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process, and the absence of monitoring of enforcement of the recommendations, are regarded as shortcomings. EU PTAs. Like U.S. PTAs, PTAs entered into by the EU emphasize consultation and cooperation in environmental matters. Under the EPA with CARIFORUM, if consultations fail, the matter can be referred to a committee of experts formed under the EPA. The committee’s findings are provided to the consultative committee responsible for implementing the EPA. If there is no resolution within nine months from the initiation of consultations, an arbitration panel for dispute resolution can be requested by the complaining party. Measures for compliance may include compensation, but unlike the case of U.S. PTAs, remedies for violation of the environmental provisions of the PTA cannot include suspension of concessions. New Zealand. The New Zealand–Thailand arrangement on environmental cooperation provides that if any differences about the arrangement arise between the parties, the environment committee set up under the agreement will attempt to resolve them through consultation (Section 3). The Trans-Pacific Strategic Economic Partnership (TPSEP), of which New Zealand is a member, goes a step further, providing that if consultations between the parties fail, any interested party may refer the issue to the TPSEP Commission for discussion and that the report emerging from such discussions would need to be implemented (Article 15.6). Japan. Japan’s PTA with Mexico, which contains principles of environmental cooperation, specifically states that the provisions for dispute resolution under the PTA do not apply to the chapter containing those principles (Articles 147 and 148).
sanctions fail to discriminate between clean and dirty firms in the affected countries and because they would inevitably penalize workers in such countries by reducing opportunities for jobs and higher wages (Wheeler 2000). Such instruments would also not be effective in achieving the desired environmental goals. As a theoretical principle, the availability and enforceability of binding dispute resolution mechanisms are critical for ensuring the effectiveness of any law. In the case of environmental provisions, effective implementation of the provisions depends on several other factors, such as the technical and financial resources committed for implementation. This issue is particularly significant for developing countries, which need to take into account the financial and technical costs of implementing environmental provisions. Accordingly, it may be advisable to opt for binding dispute resolution as an enforcement measure only when all the elements for securing effective implementation of the provisions are built into the PTA, including the technical and financial assistance required for implementing new environmental laws and standards (Wheeler 2000). Dispute settlement mechanisms emphasizing consultation and cooperation may therefore be a better option for dealing with noncompliance with environmental regulations than binding dispute settlement and sanctions. A phased approach may be desirable: in the first few years, disputes would be handled through a cooperative approach, and then, after experience with environmental provisions under the PTA has been gained, stronger remedies, such as monetary compensation or trade sanctions, could be considered. Conclusions
Devising a Suitable Dispute Resolution Mechanism None of the provisions on state-state dispute resolution described above have ever been resorted to in practice, and so their effectiveness, in terms of remedies and consequences, has not been tested. The OECD study notes that “countries may simply hesitate to incur the costs—financial, political, and other—of initiating a dispute leading to imposing penalties on another country, even if the letter of the agreement would entitle them to do so” (OECD 2007, 124). From a developing-country perspective, any specific approach to dispute settlement under a PTA will need to be determined in light of the overall framework of the PTA, the nature of the legally binding obligations it imposes, and the resources required to implement those obligations. As discussed earlier, studies have shown that the use of trade sanctions to enforce environmental obligations in a poorer country would have unjust consequences because such
The findings that have emerged from this analysis of key PTAs that incorporate environmental provisions are summarized here. 1. Approaches to environmental concerns in international agreements. Certain developed economies (the United States, Canada, the EU, New Zealand, and, more recently, Japan) have pushed for the incorporation of environmental provisions into PTAs. Regional economic groups of developing countries, as well as Australia, have tended to address environmental issues in separate agreements or understandings rather than within PTAs. In addition, environmental provisions are sometimes addressed in separate side agreements. No one approach has proved superior in delivering environmental and economic benefits. The choice of side agreements does not necessarily