Trans-Pacific Partnership trade pact text published, environment chapter scrutinised

12 November 2015

The 12 economies party to the freshly-inked Trans-Pacific Partnership (TPP) have made public the full text of the trade and investment agreement. The deluge of thousands of pages of detail organised into 30 chapters and a host of additional annexes covers an exhaustive range of issues from goods tariff liberalisation schedules, customs administration and trade facilitation, trade remedies, services trade, investment, electronic commerce, competitiveness and business facilitation, transparency and anti-corruption, labour laws, among other many others.

The TPP also includes a much-anticipated environment chapter that was the subject of considerable debate and speculation by civil society throughout the negotiations. While some other regional trade agreements (RTAs) have included environment provisions, several experts have suggested the TPP’s environment chapter could be the most important to date, due to the deal’s scale and several new approaches adopted towards key issues.  

The TPP text met a mixed reception last week, with some green groups applauding the pledges made therein, while others argued its provisions were insufficient. The text release follows one month on from the announcement of the TPP conclusion on Monday 5 October in the US city of Atlanta after more than five years of talks. (See BioRes, 14 October 2015)

Many commentators have suggested that the sheer size of the TPP agreement – which includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam – will take months and likely years to digest and for the full ramifications to be analysed both for the parties and the global economy.

Many of the chapters, moreover, touch on so-called “behind the border” regulatory issues that have become increasingly pertinent to trade and investment policy as tariffs have come down over the last few decades.

Given that TPP economies account for nearly 40 percent of the global economy – making the agreement the largest of its kind outside the WTO – trade experts point to the potential substantial significance of the new rules generated. [Editor’s note: a more detailed analysis of the overall TPP and next steps for entry into force is available in ICTSD’s flagship publication, Bridges Weekly, focused on international trade news and sustainable development.]

General commitments, provisions

According to the opening lines of the environment chapter, its objectives are to promote mutually supportive trade and environment policies, high levels of environmental protection and effective enforcement of environmental laws, alongside the enhancement of parties’ capacities in these areas.

Under the environment chapter’s “general commitments,” TPP parties also recognise the sovereign right of each participating nation to establish its own levels of environmental protection, while also pledging not to waive or derogate from environmental laws in order to encourage trade and investment.

In addition, the parties equally stress that the environment chapter cannot be used to empower one party’s authorities to undertake environmental law enforcement activities in the territory of another TPP participant.

References are also made to environment, trade obligations in other parts of the text, notably incorporating several general multilateral legal norms. Under chapter 29 on “exceptions and general provisions,” parties specify that the Article XX of the WTO’s General Agreement on Trade and Tariffs (GATT-1994) are made part of the agreement, as are paragraphs (a), (b), and (c) of Article XIV of the trade body’s General Agreement on Trade in Services (GATS).

According to information provided by the US Trade Representative (USTR) this means that the TPP applies a similar balance between trade principles and other regulatory objectives as foreseen in the WTO context.

GATT Article XX stipulates that countries can apply measures necessary to achieve a specific list of public policy objectives, including relating to the conservation of exhaustible natural resources, in so far as these do not constitute a means of arbitrary or unjustifiable discrimination between countries or a disguised restriction on international trade. The article has been deployed in several WTO disputes to date.  

The parallel GATS exceptions refer to the space for countries to adopt measures needed to protect public morals, human, animal, or plant life or health, and compliance with other laws.  

Binding environmental obligations

Diving further into the detail of the environment chapter, the parties adopt binding obligations to take measures to control ozone-depleting substances controlled by the Montreal Protocol, prevent marine pollution from ships regulated under the International Convention for the Prevention of Pollution from Ships (MARPOL), and to implement actions related the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

In each case what will constitute compliance with, or a violation of, these obligations is defined within the relevant article.  For example, parties are deemed compliant with the obligation if they maintain an agreed list of measures taken to implement obligations under the Montreal Protocol and MARPOL. CITES compliance, meanwhile, refers to parties’ efforts to adopt, maintain, or implement laws, regulations, or measures in order to fulfil its obligations under that pact.

Notably for all three, to be found in violation of the TPP obligation parties must have failed to take measures on the environmental obligation in a manner affecting trade and investment between the parties, meaning that an eventual dispute under the deal must also concern trade rather than just environmental issues.

