Environment
Trade and Environment at the WTO Any discussion of trade and environment is perhaps best appreciated when set in the context of the multilateral discussions at the WTO. Countries entering into PTAs typically focus on the rights and obligations under a PTA that are additional to or different from those under the WTO’s multilateral system. As noted above, not all WTO members agree on whether and to what extent environmental provisions should be reflected in trade agreements. The WTO agreements, however, do confirm the right of WTO members to protect the environment, provided that certain conditions are met. Environmental provisions find a place within the preamble of the Agreement Establishing the WTO, in general exceptions to trade obligations, and in agreements on technical barriers to trade (TBTs) and sanitary and phytosanitary measures (SPS).5 At the Doha ministerial conference, WTO members reaffirmed their commitment to environmental protection and agreed to embark on a new round of trade talks, including negotiations on certain aspects of the linkage between trade and environment. There have been several prominent disputes at the WTO concerning the trade and environment interface.6 Some basic propositions emerge from the jurisprudence that has been developed so far: • WTO law does not exist in clinical isolation from international law and international developments, including environmental concerns. However, environmental measures to restrict trade can be adopted only under certain strict conditions. • Multilateral solutions to environmental issues are preferred, and WTO members should therefore make serious efforts to negotiate such solutions. If, despite such efforts, an agreement cannot be concluded, unilateral measures for protection of the environment may be taken, even outside the country’s jurisdiction. • Adequate scientific evidence and risk assessment must underlie any action under the WTO’s SPS Agreement, which allows for measures to protect human, animal, and plant life and health. • Tests of necessity and of the availability of less trade restrictive measures are to be applied prior to application of any trade restriction on environmental grounds.
Overview of Approaches to Environmental Concerns in PTAs As has been noted, the primary proponents of environmental provisions in PTAs have been the United States, the EU, Canada, and New Zealand. Developing countries have
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increasingly agreed to environmental obligations in PTAs with these countries. With the exceptions of perhaps Chile and Mexico and, more recently, China, developing countries have not themselves initiated environmental provisions in PTAs. Proponents of environmental provisions in PTAs either incorporate such provisions into the main text of the PTA or place them in separate side agreements. Such provisions typically pertain to any or all of the following matters: obligations relating to “high standards” in domestic environmental laws; mechanisms for resolving disputes involving environmental provisions; principles of cooperation on environmental issues; and provisions on technical assistance and capacity building. These obligations are a blend of legally binding and nonbinding provisions. (The annexes to this chapter summarize environmental provisions in U.S. and EU PTAs.) Since the conclusion, in 1994, of NAFTA and a side agreement, the North American Agreement on Environmental Cooperation (NAAEC), all PTAs negotiated by the United States have included environmental considerations both in environmental chapters and in separate instruments that focus mainly on environmental cooperation. Examples include the agreements with Singapore, Chile, Australia, Bahrain, and Morocco and the PTA with the five countries of the Central America Free Trade Agreement, plus the Dominican Republic (CAFTA–DR).7 These agreements explicitly establish an obligation by the parties to effectively enforce their environmental laws, and they include provisions to ensure enforcement of this commitment through mechanisms for dispute settlement and public submissions. They provide for environmental cooperation between the parties and are accompanied by an environmental cooperation agreement or memorandum of understanding that establishes a framework for such cooperation. Canada’s PTAs also contain comprehensive provisions on the environment, similar to those in U.S. PTAs. The EU’s early PTAs, such as those with Mexico, Chile, and the Mediterranean countries, contain fewer and more broadly worded provisions on the environment.8 It is only in the recently concluded economic partnership agreement (EPA) between the EU and the Caribbean Forum of African, Caribbean, and Pacific (ACP) States (CARIFORUM) that the EU has devoted a separate chapter to environmental provisions. The most significant difference between U.S. and EU PTAs lies in the dispute settlement mechanism. All U.S. PTAs except the one with Jordan prescribe remedies in the form of monetary compensation for noncompliance with environmental provisions. In the event that such compensation is not paid by a party, then—as a last resort—tariff