Environmental issues in economic partnership agreements: Implications for developing countries

Chaytor, Beatrice Research Report Environmental issues in economic partnership agreements: Implications for developing countries Issue Paper, No. 1 Provided in Cooperation with: International Centre for Trade and Sustainable Development (ICTSD), Geneva Suggested Citation: Chaytor, Beatrice (2009) : Environmental issues in economic partnership agreements: Implications for developing countries, Issue Paper, No. 1, International Centre for Trade and Sustainable Development (ICTSD), Geneva This Version is available at: https://hdl.handle.net/10419/70315 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by-nc-nd/3.0/ Issue Paper No. 1 Environmental Issues in Economic Partnership Agreements Implications for Developing Countries By Beatrice Chaytor International Lawyers and Economists Against Poverty (ILEAP) ICTSD EPAs and Regionalism Series ICTSD EPAs and Regionalism Programme September 2009 | ICTSD l ICTSD EPAs and Regionalism Programme By Beatrice Chaytor International Lawyers and Economists Against Poverty (ILEAP) Environmental Issues in Economic Partnership Agreements Implications for Developing Countries September 2009 Issue Paper No. 1 ii Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries Published by International Centre for Trade and Sustainable Development (ICTSD) International Environment House 2 7 Chemin de Balexert, 1219 Geneva, Switzerland Tel: +41 22 917 8492 Fax: +41 22 917 8093 E-mail: [email protected] Internet: www.ictsd.org Chief Executive: Ricardo Meléndez-Ortiz Programme Director: Christophe Bellmann Programme Manager: El Hadji Diouf Programme Officer: Maximiliano Chab Acknowledgments This paper was commissioned under the ICTSD Programme on EPA’s and Regionalism. An initiative supported by SIDA (Sweden); the Department for International Development (U.K.); the Ministry of Foreign Affairs of Netherlands (DGIS); and the Organisation International de la Francophonie (OIF). ICTSD is grateful for their support. The author would like to thank Mr Christophe Bellmann (ICTSD), Mr David Vivas (ICTSD), Mr Moustapha Kamal Gueye (ICTSD), Mr Mahesh Sugathan (ICTSD) and Mr Carlos Murillo Rodriguez for their comments. We are grateful to the participants of the ICTSD workshop on ‘Legal and Sytemic Issues in the EPA’s,’ held in Dakar, Senegal, 14-15 April 2009. Beatrice Chaytor is Programme Officer at International Lawyers and Economists Against Poverty (ILEAP). For more information about ICTSD’s Programme EPAs and Regionalism visit our web site at http://www.ictsd.org ICTSD welcomes feedback and comments on this document. These can be forwarded directly to El Hadji Diouf: [email protected] Citation: Chaytor Beatrice, (2009). Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries. International Centre for Trade and Sustainable Development, Geneva, Switzerland. International Centre for Trade and Sustainable Development, Geneva, Switzerland. The views expressed in this publication are those of the author and do not necessarily reflect the views of ICTSD or the funding institutions. Copyright © ICTSD, 2009. Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. This work is licensed under the Creative Commons Attribution-Non-commercial-No-Derivative Works 3.0 License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-nd/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. ISSN 2071-5952 iii ICTSD EPAs and Regionalism Programme LIST OF ABBREVIATIONS AND ACRONYMS v FOREWORD vii EXECUTIVE SUMMARY ix 1. INTRODUCTION 1 2. ENVIRONMENTAL PROVISIONS IN ECONOMIC PARTNERSHIP AGREEMENTS 3 2.1 Scope of Environmental Provisions 3 2.2 Environmental Co-operation 7 2.3 Reference to International Environmental Agreements 8 2.4 National Laws on Environment 9 2.5 Dispute Settlement 10 2.6 Lessons from the CARIFORUM–Economic Partnership Agreement and Interim Economic Partnership Agreements 11 3. THE EUROPEAN UNION APPROACH TO TRADE AND ENVIRONMENT 12 3.1 Promoting Sustainable Development 12 3.2 Improving Environmental Co-operation 12 3.3 Pursuing an International Trade and Environment Agenda 13 4. NEGOTIATING ENVIRONMENTAL PROVISIONS IN ECONOMIC PARTNERSHIP AGREEMENTS 15 4.1 Treatment of Environmental Issues in Regional Trade Agreements 15 4.2 Contents of Environmental Provisions 16 4.3 Public Participation 21 4.4 Lessons from Incorporating Environmental Provisions in Regional Trade Agreements 24 TABLE OF CONTENTS iv Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries 5. IMPLICATIONS OF ENVIRONMENTAL PROVISIONS IN ECONOMIC PARTNERSHIP AGREEMENTS 25 5.1 Management and Coordination 25 5.2 Implementing Environmental Provisions 25 5.3 Relationship with International Agreements 27 5.4 Enforcement of Domestic Environmental Laws 28 5.5 Settlement of Environmental Disputes 29 5.6 Strengthened Environmental Capacity 29 6. IMPLEMENTING ENVIRONMENTAL PROVISIONS IN ECONOMIC PARTNERSHIP AGREEMENTS: COSTS AND BENEFITS 31 6.1 Benefits Arising from Environmental Provisions in Regional Trade Agreements 31 7. CHALLENGES TO NEGOTIATING AND IMPLEMENTING ENVIRONMENTAL PROVISIONS 33 8. SYSTEMIC AND OVERARCHING ISSUES 34 8.1 Policy Coherence and Synergy 34 8.2 Financing 34 8.3 Monitoring and Evaluation 34 8.4 Capacity Building 35 8.5 Harmonisation of Environmental Standards 35 9. CONCLUSIONS AND RECOMMENDATIONS 37 REFERENCES 39 ENDNOTES 42 v ICTSD EPAs and Regionalism Programme LIST OF ABBREVIATIONS AND ACRONYMS ACP African Caribbean and Pacific Countries CAFTA Central America Free Trade Agreement CARICOM Caribbean Community CARIFORUM CARICOM countries plus the Dominican Republic CEC Commission for Environmental Co-operation CEMAC Communauté Économique et Monétaire de l’Afrique Centrale C–EPA CARIFORUM Economic Partnership Agreement CITES Convention on Trade in Endangered Species of Wild Fauna and Flora COMESA Common Market for Eastern and Southern Africa CTE World Trade Organization Committee on Trade and Environment CTESS Committee on Trade and Environment Special Session DRC Democratic Republic of the Congo DR Dominican Republic EAC East African Community ECA Environmental Co-operation Agreement ECOWAS Economic Community of West African States EDF European Development Fund EEZ Exclusive Economic Zone EGS Environmental Goods and Services EPA Economic Partnership Agreement ER Environmental Review EU European Union FLEGT Forest Law Enforcement, Governance and Trade FTA Free Trade Agreement GATT General Agreement on Tariffs and Trade GSP Generalised System of Preferences ILEAP International Lawyers and Economists Against Poverty MEA Multilateral Environmental Agreement MERCOSUR Common Market between Argentina, Brazil, Paraguay and Uruguay (Mercado Común del Sur) M&E Monitoring and Evaluation MOU Memorandum of Understanding NAAEC North American Agreement on Environmental Co-operation NAFTA North American Free Trade Agreement NGO Non-governmental Organisation ODA Official Development Assistance OECD Organisation for Economic Co-operation and Development PAPED Economic Partnership Agreement Development Programme PPM Process and Production Method PRTR Pollutant Release and Transfer Register REC Regional Economic Community RTA Regional Trade Agreement SDS Sustainable Development Strategy SIA Sustainability Impact Assessment SIECA Secretariat for Central American Economic Integration vi Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries SME Small and Medium Enterprise SPS Sanitary and Phytosanitary Standards TBT Technical Barriers to Trade TDCA Trade Development and Co-operation Agreement TRAC Ten-year Review and Assessment Committee UNCLOS United Nations Convention on the Law of the Sea US United States of America WAEMU West African Economic and Monetary Union WTO World Trade Organization vii ICTSD EPAs and Regionalism Programme Regional trade agreements (RTA) have become a distinctive feature of the international trading landscape. Their number has increased significantly in recent years, as World Trade Organization (WTO) member countries continue to pursue these agreements. Some 200-odd agreements have been notified to the WTO but their number may be actually higher, as some agreements are never notified to the multilateral bodies and many more are under negotiation. As a result, more and more trade is now covered by such preferential deals, prompting many analysts to suggest that RTAs are becoming the norm rather than the exception. Many regional pacts contain obligations that go beyond existing multilateral commitments, and others deal with areas not yet included in the WTO, such as investment and competition policies, as well as labour and environment issues. Regional and bilateral agreements between countries at different stages of development have become commonplace, as have attempts to form region-wide economic areas by dismantling existing trade and investment barriers, an objective that figures prominently in East Asian countries’ trade strategies. Yet the effects of RTAs on the multilateral trading system are still unclear, as is their impact on trade and sustainable development. RTAs represent a departure from the basic non-discrimination principle of the WTO, and decrease the transparency of global trade rules, as traders are subject to multiple, sometime conflicting requirements. This is particularly the case in relation to rules of origin, which can be extremely complex and often vary in agreements concluded by the same countries. Also, the case that WTO-plus commitments enhance sustainable development is far from proven, and it is not readily apparent whether RTAs enhance trade rather than divert it. However, developed and developing countries alike continue to engage in RTA negotiations, and this tendency seems to have been intensified recently due to the slow pace of progress in the multilateral trade negotiations of the Doha Round. Countries feel the pressure of competitive regional liberalisation and accelerate their searches for new markets. Thus, while most countries continue to formally declare their commitment to the multilateral trading system and to the successful conclusion of the Doha negotiations, for many bilateral deals are taking precedence. Some countries have concluded so many RTAs that their engagement at the multilateral levels is becoming little more than a theoretical proposition. Thus, gaining a better understanding of the workings of RTAs and their impact on the multilateral trading system is a key concern of trade analysts and practitioners. Current WTO rules on regional agreements, mainly written in the late 1940s, do not seem well equipped to deal with today’s web of RTAs. Economists dispute whether RTAs create or divert trade, and political scientists try to explain the resurgence of RTAs by a mix of economic, political and security considerations. In some cases, the fear of losing existing unilateral non-reciprocal trade preferences provides the rationale for launching RTA negotiations, as is the case of the Economic Partnership Agreement (EPA) negotiations between the European Union and its former colonies in Africa, the Caribbean and the Pacific (ACP). Many worry about the systemic impact of RTAs and dispute whether they should be considered “building blocks” to a stronger and freer international trading system or rather “stumbling blocks” that erode multilateral rules and disciplines. There are many interpretations of the dynamic relationship between RTAs and the WTO. The fact remains, however, that RTAs are here to stay. If anything, they will continue to increase in number in the coming years. They are already an integral part of the international trade framework, and influence the behaviour of governments and traders. They co-exist with the multilateral trading system and impact it in manners that have yet to be fully understood. Regional rules often replicate FOREWORD 4Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries environment) in a comprehensive EPA between the EU and West Africa.14 In the case of the interim EPA with Cameroon, there is a slim chapter on sustainable development.15 Thus the all-encompassing objective reflected in the C–EPA is a similar theme in the interim EPA with Cameroon. In Article 60 of chapter 5, the EC and Cameroon recognise that sustainable development is an overall objective of the EPA. They agree to ensure that sustainability considerations are reflected in all the titles of the EPA. Although they also agree to draft specific chapters covering environmental and social issues, reference is made to a set of potential commitments on sustainable development, rather than on the environment.16 The EAC interim EPA does not spell out the precise scope of environmental issues; instead a marker is set down for future provisions on trade, environment and sustainable development in the rendez-vous clause.17 It is worth noting that there is no provision defining the terms “environment”, “sustainable development” or “environmental law” in either the C–EPA or the interim EPA. It seems that the reference to the Cotonou Agreement implies that these terms are known to the Parties; where other issues are to be included in these terms, they are done through the environmental co-operation provision in the C–EPA or in other provisions in the interim EPAs. Article 32: Environment and Natural Resources 1. Co-operation on environmental protection and sustainable utilisation and management of natural resources shall aim at: a) mainstreaming environmental sustainability into all aspects of development cooperation and support programmes and projects implemented by the various actors; b) building and/or strengthening the scientific and technical human and institutional capacity for environmental management for all environmental stakeholders; c) supporting specific measures and schemes aimed at addressing critical sustainable management issues and also relating to current and future regional and international commitments concerning mineral and natural resources such as: (i) tropical forests, water resources, coastal, marine and fisheries resources, wildlife, soils, biodiversity; (ii) protection of fragile ecosystems (e.g. coral reef); (iii) renewable energy sources notably solar energy and energy efficiency; (iv) sustainable rural and urban development; (v) desertification, drought and deforestation; (vi) developing innovative solutions to urban environmental problems; and (vii) promotion of sustainable tourism. Box 1: Articles Referring to the Environment in the Cotonou Agreement 5 ICTSD EPAs and Regionalism Programme Source: European Union, http://ec.europa.eu/comm/development/body/cotonou. d) Taking into account issues relating to the transport and disposal of hazardous waste. Article 49: Trade and Environment 1. 