For some experts, this language is potentially problematic, given that affects on trade and investment might be a small sub-set of possible impacts from failure to comply with these environmental obligations, suggesting limitations to the reach of these articles. Other stakeholders, however, welcomed these provisions.  

“Recognising the interconnected nature of these global challenges, we believe that the strong relationship between CITES, the WTO, and other trade agreements like the TPP, shows how these two legal regimes can work in concert to achieve agreed global goals,” said John Scanlon, CITES Secretary-General, in a blog post last month.

Marine fisheries

The deal includes several provisions related to fisheries management and fisheries subsidies. As TPP parties account for eight of the world’s top 20 fishing nations, a number of experts had eyed the deal as an opportunity to tackle harmful fisheries subsidies, arguing that these both distort trade by handing an unfair advantage to domestic producers and can also exacerbate the depletion of overexploited fish stocks.  

The chapter accordingly outlines several principles for parties’ fisheries management systems and conservation measures for the protection of sharks, marine turtles, and other oceanic animals that might become fisheries bycatch victims.

TPP parties have also agreed to a prohibition of subsidies to fishing that harms overfished stocks – with stock status determined by a national government, regional fisheries management organisations (RFMOs), or “best scientific evidence available” – and a prohibition of subsidies to vessels engaged in illegal, unreported, and unregulated (IUU) fishing as listed by flag states or RFMOs.

Parties have three years to bring any non-compliant subsidies in line with these prohibitions, with Vietnam furnished with the option of an extra two years to assess its fish stocks and rectify any offending support programmes.

The parties also pledge to refrain from introducing new, or extending existing, subsidy programmes that might contribute to overfishing or overcapacity.  An environment committee established under the chapter will additionally review the prohibitions regularly in light of the objective of eliminating harmful fisheries subsidies.

An obligation to notify fisheries subsidies is also outlined. This would include information provided under notification procedures in the WTO’s Agreement on Subsidies and Countervailing Measures (SCM) as well as, to the extent possible, additional information about the fish stock and capacity in the fishery for which the subsidy is provided.

In addition, to the extent possible, parties should provide information on other fisheries subsidies not covered under the prohibitions with a particular mention of fuel subsidies.

Some experts commenting on the fisheries subsidies elements in the TPP said that the binding disciplines were an innovative approach given that RTAs have not normally addressed the topic for similar reasons as to why agriculture domestic support has been avoided.

A diluted version of the language agreed around additional fisheries subsidies notification information is mirrored in a draft ministerial proposal put forward by Australia in the context of the “rules negotiating group” in the WTO Doha Round trade talks.

Canberra’s draft joins other recent proposals covering similar prohibitions to the TPP, notably for subsidies to IUU and those negatively affecting overfished stocks, circulated by a group including Argentina, Iceland, New Zealand, Norway, Peru, and Uruguay; another from Peru, and also from the African, Caribbean, and Pacific (ACP) nations. Some members are hoping to be able to deliver substantive outcomes in this area in time for the body’s Tenth Ministerial Conference (MC10) due to be held in mid-December in Nairobi, Kenya.

However, key differences remain between WTO members, with Australia’s proposal opting for additional fisheries subsidies notifications only while others would see prohibitions on subsidies related to overfishing and IUU activities either in Nairobi or shortly after. Many players have nonetheless acknowledged that time is running short to craft an acceptable outcome in this area. (See BioRes, 9 November 2015)

Additional provisions

Other provisions in the environment chapter cover areas such as the encouragement of corporate social responsibility, best-endeavour pledges around trade and biodiversity, and tackling illegal wildlife trade. 

The chapter also envisages a role for so-called “voluntary mechanisms” to enhance environmental performance. This might cover, for example, voluntary auditing and reporting, market-based incentives, public-private partnerships, and so on. The question of voluntary regulatory efforts and their relationship with government obligations is of increasing interest to the international trade community.

Parties pledge to design such mechanisms in a way that does not constitute an unnecessary trade barrier and, at the same time, would see all parties encourage authorities and businesses to develop criteria to evaluate environmental performance.

In addition, the chapter specifies that parties should encourage entities developing voluntary mechanisms to ensure these are truthful, take into account scientific and technical information, are based on relevant international standards, promote competition and innovation, and do not treat products less favourably on the basis of origin.

