Environmental provisions in Economic Partnership Agreements: Implications for developing countries

27 January 2010

Bilateral and regional trade agreements (RTAs)[1] have proliferated over the past decade, and even as they set out the basis for their respective parties' trade relations, their provisions have increasingly included environmental provisions. This trend has grown rapidly and stems from the recognition that economic and environmental policies are interlinked and should take account of each other. The countries leading this trend are mainly OECD countries (including the United States, Canada and the European Union). The attempt to achieve mutual supportiveness of trade and environmental measures within international and regional trade agreements has therefore become more or less routine;[2] however, the degree to which environmental issues are included in trade agreements remains controversial.

Developing countries in particular have been cautious about incorporating trade and environment at the multilateral level. Many are therefore wary of incorporating trade and environment in regional trade agreements for fear of prejudicing their multilateral positions. Nevertheless, the EU has incorporated environmental provisions into the agreements it is negotiating with African, Caribbean and Pacific (ACP) countries and they reflect varying degrees of substance and ambition ranging from mere exception clauses to a full chapter on environment.[1]

As the first EPA to be concluded and signed, the Agreement between the CARIFORUM States and the EU (C-EPA) was always going to be the benchmark against which the other EPAs would be measured, so it is not surprising that those countries that continue to negotiate with the EU will look at the C-EPA for the environmental provisions it contains in order to learn lessons.

Sustainable development
Sustainable development is the broad remit of all the EPAs with the EU, where it is reflected in the preamble and objectives as well as in the existing environmental provisions. Thus, in the C-EPA the issue of environment is not limited to trade; instead it is part of a broad-based, cooperative approach covering a whole range of issues under the rubric of sustainable development. Under Part I, which is titled ‘Trade Partnership for Sustainable Development', Article 3 recalls key aspects of the Cotonou Agreement in reaffirming the prime objective of sustainable development. This general approach is reflected in most interim EPAs, where sustainable development references are contained in the preamble (recalling the Cotonou Agreement's objectives and provisions) and objectives of the agreements. Thus, the references to environment or sustainable development in the Cotonou Agreement are more or less the minimum standards that will be applied in any EPA, and they will usually be recalled in the preamble or the ‘objectives' provision in the EPA. The exception is the interim agreement between Côte d'Ivoire and the EU, which only mentions sustainable development by recalling the objectives of the Cotonou agreement; the agreement does not itself contain sustainable development as a specific objective.

Natural resources and the environment
The scope of the environment issues under the C-EPA environment chapter is rather broad and generic; pursuant to their commitment to sustainable development, the parties in the C-EPA are "resolved to conserve, protect and improve the environment".[4] The reference to "sustainable management of natural resources and the environment" in Article 183 recalls environment and natural resources as cross-cutting and thematic issues in the Cotonou Agreement.[5]

Also included in the scope of environmental issues under the C-EPA are: environmental technologies, renewable and energy-efficient goods and services and eco-labelled goods.[6] The East African Community (EAC) interim EPA does not spell out the precise scope of environmental issues; instead a marker is set down for future provisions on trade, environment and sustainable development in the rendez-vous clause.[7]

Other thematic areas
Environmental standards are not only promoted in Chapter 4 of the C-EPA, but also in other chapters, such as those on agriculture and fisheries (Chapter 5 of Title I), the chapter on commercial presence (Chapter 2 of Title II) and Section 7 on tourism services (Chapter 5 of Title II). Public health issues are also covered by the commitments to environmental protection.[8]

In the EAC interim EPA, the focus of environment issues is on fisheries, a key economic resource for the EAC partner states.[9] Co-operation between the parties is to include, inter alia, fisheries management and conservation issues; development of fisheries and fisheries products; and marine aquaculture. Forest resources and production of forestry products are priorities for the Central African region and measures for their sustainable management are therefore reflected in the Cameroon interim EPA.[2] Sanitary and phytosanitary (SPS) measures are also a main thematic area in the C-EPA and the interim EPAs in so far as the protection of animal and plant health is at issue.[10] In the EAC interim EPA, SPS measures are a topic for future negotiation.[11]

All the EPAs contain a general exception clause exempting measures to protect or preserve human, plant, and animal health from general trade obligation. Such a clause is a minimum environmental protection provision found in all EPAs. In this respect, the provisions either repeat the language of GATT Article XX or they explicitly refer to, or incorporate it.