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 the international conventions and undertakings in this area and with due regard to their respective level of development. They agree that the special needs and requirements of ACP States should be taken into account in the design and implementation of environment measures. 2. Bearing in mind the Rio Principles and with a view to reinforcing the mutual supportiveness of trade and environment, the Parties agree to enhance their cooperation in this field. Co-operation shall in particular aim at the establishment of coherent national, regional and international policies, reinforcement of quality control of goods and services related to the environment, the improvement of environment-friendly production methods in relevant sectors. Box 1: Articles Referring to the Environment in the Cotonou Agreement (continued) 2.1.2 Natural resources and the environment The scope of environmental issues under the C–EPA environment chapter appears to be rather broad and generic; pursuant to their commitment to sustainable development, the Parties in the C–EPA are “resolved to conserve, protect and improve the environment”.18 The reference to “sustainable management of natural resources and the environment” in Article 183 recalls environment and natural resources as crosscutting and thematic issues in the Cotonou Agreement.19 As noted in the previous section, such sustainable management principles are to be applied and integrated at every level of the partnership between the Parties.20 Given that the partnership concerns trade, this is an attempt to mainstream environment into all the trade relations between the EU and the CARIFORUM States. This is underscored by the caveat that the “development of international trade [is to be promoted] in such a way as to ensure sustainable and sound management of the environment” found in Articles 183 and 185. In the EAC interim EPA, the focus of environment issues is also on fisheries, which are a key economic resource for the EAC partner States.21 The EC and the EAC thus “agree to cooperate for the sustainable development and management of the fisheries sector in their mutual interests taking into account the economic, environmental and social impacts”.22 Co-operation between the Parties is to include fisheries management and conservation issues, vessel management and post-harvest arrangements, financial and trade measures, development of fisheries and fisheries products, and marine aquaculture.23 It is curious that the EC has insisted that fisheries partnership agreements should be negotiated on a bilateral level with individual ACP countries. Arguably, this undermines the stated objective in the Cotonou Agreement of using EPA negotiations to strengthen regional capacity in ACP countries. In addition, from a policy coherence standpoint, key economic policy sectors such as fisheries could be better addressed within a regional framework such as the EPA where inter-linkages can be easily referenced and supported. Forest resources and production of forestry products are priorities for the Central African region and measures for their sustainable management are therefore reflected in the 6Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries Cameroon interim EPA. While there is no mention of environmental protection measures, the implication is there.24 Article 50 provides that the Parties “shall work together to facilitate trade between the EC Party and the Central Africa Party in timber and forest products which come from objectively verifiable legal sources and help to achieve sustainable development”. The reference to “forest products which come from objectively verifiable legal sources” implies that the term “sustainably managed forest products” may be too narrow in the context of illegal and unsustainably-managed timber. In the case of the C–EPA, there is no hesitation to refer to “timber and wood products, from legal and sustainable sources” in the context of the facilitation of trade between the Parties in natural resources.25 Forest products are also included in the scope of environmental co-operation between the CARIFORUM and EU States. The EU has recently concluded a sustainable timber trade agreement with the Democratic Republic of the Congo (DRC). The importance of trade in forest resources in the Central African region makes it very likely that the EPA for the Central African region (Communauté Économique et Monétaire de l’Afrique Centrale – CEMAC) will feature forest resources. While there is a trend towards bilateral agreements on natural resources, where some strategic issues are concerned (particularly the need to address illegal logging, forest depletion and other critical issues) cross-border shipments and sustainable management of forest resources suggest that it would be sensible to address such issues within a regional framework such as the EPA. This would serve to promote regional rather than bilateral standards for environmental management. Environmental standards are not only promoted in Chapter 4 of the C–EPA, but also in other chapters, such as the chapter on agriculture and fisheries (Chapter 5 of Title I), the chapter on commercial presence (Chapter 2 of Title II) and Section 7 on tourism services (Chapter 5 of Title II). Public health issues are also covered by the commitments to environmental protection.26 Also included in the scope of environmental issues under the C–EPA are: environmental technologies, renewable and energy-efficient goods and services and eco-labelled goods.27 From this list (which is not exhaustive), the implication is that the scope of environmental goods and services under the C–EPA is confined to industrial products, as in the WTO. However, the reference to “eco-labelled goods” may allow consideration of non-industrial products of export interest to developing countries such as the CARIFORUM States. The preface to the provision (Art. 183 (5)) specifies that trade will be facilitated in “goods and services which the Parties consider to be beneficial to the environment”. This provides additional scope to ensure that the environmental goods and services (EGS) trade comes from both Parties in the C–EPA. Environmental issues can also be found in sanitary and phyto-sanitary (SPS) measures in the C–EPA and the interim EPAs with respect to the protection of animal and plant health.28 In the EAC interim EPA, SPS measures are a topic for future negotiation.29 All the EPAs contain a general exception clause exempting measures to protect or preserve human, plant and animal health from general trade obligation. Such a clause is a minimum environmental protection provision. In this respect, the provisions either repeat the language of the General Agreement on Tariffs and Trade (GATT) Article XX or they explicitly refer to, or incorporate, it. Article XX justifies measures “relating to the conservation of exhaustible natural resources”, or measures “necessary to protect human, animal, or plant life or health”, subject to the requirements under the chapeau of Article XX, which provides that such measures may not be applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination, or a disguised restriction on international trade. Identical 2.1.3 Other thematic areas 2.1.4 General exception clauses 7 ICTSD EPAs and Regionalism Programme provisions in this respect are contained in the C–EPA and the interim EPAs.30 As will be seen in the later discussion of this type of provision, other RTAs mimic the language contained in the EC Treaty.31 In the C–EPA, the Parties agree to cooperate on a range of issues where trade and environment intersect such as: support for trade in environmental products and services, compliance with relevant product and other standards in the EU market, relevant labelling and accreditation schemes, trade in natural resources such as wood and timber from legal and sustainable sources, and public awareness and education programmes related to environmental goods and services.32 Cooperation on trade in environmental goods and services appears to spring from the EU’s focus on trade in environmentally-preferable goods and services identified in the EU mandate on environment.33 But it also seems to be a priority for the CARIFORUM countries in a bid to potentially diversify their economies. The agreement does not specify any precise procedures or a timeframe for co-operation on environment issues. Neither does it state how the co-operation mechanisms will be developed and implemented. The extent of reporting, the involvement of specific stakeholders, and the funds to be dedicated to such co-operation all remain undefined. In particular, the article on development co-operation (Article 8) in the C–EPA prioritises only enhancing technological research capabilities in CARIFORUM States so as to facilitate development of and compliance with internationally-recognised environmental standards.34 In this respect, an opportunity was missed to elaborate the substance of a provision that could be used as a demonstration of positive trade instruments to support environmental protection, and to promote mutual supportiveness of trade and environment measures. Moreover, the lack of detail has implications for implementation as will be discussed in Section 5 and this is an area which merits close attention by ACP negotiators. In the section on tourism services within the C–EPA, standards for sustainable tourism are explicitly mentioned as an area for co-operation in Article 117. Article 43 in the chapter on agriculture and fisheries also refers to cooperation on environmentally-sound agricultural practices and organic and non-genetically modified foods. As noted above, co-operation on fisheries management and conservation is included in the EAC interim EPA, and the Cameroon interim EPA includes co-operation on forest management. There are no co-operation provisions on environmental issues in either the Pacific interim EPA or the Côte d’Ivoire interim EPA. Pursuant to their commitment to sustainable development, the Parties in the C–EPA are resolved to conserve, protect and improve the environment, “including through their participation in regional and international environmental agreements”.35 Further, specific reference to international and regional conventions is made in Article 185, which should be read with Paragraph 4 of Article 183 which provides that the Parties commit “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 levels of development.” The Parties “recognise the importance of establishing effective strategies and measures at the regional level”, rather than commit to establishing such strategies and measures. Where there are no national or regional environmental standards, international standards are to be the benchmark for environmental protection measures.36 This has the effect of potentially bringing international environmental obligations into the domestic law of CARIFORUM States, despite the softening of this commitment by the phrase “where practical and appropriate.” When 2.2 Environmental Co-operation 2.3 Reference to International Environmental Agreements 8Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries taken together with the