As indicated above, the chapter establishes an environment committee composed of senior officials from each party. The committee would provide parties with periodic reviews of the agreement’s implementation, assist with the review of cooperative activities, help to resolve potential issues that might lead to dispute, and coordinate with other committees established by the TPP.

 “No major trade agreement before this one has gone so far to address growing pressures on natural resources like overexploited fish, wildlife, and forests,” said Carter Roberts, President and CEO of WWF-US, in a press release last week on the TPP’s unveiling.

Roberts cautioned, however, that the effectiveness of the deal in affecting certain environmental, conservation, and illegal or unsustainable trade issues would depend on its implementation.

“Of course there’s more work to be done. For the agreement to be a useful tool in addressing the Pacific region’s tremendous conservation challenges, each nation will need to take on ambitious measures to effectively comply with their TPP obligations,” he added.

Climate change?

Several environmental lobby groups struck out against the text for its apparent omission of the words “climate change” and missing references to the UN Framework Convention on Climate Change (UNFCCC). 

“The environment chapter confirms some of the worst nightmares of environmental groups and climate activists,” Matthew Rimmer, a professor of intellectual property and innovation law at Australia’s Queensland University of Technology, told reporters last week.

“The final text of the chapter does not even mention 'climate change' – the most pressing global environmental issue in the world," Rimmer continued.

These criticisms, however, were met by other analysts pointing to a more “soft law” article related to climate change designed to encourage a “transition to a low emissions and resilient economy.” This would see parties cooperate on relevant areas such as energy efficiency, the development of low-emissions technologies, sustainable transport, market and non-market mechanisms, and so on.

Other experts suggested that TPP parties had avoided referring to the UNFCCC due to the dynamics surrounding its “common but differentiated responsibilities” (CBDR) principle that to date has for some created a cleavage between so-called “developed” and “developing countries.” The UN climate talks are currently in the process of negotiating a new post-2020 regime where the question of framing the CBDR principle has at times proved tricky to navigate. (See BioRes, 12 November 2015)

The TPP environment chapter also includes an article recognising the importance of trade and investment in environmental goods and services, and would see the environment committee consider relevant issues in this area, such as addressing potential non-tariff barriers (NTBs) to that trade.

Some TPP parties – Australia, Canada, Japan, New Zealand, Singapore, and the US – are also participating in a separate ongoing plurilateral effort among 17 WTO members to cut tariffs on select environmentally-friendly goods. While these talks are initially focused on tariff liberalisation, some participants have signalled a willingness to address NTBs further down the line. (See BioRes, 10 November 2015)

Transparency, disputes

The environment chapter includes provisions stipulating that parties should accommodate requests for information on implementation. Consideration and responses should also be given to written submissions made around implementation.

Some members of the public and stakeholders in TPP nations have also raised concerns that the deal could see investors “sue” governments under so-called investor-state dispute settlement (ISDS) arrangements, for changing tack on commitments made therein. Several experts had argued that this could include, for example, policy changes around emissions-reduction targets.

The full text reveals, however, that parties have added several safeguard clauses to investment obligations in chapter nine including explicit language on the right to regulate in the public interest including around public health, financial stability, and the environment.

In addition, the obligations contained in the environment chapter are subject to the TPP’s broader state-to-state dispute settlement arrangements outlined in chapter 28, although parties must try to resolve any potential issues through consultations in the environment committee, at the level of senior representatives, and among ministers, before moving to dispute.

For several experts this consultation regime represents an interesting departure from some other RTA environment arrangements.

“The few solid commitments that exist in the environment chapter are subject to a consultation regime, which allows parties to raise the issue of non-compliance by others,” wrote Aaron Cosbey, a Senior Associate with the International Institute for Sustainable Development, in a blog post on Wednesday.  

“That possibility is unique. It’s unlikely that many cases would go through all those steps: diplomacy or cooperative efforts would seek to prevent or curtail the process (which, if it brought about change, would be a good thing; disputes themselves are never the end goal),” he continued.

ICTSD reporting; “Climate change missing from full Trans-Pacific Partnership text,” THE SYDNEY MORNING HERLAD, 5 November 2015.

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