Environmental cooperation
In the C-EPA, the Parties agree to cooperate on a range of issues where trade and environment intersect such as inter alia: support for trade in environmental products and services; compliance with relevant products and other standards in the EU market, and relevant labeling and accreditation schemes. No precise procedures or a timeframe for the cooperation on environment issues is specified in the agreement. Neither does it state how the cooperation mechanisms will be developed and implemented.

The extent of reporting, the involvement of specific stakeholders, and the funds to be dedicated to such co-operation all remain undefined. In this respect, an opportunity was missed to elaborate the substance of a provision that could be used as a demonstration of positive trade instruments to support environmental protection, and to promote mutual supportiveness of trade and environment measures. Moreover, the lack of detail has implications for implementation.

International environmental agreements
Pursuant to their commitment to sustainable development, the parties in the C-EPA are resolved to protect the environment, "including through their participation in regional and international environmental agreements."[12] The Parties "recognise the importance of establishing effective strategies and measures at the regional level," rather than commit to establishing such strategies and measures. Where there are no national or regional environmental standards, international standards are to be the benchmark for environmental protection measures.[13] This has the effect of potentially bringing the international environmental obligations into the domestic law of CARIFORUM states.

Notably, however, the C-EPA does not specify the precise international environmental agreements in question, leaving the provision fairly general. The implication is that it refers back to Article 183 (4), so it will be the international standards contained in the international conventions to which the countries are party. Thus, two issues are of note. First, what happens when CARIFORUM states are not party to a particular international convention but the EU is? Do the international standards in that particular multilateral environment agreement (MEA) apply to the C-EPA nevertheless and therefore bind the CARIFORUM states? Second, it appears that the reference to international environmental standards came at the insistence of the CARIFORUM states, which had rejected the EU proposals to use certain EU regional standards as the benchmarks and which exceeded international standards.[14]

Where MEAs are referred to by name, their provisions will expressly bind the parties. The Cameroon interim EPA specifically references the Convention on Trade in Endangered Species of Flora and Fauna, for example, and the EAC interim EPA mentions the UN Convention on the Law of the Sea (UNCLOS) as well as regional and sub-regional fisheries agreements.[15]

National laws on environment
C-EPA, like most recent RTAs, provides that parties should ensure "high levels" of environmental protection under their respective domestic laws, while allowing the parties to set their own minimum standards. The interim EPAs concluded with Pacific and East, West and Central African countries do not have this provision. The phrase "high levels" is not precisely defined, nor referenced against any specific international levels of environmental protection, despite the reference in the C-EPA that international standards should be applied in the absence of national or regional standards. The inference is that with references made to regional and international environmental agreements, parties will choose to apply those same high levels of environmental protection in their domestic laws.

There is no general mechanism in EPAs to enforce these "high levels" of environmental protection. So, for instance, the C-EPA does not oblige the parties to enforce their national environmental laws, with the exception of foreign direct investment. The commitment not to lower levels of environmental protection in order to attract investment is strongly emphasised in C-EPA. Subject to their sovereign right to regulate, in Article 188, the EU and CARIFORUM Parties "agree not to encourage trade or foreign direct investment to enhance or maintain a competitive advantage by:

(a) lowering the level of protection provided by domestic environmental and public health legislation;
(b) derogating from, or failing to apply such legislation.

Dispute Settlement
The general dispute settlement procedures in the C-EPA apply also to disputes on environmental issues,[16] although the environment chapter sets out a separate consultation process for resolution of environmental disputes.[17] The indication is that this process of consultation through the EU-CARIFORUM Consultative Committee should be exhausted first before recourse to the ordinary dispute settlement procedure in the C-EPA.[18] The usual sanctions for the disputes are fines, and although suspension of trade concessions is possible, they are ruled out for disputes concerning environment issues.[19] This exclusion of trade sanctions as remedies for environmental disputes is a similar provision to that under the US-Chile Free Trade Agreement.