provision in Article 189 (3) that Parties are obliged to seek advice from experts about any obstacles that may prevent the “effective implementation of environmental standards under multilateral environmental agreements”, this underscores the national application of international standards. The C–EPA does not specify the precise international environmental agreements in question, leaving the provision fairly general. The implication is that it refers back to Article 183 (4): so it will be the international standards contained in the international conventions to which the countries are party. Two issues are of note: the first is what happens where CARIFORUM States are not party to a particular international convention but the EU is? Do the international standards in that particular multilateral environmental agreement (MEA) apply to the C–EPA and therefore bind the CARIFORUM States? Second, it appears that the reference to international environmental standards came at the insistence of the CARIFORUM States, which had rejected the EU proposals to use certain regional standards which were already being applied in the EU Member States as the benchmarks and which exceeded international standards.37 The concern by the CARIFORUM States was over the subjectivity of the proposed standards and the fear that the CARIFORUM States “would not sufficiently appreciate the content of these standards in order to be able to comply with them”.38 The CARIFORUM States were apparently confident of being able to comply with international standards stipulated in the EPA, since they had a tradition of already doing so.39 Where MEAs are referred to by name, their provisions will expressly bind the Parties. The Cameroon interim EPA specifically references the Convention on Trade in Endangered Species of Wild Fauna and Flora (CITES): Article 53 stipulates that “trade in timber and forest products shall be governed in line with the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and any voluntary partnership agreements to which signatory Central African States might adhere individually or collectively with the European Community under the European Union’s action plan on forest law enforcement, governance and trade (FLEGT)”. The EAC interim EPA mentions the UN Convention on the Law of the Sea (UNCLOS) as well as regional and sub-regional fisheries agreements.40 The Indian Ocean Tuna Commission is mentioned in the context of appropriate limits and target levels of sustainable catch in the exclusive economic zone (EEZ) of an EAC partner State.41 Most recent RTAs provide that Parties should ensure “high levels” of environmental protection under their respective domestic laws, while allowing the Parties to set their own minimum standards; and the C–EPA is no exception. The interim EPAs concluded with the Pacific countries, East, West and Central African countries do not have this provision. The term “high level” is not precisely defined, nor referenced against any precise international level of environmental protection, despite the specific reference in the C–EPA that international standards should be applied in the absence of national or regional standards. The inference is that with references made to regional and international environmental agreements, Parties will choose to apply those same high levels of environmental protection in their domestic laws. As already noted, the C–EPA does not define the term “environmental law”. Thus, CARIFORUM States undertake “to seek to ensure” that their national environmental and public health laws and policies provide for and encourage high levels of environmental and public health protection and will strive to continue to improve such laws and policies.42 This commitment is tempered by the qualification that the special needs and requirements of CARIFORUM States shall be taken into account 2.4 National Laws on Environment 9 ICTSD EPAs and Regionalism Programme in the design and implementation of measures aimed at protecting environment and public health that affect trade between the Parties. Such measures should not be applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between the Parties or a disguised restriction on trade between them.43 On any issue covered by the chapter on environment in the C–EPA, the Parties may agree to seek advice from the relevant international bodies on best practice, the use of effective policy tools for addressing trade-related environmental challenges, and the identification of any obstacles that may prevent the effective implementation of environmental standards under relevant MEAs.44 There is no general mechanism in EPAs to enforce the “high levels” of environmental protection. So for instance, the C–EPA does not oblige the Parties to enforce their national environmental laws. The exception is foreign direct investment. The commitment not to lower levels of environmental protection in order to attract investment is strongly emphasised in the C–EPA. Subject to their sovereign right to regulate, in Article 188, the EU and CARIFORUM 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” (emphasis added). In paragraph 2 of Article 188, the EU and CARIFORUM States commit to not adopting or applying regional or national trade or investment-related legislation or other related administrative measures in a way which has the effect of frustrating measures intended to benefit, protect or conserve the environment or natural resources, or to protect public health. In the C–EPA investment chapter, Article 72 goes into further detail on enforcement and obliges the Parties to take the necessary measures to ensure that investors do not circumvent international environmental agreements to which the Parties are members. Article 73 furthermore declares that the Parties shall ensure that foreign direct investment is not encouraged by lowering domestic environmental or occupational health and safety legislation and standards. The provisions of Articles 72 and 73 are fully subject to the general dispute settlement procedures of the C–EPA and represent the only obligation regarding environmental issues which could theoretically lead to the suspension of trade concessions.45 The general dispute settlement procedures in the C–EPA apply also to disputes on environmental issues,46 although the environment chapter sets out a separate consultation process for resolution of environmental disputes.47 The indication is that this process of consultation through the EU–CARIFORUM Consultative Committee should be exhausted first before recourse to the usual dispute settlement procedure in the C–EPA.48 The consultation process established by Article 189 of the C–EPA is not wholly comprehensive and should be taken together with the general dispute settlement provisions (Part III, Chapter 2). Consultations may be requested with the other Party on matters concerning the interpretation and application of the environment provisions.49 These consultations should not take longer than three months and advice can be sought from relevant international bodies. In such a case, the period of consultation lasts six instead of three months. Where the matter has not been satisfactorily resolved through this initial consultative process, any Party may request that a Committee of Experts specifically provided for this purpose be convened to examine the matter in question.50 The Committee of Experts shall comprise three members with specific expertise in environmental issues. Within three months of its composition, the Committee of 2.4.1 Enforcement 2.5 Dispute Settlement 10 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries Experts, whose Chair should not be a national of either Party, should present a report to the Parties, and to the CARIFORUM–EC Consultative Committee. Parties may avail themselves of the main dispute settlement procedures under the C–EPA, only if after nine months they have failed to resolve a dispute by recourse to the processes laid out in Article 189.51 The complaining Party may request the establishment of an arbitration panel.52 Article 207 stipulates that the panel shall comprise at least two members with specific expertise on environmental issues. If a Party fails to notify any measure taken to comply with the arbitration panel ruling, Parties can adopt appropriate sanctions. The usual sanctions are fines, and although suspension of trade concessions is possible, they are ruled out for disputes concerning issues falling under the environment chapter.53 This exclusion of trade sanctions as remedies for environmental disputes is a similar provision to that under the US–Chile free trade agreement (see Section 4).54 The separate remedy for environmental disputes, and the fact that trade sanctions are not allowed for environmental disputes, provides an insight into the lingering reservations concerning the trade and environment debate. In particular it shows that developing countries are still uncomfortable with the idea that negative trade instruments should be used to enforce environmental obligations. It further underlines that parity between trade and environment policies has not yet been achieved, and specifically not in the context of trade agreements. Indeed it throws into sharp relief the inherent limitations of trying to enforce environmental standards through trade agreements. The provisions on environment within EPAs still strongly favour negotiation and consultation over use of trade sanctions. The balance therefore remains tipped towards the use of more positive rather than negative trade instruments for the mutual benefit of environment and trade. The C–EPA is similar to other RTAs concluded by the EU in that it does not contain rules or procedural safeguards concerning access to justice for the public in the event of violations of environmental laws.55 The interim EPAs also contain no such provisions, and given the trend in the EU RTAs and the C–EPA, future environmental provisions within the full EPAs are unlikely to specify such clauses (see Section 4). Environmental issues are firmly established in the EPAs and despite the lack of substantive provisions in the interim EPAs, more detail will come in the full EPAs to be concluded with the Pacific, East, West and Central African countries. The Cotonou Agreement which already has significant references to sustainable development and environmental issues, reflects the minimum standard which these EPAs will maintain. It is likely that their environmental provisions will go further, but the degree to which they will seek to have a balance in the mutual supportiveness goal will differ from region to region. There is already a clear delineation among the interim EPAs where certain economic issues are prevalent, and competitiveness issues are paramount. For instance, the Pacific interim EPA has the bare minimum environmental provisions referencing Cotonou, whilst EAC and Central African interim EPAs build on Cotonou’s standard with more substantive provisions on natural resources and an indication of more detailed provisions to follow in the full EPAs. The C–EPA is clearly an advance on Cotonou and will also be the benchmark for environmental provisions in EPAs. It contains a hybrid of binding and nonbinding measures: international standards are clearly embraced, however, where enforcement of those standards are concerned, there is a hesitation in using traditional trade sanctions; instead, political dialogue and consultation are preferred, possibly as a recognition that non2.5.1 Access to justice 2.6 Lessons from the CARIFORUM– Economic Partnership Agreement and Interim Economic Partnership Agreements 11 ICTSD EPAs and Regionalism Programme compliance with environmental standards is a result of lack of capacity or understanding of the obligations, rather than a deliberate neglect of responsibilities on environmental protection. Thus the mutual supportiveness objective is present but cautiously approached. Some differences are already apparent among the EPAs with a focus in the Central African interim EPA on a sustainable development rather than an environment chapter. Yet, the EU will likely insist on having some broadly similar provisions in order to ensure synergy among the EPAs. It also has clear objectives on environment and sustainable development in relation to RTAs as will be seen from the next section. 