OECD Workshop on Regional Trade Agreements and the Environment, Santiago, Chile (23-24 January 2018)

1. REGIONAL TRADE AGREEMENTS
AND THE ENVIRONMENT
23-24 January 2018, Santiago, Chile
OECD Workshop on Regional Trade Agreements and the Environment
Shunta Yamaguchi
Policy Analyst
Environment and Economy Integration Division
Environment Directorate, OECD

2. – Overview and rationale of environmental provisions in RTAs
– Implementation and effectiveness
– Coherence with other chapters and articles – Greening RTAs
– Summary and way forward
1
Outline

3. Evolution of RTAs and environmental provisions
2
Source: Monteiro (2016)

4. Evolution of RTAs more broadly - “Spaghetti Bowl”
3
Source: UNCTAD (2005) based on World Bank (2004)

5. • Environment and RTAs:
major study published in 2007
• Annual Updates 2008-14
• Further analysis of provisions
– 2008: Checklist for negotiators
– 2011: Framework for evaluation
– 2014: Trends and policy drivers
• Workshops 2006-18
– Info exchange with OECD members,
non-members and experts
4
OECD’s work on RTAs and the Environment

6. • Several motivations to include environmental provision in RTAs
– to contribute to the overarching goal of sustainable development
– to ensure a level playing field among parties to the agreement
– to enhance environmental co-operation of shared interest
– to pursue international environmental objectives
• Context is evolving
− 2030 Agenda and SDGs
− COP21 Paris Agreement
− Public acceptance of trade and trade agreements
5
Rationale:
Why should we make RTAs greener?

7. Evolution of environmental provisions in RTAs
6
OECD based on George (2014a; 2014b)
0
10
20
30
40
50
60
70
80
90
pre-2008 2008 2009 2010 2011 2012 2013 2014 2015 2016
General exceptions
Preamble
Co-operation
Specific environmental issues
Uphold environmental law
Implementation mechanism
Dispute settlement
Ex-ante impact assessment
MEAs
Public participation

8. Objectives of environmental provisions
OECD survey results
7
Scores of survey results from George (2014b)
8
9
9
9
10
10
11
11
11
14
15
15
16
16
17
17
19
0 2 4 6 8 10 12 14 16 18 20
Mitigating impacts via ex-ante impact assessments
Using trade measures to achieve env. objectives
Minimising adverse effects of env. legislation on trade
Research collaboration
Promoting trade in environmental goods and services
Promoting better governance in partner countries
Green growth
Promoting implementation of MEAs
Promoting use of environmental management tools
Mitigation of transboundary/global env. impacts
Promoting environmental co-operation
Ensuring a level playing field in env. legislation
Coherence between env. and trade objectives
Effective enforcement of environmental legislation
Promoting globally sustainable development
Ensuring trade does not harm the environment
Ensuring not to relax environmental laws
Promoting better governance in partner economies

9. What are these effects?
Implementation of environmental provisions
Monitoring & reporting is led under RTAs concerning:
– United States
– European Union
– Canada
Elements for successful implementation of environmental provisions:
• Follow-up action between the Parties
– Co-operation activities
– Capacity development of government officers
– Interagency co-ordination
• Public participation to enhance environmental governance
– Public submissions/complaints and access to remedies
• Specified institutional mechanisms
– e.g. How each of the Parties will monitor and report on implementation 8
Survey +
desk analysis

10. What are these effects?
Implementation of environmental provisions
Largely unknown but with some anecdotal evidence
• Strengthening of environmental laws and regulations
– Adopting new environmental laws, US-Chile, US-Morocco
– Adopting new EIA regulations, CAFTA-DR
• Introducing new institutional arrangements
– Creating a Ministry of Environment, US-Chile, US-Peru, US-Jordan
– Creating an Environmental Auditing Unit in Guatemala, CAFTA-DR
• Providing co-operation on improving environmental law and enforcement
– Co-operation in creating a technical council on enforcement of env laws, CAFTA-DR
– Co-operation in creating a national strategy in Honduras, CAFTA-DR
– Co-operation with private sector on environmental standards, EU-Chile
– Co-operation in pollutant registry programme, CAFTA-DR
• Improving environmental awareness
– Uplifting public participation of Mexico’s civil society, NAFTA
9
Survey +
desk analysis

