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 Handbook on Provisions and Options for Inclusive and Sustainable Development in Trade
Agreements

CHAPTER III – ENVIRONMENT

With environment as one of the pillars of sustainable development, trade rules

must increasingly respond to environmental and climate change issues, which
present a looming crisis. Trade has been a contributing factor in environmental
pollution and resource depletion, 234 and globalization has led to increased
production and energy consumption, exacerbating the challenge.235 Over the
last half century, trade liberalization and environmental protection issues have
often been addressed within different forums. Yet, efforts to tackle
environmental issues and climate change are now increasingly taking place on
the international trade front, giving rise to an opportunity for negotiators to
build forward better.

This chapter explores the inclusion of environmental provisions in RTAs and

how this reflects the interconnected nature of environmental protection and
economic development.236 Mechanisms to address environmental protection
have, to an extent, been part and parcel of international trade agreements
since the signing of the GATT in 1947. Figure 8 below demonstrates the
proliferation of environmental clauses in trade agreement over time. The GATT
introduced the first two environmental clauses in the form of defensive
provisions, or general exceptions, related to the protection of human, animal,
or plant life or health and the conservation of exhaustible natural resources.
The inclusion of environmental provisions in RTAs, which is often more
affirmative in nature, has the potential to contribute to environmental
sustainability by reinforcing international environmental commitments and
promoting adherence to domestic environmental legislation.

234
Neumayer, E., “Trade and the Environment: A Critical Assessment and Some Suggestions
for Reconciliation,” The Journal of Environment & Development, 138 (2000).
235
Dean JM, “Does Trade Liberalization Harm the Environment? A New Test,” 35 Canadian
Journal of Economics 819-842 (2002).
236
Clive George & Shunta Yamaguchi, “Assessing Implementation of Environmental Provisions
in Regional Trade Agreements,” OECD Trade and Environment Working Papers (January 2018).

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Figure 8: Environmental Clauses in the Trade Regime Over Time.

Source: TREND

There is also a growing body of environmental law that extends well beyond provisions in
RTAs. Institutions have been set up to guide specific areas and provide spheres of interaction
where actors can communicate and decide on norms, including: the UN Framework
Convention on Climate Change (UNFCCC) and its accompanying Kyoto Protocol and Paris
Agreement, the Vienna Convention on the Protection of the Ozone Layer and its Montreal
Protocol, and the Convention on Long-Range Transboundary Air Pollution (CLRTAP) and its
various accompanying protocols. These instruments, referred to collectively as Multilateral
Environmental Agreements (MEAs), are often linked to international trade law through their
incorporation into RTAs.

The extent to which a trade agreement can positively influence environmental sustainability
will be dependent upon the nature of RTA environmental provisions. Figure 9 below shows
that the most frequent environmental provisions are exceptions to trade commitments for
domestic measures related to the conservation of natural resources. The least common
provisions are those emphasizing non-derogation of environmental measures to promote
investment.

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Figure 9: The Most Widely Used Environmental Norms in Trade Agreements237

As is true with other issues covered in this Handbook, RTAs can offer a better forum for
environmental negotiations than multilateral fora, since they are often among contiguous
countries with shared ecosystems and shared concerns. RTAs are now a vehicle for positive
harmonization through environmental policies pushing for greater social benefits; however,
not all RTAs include environmental provisions, and most RTAs with environmental provisions
are North-South Agreements. In this context, some countries have expressed concerns with
the nature and intent of environmental provisions in RTAs, and the range of options for
including environmental measures in RTAs will likely continue to evolve.

A. Legal Aspects of Environmental Sustainability

Despite the early recognition of sustainable development as an objective of the global trading
system in the Preamble to the WTO,238 which recognizes that trade should be conducted in a
way that allows for “the optimal use of the world’s resources in accordance with the objective
of sustainable development,” 239 environmental issues are not extensively affirmatively
covered under multilateral trade rules, with the exception of the recently-concluded WTO
Agreement on Fisheries Subsidies. Instead, provisions accommodating environmental
objectives tend to appear as exceptions to the general rules, most notably in the General

237
Morin, J., Dür, A., & Lechner, L. (2018). “Mapping the Trade and Environment Nexus: Insights from a New
Data Set.” Global Environmental Politics 18(1), 122-139. https://www.muse.jhu.edu/article/687112
238
GATT 1994, Preamble, supra note 9.
239
Ibid.

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Exceptions clause in Article XX of the GATT 240 subparagraphs (b) (“necessary to protect
human, animal or plant life or health”)241 and (g) (“relating to the conservation of exhaustible
natural resources if such measures are made effective in conjunction with restrictions on
domestic production or consumption”). 242 General exception clauses are also common in
RTAs, which often incorporate Article XX directly.

Despite the lack of affirmative provisions at the multilateral level, environmental issues have
received increasing focus at the WTO. In 1995, the WTO Committee on Trade and
Environment (CTE) was established, and an increasing number of proposals from WTO
Member States called for Ministerial Statements on a range of environmental issues. The
Doha Round of negotiations also included specific environmental topics for the first time, and,
while the round was not concluded, the landmark WTO Agreement on Fisheries Subsidies was
concluded in June 2022.

WTO negotiations on fisheries subsidies, which had been ongoing since the 2001 Doha
Ministerial Conference, concluded with the WTO Agreement on Fisheries Subsidies, adopted
at MC12 in June 2022, that prohibited fisheries subsidies that contribute to illegal,
unreported, and unregulated fishing.243 Upon deposit of “instruments of acceptance” by 2/3
of WTO Member States, the agreement will become operational and amend the WTO
Agreement, for the second time since its creation. It is also historic in that it fulfils SDG
14.6, 244 the first agreement to fulfil an SDG and the first WTO agreement on the
environment. 245 The Agreement contains special provisions for LDC Members and a
provision on technical assistance and capacity building, as well as provisions on notification
and transparency.

Fisheries subsidies and related issues are also addressed in a number of RTAs, including the
CPTPP and USMCA. The EU-Singapore FTA includes obligations for the Parties to undertake
measures related to ensuring the conservation and management of fish stocks. The CETA also
sets out the Parties’ commitment to help develop a global, multilateral resolution to fisheries
subsidies, as well as to undertake measures for responsible management of fisheries and
aquaculture in a manner consistent with their international obligations.

In addition, over forty WTO Member States sought the conclusion of an Environmental Goods
Agreement (dormant since 2016), and work has been initiated on trade and environmental
sustainability (Trade and Environmental Sustainability Structured Discussions (TESSD)) and
plastics pollution (Informal Dialogue on Plastics Pollution and Environmentally Sustainable
Plastics Trade). Other WTO Member States had also been advocating for a Ministerial

240
GATT 1994, supra note 9.
241
GATT, Article XX(b), supra note 9.
242
GATT, Article XX(g), supra note 9.
243
WTO, “Negotiations on Fisheries Subsidies”,
https://www.wto.org/english/tratop_e/rulesneg_e/fish_e/fish_e.htm (last visited February 5, 2022).
244
Target 14.6 “by 2020, prohibit certain forms of fisheries subsidies which contribute to overcapacity and
overfishing, and eliminate subsidies that contribute to IUU fishing, and refrain from introducing new such
subsidies, recognizing that appropriate and effective special and differential treatment for developing and
least developed countries should be an integral part of the WTO fisheries subsidies negotiation.” (Indicators
and a Monitoring Framework, https://indicators.report/targets/14-6/)
245
Agreement on Fisheries Subsidies, Ministerial Decision of 17 June 2022, WTO/MIN (22)/33/WT/L/1144,
https://www.wto.org/english/tratop_e/rulesneg_e/fish_e/fish_e.htm.

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Statement on Fossil Fuel Subsidy Reform. These three initiatives target tangible outcomes in
a number of areas flagged for consideration at the Thirteenth WTO Ministerial Conference in
early 2024.

Many RTAs also increasingly impose affirmative obligations on their parties to address
environmental issues, most notably through incorporating and building upon the existing
frameworks established by MEAs, as shown in Table 9 below. Given the large number of MEAs
with varying signatories, MEA-related provisions in RTAs are thus among the most
heterogeneous, with more than 190 different provisions in 126 RTAs. 246 In addition, some
recently concluded RTAs have gone a step further to address a wider range of environmental
issues, such as those relating to fisheries subsidies247 and fossil fuel subsidies.248

Table 9: List of Most Frequently Cited MEAs in RTAs

Multilateral Environmental Agreement (MEA) Number of RTAs

Convention on International Trade in Endangered Species of Wild 36
Fauna and Flora249
Montreal Protocol on Substances that Deplete the Ozone Layer250 34
Basel Convention on the Control of Transboundary Movements of 29
Hazardous Wastes and Their Disposal251
Convention on Biological Diversity252 22
Kyoto Protocol to the United Nations Framework Convention on 20
Climate Change253

Environmental provisions tend to appear most often in RTA preambles or objectives.

Environmental issues have also been addressed in side agreements to RTAs, such as NAFTA,
and in stand-alone environmental chapters. The growing trend favours inclusion of
environmental provisions within the main text of a trade agreement, including in a specific
chapter addressing trade and environment. More recently, an RTA focused on environment
and climate change, the Agreement on Climate Change, Trade, and Sustainability (ACCTS
Agreement), is under negotiation among Costa Rica, Fiji, Iceland, New Zealand, and
Switzerland, signalling a possible new era of RTAs that are more focused on trade,
environment, and climate issues.

246
José-Antonio Monteiro, “Typology of Environment-Related Provisions in Regional Trade Agreements,” WTO,
WTO Working Paper ERSD-2016-13 (2016), https://www.wto.org/english/res_e/reser_e/ersd201613_e.pdf
[hereinafter Monteiro 2016].
247
See, e.g. EU-Singapore FTA.
248
See, e.g. the ACCTS that is currently under negotiation by New Zealand, Costa Rica, Fiji, Iceland, Norway and
Switzerland.
249
Convention on International Trade in Endangered Species of Wild Fauna and Flora, March 3rd, 1973, 993
U.N.T.S. 243 [hereinafter CITES].
250
Montreal Protocol on Substances that Deplete the Ozone Layer, 1522 UNTS 3, 26 ILM 1541, 1550 (1987)
[hereinafter Montreal Protocol].
251
Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal,
1673 UNTS 5, 28 ILM 657 (1989) [hereinafter Basel Convention].
252
Convention on Biological Diversity, 1760 UNTS 79, 31 ILM 818 (1992).
253
Kyoto Protocol to the United Nations Framework Convention on Climate Change, 2303 UNTS 148, 37 ILM 22
(1998), [2008] ATS 2 [hereinafter Kyoto Protocol].