12 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries The European Union believes that the trade and environment interface is a core element of sustainable development and that this is an objective which must be central to trade liberalisation negotiations, recalling that the preamble to the WTO Agreement underlines that the WTO should contribute to sustainable development. In particular the EU considers that environmental considerations should be reflected throughout any trade negotiations and especially that the WTO trade Round “should maximise the potential for positive synergies between trade liberalisation, environmental protection and economic and social development.”56 While the EU’s preoccupations on trade and environment issues broadly cover trade and climate change, environmental impact assessments of EU trade agreements and disposal of non-hazardous wastes, its specific approach to the integration of environmental and trade policies can be categorised according to three main and interlinked themes: promoting sustainable development, improving environmental co-operation and pursuing an international trade and environment agenda.57 The EU Sustainable Development Strategy (SDS), adopted in 2001 and renewed in June 2006, sets out a single, coherent strategy on how the EU will seek to meet the challenges of sustainable development.58 It recognises the need to move towards a more integrated approach to policy-making, reaffirms the need for global solidarity and recognises the importance of strengthening ties with partners outside the EU, including “those rapidly developing countries which will have a significant impact on global sustainable development”. The SDS includes seven key challenges, one of which is to actively promote sustainable development worldwide to ensure that the European Union’s internal and external policies are consistent with global sustainable development and international commitments. Among the actions to achieve that objective: “The Commission and Member States will increase efforts to make globalisation work for sustainable development by stepping up efforts to see that international trade and investment are used as a tool to achieve genuine global sustainable development. In this context, the EU should be working together with its trading partners to improve environmental and social standards and should use the full potential of trade or co-operation agreements at regional or bilateral level to this end”.59 The fact that all the RTAs concluded by the EU contain some reference to “sustainable development” illustrates the EU’s bid to achieve this objective. The promotion of sustainable development is factored into the EU’s internal policymaking and is also integrated into the EU’s external policies. The EU SDS stipulates that “sustainable development concerns should be incorporated into all EU external policies, including the Common Foreign and Security Policy, inter alia by making it an objective of multilateral and bilateral development co-operation”. In order to avoid potential conflicts on environmental issues and recognising that many environmental issues are global,60 the EU appears to pursue deeper environmental co-operation at bilateral, regional and international levels. In particular, the approach towards climate change solutions clearly states the need for international co-operation in order to limit global warming to two percent.61 Part of the action being advocated by the EU for this is to: foster renewable energy solutions (by increasing its share by 20 percent by 2020), foster energy efficiency (by reducing carbon dioxide emissions by 20 percent by 2020), globalise the carbon trade and factor environment in all its trade negotiations to address the competitiveness impact of the actions it will take within its own internal market.62 Building 3. THE EUROPEAN UNION APPROACH TO TRADE AND ENVIRONMENT 3.1 Promoting Sustainable Development 3.2 Improving Environmental Co-operation 13 ICTSD EPAs and Regionalism Programme 3.3 Pursuing an International Trade and Environment Agenda consensus around these actions helps the EU to pursue its global environmental agenda through its trade relations. In its communication of November 2006, the Commission is adopting “Global Europe”: to launch a set of negotiations on new free trade agreements. Environment is an essential part of these negotiations “with a view to ensuring substantial commitments from both sides”.63 Possible market access and development assistance incentives will be used to prime these negotiations. Already the EU uses a number of instruments to push forward its trade and environment agenda. Under its GSP (Generalised System of Preferences) scheme, it offers additional trade preferences to countries undertaking to implement environmental (and labour) standards. During trade negotiations, sustainability impact assessments (SIAs) are used to assess the impact of trade measures on the environment. Each of these approaches is linked to specific funding and assistance.64 The EU sees trade and environment as an important “horizontal theme” in international relations, and has taken an active role in all international discussions on trade and environment, particularly in the WTO. The EU’s stated goal is to promote a high level of environmental protection and at the same time, ensure an open, equitable multilateral trade system.65 The development of global environmental policy has resulted in an increase in the use of trade measures for environmental purposes. In the EU’s view, the extent to which trade measures for environmental purposes can be accommodated by the WTO rules remains to be clarified. For this reason it advocates a clearer trade-environment relationship which it insists can encourage the use of least trade-restrictive measures. In particular it has emphasised that the policy objectives it has outlined for addressing climate change in particular,66 should be compatible with WTO rules. The EU has therefore sought to build consensus around a range of issues touching on its core concerns about the mutual supportiveness of trade and environment measures. It has submitted a number of papers to the WTO setting out a package of ideas to feed into the current negotiations within the WTO Committee on Trade and Environment Special Session (CTESS) as to how the relationship between WTO rules and trade measures under MEAs can be clarified.67 Responding to concerns from developing countries about the possible market access impacts of increased use of environmental measures in trade agreements,68 the EU has this to say: “the answer to concerns about reduced market access is not to weaken such [environmental] standards, but rather to enable exporters to meet them”.69 From this perspective therefore, the agenda on trade and environment should be organised in such a way as to meet every Party’s trade interests (in particular those of developing countries) and to promote sustainable development. The EU declares that it “understands developing countries’ concerns and is ready to work and discuss on the basis that environmental requirements should be developed and applied in such a manner so as to minimise possible adverse effects on market access for developing countries, while still achieving the objectives of environmental policies”.70 In this respect, under the negotiations in the CTESS on paragraph 31 of the Doha Declaration, the EU has made the following proposals: • Open trade for environmental goods and services, i.e. no quota or tariffs on goods and services that contribute to combating climate change; • Equal relationship between WTO rules and multilateral environmental agreements, to secure legal certainty that multilateral trade rules acknowledge environmental commitments; • Observer status for MEAs’ Secretariats in the WTO. 20 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries approach may be more in line with their capabilities on environmental protection. The right to establish respective levels of domestic environmental protection and to modify environmental laws accordingly, while seeking to reach “high levels of environmental protection and strive to improve those laws” is common to the C–EPA and the recent FTAs involving the US but totally absent in the EU–Chile FTA.113 This kind of specific statement about Parties’ prerogative on levels of environmental protection and the accompanying pledge, is likely to find its way into more regional trade agreements. In the US–Chile FTA, non-compliance with domestic environmental laws triggers dispute settlement measures, as does a Party’s failure to effectively enforce its domestic environmental laws.114 However, where a Party has used reasonable discretion or has made a bona fide decision to allocate resources to enforcement, this will not constitute non-compliance. Moreover, 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 for environmental matters. Paragraph 3 of Article 19.2 then cautions that: “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 same provisions can be found in the US–CAFTA–DR.115 This type of provision appears to be a safeguard of territorial sovereignty. Formal dispute settlement procedures are common to all the RTAs, but like the C–EPA, in US–Chile and US–CAFTA–DR, detailed procedures for resolution of environmental disputes are laid out, starting with consultations.116 There are no special environmental dispute provisions in the EU–Chile FTA or the Euro–Med Agreements. Thus the general dispute settlement provisions will apply. In the US–Chile FTA, there is an express warning: neither Party may use the normal dispute settlement procedures in the FTA without having first attempted to resolve the dispute through the environmental consultation process established by Article 19.6.117 The US–Chile FTA and the US–CAFTA–DR are among the few trade agreements which stipulate that failure to effectively enforce domestic environmental laws will trigger dispute settlement proceedings. The C–EPA did not follow this model and it is unlikely that the EU would push for this kind of provision in the agreements it is negotiating with groups of developing countries. For the US–Chile FTA, if the dispute concerns a Party’s failure to effectively enforce its domestic environmental laws, and it remains unresolved after consultations, it is then dealt with under the Chapter 22 dispute settlement provisions. Either Party can make a written request for consultations through the provision of specific and sufficient information.118 Where consultations do not resolve the matter, the Environment Council may be convened.119 In the case of issues not involving non-enforcement of domestic environmental law, this is the final stage of dispute settlement. In cases involving a failure to effectively enforce domestic environmental laws, where consultations have not resolved the matter, within sixty days of an initial request for consultations, the complaining Party can invoke the provisions of Chapter 22 dispute settlement.120 In such cases, the complaining Party should first use either consultations under Article 22.4 or a meeting of the Commission under Article 22.5 before it can use the other dispute settlement provisions of Chapter 22.121 The last resort for resolving disputes after consultations under Article 22.4 is an arbitration panel, for which panellists are chosen from the “Environment Roster”. The arbitration panel must deliver an initial report within 120 days of being established. Monetary fines are part of the sanctions available to the panel; however, it cannot impose a fine greater than USD 15 million. The Party found to be in breach of its obligations pays the fine into a fund which must be used for environmental programmes.122 Suspension of trade concessions in disputes involving failure to effectively enforce domestic environmental laws is intended as a penalty of last resort and is not routinely encouraged. It is to be used only after a Party fails to pay the fine determined by the arbitration panel and 21 ICTSD EPAs and Regionalism Programme no other alternative is available that is less harmful to the Agreement’s goal of eliminating trade barriers.123 Similar provisions exist in the US–CAFTA–DR.124 The recognition of countries’ right to take action necessary to protect the environment is a theme that runs through RTAs involving both the EU (including the EPAs) and the US, and is likely to continue to be incorporated into future RTAs. The clauses which have been used in most RTAs, including all the interim EPAs, are standard phrases drawn from the language of GATT Article XX or from Article 30 of the Treaty Establishing the European Community, last updated through the 1998 Amsterdam Treaty (hereafter referred to as “EC Treaty”)125 with only a slight amendment in the wording depending on the particular trade agreement. The text of Article 30 of the EC Treaty differs from that of GATT Article XX in that it requires that exceptions be “justified” on specified grounds; such terms are not found in Article XX of GATT. However, Article 30 includes language similar to that used in the chapeau of Article XX: the admonition that such measures should not be discriminatory or disguised restrictions on trade. In contrast with Article XX, Article 30 does not contain a specific exception relating to the conservation of natural resources. However, it does include an exception relating to health and, additionally, to “public policy” (among others). Reference to the conservation of exhaustible natural resources found in the EU–Chile FTA, EU–South Africa TDCA and other