Trade Policy and the Environment: Uneasy NeighborsBy Bill Krist // Thursday, April 17, 2014
Environmentalists have long viewed our Trade Agreements with a good bit of skepticism. These concerns were particularly strong during the negotiations for the North America Free Trade Agreement (NAFTA) in the early 1990s and in 1995 immediately after the World Trade Organization (WTO) was launched. Environmentalists were front and center during the 1999 protests in Seattle when the World Trade Organization tried unsuccessfully to launch a new round of multilateral trade negotiations.
Since then, a number of actions have been taken to try to meet the environmental community’s concerns regarding our trade agreements. On Earth Day 2014 it is useful to take a look at the progress that has been made to better reconcile our trade policy with good environmental stewardship. Unfortunately this progress is at risk in the negotiations for the Trans-Pacific Partnership, an issue we will address in our blog next Monday, April 21.
In the 1990s, many in the environmental community were deeply concerned that U.S. trade agreements would squash laws and regulations designed to protect the environment. The North American Free Trade Agreement (NAFTA) that went into effect January 1, 1994 was of concern, for a number of reasons including that Mexico’s protection of the environment lagged far behind the U.S. In particular, environmentalists (and others) strongly objected to the Investor-State Dispute Settlement (ISDS) provisions that allow a foreign investor to initiate a claim against a NAFTA government if they believe their investment has been directly or indirectly expropriated without full compensation.
The new World Trade Organization (WTO) that replaced the General Agreement on Tariffs and Trade (GATT) in 1995 was another worry. The concerns of environmentalists had been stoked by a 1991 GATT dispute settlement panel ruling against a U.S. law prohibiting imports of tuna caught in a way that often injured dolphins, a ruling environmentalists dubbed “GATTzilla vs. Flipper”. The WTO contained strong trade rules and had a robust dispute settlement mechanism to enforce those rules, and environmentalists were concerned that the WTO would focus on trade liberalization, not environmental protection. The U.S. and other countries had been able to ignore a GATT ruling, but this was not possible under the WTO. The anger at the trade rules bubbled over in massive protests in Seattle in 1999 when the WTO tried to launch a new round of trade negotiations.
Over the past twenty years, however, a number of steps have been taken to attempt to better mesh our trade agreements with good environmental stewardship including the following:
• In 1998 a WTO Appellate Body ruled that Article XX allowed countries to adopt measures to protect human, animal or plant life or health, or to conserve exhaustible natural resources, provided the measures were not applied discriminatorily or were not a disguised restriction on international trade.
• In 1999 President Clinton issued an executive order requiring that environmental impact assessments be conducted for all future trade agreements.
• In 2001, as part of the mandate for the newly launched WTO Doha Trade Round, countries agreed to seek an agreement to eliminate tariffs on environmental goods. Unfortunately the Doha negotiations have stalemated, but this element has been spun out in a new WTO effort to negotiate a plurilateral agreement to eliminate tariffs on green goods.
• In 2001, our agreement with Jordan required both parties to effectively enforce their environmental laws and these provisions have been in all subsequent agreements.
• The 2002 Trade Act required that future U.S. trade agreements ensure that the parties effectively enforce their environmental laws and this shaped our agreements with Chile, Singapore, Australia, Morocco, CAFTA-DR and Bahrain.
• Since 2004 the U.S. has provided some $87 million to our CAFTA-DR partners to build capacity to protect the environment.
• In May 2007 the Bush Administration and Congressional leaders agreed that environmental provisions of our free trade agreements would be subject to the same effective dispute settlement provisions as commercial disputes. They also agreed to include enforcement of commitments under seven important multilateral agreements, including CITES and the Montreal Protocol, in our future trade agreements.
• Our 2009 agreement with Peru contained a ground breaking annex on forest conservation. Under this agreement, the U.S. provided Peru with some $60 million in capacity building support, and some of the measures Peru has undertaken because of this agreement include creating a Ministry of Environment and adopting far reaching laws and procedures to deal with illegal logging.
• In 2012 our agreements with Colombia, Panama, and South Korea subjected obligations of specified Multilateral Environmental Agreements to dispute settlement.
• The U.S. has made important and innovative proposals in the Trans-Pacific Partnership negotiations. Unfortunately, these have not been well received by our TPP partners, jeopardizing both environmental protection and the outcome of the TPP. This issue will be addressed in our blog next Monday.
Trade policy and environmental policy have different objectives, but both can achieve their goals without conflict with the other. Over the past twenty years substantial progress has been made in developing a trade policy that is supportive of good environmental stewardship, yet more still can be done.
Trade and environment issues are described in detail in my book Globalization and America’s Trade Agreements.
Image Credit: “Dolphin” courtesy of Flickr user Gordon Wrigley