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B. RTA Options for Environmental Sustainability

The RTA options below, broadly grouped into defensive and affirmative provisions, set out
important RTA options for addressing environmental sustainability and tackling ongoing and
pressing environmental issues, including climate change. In addition to the defensive options
that incorporate exceptions to accommodate environmental issues in RTAs, tracking with the
WTO Baseline, affirmative options are presented in the following areas: (i) cooperation,
consultation and capacity building provisions; (ii) provisions related to MEAs; (iii) provisions
on domestic environmental laws and policies; (iv) compliance and enforcement measures; (v)
environmental goods and services; and (vi) emerging issues relating to environmental
sustainability.

With the exception of defensive measures (exceptions), where there is a baseline established
under the GATT/WTO rules, the sections below will present Example Options for environment
commitments in RTAs that reflect the widely differing approaches, contexts, and political
sensitivities across countries and regions. These options will be presented ranging from the
lowest level of commitment to the highest level, and, where possible, the degree to which
these approaches are more or less common will also be noted. Flexibility aspects, including
policy space in both a defensive and affirmative context, will also be referenced.

a. Exceptions: Preserving Policy Space to Regulate the Environment

GATT Article XX contains general exceptions that provide “defensive” means to preserve
policy space to regulate the environment. In order for Art. XX to apply, first, a measure taken
by a Member State has to be inconsistent with other GATT provisions and principles, such as
those related to National Treatment or Most-Favoured Nation (MFN). A respondent can
trigger GATT Art. XX in defence of these measures when the measure (1) falls under the
specific exceptions listed in paragraphs (a) to (j) of GATT XX and (2) satisfies the Article XX
“chapeau,” which relates to the manner in which the measure is applied.254

Jurisprudence on Article XX has also explored issues of territoriality, that is, whether a
measure taken with respect to any human, animal or plant (subparagraph (b)) or natural
resources (subparagraph (g)) must be within the territory of the WTO Member State
undertaking the measure. Despite instances of measures allowed to be taken in respect of
natural resources that extended beyond the geographical boundaries of the WTO Member
State undertaking the measure,255 these measures remain limited and subject to contention.
The term “natural resources” under Article XX(g) has also been interpreted to include living
resources (such as turtles)256 and non-living resources (such as clean air).257

254
The GATT XX “chapeau” provides as follows: “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 disguised restriction on international trade.”
255
Appellate Body Report and Panel Reports, United States-Measures Concerning the Importation, Marketing
and Sale of Tuna and Tuna Products, WT/DS381/49/Rev.1, (January 17, 2019) (“Tuna-Dolphin”).
256
Appellate Body Report and Panel Report, United States-Import Prohibition of Certain Shrimp and Shrimp
Products, WT/DS58/23 (November 26 2021) (“Shrimp-Turtle”).
257
Appellate Body Report and Panel Reports, United States-Standards for Reformulated and Conventional
Gasoline, WT/DS2/10 (26 August 1997).

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In RTAs, General Exceptions clauses are common and are usually based on Art. XX, often by
simply incorporating GATT Art. XX in its entirety. Other agreements, such as CPTPP or USMCA,
clarify the meaning of exceptions, particularly environmental measures.

Baseline Option A below incorporates GATT Art. XX in its entirety and can be found in RTAs
such as the EU-SADC EPA(Note: this approach is most commonly observed). In Baseline
Option B, GATT Art XX is incorporated, but the article itself is not copied. Parties confirm that
GATT Art. XX and its interpretive note constitutes a part of the agreement, mutatis mutandis.
Such a provision is found in a majority of RTAs, such as the China-Korea FTA, the EFTA-Bosnia
and Herzegovina FTA, and the Hong Kong-Georgia FTA, as set out below. Baseline Option C
below, taken from the Southern Common Market Agreement (MERCOSUR)-Egypt FTA, the
parties recognize the right to impose measures that are consistent with GATT Art. XX. It should
be noted that the meaning of “consistent with GATT Art. XX” has not been clarified, however.

Finally, in the Baseline Plus Option (less frequently observed), taken from the CPTPP and
USMCA, GATT Art. XX has been incorporated with additional clarifications. GATT Art. XX and
its interpretative notes are incorporated as a part of the RTAs, mutatis mutandis. Further,
parties confirm that the measures referred to in Article XX(b) of GATT 1994 include
environmental measures necessary to protect human, animal or plant life or health and that
Article XX(g) of GATT 1994 applies to measures relating to the conservation of living and non-
living exhaustible natural resources. It further clarifies the meaning of the measure
“consistent with GATT Art. XX” by articulating precise examples.

Example Options for General Exceptions (Defensive Provisions)

Baseline Option A: Incorporation of GATT Art. XX

General Exception Clause

Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between the Parties where like
conditions prevail, or a disguised restriction on international trade, nothing in this Agreement
shall be construed to prevent the adoption or enforcement by either 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;

Source: EU- SADC EPA Article 97; Stepping Stone EPA between Côte d'Ivoire, of the one part,
and the European Community and its Member States, of the other part Article 68

Baseline Option B: Incorporation of GATT Art. XX (Mutatis Mutandis)

1. Article XX of GATT 1994 and its interpretive notes are incorporated into and made part of
this Agreement, mutatis mutandis.

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2. Article XIV of GATS (including its footnotes) is incorporated into and made part of this
Agreement, mutatis mutandis.

Source: China-Korea FTA Article 21.1, EFTA - Bosnia and Herzegovina FTA Article 24 & 32, Hong
Kong-Georgia FTA Chapter 17 Article 2

Baseline Option C: Recognition of Party’s Right to Adopt Measures Consistent with GATT XX

Nothing in this Agreement shall prevent any Party or Signatory Party from taking actions and
adopting measures consistent with Articles XX and XXI of the GATT 1994.

Source: Southern Common Market (MERCOSUR) – Egypt FTA Article 22

Baseline Plus Option: Incorporation of GATT XX with Clarifications

General Exceptions

1. Article XX of GATT 1994 and its interpretative notes are incorporated into and made part of
this Agreement, mutatis mutandis.

2. The Parties understand that the measures referred to in Article XX(b) of GATT 1994 include
environmental measures necessary to protect human, animal or plant life or health, and that
Article XX(g) of GATT 1994 applies to measures relating to the conservation of living and non-
living exhaustible natural resources.

3. Paragraphs (a), (b) and (c) of Article XIV of GATS are incorporated into and made part of this
Agreement, mutatis mutandis. The Parties understand that the measures referred to in Article
XIV(b) of GATS include environmental measures necessary to protect human, animal or plant
life or health.

4. Nothing in this Agreement shall be construed to prevent a Party from taking action, including
maintaining or increasing a customs duty, that is authorised by the Dispute Settlement Body
of the WTO or is taken as a result of a decision by a dispute settlement panel under a free trade
agreement to which the Party taking action and the Party against which the action is taken are
party.

Source: CPTPP Article 29.1, USMCA Article 32.1, Chile - Indonesia Comprehensive Economic
Partnership Agreement Article 13.1, FTA Between Chile and Thailand Article 15.1, A-HK FTA
Article 19.3

b. Cooperation, Consultation and Capacity Building Provisions

Cooperation provisions related to the environment are common in RTAs, and the most
specific cooperation provisions often push for the implementation of environmental
provisions within RTAs, such as building institutional capacity and maintaining high levels of
environmental protection. Some RTAs even provide opportunities for private sector and civil
society to participate in the implementation of environmental cooperation activities.

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Cooperation can relate to a number of different aspects, including enforcement, scientific

cooperation, information exchange, harmonization, assistance, and joint institutions. Overall,
there has been an increase in the number of RTA provisions related to environmental
cooperation. The most common are clauses on the exchange of information, followed by less
specific clauses on environmental issues and scientific cooperation.

i. Cooperation Provisions

Cooperation among parties on environmental measures is a common approach across RTAs.

Strengthening environmental protection through RTAs is dependent upon mutual
environmental interests and the political will of the parties to an RTA. It is important to keep
in mind, however, that even though cooperation provisions can appear to be relatively
neutral, parties’ notions of cooperation may differ and face capacity challenges in some cases.

Cooperation often focuses on adherence to environmental standards and regulations, and it

can either be mandatory or voluntary, depending upon whether the measures were
established by a public authority or a private entity. Within environmental policy, cooperation
tends to take into consideration governmental and non-governmental interests. Internal
policy coherence is important as well.

Cooperation provisions in RTAs can take many forms, including provisions on the
implementation of research and development programmes, training programmes for
capacity building, and climate technology transfer, among others. Provisions related to the
exchange of information make up 26 percent of cooperation provisions of all trade
agreements (since 1947). Trends in cooperation preferences differ across regions, with the
US favouring provisions focused on regulatory harmonization and the EU favouring the
creation of joint organizations for environmental cooperation.

The Example Option below, taken from the EU-Japan Economic Partnership Agreement (EPA),
includes a more general, and more common, cooperation provision focused on information
exchange.

Example Options Cooperation on Exchange of Information

Recognising the importance of cooperation on trade-related and investment-related aspects

of environmental and labour policies in order to achieve the objectives of this Agreement, the
Parties may [...] (c) cooperate to facilitate and promote trade and investment in
environmental goods and services, in a manner consistent with this Agreement, including
through the exchange of information.

Source: EU-Japan EPA Article 16.12 (c)

Often, cooperation is more feasible on a regional level, where countries share common
priorities. One example is the Regional Coordinating Unit of the Convention for Co-operation
in the Protection and Development of the Marine and Coastal Environment for the West and
Central Africa Region (Abidjan Convention), a treaty coordinated by the United Nations
Environment Programme (UNEP) for the prevention of marine pollution in the West and
Central Africa Region, which focuses on inter-governmental cooperation and encompasses
several MEAs that address shipping pollution. This is shown below in Example Option A, taken

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from the Abidjan Convention Protocol Concerning Co-operation in Combating Pollution in

Cases of Emergency, the UNEP Regional Seas Programme, which calls for development of a
regional action plan and cooperation in implementing an agreed-upon environmental work
programme. Example Option C, below, also drawn from the Abidjan Convention, calls for
harmonization of national law and policy related to relevant environmental matters.