RTAs which follow the language of Article XX, is absent from the general exception clause in the Euro–Med agreements; they follow the language in the EC treaty.126 Some RTAs specifically incorporate GATT Article XX wholesale and make it part of the agreement, as has been done by US–Chile FTA, US–CAFTA–DR and other FTAs involving the US. Both the general exception clauses used in the US–Chile FTA and the US–CAFTA–DR contain further provisions setting out what the Parties understand by the measures contained in GATT Article XX (b) and (g).127 Such provisions have not been thought to be necessary for inclusion in the EPAs. The issue of public participation in environmental decision-making and policy-making has become significant in the last several years, especially as the relationship between trade and environment has become increasingly controversial. The rationale for consultative and participatory processes in trade negotiations is that they may enhance the quality of content and implementation of the RTAs by facilitating the input of information and expertise.128 Public participation is also seen as vital in building public and political support for the RTA. Some governments allow for participation of the public through consultative processes, in negotiation and implementation of RTAs, as well as through ex-ante and ex-post environmental impact assessments. For instance, the EU uses sustainability impact assessments as tools for public comment and consultation around trade agreements so that civil society organisations can directly input into the preparation of these assessments. This practice has not yet evolved into a strict legal obligation but is supported by the Communication on Impact Assessment issued by the EU Commission in 2002 which has the legal status of a policy guideline. It requires the Commission to execute environmental, economic and social impact studies for different types of major regulatory initiatives.129 In the US, the framework for conducting Environmental Reviews (ERs) of trade agreements is provided by Executive Order 13141 “Environmental Review of Trade Agreements” (1999) and the Guidelines for Implementation of Executive Order 13141 (2000).130 Some mechanisms for consultation with experts on environmental issues may be warranted during the negotiations or implementation of the RTA. Detailed and wide-ranging pubic participation provisions are contained in the US–Chile FTA and US–CAFTA–DR. In the US–Chile FTA, the public is to be consulted in co-operative activities between the Parties, and in the design and implementation of work programmes for 4.2.5 Environmental exceptions 4.3 Public Participation 22 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries such co-operation. In the US–CAFTA–DR, there are institutional arrangements for public participation in environmental planning and issues related to the environmental chapter.131 In the C–EPA there is merely a reference to public and mutual consultations including consultations with the private sector.132 In the EU–Chile FTA, the public is encouraged to keep the Parties informed about the implementation of the agreement and gather suggestions for its improvement.133 Public participation provisions can be used to improve environmental performance by the Parties. For instance, in the US–Chile FTA, an Environment Affairs Council is established to discuss implementation of the commitments in the environment chapter and to address environmental issues which the public considers significant.134 The Council should provide space for public participation in the development of Council activities, including allowing the public to help create agendas for its meetings.135 As has already been noted, the C–EPA contains a provision where the state Parties may seek advice from the relevant international bodies on best practice.136 The inclusion of this kind of provision seeks to avoid the eventuality of non-performance of environmental obligations. The trade agreements with the EU take this sort of dispute avoidance approach in their tone and substance. Public participation in dispute settlement procedures is also encouraged. First, there is a trend for experts to be consulted in the resolution of environmental disputes. For instance, the C–EPA, the US–Chile FTA and US–CAFTA–DR all establish rosters of environmental experts that can be called upon in settling environmental disputes.137 This type of provision is useful and is likely to be repeated in some form in other RTAs and EPAs. Second, there are provisions on submissions by members of the public on issues regarding enforcement of the environmental provisions. In the US–Chile FTA and the US– CAFTA–DR, there is a commitment to provide for procedural safeguards to allow interested persons the right to pursue legal remedies for violations of domestic environmental law.138 Such proceedings should be fair, equitable and open to the public.139 Paragraph 3 of Article 17.7 specifically recognises the procedure laid down in the North American Agreement on Environmental Co-operation (NAAEC) for submissions from the public in the US to the NAAEC Commission, and avoids conflict with that process by providing that only members of the public from another Party in the agreement can file a submission with the secretariat in the case of violations of US law under the US–CAFTA–DR.140 Appropriate and effective remedies or sanctions for violations of domestic environmental laws should be provided; these include fines, imprisonment, injunctions, closure of facilities and cost of clean-up.141 It is interesting to note that the US–CAFTA–DR includes a clause providing that “…nothing in this Chapter shall be construed to call for the examination under this Agreement of whether a Party’s judicial, quasi-judicial, or administrative tribunals have appropriately applied that Party’s environmental laws.”142 Unlike most FTAs with the USA, neither the C–EPA nor the EU–Chile FTA provides space for such access to justice provisions where members of the public may bring an action against the State. However, the EU–Chile FTA does provide that panel hearings may be open to the public if both Parties agree (except for confidential business information). The Agreement also specifies that the Panel may receive amicus curiae submissions, unless the Parties agree otherwise.143 23 ICTSD EPAs and Regionalism Programme Table 1: Types of Environmental Provisions in Selected RTAs Type of environmental provisions EU–Chile FTA C–EPA EU–Mexico FTA EU–South Africa TCDAEuro–Med Agreements US–Chile FTA US–CAFTA– DR Environment or sustainable development in preamble Yes Yes Yes Yes No Yes Yes Environment in RTA or environmental side agreement RTA RTA RTA RTA RTA Both Both Obligation to enforce domestic environmental law No No No No No Yes Yes Environmental standards No Yes No No No Yes Yes Environmental co-operation Yes Yes Yes Yes Yes Yes Yes Relationship with MEAs No Yes No No No Yes Yes Consultations or exchange of information on environmental issues No Yes No Yes No Yes Yes Exceptions related to environmental protection Yes Yes Yes Yes Yes Yes Yes Formal environmental dispute settlement mechanism No Yes No No No Yes Yes Public participation in environmental affairs No No No No No Yes Yes Source: OECD 2007. 24 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries From the discussion above, it is clear that environmental provisions in RTAs come in various forms and include a range of types of provisions depending on the relationship between the Parties and their objectives in entering into trade relations. Broad environmental co-operation provisions tend to predominate in the EU’s trade relations and the C–EPA represents the first time that the EU has incorporated a whole chapter on environment within an RTA. In some cases, environmental issues were not part of the original agenda for trade, but have managed to find their way onto that agenda by necessity, because of concerns about intra-regional competition and the need for a level playing field. For instance, it is clear that in relation to trade agreements with Mexico, Chile and the Mediterranean countries, there were ongoing initiatives that were subsequently formalised or integrated as environmental provisions in the text of the trade agreement. In the case of the C–EPA, the EU is clearly starting from scratch in terms of balancing trade and environment provisions within a trade agreement with this group of countries, thus it has gone broader than the environmental provisions found in the Mexico or Chile trade agreements where there already were prior economic relations. With some regions like the Andes and Central America, the EU is likely to take account of the types of environmental provisions contained in the RTAs with other OECD countries and either take some comfort from the fact that the environmental provisions are enforced through those agreements or seek to use those environmental provisions as precedents for its own RTA with the region in question. Developing countries now negotiating with the EU may wonder which approach will be followed by the EU. Will it continue the trend of broad environmental co-operation as it has done in the EU–Chile FTA or will it seek to incorporate specific environmental issues in a full chapter as has done in the C–EPA? Given the EU’s policy approach towards the Andean Community and Central American countries, it is likely to pursue a broad co-operative approach towards environmental issues in a future agreement with these countries. For the African, Caribbean and Pacific countries, it is fairly certain that the EU will adopt the approach taken in the C–EPA to have a full chapter on environment with a hybrid of binding and non-binding provisions while adopting a softer approach (a mix of dialogue and consultation) to enforcement than the RTAs involving the US. The exception may be in the Central African region where the chapter emphasises sustainable development rather than purely environmental issues, however it is likely to be the same mix of binding and nonbinding measures. 4.4 Lessons from Incorporating Environmental Provisions in Regional Trade Agreements 25 ICTSD EPAs and Regionalism Programme 5. IMPLICATIONS OF ENVIRONMENTAL PROVISIONS IN ECONOMIC PARTNERSHIP AGREEMENTS There are a number of implications related to incorporating various types of environmental provisions in EPAs. Some RTAs seek to be consistent with the trade and environment provisions in other international agreements such as MEAs. How is this relationship borne out in the particular RTA and other regional and international agreements, and how will the relationship be managed by policy-makers? In particular, how can any potential conflicts be managed and handled? These issues will be considered in this section. As countries expand their regional and bilateral trade deals, and RTAs proliferate, developing countries in Africa, the Pacific and Latin America are faced with the increasingly complex problem of managing various processes of negotiation, different levels of environmental commitments, and implementing different types of environmental provisions under a range of RTAs to which they are party. This problem needs careful management. It will require developing countries to have in place some basic structures for coordination between trade and environment government institutions, as well as between government and private sector agents. It will also involve significant human financial and technical resources for negotiation and implementation of provisions which may have a multidisciplinary feature, particularly where scientific or technological issues are involved, for instance for SPS or environmental goods and services. The process of negotiating regional trade agreements is just as important as the substance and therefore the mandate and responsibilities given to particular government departments will shape the outcome of the negotiations.144 The incorporation of environmental provisions in EPAs or other RTAs may help along the required coordination between environment and trade officials, or it may focus the developing country partner on the required process for the implementation of its own environmental laws. In such a case, environmental cooperation could help to harness the resources and institutional platforms necessary to address shared environmental concerns between the trading partners; and in some cases, the trade agreement may help to provide the resources for such coordination. However, this becomes a circular process because the success of the environmental co-operation activities demands some initial level of institutional development within the developing country partner. Generally, coordination of environmental policies tends to work better within highly integrated groups such as the EU or NAFTA where the supporting institutional structures are present and functioning well. Thus, at the very least, a basic level of institutional coordination