104 US-Peru environmental cooperation, 102–3, 218–19 US Trade Representative (USTR), 5, 22, 58–61, 210, 233, 239 Ukrainian FTAs, 123, 136–8, 175, 178, 188, 191 UN Framework Convention on Climate Change (UNFCCC), 54, 230 Uruguay, 114, 116, 137 Uruguay Round, 1, 19–20, 22–3, 48–51, 60, 89, 241, 244 Vietnam, 137, 141, 144, 151, 229–30 Ways and Means Committee, US Congress, 91, 99, 189 West African Economic and Monetary Union (UEMOA), 152

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West African Monetary Zone (WAMZ), 152 World Bank, 3, 48 World Environmental Organization, proposed (WEO), 29 World Trade Organization (WTO), 1, 23, 28, 137; Committee on RTAs, 21; CTE formed, 51, 241; dispute settlement, 26, 50, 70, 81; See also trade disputes, GATT/WTO; Doha Round, 28; environmental issues and, 5, 27–8, 48, 51; environmental negotiations, See Doha Round environmental negotiations; environmental study, 19; fast track and, 91; formation of, 21, 48, 51,89, 241; FTA provisions on, 27–8, 66, 76–8, 89, 133, 136, 143, FTAs undermine, belief in, 20, 32, MEA relationships with, 28, 66, 76–8, 105, 168, 171; membership, 148, 153; notifications of FTAs, 11, 123, 143,183; policies on RTAs, 21; RTA database, 3–5, 64, 88, 90; SIA of Doha Round, 171, 181, 191 World Wildlife Fund (WWF), 10, 25, 188, 190 WTO Committee on Trade and Development, 21, 56 WTO environmental negotiations, See Doha Round, Uruguay Round WTO Group on Environmental Measures and International Trade (EMIT), 48–51 WTO Ministerials, Davos, 51; Doha, 52–3; Geneva, 59; Seattle, 2, 22, 59, 181 WTO Rules Committee, 21 WTO Transparency Mechanism, 21

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