May 01, 2016

The environment chapter of the Trans-Pacific Partnership: An environmental agreement within a trade agreement

Howard F. Chang

Starting with the North American Free Trade Agreement (NAFTA), the United States has made striking progress in linking trade liberalization in its trade agreements with obligations to protect the environment. This trend began in 1993, when the United States negotiated an environmental side agreement to supplement NAFTA before its approval by Congress. Since then, the United States has incorporated additional significant environmental obligations into its free trade agreements. The recent Trans-Pacific Partnership Agreement (TPP) represents the most important manifestation to date of this promising development in international trade law. The TPP currently awaits congressional approval and cannot enter into force without it.

Environmental obligations enforced by trade sanctions

Unlike the environmental obligations in the NAFTA side agreement, which have their own special procedures for enforcement, the TPP environmental obligations appear in an environmental chapter (Chapter 20) included in the TPP itself and are subject to the same enforcement mechanism that the TPP applies to its trade obligations. Thus, the TPP enforces its environmental obligations with the threat of trade sanctions. This equal treatment for environmental obligations and trade obligations continues the practice followed by the environmental chapters included in each of the four bilateral free trade agreements negotiated most recently by the United States: those with Peru, Colombia, Panama, and South Korea.

Incorporating substantive environmental standards

The environmental obligations enforced in the NAFTA side agreement merely require each party to enforce its own environmental standards, without imposing substantive obligations regarding the level of environmental protection. The TPP includes a similar obligation in Article 20.3 but also goes much further, including specific substantive obligations to protect the environment. Thus, the TPP is not only an important trade agreement but also a significant environmental agreement.

The environmental chapter in each of the four most recent bilateral free trade agreements negotiated by the United States incorporated substantive obligations from the same list of seven multilateral environmental agreements (MEAs). Many of these MEAs lack effective enforcement mechanisms, so incorporating their legal obligations into free trade agreements provides much needed “teeth” through the threat of trade sanctions. Each of those four bilateral free trade agreements, however, incorporated these MEA obligations only if both parties to the free trade agreement were also both parties to a listed MEA. The TPP extends this approach to its 12 parties by incorporating or replicating substantive obligations from three of the seven MEAs listed in prior free trade agreements, thereby effectively including obligations from all the listed MEAs that all 12 TPP parties have joined: the Montreal Protocol on Substances that Deplete the Ozone Layer, the International Convention for the Prevention of Pollution from Ships (MARPOL), and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

Entirely new wildlife protections

More impressive than the incorporation of existing MEA obligations are the entirely new substantive environmental obligations that the TPP would impose an all 12 TPP parties. These obligations go beyond those in any existing agreement and break new ground in the protection of wildlife. For example, the TPP includes commitments in Article 20.17 to “take measures to combat” and to “cooperate to prevent” trade in wild animals and plants taken illegally, whether or not those species are protected under CITES. TPP Article 20.16 includes another especially important commitment in which the TPP parties agree to prohibit subsidies for fishing that “negatively affect” stocks that are overfished or that subsidize “any fishing vessel” listed as engaged in illegal fishing.

Effectively a revision of prior free trade agreements

With the negotiation of the TPP, President Barack Obama has in effect made good on his 2008 campaign pledge to renegotiate NAFTA. The TPP includes all three parties to NAFTA, so the United States would impose new environmental obligations on Mexico and Canada through the TPP in addition to those already imposed by NAFTA. Similarly, the TPP would also impose new environmental commitments on Australia, Chile, Peru, and Singapore beyond those already imposed by the bilateral free trade agreements that those TPP parties have with the United States. In this sense, Congress can augment the environmental commitments in prior free trade agreements by approving the TPP agreement.

A model for a broader free trade area and for future agreements

As made explicit in TPP Article 30.4, the TPP is open to new members. Several countries have already expressed interest in joining and the TPP seems likely to expand. Thus, the TPP would not only establish new environmental obligations for current TPP parties but also provide the basis for extending these obligations to still more of our trading partners.

The recent history of free trade agreements reveals a general trend in which the United States has increased the integration of environmental commitments into its free trade agreements. The environmental chapter of the TPP is significant not only for the environmental obligations it would impose on TPP parties but also as a precedent for the next generation of free trade agreements. The United States can build on the TPP model and seek still deeper and broader environmental commitments in negotiating future free trade agreements.

Howard F. Chang

Howard F. Chang is the Earle Hepburn Professor of Law at the University of Pennsylvania Law School, where he teaches international trade law and international environmental law and writes about the law and economics of trade and the environment.