Overall, the Abidjan Convention contains general provisions that do not provide a clear
pathway for parties to adhere to its obligations. However, the Protocol Concerning
Cooperation in Combating Pollution in Cases of Emergency is notable in terms of
environmental protection in times of crisis, 258 as it contains more specific obligations and
gives the parties the option to cooperate on various aspects of environmental management,
such as: coastal erosion, environmental impact assessments, and specially protected areas.
The Protocol goes even further to incorporate specific articles on scientific and technological
cooperation. UNEP acts as the Secretariat to the Abidjan Convention, and, among its duties,
coordinates the implementation of cooperative activities agreed upon by the Contracting
Parties.259 Notably, with such coordination, it is also important to ensure that trade issues do
receive sole focus at the expense of researchers, civil society, intergovernmental
organizations, and government bodies focused on environmental matters.

In some cases, regional cooperation will depend upon legal changes at the national level. The
Protocol to the Abidjan Convention, 260 referenced in Example Option B below, includes
language calling for Parties to cooperate in harmonizing national legislation and policies for
the effective discharge of obligations under the Protocol.

Example Option for Regional Cooperation

Example Option A: Cooperation via a Regional Action Plan

4. Two elements are fundamental to UNEP’s Regional Seas Programme:

Cooperation among Governments of the regions. Since any specific regional programme is
aimed at benefitting the States of that region, Governments are invited to participate from
the very beginning in the formulation, acceptance, and policy development of the
programme. The programme is based on a regional action plan formally adopted by the
Governments of the region and is carried out primarily by the national institutions of those
Governments. Periodic intergovernmental meetings are used to review the progress made in

258
The Abidjan Convention Protocol Concerning Cooperation in Combating Pollution in Cases of Emergency,
https://abidjanconvention.org/themes/critai/documents/meetings/partnersmeeting2019/Working%20Docum
ents/Anglais/LBSA%20Protocol%20English%2022%20June%202012.pdf
259
Convention for Cooperation in the Protection and Development of the Marine and Coastal Environment of
the West and Central African Region, Institutional Arrangements, Article 16 (1)(v), United National
Environment Programme, (1981),
https://wedocs.unep.org/bitstream/handle/20.500.11822/36241/AC.pdf?sequence=3&isAllowed=y
260
Additional Protocol to the Abidjan Convention Concerning Cooperation in the Protection and Development
of Marine and Coastal Environment from Land-Based Sources and Activities in the Western, Central, and
Southern African Region (22 June 2012),
https://abidjanconvention.org/themes/critai/documents/meetings/plenipotentiaries/working_documents/en/
LBSA%20Protocol%20English%2022%20June%202012.pdf

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implementing the agreed work-plan of the programme and to introduce appropriate

adjustments in order to meet the wishes of the Governments […]

Source: Abidjan Convention, Protocol Concerning Co-operation in Combating Pollution in

Cases of Emergency

Example Option B: Regional Cooperation to Harmonize National Legislation and Policies

2. The Contracting Parties shall cooperate in harmonizing national legislation and policies
for the effective discharge of their obligations under this Protocol.

3. Each Contracting Party shall take appropriate measures in accordance with international
law to enhance compliance with the provisions of this Protocol and cooperate by offering
assistance, advice or information to other Contracting Parties to enhance compliance with
and ensure enforcement of the Protocol.

Source: Second Draft Protocol Additional to the Abidjan Convention Concerning Land-based
Sources and Activities in the Western, Central and Southern African Region—Introduction to
the Abidjan Convention and Its Related Protocol

Environmental protection and management tend to require institutional flexibility to allow

for adaptation to rapidly changing environmental concerns, an aspect that is particular tied
to flexibility in the context of changing circumstances. Some RTAs encourage mutual
recognition of Members’ environmental standards through general and/or specific provisions
recognizing other Parties’ conformity assessments. CETA contains a Protocol on Mutual
Acceptance of Conformity Results for specific products, including products required to comply
with energy-efficiency requirements; this is noted as Example Option A below.

In some cases, RTAs can impose legal liability by explicitly containing provisions calling for
environmental protection performance requirements. Example Option B below, taken from
the Nicaragua-Republic of China FTA, promotes cooperation by stipulating that Parties
develop performance measures to ensure that environmental protection goals are met.

Example Options for Conformity Assessment and Environmental Performance

Requirements

Example Option A: Cooperation on Conformity Assessment Procedures

1. The Parties recognise that differences may exist between their respective standards,
technical regulations and conformity assessment procedures. When such differences exist,
the recognising Party may seek to satisfy itself that the nominated accreditation body is
competent to accredit conformity assessment bodies as competent to assess conformity with
the relevant technical regulations of the recognising Party. The recognising Party may satisfy
itself based on the following:

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(a) an arrangement establishing cooperation between the European and Canadian

accreditation systems; […]

Source: CETA, Protocol on Mutual Acceptance of Conformity Results, Article 12.3

Example Option B: Evaluation of Cooperation Based on Environmental Performance

Requirements

In developing cooperative programs, projects and activities, the Parties shall develop
benchmarks or other types of performance measures to assist the contact points in their
ability to examine and evaluate the progress of specific cooperative programs, projects and
activities in meeting their intended goals.

Source: Nicaragua-Republic of China FTA, Annex 19.08, Environmental Cooperation

Mechanism (Program of Work and Priority Cooperation Areas)

RTAs can also focus on sector-specific cooperation. Under such an approach, special
provisions, chapters, and annexes can be used to address a specific environmental problem.
Sector-specific annexes are also used to enhance regulatory cooperation in particular
products or sectors. These annexes often contain general commitments to exchange
information, improve understanding, or cooperate towards a particular objective. They aim
to enhance regulatory compatibility by giving parties a chance to harmonize their
environmental standards and promote mutual recognition. The Example Option below,
drawn from the USMCA, exemplifies this approach in a more general manner. Notably, it
includes specific reference to medical devices and pharmaceuticals, making it an example of
a provision with cross-cutting relevance in the context of crisis and pandemic.

Example Option on Sector-Specific Cooperation

In addition to other applicable provisions of this Agreement, this Chapter contains provisions
with respect to chemical substances, cosmetic products, information and communication
technology, energy performance standards, medical devices, and pharmaceuticals, as defined
therein.

Source: USMCA, Sectoral Annex on Energy Performance Standards, Article 12.1

Parties to an RTA may also agree to cooperate to harmonize procedures to respond to

environmental emergencies. The Additional Protocol on Cooperation and Assistance in
Environmental Emergencies to the Framework Agreement on the Environment of
MERCOSUR261 emphasizes regional cooperation in environmental emergencies, as does the
Abidjan Convention, referenced above. In the Example Option below, taken from MERCOSUR,

261
Additional Protocol to The Framework Agreement on the Environment of the South American Economic
Organization (MERCOSUR) Regarding Cooperation and Assistance in Environmental Emergencies,
www.sice.oas.org/mrcsrs/decisions/dec1404s.asp

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an additional protocol calls upon State Parties to harmonize procedures in the event of an
environmental emergency and articulates implementation, notification procedures,
assistance procedures, and assistance financing.

Example Option on Harmonizing Procedures in Case of Environmental Emergency

The State Parties shall develop actions tending to harmonize compatible procedures to act in
case of environmental emergencies. To this end, cooperation in this area will be implemented
through:

(a) The exchange of prior information on situations that require common prevention
measures and those that may lead to an environmental emergency;

(b) The exchange of information and experiences in prevention, mitigation, warning,

response, reconstruction and recovery;

(c) Exchange of information on applicable technologies;

(d) Joint planning for risk reduction;

(e) The preparation of contingency plans, programs and projects for joint action;

(f) The incorporation of statistics on environmental emergency situations that have occurred
in the region to the MERCOSUR Environmental Information System (SIAM);

(g) The creation of a bank of experts in environmental emergencies for inclusion in SIAM;

(h) The use of personnel and means of a state party at the request of another;

(i) The provision of technical and logistical support to respond to environmental emergencies
at the request of the state parties;

(j) The training of human resources.

Source: Article 3, The Additional Protocol on Cooperation and Assistance in Environmental

Emergencies to the Framework Agreement on the Environment of MERCOSUR

ii. Consultation Provisions

Consultation provisions are also common and are used to accommodate and incorporate
different perspectives on environmental protection and address sustainability concerns and
environmental regulatory approaches in other jurisdictions. Notably, they can enhance
inclusion through stakeholder engagement, which can be particularly important in times of
crisis. Consultation provisions can also be used to initiate dispute resolution between parties.

Example Option A below, drawn from the EU-Singapore FTA, calls for expedited consultations
where there is a risk to human, animal or plant life or health. Example Option B, taken from
the Korea-Australia FTA, provides for consultations when environmental matters arise
involving either of the parties to the FTA, with establishment of an ad hoc committee if
consultations cannot resolve relevant issues.

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Example Options for Consultation Provisions

Example Option A: General Consultations

2. Where a Party has serious concerns regarding a risk to human, animal or plant life or health,
affecting commodities to which trade takes place, consultations regarding the situation shall
take place as soon as possible. In such case, each Party shall endeavor to provide all necessary
information in due time to avoid disruption in trade.

Source: EU-Singapore FTA, Article 5.12.2

Example Option B: Consultations to Mitigate Environmental Issues

1. A Party may request consultations with the other Party regarding any matter arising under
this Chapter [Environment] by delivering a written request to the contact point of the other
Party. Consultations shall commence promptly after a Party delivers a request for
consultations to the contact point of the other Party. The Parties shall make every attempt to
arrive at a mutually satisfactory resolution of the matter.

2. If consultations . . .] fail to resolve the matter, and a Party deems that the matter needs
further discussion, that Party may request the establishment of an ad hoc Committee [. . .] to
consider the matter. Where the establishment of such an ad hoc Committee is requested
under this paragraph, that ad hoc Committee shall be established without undue delay and
shall endeavour to agree on a resolution of the matter.

Source: Korea-Australia FTA, Article 18.7

Some RTAs go further and specify the designation of contact points to facilitate consultations
on environmental matters. The USMCA, in Example Option A below, specifies that each party
is to designate a national contact point to facilitate communication between the parties.
Additional RTA provisions can be relevant in the context of environmental engagement, such
as provisions regarding stakeholder engagement in the regulatory process, as reflected in
Example Option B below, also drawn from the USMCA.

These provisions can call for publication of an annual list of regulations a country plans to
adopt, along with other processes to ensure stakeholder engagement during the
development of regulations. These provisions can also call for the creation of expert bodies
that include NGOs, businesses, consumer bodies, and others in the development or
implementation of regulations.

Example Options for Consultation with Contact Points or Expert Advice

Example Option A: Designation of Contact Points

1. Each Party shall designate and notify a contact point from its relevant authorities within
90 days of the date of entry into force of this Agreement, in order to facilitate communication

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between the Parties in the implementation of this Chapter. Each Party shall promptly notify,
in writing, the other Parties in the event of any change of its contact point.

