Environment-related Provisions in FTAs

1. Project Executed by:
Partner:
Session 11
Environmental Provisions in FTAs
Jakarta, Indonesia
5-7 September 2017
Rita Lindayati
Senior Environment Specialist
The Conference Board of Canada

2. Overview
• Background: Pros and Cons of FTA Environmental
Impacts
• Environmental Provisions in Free Trade Agreements:
Historical Trends
• Main Types of Environmental Provisions
• Common Objectives of Environmental Provisions
• Example from Canada
• Concerns of Developing Countries
• Some Considerations for Indonesia in Negotiating FTA
Environmental Provisions

3. Pros and Cons of FTA Environmental Impacts
Pros:
- More resources for environmental protection as
increased trade boosts economic growth
- Better access to cleaner technology and
environmental goods and services
- Encourage technical innovation and more
efficient allocation of resources
- Improved environmental standards (especially to
meet the requirements from the developed
markets)
Cons:
- Increased trade could deplete natural resources
and worsen pollution
- Weak environmental standards and law
enforcement in many developing countries would
attract polluting industries
FTAs are
good for the
environment!
FTAs are bad
for the
environment!
Source: picture from the internet

4. Factors Affecting FTA Environmental Impacts
FTAs
Scale
Structure
Sector/product
Environmental policies/
regulations
Environ-
mental
impacts:
• Land
• Water
• Air
• Flora &
fauna
• Human
health
• Etc.
Technology

5. FTA Environmental Provisions: Historical Trends
• GATT General Exceptions Articles XX (b) and (g)
•Groups on Environmental Measures and International Trade/ EMIT (dormant)
•Sanitary and Phytosanitary (SPS) Measures
•Technical Barriers on Trade (TBT)
•Subsidies and Countervailing Measures (SCM)
•Trade-Related Aspects of Intellectual Property Rights (TRIPS)
•General Agreement on Trade in Services (GATS)
•Agreement on Agriculture (AoA)
GATT
(1947)
• Preamble of MarrakeshAgreement:Sustainable Development Objective
• GATTGeneral ExceptionsArticles XX (b) and (g)
• SPS,TBT, SCM,TRIPS, GATS,AoA
• Established the Committee onTrade and Environment (CTE) to advice GeneralCouncil onTrade-Environment
linkage
• Established Committee onTrade and Environment Special Sessions (CTESS) focusing on trade-environment
negotiations: e.g., link betweenWTO & Multilateral Environmental Agreements (MEAs),
• fisheries subsidies, removing trade barriers on environmental goods and services
WTO
(1995)
• Preamble
• Environmental provisions in the main text
• Environmental Side Agreement (North AmericanAgreement on Environmental Cooperation/NAAEC)
• Established institution and resources to implement the agreement (Commission on EnvironmentalCooperation)
• The first most comprehensive FTA environmental provisions
NAFTA
(1994)
Global Environmental Events
- 1972 UNConference on the Human Environment
(Stockholm Conference)
- 1987 Brundtland Report
- 1992 Rio Earth Summit (Agenda 21)
- 2002World SummitOn Sustainable
Development

6. GATT Article XX: General Exceptions
• Subject to the requirement that such measures are not applied in a
manner which would constitute a means of arbitrary or unjustifiable
discrimination between countries where the same conditions prevail, or a
disguised restriction on international trade, nothing in this Agreement shall
be construed to prevent the adoption or enforcement by any contracting
party of measures:
(b) necessary to protect human, animal or plant life or health;
(g) relating to the conservation of exhaustible natural resources if such
measures are made effective in conjunction with restrictions on domestic
production or consumption;

7. Free Trade Agreements With and Without Environmental
Provisions post-NAFTA
Source: Colyer, 2013

8. Common Objectives of Environmental
Provisions in FTAs
•Promoting sustainable development and attaining
high levels of environmental protection
•Levelling the playing field and improving
environmental cooperation
•Pursuing an international environmental agenda in
a more efficient and rapid way through trade
agreements

9. Main Types of FTA Environmental Provisions
• Protection and improvement of the environment through maintaining,
enhancing, and enforcing environmental laws and regulations (e.g.,
national/ bilateral/regional/multilateral environmental laws)
• Cooperation in environmental activities and projects including
improving and enforcing laws
• Public involvement in environmental activities related to trade and
the environment
• Institutional mechanisms for the implementation of trade-environment
related activities/projects and dispute resolution
Source: Coyler,

10. Spectrum of FTA Environmental Objectives
Least
ambitious
In between
Most
ambitious

12. www.TRENDanalytics.info

13. Canada Experience
• Environment is an integral part of majority Canada’s FTAs
• Canadian government conducts Environmental Assessment of
FTAs as a part of negotiation process
• Legal framework: the Cabinet Directive on the Environmental
Assessment of Policy, Plan and Program Proposals
• The Framework for Conducting Environmental Assessments of
Trade Negotiations outlines the process and analytical
requirements for conducting the assessment. It focuses on the
identification of the potential environmental impacts of an
initiative.
• The key objective of environmental assessment is to assist
Canadian negotiators to integrate environmental
considerations into the negotiating process by providing
information on the environmental impacts of the proposed
trade agreement.

16. Concerns of Developing Countries
in Adopting Environmental Provisions
•Domestic environmental management system is still
in its infancy (vis a vis the trading partners)
•Environmental provisions will become trade barriers
•Implementation will be excessive burden on human
and financial resources
•Lack of political will/ opposition from higher level of
government
•Lack of capacity in negotiating environmental issues
•Insufficient coordination between trade and
environment ministries

17. Some considerations for negotiating environment
related provisions in FTAs for Indonesia
• The nature of legal obligations emerging from
provisions relating to the environment under a FTA;
• The potential economic costs of specific
environmental requirements;
• Areas where technical assistance and capacity
building would be necessary to ensure compliance
with environmental obligations;
• The nature and extent of financial assistance
required; and
• The nature of dispute settlement and enforcement
mechanisms.

18. THANKYOU!!