between trade and environment ministries is required in developing countries in Africa, the Pacific and Latin America negotiating with the EU, first to ensure a successful and efficient negotiating process, and then to make sure that implementation proceeds as planned. The more complex the negotiation process, the more the institutional systems for managing and coordinating the process will need to be elaborate. Consideration also should be given to how the implementation process will progress once the provisions are given effect in the RTA. Will new laws and regulations need to be enacted or can existing laws be adequately amended for the purpose? Will new institutional frameworks be necessary? Are there any additional administrative burdens arising from the inclusion of environmental provisions within the RTA? All these are important considerations for developing country negotiators and policy-makers. In effect, the aim should be to ensure that environmental provisions 5.1 Management and Coordination 5.2 Implementing Environmental Provisions 26 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries are workable and do not place additional burdens than are necessary for the particular developing country. As has been seen, in the EU–South Africa TDCA, the Euro–Med Agreements, and to some extent the EU–Mexico FTA, the scope of environmental co-operation is left open in the agreements and may be determined during the implementation phase through discussions among environmental officials. In the Euro– Med agreements, the article on regional cooperation broadly identifies “environmental matters” as an area for the Parties to “foster all activities which have a regional impact or involve third countries.”145 The EU–South Africa TDCA provides that “there will be dialogue on the identification of environmental priorities.”146 In the EU–Mexico FTA, a future sectoral agreement on the environment and natural resources is forecast.147 Where specific priorities for co-operation are identified, activities are developed on the basis of mutual interest and needs, and the capability to meet those needs. This more general approach to environmental cooperation allows for an ongoing assessment of needs by the developing country partner. It may provide a strong basis for ongoing development and consolidation of relationships between the partner countries. At the same time, the failure of the agreements to identify more concrete projects and to create specific institutions to advance co-operation activities could prevent such comprehensive provisions from being implemented. Nevertheless, the provisions incorporated in these agreements implying common areas for required action, as part of the economic and trade links between the Parties, may already be defining the priorities for future co-operation, and thereby the process of implementation. In trade agreements which broadly aim at regional integration (such as the EPAs), the co-dependence created by close economic and cultural ties, and, in the case of the Euro–Med partnerships, that created by geographical proximity, brings with it another dimension of environmental co-operation.148 In such cases, the idea behind interlinking environmental co-operation and trade measures in the same agreement is that the economic growth that could result from such trade liberalisation needs to be sustainably managed, yet in many countries the necessary institutions and expertise to manage such growth are poorly developed. Environmental co-operation is therefore seen as a way of mitigating or addressing potential negative environmental impacts which may arise from the implementation of trade measures – impacts which may be shared where countries are more or less neighbours or have close migration ties. Here the importance of building on economic co-operation through social and environmental collaboration is a distinct strategy.149 The EU–Chile agreement, for instance, refers to co-operation on the relationship between poverty and environment, environmental impact of economic activities, projects to reinforce environmental structures and policies, exchanges of information, environmental education and training, technical assistance, and joint regional research programmes. Similar areas for cooperation are identified in the C–EPA and in the EU–South Africa TDCA. In the case of the C–EPA, specific reference is made to environmental goods and services and environmentally-sound technologies.150 In the case of the US–CAFTA–DR, reference to co-operation on “developing and promoting environmentally beneficial goods and services” is contained not in the body of the agreement but in its side agreement, because the environmental co-operation arrangements between the US and the Central American countries are so detailed.151 Exactly what “developing and promoting” entails, is not spelled out, although it may involve product development, and therefore the issue of distinguishing between products based on their process and production methods may be the subject of discussion and negotiation between the CAFTA–DR States and the US.152 In the CAFTA–DR the outline of the institutional structures for co-operation and the details 5.2.1 Fostering environmental co-operation through implementation 27 ICTSD EPAs and Regionalism Programme of financing of such co-operation activities, provide a solid basis for implementation, in contrast to the open-ended approach to environmental co-operation adopted in the C–EPA, the EU–South Africa TDCA and others. Some level of institutional arrangement will be required in order to implement regional trade agreements. Some RTAs establish joint institutions with a mandate spelled out in the agreement, such as the EU–CARIFORUM Consultative Committee under the C–EPA. Alternatively, the Parties may establish a joint forum for regular meetings to discuss implementation issues arising from the agreement. Moreover, they may designate new or existing national institutions to supervise implementation at the domestic level. In the US– CAFTA–DR, the existing Secretariat for Central American Economic Integration (SIECA) has been given the responsibility of receiving public submissions by citizens from all the Parties, except US citizens who should bring submissions before the Commission for Environmental Cooperation (CEC) established under the NAAEC. The reporting lines and mechanisms to be followed by these institutions will also be important elements to consider by the Parties. The agreements concluded by the EU do not entrust particular institutions with environmental co-operation, though the body overseeing the implementation of the Agreement – typically an Association Council or Co-operation Council – is also entitled to create sub-bodies to deal with specific issues. The relationship between trade rules and the provisions of MEAs has been one of the core issues in the trade and environment debate at the multilateral level, particularly the WTO Committee on Trade and Environment (CTE). As already noted, only the C–EPA makes specific reference to multilateral environmental agreements;153 the interim EPAs contain no such references. The other RTAs involving the EU also do not contain specific references to MEAs, but may refer broadly to international environmental standards. In contrast, not only do the US–Chile FTA and the US–CAFTA–DR make specific reference to MEAs, but they also provide for possible accommodation of the outcome of negotiations in the WTO on the relationship between trade and environment. In the US–Chile FTA, Article 19.9 provides that the Parties “shall consult on the extent to which the outcome of the negotiations [on the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements] applies to this Agreement”. In the US–CAFTA– DR, the Parties will consult on the ongoing negotiations in the WTO.154 Where environmental provisions have made mention of multilateral environmental agreements, the implication is that the RTA standards will attempt to ensure consistency with the trade and environment provisions in those MEAs or regional environmental agreements. The question arises as to how potential conflicts on trade and environment issues between those international commitments and the RTA will be handled. None of the recent RTAs go as far as the NAFTA in providing a specific savings clause that would exempt MEA-related measures from the trade agreements’ rules and obligations.155 And it is unlikely that such a clause would find its way into the EPAs and other RTAs being negotiated by the EU with developing countries. It seems that there has been a deliberate choice to use the forum of the MEAs themselves to pursue improved environmental performance, demonstrating again the balance to be struck between environment and trade provisions in RTAs. Having said that, the effect of the reference to MEAs in the C–EPA is to bind the CARIFORUM States to international environmental standards, whether or not they are party to such MEAs. Both this and the provision in the C–EPA requiring Parties to seek advice about obstacles 5.2.2 Institutional arrangements for implementation 5.3 Relationship with International Agreements 5.3.1 Multilateral environmental agreements 28 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries to meeting environmental standards in MEAs is easily replicated in future EPAs and needs careful consideration by developing country negotiators and policy-makers. The significance of the references to environmental laws and standards contained in recent RTAs, including the EPAs, lies in the implications for the levels of protection and the enforcement mechanisms applied. Reference to international standards or high standards in the context of domestic laws may lead to higher levels of protection than the domestic law prescribes in the developing country. This has implications for implementation and enforcement: developing countries may find that they are enforcing higher environmental standards through their laws than they have the human, technical or financial capacity to implement.156 All the RTAs involving the EU include provisions relating to both sanitary and phytosanitary measures, and technical barriers to trade (TBT). These can have important environmental implications as many environment and healthrelated measures qualify as TBT or SPS measures. Regional trade agreements with the US and EU have extended the application of their general exception clauses relating to trade in goods to also cover the chapters or provisions on SPS and TBT. Such provisions are contained in the US–Chile FTA157 and the US–CAFTA–DR.158 These provisions recognise the Parties’ rights to impose SPS and TBT measures subject to certain conditions. In addition, specific SPS and TBT provisions aim to facilitate the application of SPS and TBT rules under the WTO. Some provisions affirm WTO rules or pursue a common understanding of the existing WTO provisions. In effect, they rely on existing rights and obligations in the WTO’s SPS and TBT agreements to also be applied in the RTA. This is the case for the EU–Chile FTA,159 the EU–Mexico FTA160 and to some extent the C–EPA.161 Both the US–Chile FTA and the US–CAFTA–DR contain a clear commitment by the Parties to “effectively enforce” their domestic environmental laws.162 At the same time, they also recognise that Parties retain the right to exercise discretion in enforcement matters, and specifically with respect to investigatory, prosecutorial, regulatory and compliance matters, and to make decisions regarding the allocation of resources to enforcement.163 As already noted, this provision is absent from the EU RTAs. At a minimum, the signal to effectively enforce national environmental laws has the value of reflecting the importance that Parties to the RTA attach to environmental matters. For developing country Parties, entering into such commitments may constitute a challenge. However, it may also prove to be an opportunity to have a closer look at their own environmental regulation and enforcement systems, and enhance their effectiveness.164 Of course, the right to exercise discretion could be abused and could thereby frustrate the obligation to effectively enforce environmental laws: a country could simply excuse itself by pointing to its priorities and limited resources to implement environmental provisions.165 However, to reduce the burden of this provision, the US RTAs clarify that a Party is in compliance with the obligation to effectively enforce laws 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.166 Although these mechanisms have not been followed in the EU RTAs, they are nonetheless pioneering from the international environmental legal perspective in that they focus not on the State’s compliance with international legal obligations, but rather on its enforcement of purely domestic law.167 They are aimed at one or both of two basic objectives: to strengthen the environmental regulatory regime of the agreement’s trading Parties