Source: USMCA, Article 24.26

Example Option D: Advice and Consultation

1. The Parties recognize that their respective regulatory authorities may seek expert advice
and recommendations with respect to the preparation or implementation of regulations from
groups or bodies that include non-governmental persons. The Parties also recognize that
obtaining those advice and recommendations should be a complement to, rather than a
substitute for, the procedures for seeking public comment pursuant to Article 28.9.3
(Transparent Development of Regulations).

Source: USMCA, Article 28.10

iii. Capacity Building Provisions

Many countries involved in the negotiation of environmental provisions lack the capacity to
negotiate on environmental issues. This can be a result of power asymmetries in negotiations,
capacity within negotiating teams, lack of finance, or national regulatory and enforcement
capacity. Low-income countries in particular have a hard time negotiating environmental
chapters in RTAs when their own national environmental regulation standards are at their
infancy. Environmental measures also require significant preparation, coordination, and
financial means. The weight of environmental issues within specific countries and geographic
regions also differs greatly. In addition, relevant institutions often do not exist to carry out
environmental activities during the implementation phase of an RTA, making capacity
building critical to successful environmental approaches.

In 2019, the SADC Secretariat and EU launched a capacity building programme, the Intra-
African, Caribbean and Pacific (ACP) Global Climate Alliance Plus (GCCA+) Programme, to
strengthen the capacity of SADC Member States to undertake climate adaptation and
mitigation interventions. 262 This builds upon SADC framework policies such as the SADC
Climate Change Strategy and Action Plan of 2015 and the SADC Regional Green Growth
Strategy and Action Plan of 2015. Example Option A below, taken from the EU-SADC EPA,
recognizes the importance of development finance to these efforts. Because it does not call
upon the parties to establish new institutions and instead focuses on leveraging prior
commitments under the Cotonou Agreement, it is highlighted as the option that requires the
lowest level of additional commitment.

Example Option B, also from the EU-SADC EPA, encourages the parties to establish new
institutional structures (“shall aim at supporting”) but does not require their creation, which

262
SADC and EU launch a programme to strengthen capacity of SADC Member States to undertake Climate
Change Adaptation and Mitigation actions, https://www.sadc.int/news-events/news/sadc-and-eu-launch-
programme-strengthen-capacity-sadc-member-states-undertake-climate-change-adaptation-and-mitigation-
actions/

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reduces the level of commitment. It also encourages the delivery of coordinated activities to
adjust to SADC Member States’ specific financing needs.

Example Option C, taken from a joint statement issued by the U.S. and Jordanian
governments, provides for technical assistance on the environmental review. It also
establishes a Joint Forum on Environmental Technical Cooperation to meet regularly to
develop technical cooperation initiatives. Because establishment of a new forum may be
more difficult for developing country partners, this option calls for a higher level of
commitment than Example Option B.

Example Options on Capacity Building

Example Option A: Development Finance Cooperation

2. The Parties recognize that development cooperation is a crucial element of their

Partnership and an essential factor for the achievement of the objectives of this Agreement
as laid down in Article 1. Development finance cooperation for regional economic
cooperation and integration, as provided for in the Cotonou Agreement, shall be carried out
to support and promote the efforts of the SADC EPA States to achieve the objectives and to
maximize the expected benefits of this Agreement.

Source: EU-SADC EPA, Article 12.1

Example Option B: Institutional Capacity Building

8. Cooperation for EPA institutional capacity building shall aim at supporting institutional
structures for EPA implementation management, capacity building for trade negotiations and
for trade policy in cooperation with the relevant institutional mechanisms established under
the SADC Treaty and SACU Agreement or in the respective SADC EPA States.

Source: EU-SADC EPA, Article 13.8

Example Option C: Joint Forum on Environmental Technical Cooperation

The following programs reflect both ongoing and future U.S. support for enhancing
environmental protection in Jordan. These programs focus on building human and
constitutional capacity in environmental management, compliance assurance and
enforcement, and conservation of living and non-living natural resources. It is intended that
the work of these programs will inform the development agenda of the Joint Forum on
Environmental Technical Cooperation.

Source: US-Jordan Joint Statement on Environmental Technical Cooperation

Other RTAs, like the CAFTA-DR FTA, contain a range of environmental cooperation activities,
such as strengthening environmental management systems. Here, the U.S. Environmental
Protection Agency and its cooperative agreement partner, Battelle Memorial Institute, in
collaboration with the Pan-American Health Organization (PAHO), designed and implemented

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the Air Quality Management program. 263 Such an option may require greater capability and
capacity among the parties, however, making it a more involved option than those noted
above. It is included as the Example Option below.

Example Option on Fostering Partnerships to Address Conservation and Management

3. As set forth in Article V of the ECA, the Parties have identified the following priorities for
environmental cooperation activities:
….
(c) Fostering partnerships to address current or emerging conservation and management
issues, including personnel training and capacity building (emphasis added);

Source: Chapter 17, Annex 17.9, CAFTA-DR Agreement

c. Multilateral Environmental Agreements

MEAs permeate the landscape of environment-related agreements and are integral to global
efforts in tackling environmental challenges, not least of which is the crisis of climate change.
Including MEA-related provisions in RTAs serves to reinforce and strengthen the existing
commitments that parties have undertaken under these other instruments. This also presents
an opportunity to clarify and scope the interactions between RTAs and MEAs, particularly
where both agreements provide for overlapping areas of commitments, and, in turn,
contribute to the development of a cohesive body of international rules on trade and
environmental sustainability for effective implementation and enforcement of environmental
objectives.

i. Strengthening MEA-related Commitments

At the minimum, MEA-related provisions reaffirm the importance of MEAs and the parties’
obligations thereunder. Some RTAs go further by calling upon parties to adopt measures
required to comply with MEA obligations, although only a minority require parties to ratify
specific MEAs. Instead, when they appear in RTAs, MEAs tend to be identified as an area of
cooperation between parties, which allows for more flexibility in implementation while still
committing the parties to prioritizing environmental sustainability and protection in their
dialogues. RTAs also differ in their approach towards MEAs. While some RTAs refer to MEAs
in general, others restrict the RTA’s application to unspecified MEAs to which one or more of
the parties adhere, while others prescribe a specific list of MEAs to which the RTA applies.

263
Phase I of the program focused on emission inventories, standards and regulations, quality control and data
analysis and equipment. Phase II focused on development and deployment of air quality webinars to address
priorities in CAFTA-DR countries through dissemination of expert knowledge and best practices. Phase III
provided targeted support for the development of emissions inventories and support M&E capacities of CAFTA-
DR countries. An Emissions Inventory Planning guide was formulated. Phase IV plans to develop training modules
with case studies to help CAFTA-DR countries and Panama use EPA’s Motor Vehicle Emission Simulator, a
modeling system that estimates emissions for mobile sources at the national, country and project level for air
pollution, GHG and air toxics. (See Capacity-Building Programs Under the CAFTA-DR FTA, United States EPA,
https://www.epa.gov/international-cooperation/capacity-building-programs-under-dominican-republic-
central-america).

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While MEAs serve as useful reference points, RTA commitments may also go beyond MEA
commitments or include MEA-related commitments without obligations that bind a non-
party to the MEA. In the former, RTAs provide a platform for States to explore an expanded
scope of commitments to strengthen the achievement of environmental goals under the
respective MEAs. In the latter, including MEA-related commitments in RTAs, without
obligations that bind a non-signatory to the MEA, achieves the effect of diffusing and
strengthening MEA-related commitments.264

Example Option A below, taken from the CPTPP, is an example of a general provision that
reaffirms countries’ existing commitments under MEAs. Such provisions often do not create
additional binding obligations, but they are useful as a signal of the parties’ commitments to
environmental sustainability and protection. Example Option A also calls upon the parties to
engage in dialogue with respect to the negotiation and implementation of relevant MEAs and
trade agreements; however, this clause is softer than the language in Example Option B.

Example Option B below, taken from the USMCA, highlights the parties’ commitment to
consult and cooperate with respect to “environmental issues of mutual interest, in particular
trade-related issues, pertaining to relevant multilateral environmental agreements.” While
this option imposes obligations beyond the general language in Example Option A, it still
offers significant flexibility and policy space for States to explore and engage in conversations
on the MEAs and environmental issues that are of mutual interest to them.

Other RTA options establish commitments for the parties to cooperate with respect to
particular issues or MEAs. Example Option C below, taken from the USMCA, creates binding
obligations for RTA parties to fulfil their obligations under a specified list of MEAs where the
parties have already undertaken obligations. This option complements the flexible approach
in Example Option B by drawing attention to the MEAs and environmental issues that have
already been agreed upon by the parties to be most critical to their environmental agendas.

Example Option D below, taken from the Agreement Establishing a Common Market for
Eastern and Southern Africa (COMESA), sets out the parties’ agreement to accede to specific
MEAs in the main text of the RTA. While this option sends the strongest signal of a State’s
commitment to the specified MEAs and their respective environmental issues, creating an
obligation to sign onto new MEAs ultimately requires ratification subject to the State’s
legislative process. Nonetheless, this option has the potential to increase participation in
certain MEAs, allowing these MEAs to gain greater visibility, legitimacy and effectiveness.265
Example Option E below, taken from the US-Peru Trade Promotion Agreement, illustrates
commitments on biological diversity. While framed in aspirational terms, it places biological
diversity on the environmental agenda of the parties, pulling in countries that are non-
signatories to the relevant MEA, the Convention on Biological Diversity (namely the US).

264
For example, the U.S. has not ratified the Convention on Biological Diversity, but has entered into RTAs such
as the US-Peru Trade Promotion Agreement that contain provisions on biological diversity. Noémie Laurens &
Jean-Frédéric Morin, “Negotiating Environmental Protection in Trade Agreements: A Regime Shift or A Tactical
Linkage?,” International Environmental Agreements: Policitcs, Law and Economics, (2019),
https://doi.org/10.1007/s10784-019-09451-w
265
Id.

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Example Options on Strengthening MEA-related Commitments

Example Option A: General Affirmation of MEA Commitments

1. The Parties recognize that multilateral environmental agreements to which they are
party play an important role, globally and domestically, in protecting the environment and
that their respective implementation of these agreements is critical to achieving the
environmental objectives of these agreements. Accordingly, each Party affirms its
commitment to implement the multilateral environmental agreements to which it is a
party.

2. The Parties emphasize the need to enhance the mutual supportiveness between trade
and environmental law and policies, through dialogue between the Parties on trade and
environmental issues of mutual interest, particularly with respect to the negotiation and
implementation of relevant multilateral environmental agreements and trade agreements.