11. 10
What are these effects?
Effectiveness of EPs…Empirical Framework
PM2.5 48 countries, 1999-2011
SO2 157 countries, 1970-2008
NOx 157 countries, 1970-2008
RTAs between 1970-2011
RTAs with EPs: 94
RTAs between 1970-2011
RTAs without EPs: 120
RTA with EPs
Population
GDP per capita
Trade openness
Environmental policy stringency
Environmental regulations
Institutional arrangements
Environmental co-operation
Environmental awareness
RTA without EPs
Environmental quality
Data available
Data unavailable
(omitted variable)
Considered channels
Potential reverse causality
(endogeneity)

12. What are these effects?
Effectiveness of EPs…Results
11
Environmental
indicator
Effect of RTAs with EPs Effect of RTAs without EPs
PM2.5
(population weighted
mean concentration)
No statistically significant results (possibly due to limited data availability)
SO2 per capita SO2 decrease by around 0.26 % in
short-run and 2.19% in long-run for
1 additional RTA with EPs
SO2 decrease by around 0.16 % in
short-run and 1.36% in long-run for
1 additional RTA without EPs
NOx per capita NOx decrease by around 0.17 %
in short-run and 1.41% in long-run
for 1 additional RTA with EPs
NOx decrease by around 0.11 %
in short-run and 0.91% in long-run
for 1 additional RTA without EPs
• SO2 and NOx emission decreases are slightly more strongly related to the
number of RTAs with EPs than without EPs.
• However, difference between two coefficients were not statistically significant
(additional effect of EPs can’t be concluded with sufficient statistical certainty)

13. Preamble
1. General Definitions and Initial Provisions
2. National Treatment and Market Access
3. Trade Remedies
4. Technical Barriers to Trade
5. Sanitary and Phytosanitary Measures
6. Customs and Trade Facilitation
7. Subsidies
8. Investment
9. Trade in Services
10. Government Procurement
11. Intellectual Property
13. Environment, Sustainable Development
14. Cooperation and Capacity Building
15. Transparency
16. Exceptions
17. Dispute Settlement
18. Final Provisions
Coherence with other chapters & articles
12
ENVIRONMENTALOBJECTIVES
Regional Trade Agreement
Project on Greening RTAs
Investment
- Right to regulate for environment
- Green investment
Subsidies
- Environmentally supportive subsidies
- Environmentally harmful subsidies

14. • Environmental provisions in RTAs reveals an upward global trend
− To pursue sustainable development, level playing field, environmental cooperation,
and international environmental objectives
− More recently supported by SDGs, Paris Agreement and public acceptance
• Two basic provisions remain most common:
− Preamble
− General exceptions
• More substantive provisions increased significantly in recent years:
− Co-operation
− Specific environmental issues
− Uphold environmental law
− Implementation mechanism 13
Summary
− Dispute settlement
− Ex-ante impact assessment
− Multilateral Environmental Agreements (MEAs)
− Public participation

15. • Implementation of environmental provisions
− Largely unknown with some anecdotal evidence (legislation, institutional
arrangement, co-operation and public awareness)
− Need systematic monitoring and evaluation (efforts emerging in US, EU and CAN)
• Effectiveness of environmental provisions
− Scarcely researched with some empirical results
− Need better information and data on channels of effects, and environmental
indicators (policy and output)
• Coherence between other chapters and articles
− Potential misalignment between different areas (e.g. Investment, subsidies)
− Need integrated approach towards including environment and sustainable
development objectives in RTAs
14
Summary cont…

16. THANK YOU!
Gracias!
For more information:
www.oecd.org/environment/envtrade
Shunta.Yamaguchi@oecd.org