and to level the playing field for competing industries by ensuring that, at a minimum, the environmental laws on the books are effectively enforced.168 In effect, 5.3.2 High international standards versus domestic standards 5.3.3 WTO rules on sanitary and phytosanitary standards and technical barriers to trade 5.4 Enforcement of Domestic Environmental Laws 29 ICTSD EPAs and Regionalism Programme the latter objective could have a beneficial effect on developing countries by increasing the chances that their environmental statutes are enforced. However, the EU RTAs have sought other means to ensure this objective; the focus is more on a co-operative than on a litigious approach to enforcement. Most RTAs involving the EU subject their environmental provisions to the general dispute settlement procedures in the agreement by not providing specific processes for settlement of environmental disputes. However, the C–EPA and those RTAs involving the US, provide for a consultation process under which “a Party may request consultations with the other Party regarding any matter arising under [the environment chapter]…the 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”.169 If the consultations fail to resolve the matter, Parties can generally go a step further and request that a specific body be convened to resolve the matter expeditiously. Dispute resolution can then take the form of consultations with governmental or outside experts, good offices, conciliation and mediation. In the event that the Parties fail to resolve the question at issue, they may initiate formal dispute settlement proceedings (the normal procedures applicable with respect to trade obligations). However, (at least for US RTAs), it is an option of last resort where there is an alleged failure by a Party to effectively enforce its own environmental laws (even then, it is only available where a defending Party has failed to pay the imposed fine). It is not available for alleged violations of other environmental obligations under the agreements, such as the obligation not to weaken environmental standards or to provide for minimal procedural guarantees. The clear signal is therefore that all issues arising under the environment chapter must be addressed under the special consultation process established by the chapter for this purpose.170 As discussed in Section 4, the implication is that there is a delicate balance to be struck in the mutual supportiveness of trade and environment measures under the RTA – in other words, some enforcement can be achieved through co-operative approaches or with the use of more positive trade measures. Civil, administrative or criminal enforcement of environmental laws requires, inter alia, strong institutions, trained judiciary, extensive financial resources and qualified personnel. However, in African, Pacific and Latin American countries, authorities are faced with limited resources and competing demands leading to limitations in their capacity to effectively enforce their laws. Efforts in regional trade agreements to improve environmental management may therefore involve provisions aimed at building capacity for environmental management in RTA partners. In some instances, simply incorporating substantial environmental provisions in the RTA in itself increases domestic attention to improved environmental management. The OECD cites the example of Chile, which thoroughly overhauled and codified its environmental legislation during ongoing trade negotiations with Canada and the United States. Prior to that, its environmental legislation had been scattered among numerous pieces of legislation and regulations. The negotiations with the US and Canada involving the detailed environmental provisions provided the “external” impulse to make changes which may not have otherwise occurred, or might have occurred at a later stage.171 In other respects, technical assistance and capacity building may be aimed at sharing and exchanging information or strengthening institutions charged with environmental management responsibility. Most such efforts involve developed countries undertaking capacity-building efforts in lessdeveloped partner countries, which are perceived to have critical gaps in this area. In particular, the environmental co-operation provisions in the RTAs usually outline the specific technical 5.5 Settlement of Environmental Disputes 5.6 Strengthened Environmental Capacity 36 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries enforcement of domestic environmental laws. Otherwise, the huge differences in environmental legislation, standards and compliance levels between the EU and the ACP countries, as well as the attendant costs of improving weak institutional and weak human resource capacity, may make harmonisation very difficult, or even impossible. 37 ICTSD EPAs and Regionalism Programme 9. CONCLUSIONS AND RECOMMENDATIONS Environmental provisions in RTAs run from bare minimum environmental exceptions to fully-fledged environmental chapters or environmental side agreements. They may contain binding or non-binding provisions backed by comprehensive dispute settlement provisions to resolve environmental disputes between the Parties to the agreement. It is clear that environmental provisions will continue to be incorporated, to varying degrees of detail, into bilateral and regional trade agreements. This approach is seen as a strategic policy intervention by members of the OECD, particularly in the absence of substantive progress on this issue in the WTO. Some developing countries have accepted the inclusion of environmental provisions in RTAs while continuing to resist their incorporation into the WTO. Generally, among developing countries, there continues to be a sentiment that environmental requirements constitute barriers to trade. They emphasise the importance of ensuring that environmental requirements in RTAs are balanced, and point to the need for a “positive environmental agenda” which would help limit the potential conflicts between trade and environmental requirements. This includes coupling strong provisions – such as those aimed at enhancing environmental standards or ensuring enforcement of environmental laws – with co-operation mechanisms and support for capacity building. A comparison of the EU and US approaches to incorporation of environmental provisions into RTAs demonstrates conceptually and substantively different approaches to the notion of mutual supportiveness of trade and environment measures. While the US RTAs effectively place trade and environmental issues and commitments on an equal footing, the EU’s approach is more co-operative, political and diplomatic with trade and environment seen as mutually supportive but not quite equal. Even as the EU focuses on broader sustainable development and co-operative approaches to its trade and environment relations with developing countries, it takes different approaches depending on the region or country in question. Wherever the EU is negotiating with a region or country which already has fairly stringent environmental commitments in an existing EPA (e.g. the US or Canada) it does not push for such stringent environmental provisions in its own FTA with that country or region. Free trade agreements with the Andean and Central American countries are therefore likely to be modelled on the looser co-operative approach of the EU–Chile FTA. The general trend adopted by the EU to incorporating environmental provisions into EPAs is to reflect the environment provisions in the Cotonou Agreement. The C–EPA provides a further benchmark for the EU in its continuing negotiation with ACP countries; however, although it may incorporate a chapter on the environment in upcoming EPAs, the provisions are likely to differ in substance and procedure. What emerges is a general trend towards some sort of environmental provisions, ranging from environmental exceptions modelled on the GATT Article XX or the EC Treaty, to environmental co-operation and dispute settlement provisions. The extent to which environmental provisions are detailed will always depend on the economic and political relationship which the EU has with the country or region in question. Incorporating environmental provisions within RTAs may present some benefits to developing countries, including increased enforcement of environmental laws and the raising of environmental standards. At the same time, developing countries should try to mitigate certain challenges associated with negotiating and implementing environmental provisions in RTAs including managing complex and different negotiating processes at the same time, lack of coordination between trade and environment 38 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries ministries, and added administrative and legal burdens. Moreover, the need to establish and maintain appropriate levels of environmental protection and related standards may pose particular challenges for public and private sector institutions in developing countries. Appropriate packages of technical assistance, capacity building and environmental co-operation measures will be needed to help countries adjust to meet new environmental challenges. Recommendations Developing countries (including African, Caribbean, Pacific, Andean and Central American countries) wishing to continue their negotiations with the EU should keep the following issues in mind: • Place the negotiation of environmental provisions in the RTA within the broader context of their environmental protection priorities as well as their export interests. The identification of specific export interests should be based on sound economic analysis. Issues could include compliance with SPS and TBT requirements, environmental goods and services, and management of natural resources. • Manage and coordinate the process of negotiation in order to ensure the intended outcome. This will entail coordination among government institutions as well as between the government and private sector (business community), and the government and civil society. • Use ex-ante and ex-post environmental impact assessments as a tool for (a) ensuring that all potential environmental and sustainable development implications of the EPA are considered, and (b) allowing adequate stakeholder involvement into the design and implementation of the EPA. • Ensure the incorporation of as much detail as possible in the RTA text on provisions for environmental co-operation priorities to secure effective implementation, including provisions on funding for such activities. • Incorporate adequate provisions on technical assistance and capacity building targeted at improvements in environmental standards and strengthening of institutions for monitoring and enforcement of such standards. These could include financing of adjustment costs for SMEs to new environmental standards, access to new or existing technologies for improved environmental performance, financing for adaptation to new market access requirements, etc. 39 ICTSD EPAs and Regionalism Programme REFERENCES Cameroon Interim EPA. 2008. Interim Agreement with a view to an Economic Partnership Agreement between the European Community and its Members States of the one part and the Central Africa Party of the other part. Campling, L. 2008. Fisheries Aspects of ACP–EU Interim Economic Partnership Agreements: Trade and Sustainable Development Implications, Issue Paper No.6. Geneva: ICTSD. (Available at: http://ictsd.net/downloads/2008/11/fisheries-aspects-of-acp-eu-interim-economicpartnership-agreements1.pdf). CARIFORUM EPA. 2007. Economic Partnership Agreement between the CARIFORUM States of the one part and the European Community and its Member States of the other part. (Available at: www.crnm.org). Côte d’Ivoire Interim EPA. 2007. Stepping Stone Economic Partnership Agreement between Côte d’Ivoire of the one part and the European Community and its Member States of the other part. EAC Interim EPA. 2007. Agreement establishing a framework for an Economic Partnership Agreement between the East African Community Partner States and the European Community and its Member States. EU DG Trade. 2004. Addressing the Concerns of Developing Countries on the Effects of Environmental Measures on Market Access (doc. 344/04 Revised, 5 October 2004). Brussels: European Commission. European Union. 2006. Renewed Sustainable Development Strategy, European Council Resolution, 10917/06 (26 June 2006). Brussels: European Commission. EU–Chile FTA. 2002. Agreement establishing an association between the European Community and its Member States of the one part, and the Republic of Chile of the other part. EU–Mexico FTA. 2000. Economic Partnership, Political Coordination and Co-operation Agreement between the European Community and its Member States of the one part, and the United Mexican States of the other part, Official Journal of the EC, L 276/45 (28.10.2000). Euro–Med Agreements. 