Source: CPTPP, Article 20.4

Example Option B: Obligation to Consult and Cooperate on Environmental Issues Covered

Under MEAs

The Parties commit to consult and cooperate as appropriate with respect to environmental
issues of mutual interest, in particular trade-related issues, pertaining to relevant
multilateral environmental agreements. This includes exchanging information on the
implementation of multilateral environmental agreements to which a Party is party;
ongoing negotiations of new multilateral environmental agreements; and, each Party’s
respective views on becoming a party to additional multilateral environmental agreements.

Source: USMCA, Article 24.8.3

Example Option C: Obligation to Adopt Measures to Comply with Specific MEAs

Each Party shall adopt, maintain, and implement laws, regulations, and all other measures
necessary to fulfil its respective obligations under the following multilateral environmental
agreements (“covered agreements”):
(a) the Convention on International Trade in Endangered Species of Wild Fauna and Flora,
done at Washington, March 3, 1973, as amended;
(b) the Montreal Protocol on Substances that Deplete the Ozone Layer, done at Montreal,
September 16, 1987, as adjusted and amended;
(c) the Protocol of 1978 Relating to the International Convention for the Prevention of
Pollution from Ships, 1973, done at London, February 17, 1978, as amended;
(d) the Convention on Wetlands of International Importance Especially as Waterfowl
Habitat, done at Ramsar, February 2, 1971, as amended;
(e) the Convention on the Conservation of Antarctic Marine Living Resources, done at
Canberra, May 20, 1980;

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(f) the International Convention for the Regulation of Whaling, done at Washington,
December 2, 1946; and
(g) the Convention for the Establishment of an Inter-American Tropical Tuna Commission,
done at Washington, May 31, 1949.

Source: USMCA, Article 24.8.4 (footnotes omitted)

Example Option D: Obligation to Accede to Specific MEAs

The Member States undertake to accede to international environmental Conventions that

are designed to improve the environmental policies and management. To this end, the
Member States agree to accede to the Montreal Protocol on the Environment.

Source: COMESA, Article 125.3

Example Option E: Commitments on Biological Diversity

1. The Parties recognize the importance of the conservation and sustainable use of
biological diversity and their role in achieving sustainable development.

2. Accordingly, the Parties remain committed to promoting and encouraging the

conservation and sustainable use of biological diversity and all its components and levels,
including plants, animals, and habitat, and reiterate their commitments in Article 18.1.

3. The Parties recognize the importance of respecting and preserving traditional knowledge
and practices of indigenous and other communities that contribute to the conservation and
sustainable use of biological diversity.

4. The Parties also recognize the importance of public participation and consultations, as
provided by domestic law, on matters concerning the conservation and sustainable use of
biological diversity. The Parties may make information publicly available about programs
and activities, including cooperative programs, it undertakes related to the conservation
and sustainable use of biological diversity.

5. To this end, the Parties will enhance their cooperative efforts on these matters, including
through the ECA.

Source: US-Peru Trade Promotion Agreement Article 18.11

ii. Clarifying Inconsistencies Between RTAs and MEAs

The incorporation of environmental provisions in RTAs and the proliferation of MEAs have
raised concerns on the legal compatibility of overlapping commitments under RTAs and
MEAs. Yet, only 29 RTAs address situations of inconsistency between RTA and MEA

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obligations.266 Provisions that clarify the relationship between an RTA and relevant MEAs are
usually drafted to favour MEA obligations.

The NAFTA was the first RTA to address inconsistency between an RTA and MEA,267 and the
relevant language, shown in Example Option A below, has been replicated in the Canada-Chile
RTA and Chile’s RTAs with Honduras, Guatemala, El Salvador, Costa Rica and Nicaragua. This
is a more common approach that places a less stringent burden upon the parties to an RTA.

In contrast, Example Option B below, taken from the US-Peru FTA, adopts a stricter wording
that references the multilateral principle of “a disguised restriction on trade.” This approach
is further expanded in Example Option C below, taken from the Canada-Jordan RTA, which
also incorporates the principle of “arbitrary or unjustifiable discrimination.”

Example Options on Clarifying Inconsistencies Between RTAs and MEAs

Example Option A: Parties to Choose the Least Inconsistent Means

In the event of any inconsistency between this Agreement and the specific trade obligations
set out in:

(a) the Convention on International Trade in Endangered Species of Wild Fauna and Flora,
done at Washington, March 3, 1973, as amended June 22, 1979;

(b) the Montreal Protocol on Substances that Deplete the Ozone Layer, done at Montreal,
September 16, 1987, as amended June 29, 1990; or

(c) the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes
and Their Disposal, done at Basel, March 22, 1989.

Such obligations shall prevail to the extent of the inconsistency, provided that where a Party
has a choice among equally effective and reasonably available means of complying with
such obligations, the Party chooses the alternative that is the least inconsistent with the
other provisions of this Agreement.

Source: Canada-Chile FTA, Article A-04; Chile-Costa Rica FTA, Article 1.04.2 (taken from
NAFTA)

Example Option B: Measure Must Not Impose a Disguised Restriction on Trade

In the event of any inconsistency between a Party’s obligations under this Agreement and
a covered agreement, the Party shall seek to balance its obligations under both
agreements, but this shall not preclude the Party from taking a particular measure to
comply with its obligations under the covered agreement, provided that the primary
purpose of the measure is not to impose a disguised restriction on trade.

266
Id.
267
North American Free Trade Agreement, (December 17, 1992), Article 104(1),
http://www.sice.oas.org/trade/nafta/naftatce.asp

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Source: US-Peru FTA, Article 18.3(4); KORUS FTA, Article 20.10.3 (footnote 6 omitted)

Example Option C: Measure Must Not Constitute Arbitrary or Unjustifiable Discrimination

or a Disguised Restriction on International Trade

In the event of any inconsistency between this Agreement and a Party’s obligation in one
of the MEAs listed in Annex 1-5, such obligation shall prevail to the extent of the
inconsistency, provided that the measure taken is necessary to comply with that obligation,
and is not applied in a manner that would constitute arbitrary or unjustifiable
discrimination or a disguised restriction on international trade.

Source: Canada-Jordan FTA, Article 1-5

d. Domestic Environmental Laws and Policies

Alongside MEA-related commitments, domestic environmental laws and policies are an

essential component of the framework within which global environmental efforts are
pursued. RTAs frequently contain provisions regarding domestic environmental laws and
policies that commit the parties to support, or at least not undermine, global environmental
efforts. Increasingly, RTAs, such as the CPTPP and Canadian RTAs, also set out provisions that
call for greater transparency in the domestic environmental rule-making process.

This section presents options on the domestic environmental commitments that are most
prevalent and/or gaining momentum in RTAs, including: (i) high level of environmental
protections; (ii) upholding domestic environmental laws; (iii) ensuring transparency in the
domestic environmental rule-making process; and (iv) enforcement of domestic
environmental laws.

i. High Level of Environmental Protection

Most RTAs contain provisions that commit the parties to maintain a high level of
environmental protection and continue to improve the level of environmental protection.
These provisions range from aspirational language (“strive,” “seek” or “endeavour”) to
stronger, more binding language (“shall ensure”). Generally, these provisions tend to afford
States the space to regulate and set their level of environmental protection; however, some
turn to international standards to fill the void in the absence of relevant environmental
standards in national or regional legislation.

Example Option A is adapted from the CPTPP and EU-Japan EPA. This option, framed in
aspirational language, is least restrictive and accords the parties the greatest policy space to
establish their own levels of domestic environmental protection. This option also commits the
parties to “continue to improve [their] respective levels of environmental protection,” in a
nod to the iterative process of environmental efforts.

Example Option B, taken from the EU-CARIFORUM EPA, commits the parties to adopt
“relevant international standards, guidelines or recommendations, where practical and

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appropriate,” covering maximum ground in their environmental protections through a blend

of national, regional and international standards.

Example Options on High Level of Domestic Environmental Protection

Example Option A: Aspirational Language on Upholding of High Levels of Domestic

Environmental Protection

1. The Parties recognize the sovereign right of each Party to establish its own levels of
domestic environmental protection and its own environmental priorities, and to establish,
adopt or modify its environmental laws and policies accordingly.

2. Each Party shall strive to ensure that its environmental laws and policies provide for, and
encourage, high levels of environmental protection and to continue to improve its
respective levels of environmental protection. (emphasis added)

Source: CPTPP, Articles 20.3.2 & 20.3.3

Example Option B: Incorporating International Environmental Standards in

Environmental Protections

In light of the environmental challenges facing their respective regions, and in order to
promote the development of international trade in such a way as to ensure sustainable and
sound management of the environment, the Parties recognise the importance of
establishing effective strategies and measures at the regional level. The Parties agree that
in the absence of relevant environmental standards in national or regional legislation, they
shall seek to adopt and implement the relevant international standards, guidelines or
recommendations, where practical and appropriate.

Source: EU-CARIFORUM Economic Partnership Agreement, Article 185

ii. Upholding Domestic Environmental Laws

Many RTAs contain provisions that reference the importance of upholding domestic
environmental laws and some prohibit the parties from lowering their levels of environmental
protection to further trade or investment.268 These provisions tend to adopt language that
“recognizes” or “agrees” that it is inappropriate to encourage trade and/or investment by a
weakening or reduction in the protections afforded by domestic environmental laws. While
strong enforcement commitments in this context can address concerns regarding a ‘race to
the bottom’, some RTAs temper these obligations by retaining the parties’ right to exercise
discretion with respect to investigatory, prosecutorial, regulatory, and compliance matters,
and to make decisions regarding the resources allocated to enforcement.

Example Option A, taken from the Japan-Philippines EPA, contains non-binding language
(“should not”) with respect to derogation from domestic environmental laws. Due to its

268
Monteiro 2016, supra note 143.

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design, this provision requires less commitment and affords the greatest degree of policy
space, although flexibility in this case could favour certain priorities over others.

The newer mega-RTAs, such as the CPTPP and USMCA, stipulate a more specific and binding
prohibition on parties against waiving or otherwise derogating from their environmental laws
in order to encourage trade or investment within their territory. Example Option B, taken
from the CPTPP, contains binding language that creates an obligation that the parties shall
not fail to effectively enforce their environmental laws in a manner affecting trade or
investment. However, it is notable that this firmer commitment also encompasses policy
space. This is shown in Example Option B, which provides that a party has not failed to
effectively enforce its environmental laws if a course of action or inaction reflects a
reasonable exercise of discretion or results from a bona fide decision to allocate resources to
enforcement of other environmental matters determined to be of a higher priority.