The separate remedy for environmental disputes, and the fact that trade sanctions are not allowed for environmental disputes, provides an insight into the lingering reservations concerning the trade and environment debate. In particular, it shows that developing countries are still uncomfortable with the idea that negative trade instruments should be used to enforce environmental obligations. The provisions on environment within EPAs still strongly favour negotiation and consultation over use of trade sanctions. The balance, therefore, remains tipped towards the use of more positive rather than negative trade instruments for environmental purposes in order to achieve the mutual supportiveness of trade and environment.

Lessons from the C-EPA and the interim EPAs
Environmental issues are firmly established in the EPAs and despite the lack of substantive provisions in the interim EPAs, more detail will come in the full Agreements to be concluded with Pacific and East, West and Central African countries. The Cotonou Agreement which already has significant references to sustainable development and environmental issues reflects the minimum standard which these EPAs will maintain. It is likely that their environmental provisions will go further, but the degree to which they will seek to have a balance in the mutual supportiveness goal will differ from region to region. There is already a clear delineation among the interim EPAs where certain economic issues are prevalent, and competitiveness issues are paramount. For instance, the Pacific interim EPA has the bare minimum environmental provisions referencing Cotonou, whilst EAC and Central African interim EPAs build on Cotonou's standard with more substantive provisions on natural resources and an indication of more detailed provisions to follow in the full EPAs.

C-EPA clearly improves upon Cotonou and its hybrid of binding and non-binding measures may also be a benchmark for some environmental provisions in EPAs. International standards are clearly embraced, however, where enforcement of those standards are concerned, there is a hesitation in using traditional trade sanctions; instead, political dialogue and consultation are preferred, possibly as a recognition that non-compliance with environmental standards is due to lack of capacity or understanding of the obligations, rather than a deliberate neglect of responsibilities on environmental protection. Thus, the mutual supportiveness objective is present but cautiously approached.

Beatrice Chaytor is a Programme Officer at International Lawyers and Economists Against Poverty (ILEAP).

[1] In this article, RTAs refers in a generic sense to bilateral, and regional trade agreements.
[2] This objective is contained in numerous political statements including the 1992 Rio Declaration.
[3] See e.g. Article 42 of the interim EPA between the EU and Pacific Island states and Article 40 of the interim EPA between the East African Community and the EU.
[4] C-EPA, Article 183 (3).
[5] This is placed in the context of broader sustainable development principles by Article 183.1.
[6] See Article 183.5. The Parties are resolved to make efforts to promote such trade.
[7] See EAC interim EPA, Article 37(Areas for future negotiations). The EAC partner states and the EC have agreed to conclude a comprehensive EPA by 31st July 2009.
[8] Article 184 refers to "domestic environmental and public health protection and ...sustainable development priorities" in the same context, thereby linking them to each other.
[9] A whole chapter (III) is dedicated to fisheries, and includes marine and inland fisheries and aquaculture development.
[10] E.g., C-EPA, chapter 7  (Articles 52-59) ; Cote d'Ivoire interim EPA, Title III, chapter 4 (Articles 36-43); Cameroun interim EPA, Chapter 4 (Articles 40-47); Pacific interim EPA, chapter 5 (Articles 33-41).
[11] EAC interim EPA, Article 37 (c).
[12] C-EPA,  Article 183.3.
[13] Article 185.2.
[14] This assertion comes from Audel Cunningham, Legal Advisor to the Caribbean Regional Negotiating Machinery, in Philipp Schukat, CARIFORUM EPA and Beyond: Recommendations for Negotiations on Services and Trade Related Issues in EPAs, GTZ Study on Social Aspects and Environment, BMZ Working Paper, 2008.
[15] EAC interim EPA, Articles 28, 31 (1) (d);
[16] See C-EPA, Article 203.1: "This part shall apply to any dispute concerning the interpretation and application of this Agreement."
[17] See C-EPA Article 189.
[18] Ibid, Article 204.
[19] Ibid, Article 213.2: "...In cases involving a dispute under Chapter 4...of Title IV, appropriate measures shall not include the suspension of trade concessions under this Agreement..."
[1] See also Peter Thompson, EPAs and natural resources, Trade Negotiations Insights, 8(4), April 2009
[2] See endnote [1] and for a critic Hall, R., Undercutting Africa: Why EPAs threaten the world's forests and forest peoples, Trade Negotiations Insights, 8(1), February 2009.

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