2000. Euro–Mediterranean Agreement establishing an association between the European Communities and their Member States of the one part and the Kingdom of Morocco on the other part, OJ L 70/2 (18.3.2000). Jha, V., Markandya, A. and R. Vossenar. 1999. Reconciling Trade and the Environment: Lessons from Case Studies in Developing Countries, UNCTAD. Cheltenham: Elgar Publishing. Mbirimi, I., Chilala, B. and R. Grynberg. 2003. From Doha to Cancun, Delivering a Development Round. London: Commonwealth Secretariat Economic Paper 57. OECD. 2007. Environment and Regional Trade Agreements. Paris: OECD. Pacific Interim EPA. 2007. Interim Agreement between Pacific States of the one part and the European Community of the other part, Joint text initialled on 23rd November 2007 in Brussels. 40 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries Schukat, P. 2008. Cariforum EPA and Beyond: Recommendations for Negotiations on Services and Trade related Issues in EPAs: GTZ Study on Social Aspects and Environment Working Paper. Eschborn: GTZ. US–CAFTA–DR FTA. 2004. The Central America–Dominican Republic–United States Free Trade Agreement (05.08.2004). US–Chile FTA. 2003. Free Trade Agreement between the United States of America and the Republic of Chile (06.06.2003). US–Singapore FTA. 2003. United States and the Republic of Singapore Free Trade Agreement (06.05.2003). US Jordan FTA. 2001. Agreement Between The United States Of America And The Hashemite Kingdom Of Jordan On The Establishment Of A Free Trade Area Agreement (17.12.2001). Von Weizsacker, E., Lovins, A.B. and L. Hunter Lovins. 1997. Factor Four: Doubling Wealth, Halving Resource Use. London: Earthscan. WTO. 2004. Trade and Environment at the WTO. Geneva: WTO. 41 ICTSD EPAs and Regionalism Programme ADDITIONAL REFERENCES Caricom. 2001. Revised Treaty of Chaguaramas establishing the Caribbean Community including the Caricom single market and economy. (Available at: www.caricom.org/jsp/community/revised_treaty-text.pdf) EU–Andean Community FTA. 2004. Political Dialogue and Co-operation Agreement between the European Community and its Member States of the one part, and the Andean Community and its Member Countries (Bolivia, Colombia, Ecuador, Peru and Venezuela), of the other part. Geradin, D. 1997. Trade and the Environment: A Comparative Study of EC and US Law. Cambridge: Cambridge University Press. Kim, J.A. (undated). Harnessing the Regional Trade Agreements for the post-2012 climate change regime (manuscript). OECD. 2008. Trade and Environment at the OECD: Key Issues since 1991. Paris: OECD. Tebar Less, C. and J. A. Kim. 2008. Checklist for Negotiators of Environmental Provisions in Regional Trade Agreements, OECD Trade and Environment Working Paper 2008-02, COM/TAD/ENV/ JWPTE, 35/FINAL, (23-Sep-2008). US–Panama FTA. 2007. United States of America and the Republic of Panama Trade Promotion Agreement (28.06.2007). US–Peru FTA. 2006. United States of America and the Republic of Peru Trade Promotion Agreement (12.04.2006). US–Colombia FTA. 2006. The United States of America and the Republic of Colombia Trade Promotion Agreement, (22.11.2006). 42 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries ENDNOTES 1 As at the time of writing (May 2009). 2 In this study the term “regional trade agreements” and “RTAs” is used to refer in a generic sense to bilateral, regional and free trade agreements. 3 This objective is contained in numerous political statements including the 1992 Rio Declaration. 4 This argument has been used in the debate surrounding “pollution havens” and the discussion about the “race to the bottom”. 5 See Von Weizsacker et al 1997. 6 See e.g. Article 42 of the interim EPA between the EU and Pacific Island States and Article 40 of the interim EPA between the East African Community and the EU. 7 Comment obtained from an official in the Directorate-General for Trade of the European Commission (DG Trade). 8 Partnership Agreement between the members of the African Caribbean and Pacific (ACP) States on the one part, and the European Community and its Member States on the other part (found at http://ec.europa.eu/comm/development/body/cotonou). 9 CARIFORUM EPA, Article 3.1. 10 Interim Agreement between Pacific States on the one part and the European Community on the other. Joint text initialled on 23rd November 2007 in Brussels (hereinafter “Pacific interim EPA”). 11 Agreement establishing a framework for an Economic Partnership Agreement between the East African Community Partner States and the European Community and its Member States (hereinafter “EAC interim EPA”), Preamble, Article 2 (a). 12 Pacific interim EPA, Article 3 states that: “the Parties reaffirm that the objective of sustainable development shall be an integral part of the provisions of this agreement, consistent with the overarching objectives and principles set out in Articles 1, 2 and 9 of the Cotonou Agreement, and especially the general commitment to reducing and eventually eradicating poverty in a way that is consistent with the objectives of sustainable development”. 13 Stepping Stone Economic Partnership Agreement between Côte d’Ivoire on the one part and the European Community and its Member States on the other part (hereinafter “Côte d’Ivoire interim EPA”). 14 Côte d’Ivoire interim EPA, Article 44. 15 Interim Agreement with a view to an Economic Partnership Agreement between the European Community and its Members States on the one part and the Central Africa Party on the other part (hereinafter “Cameroon interim EPA”), Title IV, Chapter 5, Sustainable Development. 16 There is however, indication that the commitments are likely to include environmental ones with the reference to “international environmental standards” as relating to those commitments. See Cameroon interim EPA, Article 60 (2) (b). 43 ICTSD EPAs and Regionalism Programme 17 See EAC interim EPA, Article 37 (Areas for future negotiations). The EAC partner States and the EC have agreed to conclude a comprehensive EPA by 31st July 2009. 18 Ibid, Article 183 (3). 19 This is placed in the context of broader sustainable development principles by Article 183.1. 20 C–EPA, Article 183 (1). 21 A whole chapter (III) is dedicated to fisheries, and includes marine and inland fisheries and aquaculture development. 22 EAC interim EPA, Article 25 (2). 23 Ibid, Article 32 (1). 24 Côte d’Ivoire interim EPA, Articles 50ff. 25 C–EPA, Article 190 (2) (d). 26 Article 184 refers to “domestic environmental and public health protection and …sustainable development priorities” in the same context, thereby linking them to each other. 27 See Article 183.5. The Parties are resolved to make efforts to promote such trade. 28 E.g. C–EPA, chapter 7 (Articles 52–59) ; Côte d’Ivoire interim EPA, Title III, chapter 4 (Articles 36–43); Cameroon interim EPA, Chapter 4 (Articles 40–47); Pacific interim EPA, chapter 5 (Articles 33–41). 29 EAC interim EPA, Article 37 (c). 30 See C–EPA, Article 183; Pacific interim EPA, Article 42; EAC interim EPA, Article 40; Cameroon interim EPA, Article 89; Côte d’Ivoire interim EPA, Article 68. 31 See Section 4.2.5. 32 See C–EPA, Article 190. 33 See EU Sustainable Development Strategy 34 Article 8.1 (v). 35 C–EPA, Article 183.3. 36 Article 185.2. 37 This assertion comes from Audel Cunningham, Legal Advisor to the Caribbean Regional Negotiating Machinery, in Schukat 2008. 38 Schukat 2008 39 Ibid. 40 EAC interim EPA, Articles 28, 31 (1) (d); 41 Ibid, Article 32 (2). 44 Chaytor — Environmental Issues in Economic Partnership Agreements: Implications for Developing Countries 42 Article 184.1. 43 Article 184.3. 44 C–EPA, Article 189.3. 45 See Section 4 for a comparison with RTAs involving the US on this issue. 46 See C–EPA, Article 203.1: “This part shall apply to any dispute concerning the interpretation and application of this Agreement.” 47 See C–EPA Article 189. 48 Ibid, Article 204. 49 C–EPA, Article 189.4. 50 Ibid, Article 189.5. 51 C–EPA, Article 204. In such a case, the consultation process in Article 189 replaces that set out in Article 204. 52 C–EPA, Article 206. Parties could also opt for mediation under Article 205. 53 Ibid, Article 213.2: “…In cases involving a dispute under Chapter 4…of Title IV, appropriate measures shall not include the suspension of trade concessions under this Agreement…” 54 See US–Chile FTA, Article 22.16. Only if the defending Party fails to pay the fine can a suspension of tariff benefits be applied. 55 See Section 4 below for a comparison with RTAs involving the US. 56 See European Union website: www.ec.europa.eu/trade/issues/global/environment 57 Ibid. 58 European Union 2006 (Sustainable Development Strategy, hereinafter “EU SDS”). 59 See EU SDS, p.21. 60 For instance, climate change or biodiversity loss. 61 See: “The EU Approach to Trade and Environment”, presentation made at the OECD Regional Workshop on RTAs and the Environment, 19–20 June 2007 in Tokyo, Japan, available at www.oecd.org (hereinafter, “The EU Approach to Trade and Environment”) 62 The EU Approach to Trade and Environment. 63 Ibid. 64 Ibid. 65 See EU SDS, p.5, available at: www.ec.europa.eu/trade/issues/global/environment 66 For instance, liberalise environmental goods and services, seek a global market for carbon emissions trading, increase sustainable trade in biofuels, foster trade co-operation to improve 45 ICTSD EPAs and Regionalism Programme energy efficiency, reverse deforestation through voluntary partnership agreements. See EU Approach to Trade and Environment, supra note 56. 67 See the range of EU submissions on this topic to the CTE Special Session at www.wto.org. 68 Particularly through the application of the precautionary principle and labelling schemes. 69 See EU DG Trade 2004. 70 Ibid. 71 See US–Chile, US–Singapore, US–Jordan, EU–Chile, EU–Med RTAs, all of which include differing levels of environmental provisions. 72 North American Free Trade Agreement, North American Agreement on Environmental Cooperation, Sept. 14, 1993., 32 ILM 1480 (1993). 73 Environment and Regional Trade Agreements, OECD 2007. 74 Agreement establishing an association between the European Community and its Member States on the one part and the Republic of Chile on the other part (hereinafter, “EU–Chile FTA”) 75 Economic Partnership, Political Coordination and Co-operation Agreement between the European Community and its Member States on the one part, and the United Mexican States on the other part (hereinafter, “EU–Mexico FTA”), OJ L 276/45, 28.10.2000. 76 Euro–Mediterranean Agreement establishing an association between the European Community and its Member States on the one part and the Kingdom of Morocco on the other part (hereinafter “Euro–Med (Morocco)”), OJ L 70/2, 18.3.2000. 77 Agreement on Trade, Development and Co-operation between the European Community and its member states on the one part and the Republic of South Africa on the other part (hereinafter “EU–South Africa TDCA”), OJ, L311/3, 4.12.1999. 78 See e.g. US–Chile FTA; US–CAFTA–DR; US–Jordan FTA…. 79 See EU–Morocco Action Plan, available at www.ec.europa.eu. 80 Ibid, p. 2. Cross border co-operation and shared responsibility for the establishment of an area of peace and stability, including crisis management and the prevention and resolution of conflicts in the region are key objectives. 81 This will include promotion of “measures to integrate environmental considerations into other policy sectors: industry, energy, transport, agriculture and regional policies”. EU–Morocco Action Plan, p. 11. 82 Mexico is the EU’s second largest trading partner (after MERCOSUR) in Latin America. 83 For instance, preamble to EU–Chile FTA. 84 See NAFTA, preamble: the Parties “…undertake each of the preceding in a manner consistent with environmental protection and conservation… promote sustainable development; strengthen the development and enforcement of environmental laws and regulations”. www.ictsd.org The EPAs and Regionalism Programme seeks to increase the understanding of and to provide policy options on the articulation of multiple regional trade negotiations and sustainable development linkages. Publications include: t -FHBMBOE4ZTUFNBUJD*TTVFTJOUIF*OUFSJN&DPOPNJD1BSUOFSTIJQ"HSFFNFOUT8IJDI8BZ/PX CZ Cosmas Milton Obote Ochieng, ICTSD Programme on Regionalism and EPA’s, Issue Paper No. 2, 2009 t *OEJDBDJPOFT(FPHSÈåDBTZ%FOPNJOBDJPOFTEF0SJHFOFO$FOUSPBNÏSJDB4JUVBDJØOZQFSTQFDUJWBT by Julio Paz Cafferata y Carlos Pomareda, 2009 t *OEJDBDJPOFT(FPHSÈåDBTFOMB1PMÓUJDB$PNFSDJBMEFMB6OJØO&VSPQFBZTVT/FHPDJBDJPOFTDPO Países en Desarollo, by Carolina Belmar y Andrés Guggiana, Policy Brief No. 4, 2009 ABOUT ICTSD Founded in 1996, the International Centre for Trade and Sustainable Development (ICTSD) is an independent non-profit and non-governmental organization based in Geneva. By empowering stakeholders in trade policy through information, networking, dialogues well-targeted research and capacity building, the centre aims to influence the international trade system such that it advances the goal of sustainable development.