Example Options on Non-Derogation from Domestic Environmental Laws

Example Option A: Non-Binding Language on Non-Derogation from Domestic

Environmental Laws

Each Party recognizes that it is inappropriate to encourage investments by investors of the

other Party by relaxing its environmental measures. To this effect each Party should not
waive or otherwise derogate from such environmental measures as an encouragement for
establishment, acquisition or expansion in its Area of investments by investors of the other
Party.

Source: Japan-Philippines EPA, Article 102

Example Option B: Binding Language on Non-Derogation from Domestic Environmental

Laws

4. No Party shall fail to effectively enforce its environmental laws through a sustained or
recurring course of action or inaction in a manner affecting trade or investment between
the Parties, after the date of entry into force of this Agreement for that Party.

5. The Parties recognize that each Party retains the right to exercise discretion and to make
decisions regarding: (a) investigatory, prosecutorial, regulatory and compliance matters;
and (b) the allocation of environmental enforcement resources with respect to other
environmental laws determined to have higher priorities. Accordingly, the Parties
understand that with respect to the enforcement of environmental laws a Party is in
compliance with paragraph 4 if a course of action or inaction reflects a reasonable exercise
of that discretion, or results from a bona fide decision regarding the allocation of those
resources in accordance with priorities for enforcement of its environmental laws.

6. Without prejudice to paragraph 2, The Parties recognize that it is inappropriate to

encourage trade or investment by weakening or reducing the protection afforded in their
respective environmental laws. Accordingly, a Party shall not waive or otherwise derogate
from, or offer to waive or otherwise derogate from, its environmental laws in a manner

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that weakens or reduces the protection afforded in those laws in order to encourage trade
or investment between the Parties.

Source: CPTPP, Articles 20.3.4, 20.3.5, and 20.3.6

iii. Ensuring Transparency in the Domestic Environmental Rule-

Making Process

While most RTAs recognize the right of States to set domestic environmental laws and
policies, an increasing number of RTAs set out the requirements by which domestic
regulations are made and adopted, such as the requirement for governments to consult the
public prior to adopting environmental regulations. The requirement for public participation
and consultation may appear in a general standalone provision or in provisions on specific
environmental regulations. A handful of RTAs also require States to commit to monitor the
state of the environment and provide periodic public reports. Such provisions remain rare in
RTAs, as they pose administrative challenges for States with respect to domestic rule-making
discretion, with high costs of compliance and enforcement, particularly for developing and
LDC States that may not have the relevant resources and capacity.

Example Option A, taken from the Preamble to the Canada-Colombia Agreement on the
Environment, stresses the importance of transparency and public participation in the
domestic environmental rule- and policy-making process. It is the least restrictive of the
options, as it merely acknowledges the importance of transparency and public participation
in environmental governance but does not create any obligations for the parties. Example
Option B, taken from the CPTPP, calls upon the parties to “seek to accommodate requests for
information,” creating a somewhat deeper focus but still using best endeavour language
(“seek to accommodate”). In contrast, Example Option C, taken from the USMCA, creates a
binding obligation on the parties to promote public awareness of environmental laws and
policies and consider questions or comments received through a more comprehensive public
consultation process. Both options B and C also obligate the parties to “make use of existing,
or establish new, consultative mechanisms” to seek views from the public. Example Option D,
also taken from the CPTPP, sets out a binding obligation related to a specific environmental
issue (ozone layer protection).

Example Options on Domestic Environmental Rule-Making Process

Example Option A: Preambular Reference to Transparency and Public Participation in the

Development of Environmental Laws and Policies and Environmental Governance

Acknowledging the importance of transparency and public participation in the

development of environmental laws and policies and with respect to environmental
governance. (emphasis added)

Source: Canada-Colombia Agreement on the Environment, Preamble

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Example Option B: Best Endeavour Provision on Public Participation

1. Each Party shall seek to accommodate requests for information regarding the Party’s
implementation of this Chapter.

2. Each Party shall make use of existing, or establish new, consultative mechanisms, for
example national advisory committees, to seek views on matters related to the
implementation of this Chapter. These mechanisms may include persons with relevant
experience, as appropriate, including experience in business, natural resource conservation
and management, or other environmental matters.

Source: CPTPP, Article 20.8

Example Option C: Binding Provision on Public Participation

1. Each Party shall promote public awareness of its environmental laws and policies,
including enforcement and compliance procedures, by ensuring that relevant information
is available to the public.

2. Each Party shall provide for the receipt and consideration of written questions or
comments from persons of that Party regarding its implementation of this Chapter. Each
Party shall respond in a timely manner to these questions or comments in writing and in
accordance with domestic procedures, and make the questions or comments and the
responses available to the public, for example by posting on an appropriate public website.

3. Each Party shall make use of existing, or establish new, consultative mechanisms, for
example national advisory committees, to seek views on matters related to the
implementation of this Chapter. These mechanisms may include persons with relevant
experience, as appropriate, including experience in business, natural resource conservation
and management, or other environmental matters. (emphasis added)

Source: USMCA, Article 24.5

Example Option D: Public Information and Public Participation in Relation to Specific

Environmental Commitments

The Parties recognize the importance of public participation and consultation, in

accordance with their respective law or policy, in the development and implementation of
measures concerning the protection of the ozone layer. Each Party shall make publicly
available appropriate information about its programs and activities, including cooperative
programs that are related to ozone layer protection. (emphasis added)

Source: CPTPP, Article 20.5.2 (with respect to specific obligations relating to the protection
of the ozone layer)

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Environmental impact assessment is also sometimes included, which may be defined as

“analytical processes of identifying, forecasting and estimating the possible (positive and
negative) environmental impacts of the implementation of particular projects, programs and
policies.” 269 Since the NAFTA, which introduced a provision requiring parties to conduct
environmental impact assessments in their territories, similar provisions have been
incorporated in environmental cooperation agreements associated with RTAs, which require
parties to ensure they maintain appropriate procedures for assessing the environmental
impacts of proposed projects which may cause significant adverse effects on the
environment, with a view to avoiding or minimizing such adverse effects. These provisions
also tend to follow a commitment of States to disclose to the public information arising from
the proposed projects and allowing the public to participate in these environmental
assessment procedures.

Example Option A, taken from the Canada-Colombia Agreement on the Environment, sets out
in binding terms the obligation on the parties to ensure that appropriate procedures for
environmental impact assessments are maintained. Example Option B, taken from the
USMCA, explicitly limits the parties’ obligation to projects that are “subject to an action by
that Party’s central level of government.”

Example Options on Environmental Impact Assessments

Example Option A: General Requirement for Environmental Impact Assessments

Each Party shall ensure that it maintains appropriate procedures for assessing the
environmental impacts in accordance with national law and policy of proposed plans and
projects, which may cause adverse effects on the environment, with a view to avoiding or
minimizing such adverse effects. (emphasis added)

Source: Canada-Colombia Agreement on the Environment, Article 2.5

Example Option B: Limited Requirement for Environmental Impact Assessments Only in

Projects by a Party’s Central Level of Government

1. Each Party shall maintain appropriate procedures for assessing the environmental
impacts of proposed projects that are subject to an action by that Party’s central level of
government that may cause significant effects on the environment with a view to avoiding,
minimizing, or mitigating adverse effects. (emphasis added)

Source: USMCA, Article 24.7

269
Jean-Frédéric Morin & Rosalie Gauthier Nadeau, “Environmental Gems in Trade Agreements: Little-known
Clauses for Progressive Trade Agreements,” CIGI PAPERS NO. 148 (October 2017).

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iv. Enforcement of Domestic Environmental Laws

Several RTAs commit the parties to ensuring that judicial, quasi-judicial, or administrative
proceedings can be used to sanction or remedy violations of domestic environmental laws.
Some RTAs, mainly those negotiated by the United States and Canada, require each party to
ensure that its citizens have appropriate access to these proceedings, including the right to
request that competent authorities investigate alleged violations of domestic environmental
laws. A large number of these RTAs also commit parties to providing appropriate and effective
sanctions or remedies for these violations, such as penalties, fines, imprisonment, injunctions,
suspension of activities, or compliance agreements.

Example Option A, taken from the CPTPP, details a comprehensive set of procedural and rule
of law requirements, such as the right to fair hearing and access to justice, as well as sanctions
and remedies that commensurate with the nature and gravity of the violation of domestic
environmental laws.

Example Option B, taken from the USMCA, stipulates further procedural requirements,
including an explicit recognition by the parties that “proceedings should not be unnecessarily
complicated nor entail unreasonable fees or time limits,” requirements relating to the final
decision on merits of cases decided in these proceedings, and the right for parties to these
proceedings to seek review, correction or redetermination of final decisions. Both provisions
are binding upon the parties (as signalled by use of “shall ensure” and “shall provide”),
although Example Option B contains additional procedural options, as noted, creating a more
substantial obligation.

Example Options on Enforcement of Domestic Environmental Laws

Example Option A: Enforcement Mechanisms

1. Each Party shall promote public awareness of its environmental laws and policies,
including enforcement and compliance procedures, by ensuring that relevant information
is available to the public.

2. Each Party shall ensure that an interested person residing or established in its territory
may request that the Party’s competent authorities investigate alleged violations of its
environmental laws, and that the competent authorities give those requests due
consideration, in accordance with the Party’s law.

3. Each Party shall ensure that judicial, quasi-judicial or administrative proceedings for the
enforcement of its environmental laws are available under its law and that those
proceedings are fair, equitable, transparent and comply with due process of law. Any
hearings in these proceedings shall be open to the public, except when the administration
of justice otherwise requires, and in accordance with its applicable laws.

4. Each Party shall ensure that persons with a recognized interest under its law in a
particular matter have appropriate access to proceedings referred to in paragraph 3.

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5. Each Party shall provide appropriate sanctions or remedies for violations of its
environmental laws for the effective enforcement of those laws. Those sanctions or
remedies may include a right to bring an action directly against the violator to seek
damages or injunctive relief, or a right to seek governmental action.

6. Each Party shall ensure that it takes appropriate account of relevant factors in the
establishment of the sanctions or remedies referred to in paragraph 5. Those factors may
include the nature and gravity of the violation, damage to the environment and any
economic benefit the violator derived from the violation.

Source: CPTPP, Article 20.7

Example Option B: Proceedings for Enforcement of Domestic Environmental Laws

1. Each Party shall ensure that administrative, quasi-judicial, or judicial proceedings for the
enforcement of the Party’s environmental laws are available under its law and that those
proceedings are fair, equitable, transparent, and comply with due process of law, including
the opportunity for parties to the proceedings to support or defend their respective
positions. The Parties recognize that these proceedings should not be unnecessarily
complicated nor entail unreasonable fees or time limits.

2. Each Party shall provide that final decisions on the merits of the case in these proceedings
are:
(a) in writing and if appropriate state the reasons on which the decisions are based;
(b) made available without undue delay to the parties to the proceedings and, in
accordance with its law, to the public; and
(c) based on information or evidence presented by the parties or other sources, in
accordance with its law.

3. Each Party shall also provide, as appropriate, that parties to these proceedings have the
right, in accordance with its law, to seek review and, if warranted, correction or
redetermination, of final decisions in such proceedings.

Source: USMCA, Article 24.6

v. Compliance and Enforcement of RTA Provisions

The effectiveness of environmental provision in RTAs is often measured by their enforcement

mechanisms. Some parties rely on soft mechanisms for enforcement, such as the EU, which
uses the mechanism known as the Civil Society Dialogue. Within this mechanism,
governments and civil society actors from both the EU and its trading partners meet regularly
to work together on implementation. Other parties rely upon more binding enforcement
mechanisms, as presented below.

A good example of a soft enforcement mechanism is the EU-Japan Joint Dialogue with Civil
Society under the EU-Japan EPA, shown as the Example Option below. The EU-Japan EPA sets

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up a committee on trade and sustainable development to review and monitor the

implementation of the chapter on trade and sustainable development.

Example Option on Committee Tasked with Compliance with Environmental Sustainability

Provisions

1. The Committee on Trade and Sustainable Development established pursuant to Article 22.3
(hereinafter referred to in this Chapter as “the Committee”) shall be responsible for the
effective implementation and operation of this Chapter.

Source: EU-Japan EPA, Chapter 16 on Trade and Sustainable Development

The Example Option below, also drawn from the EU-Japan EPA, establishes a Joint Dialogue
with civil society organisations in the member state territories. The main function of the Joint
Dialogue is to receive information from member states on the implementation of the chapter,
including environmental interests. However, it is important to note that the success of civil
society engagement will be dependent upon organizational capacity and the willingness of
government to actually hold these meetings and adhere to the Agreement.

Example Option on Joint Dialogue with Civil Society

2. The Parties shall promote in the Joint Dialogue a balanced representation of relevant
stakeholders, including independent organizations which are representative of economic,
environmental and social interests as well as other relevant organizations as appropriate. […]

3. The Parties will provide the Joint Dialogue with information on the implementation of this
Chapter. The views and opinions of the Joint Dialogue may be submitted to the Committee
and may be made publicly available.

Source: EU-Japan Economic Partnership Agreement, Article 16.16

Further, the Example Option below shows how some RTAs, such as the CPTPP, allow parties
to have flexible, voluntary mechanisms contributing to the maintenance of high levels of
environmental protection. Voluntary mechanisms may include: private-public partnerships,
voluntary guidelines for environmental performance, and market-based incentives, such as
public recognition of superior environmental performance, among others.

Example Option on Voluntary Mechanisms to Enhance Environmental Performance

1. The Parties recognise that flexible, voluntary mechanism, for example, voluntary auditing
and reporting, market-based incentives, voluntary sharing of information and expertise, and
public-private partnerships, can contribute to the achievement of high levels of
environmental protection and complement domestic regulatory measures. The Parties also
recognise that those mechanisms should be designed in a manner that maximises their
environmental benefits and avoids the creation of unnecessary barriers to trade.

Source: CPTPP, Article 20.11

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On the other hand, countries like the United States use a more binding approach, which is
often viewed as a more “coercive” model based on the threat of sanctions and fines. Under
such provisions, a party reserves the right to conduct periodic reviews of environmental
policies of its trade partners so as to monitor implementation and compliance with agreement
provisions. If levied, sanctions can involve the elimination of trade privileges and fines and
are designed to hold parties accountable to commitments on environmental policy. The
Example Option below, drawn from the USMCA, highlights the threshold of environmental
regulatory compliance under the USMCA. Under the USMCA, the parties also reserve
discretion regarding compliance matters.

The USMCA also has side agreements aimed at promoting compliance with environmental
provisions within the agreement. For example, the United States and Mexico negotiated a
separate Environment Cooperation and Customs Verification Agreement that will help bolster
efforts to combat trade in illegally taken wildlife, fish and timber.270

Example Option on Compliance Threshold Provisions

1. No Party shall fail to effectively enforce its environmental laws through a sustained or
recurring course of action or inaction in a manner affecting trade or investment between the
Parties, after the date of entry into force of this Agreement.

2. The Parties recognize that each Party retains the right to exercise discretion and to make
decisions regarding: (a) investigatory, prosecutorial, regulatory, and compliance matters” […]
Accordingly, the Parties understand that with respect to the enforcement of environmental
laws a Party is in compliance with paragraph 1 if a course of action or inaction reflects a
reasonable exercise of that discretion, or results from a bona fide decision regarding the
allocation of those resources in accordance with priorities for enforcement of its
environmental laws.

Source: USMCA, Article 24.4.2

Other RTAs have taken more comprehensive approaches to compliance and enforcement
rather than independently focus on mitigation measures. These may center around
collaboration, such as the approach taken by COMESA, the East African Community (EAC),
and SADC under the five-year Programme on Climate Change Adaptation and Mitigation in
the COMESA-EAC-SADC region. This initiative was built off of the COMESA Climate Change
Initiative and worked to complement other climate change mitigation projects in the region;
it also included a dedicated Monitoring & Evaluation department within the COMESA Climate
Change Unit that reports on progress and submits annual reports.

However, in the event of compliance failure, related agreements provide for a number of
measures. Example Option A below, taken from the EAC Treaty, illustrates a sanctions-based
approach when Partner States fail to meet their obligations under the Treaty. Example Option
B below, from the SADC Protocol on Environmental Management for Sustainable

270
USTR, “USMCA Trade Fact Sheet: Modernizing NAFTA into a 21st Century Trade Agreement”
https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/fact-
sheets/modernizing (last visited February 5, 2022).

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Development, aims to criminally charge offenders and even provides for extradition in an
effort to prosecute trans-national environmental offences. Example Option C, from the
COMESA Treaty, echoes the polluter pays principle, which is a commonly-accepted practice
to require that those who pollute to bear the costs of management to prevent damage to
human health or the environment.

Example Options on Comprehensive Approaches to Compliance and Enforcement

Example Option A: Sanctions-based Compliance Approach

A Partner State which defaults in meeting its financial and other obligations under this Treaty
shall be subject to such action as the Summit may on the recommendation of the Council,
determine.

Source: The Treaty Establishing the EAC, Article 143

Example Option B: Law Enforcement

2. State Parties shall agree upon activities detrimental to the environment, to be deemed as
offences.

3. State Parties shall co-operate in the harmonisation and use of monitoring and surveillance
systems with a view to minimise the cost of environment law enforcement.

4. State Parties may conclude arrangements, bilateral or otherwise to co-operate in the

provision of personnel and the use of vessels, aircraft, communications, databases and
information, or other assets for the purposes of environmental management surveillance and
law enforcement.

5. State Parties shall designate competent institutions and persons to act as environmental
management enforcement officers. […]

7.State Parties shall establish appropriate arrangement to co-operate in dealing with

suspected environmental criminals who cross from one Member State to another.

8. State Parties shall enact laws, conclude arrangements and establish procedures for the
extradition to each other of persons charged with or convicted of offences of contravening
the environmental laws of the State Party seeking the extradition of such persons.

9. State Parties shall take measures to strengthen the capacity of their judicial systems to
effectively prosecute perpetrators of environmental crimes or offences.

10. Should some State Parties wish to provide that a penalty imposed by each one of them
under their environmental management laws be enforced by another State Party or Parties,
they may agree on procedures for that purpose consistent with their national laws.

11. State Parties shall establish region-wide comparable levels of penalties to be imposed for
activities that constitute offences against the environment.

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Source: SADC Protocol on Environmental Management for Sustainable Development, Article

1

Example Option C: Polluter Pays

6. Action by the Common Market relating to the environment shall be based on the principles
that preventative action should be taken, that environmental damage should as a priority be
rectified at source and that the polluter should pay….

Source: Treaty Establishing the Common Market for Eastern and Southern Africa, Chapter 16
on Co-operation in the Development of Natural Resources, Environment, and Wildlife.

vi. Emerging Issues

A number of other issues related to trade and environment are evolving internationally.
Among these are: (i) Environmental Goods and Services, (ii) Carbon Border Adjustment
Mechanism (CBAM), (iii) Fossil Fuel Subsidies, (iv) Business & Human Rights, and (v) Circular
Economy, all of which are referred to as “emerging issues” below.

Progress on these issues is evident at the multilateral and regional levels. For example, WTO
Member States recently concluded the WTO Agreement on Fisheries Subsidies, after many
years of negotiations, and the OECD recently released the Global Plastics Outlook,271 which
highlights exponential increases in global plastic waste generation in the context of
developing an internationally legally binding instrument on plastic pollution. The EU also
presented its Strategy for Sustainable Circular Textiles as a step in combating the sector’s
negative environmental impact. Circular economy provisions are also appearing in RTAs to
incorporate approaches to tackle plastic pollution.

vii. Environmental Goods and Services

Another area at the nexus of trade and environment, which has been a focus of negotiations
at both the multilateral and regional levels, is preferential treatment, cooperation, and
preferential trade terms for those goods and services most important for environmental
sustainability. At present, there is no agreed-upon definition on “environmental goods” or
“environmental services”; however, the OECD and APEC aim to identify them by HS codes
(goods) or CPC codes (services). 272 At the WTO, the 2001 Doha Ministerial Declaration
instructs members to negotiate the reduction of or, as appropriate, elimination of tariff and
non-tariff barriers on environmental goods and services. Multilateral negotiations on the
topic have not advanced since 2011. From 2014 on, a sub-set of WTO Member States
launched plurilateral efforts on the reduction of tariffs on environment-related products (as
identified by HS codes) under the Environmental Goods Agreement negotiations. The last
round of negotiations took place in December 2016. Since November 2020, WTO Member
States co-sponsoring the TESSD have been discussing environmental goods and services but

271
OECD, “Countries Pledge to Step Up on Climate and Environment at OECD Environment Ministerial,” 31
Mar. 2022, https://www.oecd.org/environment/countries-pledge-to-step-up-action-on-climate-and-
environment-at-oecd-environment-ministerialhtm.htm
272
Ronald Steenblik, “Environmental Goods: A Comparison of the APEC and OECD Lists,” OECD Trade and
Environment Working Paper No. 2005-04.

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have yet to determine how environmental goods and services will be defined and treated
within the context of the environmental initiative.

The Ministerial Statement on Trade and Environmental Sustainability, the Baseline Option
below, does provide a basic approach to the promotion and facilitation of environmental
goods and services; however, it focuses on more general cooperation and does not define
environmental goods and services. It is fairly aspirational and calls upon the parties to
“explore opportunities and possible approaches.”

At the RTA level, some regional trade agreements also recognise the importance of working
together on trade-related aspects of environmental policies. These provisions tend to appear
in the general rules of an environmental chapter. In Example Option A below, drawn from
the EU-Singapore trade and investment agreements and New Zealand-Korea FTA, the parties
agree to promote trade and investment in environmental goods and services under “Trade
and Investment Promoting Sustainable Development” clauses. Example Option B, taken from
CPTPP and USMCA, highlights a more substantial approach dedicated to recognizing the
importance of trade and investment in environmental goods and services as a means to
progress on various environmental issues, confirming an obligation to make a sincere effort
for promotion and facilitation of trade and investment in environmental goods and services.
Also, parties obligate the Environment Committee to identify potential non-tariff barriers to
trade in environmental goods and services.

Example Options on Environmental Goods and Services

Baseline Option: Ministerial Statement on Trade and Environmental Sustainability

1. Explore opportunities and possible approaches for promoting and facilitating trade in
environmental goods and services to meet environmental and climate goals, including through
addressing supply chain, technical and regulatory elements.

Source: World Trade Organization, Ministerial Statement on Trade and Environmental

Sustainability, WTO Doc. WT/MIN(21)/6/Rev.2 (2021)

Example Option A: Provision Promoting Trade and Investment in Environmental Goods and
Services

Article 12.10: Cooperation on Environmental Aspects in the Context of Trade and Sustainable
Development

The Parties recognise the importance of working together on trade-related aspects of

environmental policies in order to achieve the objectives of this Agreement. The Parties may
initiate cooperative activities of mutual benefit in areas including, but not limited to: […]

(j) the exchange of views on the liberalisation of environmental goods and services; […]

Article 12.11: Trade and Investment Promoting Sustainable Development

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1. The Parties resolve to make continuing special efforts to facilitate and promote trade and
investment in environmental goods and services, including through addressing related non-
tariff barriers. The Parties also recognise the usefulness of efforts to promote trade in goods
that are the subject of voluntary or private sustainable development assurance schemes, such
as eco-labelling, or fair and ethical trade.

2. The Parties shall pay special attention to facilitating the removal of obstacles to trade or
investment concerning climate-friendly goods and services, such as sustainable renewable
energy goods and related services and energy efficient products and services, including
through the adoption of policy frameworks conducive to the deployment of best available
technologies and through the promotion of standards that respond to environmental and
economic needs and minimise technical obstacles to trade.

Source: EU-Singapore trade and investment agreements Articles 12.10 and 12.11; Korea- NZ
FTA Articles 16.1 and 16.4

Example Option B: Entire Article on Environmental Goods and Services

1. The Parties recognize the importance of trade and investment in environmental goods and
services, including clean technologies, as a means of improving environmental and
economic performance, contributing to green growth and jobs, and encouraging
sustainable development, while addressing global environmental challenges.

2. Accordingly, the Parties shall strive to facilitate and promote trade and investment in
environmental goods and services.

3. The Environment Committee shall consider issues identified by a Party related to trade in
environmental goods and services, including issues identified as potential non-tariff
barriers to that trade. The Parties shall endeavor to address any potential barriers to trade
in environmental goods and services that may be identified by a Party, including by
working through the Environment Committee and in conjunction with other relevant
committees established under this Agreement, as appropriate.

4. The Parties shall cooperate in international fora on ways to further facilitate and liberalize
global trade in environmental goods and services, and may develop cooperative projects
on environmental goods and services to address current and future global environmental
challenges.

Source: USMCA Article 24.24; CPTPP Article 20.18

viii. Carbon Border Adjustment Mechanism (CBAM)

As an example of a measure to cope with climate change, which has become increasingly
severe in recent years, countries are now considering CBAMs in order to meet Paris
Agreement commitments, a move that has been spearheaded by the EU in order to address
“carbon leakage” when companies transfer their production to countries with less restrictive
environmental standards, resulting in higher greenhouse gas (GHG) emissions in total. The
COP26 climate negotiations led to the conclusion of rules to operationalize Article 6 of the

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Paris Agreement, which promotes the objective of the United Nations Framework Convention
on Climate Change (UNFCCC) by embracing cooperative approaches to national carbon
reduction and removal targets.273

The EU’s CBAM is based on EU policy,274 and it is set to apply to imported products from all
countries (with the exception of a few countries that are linked to EU-ETS) in certain sectors
(steel, aluminium, cement, electricity etc., as defined by HS codes), based on carbon footprint
per product. 275 Although the Paris Agreement stipulates “common but differentiated
responsibilities,” akin to special and differential treatment, developing countries and LDCs
will likely face challenges meeting CBAM requirements. It is also unclear how introduction of
CBAMs will affect legal provisions under RTAs. However, negotiators may want to note that
the CBAM arose in the context of reconciliation of existing international trade rules,
transparency on carbon footprint calculation regulations, and technical assistance and
capacity building, especially for LDCs.

ix. Fossil Fuel Subsidies

Fossil-fuel subsidies are one of the biggest factors hindering the global transition to renewable
energy sources. Decreases in the global carbon budget, the amount of GHG that can be
produced before global warming goes above the 2ºC threshold, necessitate the need to
actively limit fossil fuel production. Between 2015 and 2020, 53 countries implemented fossil
fuel subsidy reform and fuel taxation.

Sectoral agreements have previously been used to address subsidies in fossil fuel intensive
industries, such as the plurilateral agreement on Trade in Civil Aircraft, 276 although these
agreements have not gone so far as to address fossil fuel subsidies. The EU-Singapore FTA
takes a soft approach in addressing the transition to low carbon fuels and the need for parties
to gradually reduce fossil fuel subsidies, with a focus on promoting investment in renewable
energy solutions.277 While the CPTPP does not contain provisions specifically targeting fossil
fuel subsidies, its predecessor, the TPP,278 sets out a progressive adoption by the parties of
migration and adaptation actions to increase energy efficiency and develop low-carbon
technologies and renewable energy sources. Notably, negotiations are ongoing under the
ACCTS Agreement to include disciplines that aim to eliminate both production and

273
Charles e. Di Leva, “The Paris Agreement’s New Article 6 Rules: The Promise and Challenge of Carbon
Market and Non-Market Approaches,” IISD, 13 December 2021, https://www.iisd.org/articles/paris-
agreement-article-6-rules
274
European Commission President Ursula von der Leyen has set the “European Green Deal” as one of the six
priorities in her policy agenda. The European Climate Act aims to make carbon neutral by 2050, and raise the
2030 GHG reduction target to at least 55 percent of the 1990 level.
275
Importers must purchase a “CBAM Certificate,” paying the equivalent price of EU-ETSs, based on the
following formula: Amount of duty = CBAM Certificate price(P/CO2-ton) x Carbon footprint per product (CO2-
ton/Q) x Import Amount (Q)
276
ATCA Preamble; See Richard O. Cunningham, “Subsidies to Large Civil Aircraft Production: New WTO
Subsidy Rules and Dispute Settlement Mechanism After Dynamics of U.S.-EU Dispute,” Air & Space Law 1208.
277
The EU-Singapore Trade and Investment Agreements,
https://trade.ec.europa.eu/doclib/docs/2013/september/tradoc_151766.pdf
278
Trans-Pacific Partnership Agreement Text, https://wikileaks.org/tpp-enviro/#trade_and_climate

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consumption of fossil fuel subsidies which build upon work at the WTO on fossil fuel subsidy
reform.279

x. Transition to a Circular Economy

With the world’s population projected to reach approximately 11 billion by 2100,280 a circular
economy model is needed to negate the depletion of natural resources caused by the increase
in consumption levels. Preambular language in some RTAs recognizes the relationship
between trade and sustainable development, including on matters relating to the circular
economy. The CPTPP contains an Annex on Organic Labelling which is designed to facilitate
transparency and compatibility among voluntary labelling schemes relevant to the circular
economy. The ongoing ACCTS negotiations also envisage developing guidelines that inform
the development and implementation of voluntary eco-labelling programmes and associated
mechanisms to encourage their promotion and application. 281 In addition, sectoral
cooperation provisions, such as the provision on autos in the CETA Annex on Motor Vehicle
Regulation, can further promote the circular economy.282 States are also leveraging RTAs to
advance the harmonization of energy efficiency standards by encouraging parties to base
their technical regulations on an international standard of energy efficiency, with the EU-
Japan EPA and EU-Singapore FTA affording parties the flexibility to adopt international
standard most aligned with their policy objectives.

In the international arena, negotiations on an internationally binding instrument to end

plastic pollution were recently launched at the 5th UN Environment General Assembly (UNEA-
5) in Nairobi. The instrument will reflect diverse alternatives to addressing the lifecycle of
plastics, the design of reusable and recyclable products and materials, and the need for
enhanced collaboration to facilitate access to technology, capacity building and scientific and
technical cooperation.283 At the WTO level, the TESSD and DPP initiatives cover issues related
to trade and circular economy/circularity.

279
New Zealand Ministry of Foreign Affairs and Trade, Fossil Fuel Subsidy Reform (FFSR),
https://www.mfat.govt.nz/mi/environment/fossil-fuel-subsidy-reform-ffsr/
280
Anthony Cilluffo and Neil Ruiz “World’s Population is Expected to Nearly Stop Growing by the End of the
Century,” June 17, 2019, PEW RESEARCH, https://www.pewresearch.org/fact-tank/2019/06/17/worlds-
population-is-projected-to-nearly-stop-growing-by-the-end-of-the-century/
281
New Zealand MoFT 2020, supra note 41
282
Christophe Bellmann, “The Circular Economy and International Trade: Options for the WTO,” International
Chamber of Commerce, (November 2021), https://icc.se/wp-content/uploads/2021/12/20211214_Circular-
Economy.pdf
283
UNEP, “Historic Day in the Campaign to Beat Plastic Pollution: Nations Commit to Develop a Legally Binding
Instrument,” (March 2, 2022), https://www.unep.org/news-and-stories/press-release/historic-day-campaign-
beat-plastic-pollution-nations-commit-develop

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