Guidelines for Environment Arrangements Merinda-Lee Hassall Ministry for the Environment New Zealand

Environment Arrangements? What? Where? HOW? WHO? Why? When? The world bank estimates that 1/3 of global trade now takes place between countries that have some form of bilateral or multilateral trade agreement. RTAs are increasingly between developed and developing countries and in many cases the developed country is interested in setting an environment arrangement. Environment and trade is a relatively new area for many countries and there is limited information and knowledge available. When developing something new such as linking trade and environment there are many questions asked… what shall we do, how do we do it, who will use it, why do we need it… I don’t propose to answer all the w’s however we can attempt to show how NZ has approached the issue of trade and environment.

OECD World Trade World Trade - OECD Countries 1992 1992 This is the structure of world trade between OECD countries in 1992. The size of the nodes gives the volume of flows in dollars (imports and exports) for each country . The size of the links stands for the volume of trade between any two countries. Colours give the EC countries (yellow), EFTA countries (green), USA and Canada (blue), Japan (red), East Asian Countries (pink), Oceania (Australia , New Zealand) (black When you look at this diagram the phrase a spaghetti bowl is understated. Imagine what this diagram would look like today, even more of a spiders cobweb. Many of these trade agreements have environment associated with them. Each region or country around the world has a different approach to environment and trade. The scope and depth of environmental provisions varies from an environmental chapter to the mention of exception clauses in the general trade obligations. If you were interested in trying to unravel the trade and environment mystery, where would you begin? This cobweb of trading and any links to environment leads to confusion, misunderstanding, mis-use and fear of trade and environment issues We suggest there is a need to provide information and coordinate ideas for countries interested in learning about trade and environment To make a start the OECD has produced an excellent comprehensive paper on Environment and RTAs. This workshop further develops this idea and has been a good forum to increase understanding on trade and environment issues. 1992 1992

Why do we need guidelines? Baseline threshold Transparency Reference point for discussion Consistency Increase understanding/education Promote and encourage We consider that the co-ordination of these different approaches to trade and environment would provide: Baseline Threshold –A map or guideline on the different elements that might be included in an environment arrangement. Transparency – Increase transparency so that countries with little experience in RTAs are able to learn about their options… with no prejudice or pressure. Reference point for discussion –Provide a reference point for discussion and encourage communication between countries implementing and exploring options for trade and environment arrangements. Consistency on what a standard arrangement may contain. Increase Understanding and Education. Increase understanding and educate trade and environment officials. And in turn with increased education trade and environment is more likely to be recognised as a legitimate topic. Promotes and encourages – Promotes and encourages countries to approach environment and trade in a constructive positive manner. It highlights that environment arrangements do not have to be cumbersome, misused or protectionist.

New Zealand Approach Environment Arrangements Framework Guidelines – 6 elements Drafting options In an attempt to unravel the trade and environment mystery, I would like to briefly mention the NZ approach. Trade and environment in NZ has several different levels of engagement. Framework - At the top of the hierarchy is a framework that provides general overarching aspirations and visions to integrate environment and trade. It provides the guiding principles and concepts for New Zealand to link trade and sustainable development. It covers the underlying belief that maintaining high standards of environment protection is important in its own right and compatible with economic prosperity. For example, it covers principals such that the government is committed to ensuring that its objectives for sustainable development are reflected in all its international negotiations. This framework was endorsed by the NZ government in 2001 and originally developed primarily for government use at WTO negotiations. However since then it has been adapted for use in NZ’s bilateral and pluri-lateral negotiations. As a consequence of this framework we have established working guidelines that provide the basic structure of what a trade and environment arrangement may encompass. We have developed 6 elements in our arrangements that cover our common commitments, cooperation and consultation. Lastly we prepare drafting options. This is the actual wording of the document where we identify the scope of drafting options available to us when at the negotiation phase.

Guidelines ‘Environment Arrangement’ Preamble e.g. ‘closer social & political relationships & economic partnerships….…promoting sustainable development” Objectives e.g. “Committed to the pursuit of sustainable development….” Looking at the 2nd component of the NZ approach we have developed guidelines for Environment arrangements. These cover the following 6 elements… To first element is the Preamble - this is an introductory statement sentence or paragraph that introduces the agreement. It mentions the concept of environment and sustainability and provides a flavour or sense of purpose to the agreement. We look for words and phrases that cover trade and the promotion of sustainable development. Second are the objectives which set the purpose or goals for the agreements. Objectives ensure that all parties are aware of what the environment agreement is trying to achieve. Examples of objectives used in NZ agreements are …’sharing a common aspiration to conserve and enhance environmental quality’ or ‘committed to the pursuit of sustainable development’ or ‘respecting the sovereign right of each country’.

Guidelines ‘Environment Arrangement’ Principles and Commitments e.g. “will not seek to gain trade or investment advantage by weakening its environmental laws….” Cooperation e.g. “cooperative activities may be in areas of environmental expertise …” The 3rd element are principles and commitments. This section sets out agreed and accepted rules of action and conduct. Each country agrees to adhere to basic fundamental principles of sustainable development in the context of regional trade. NZ does not require countries to change their environment laws or regulations. One key concern for NZ is that we must ensure that environment standards are not misused for protectionist reasons. The majority of commitments in the NZ approach are founded from the WTO Doha Ministerial declaration 2001 and other international organisations such as Multilateral Environmental Agreements (MEAs) and the UN Commission on Sustainable Development (UNCSD). Next we look at cooperation. This section provides a means by which parties can communicate and work cooperatively and to promote environment on areas of mutually agreed interest. It provides suggestions on topics and what kind of environmental cooperation activities could occur such as information exchanges, joint projects visits. NZ looks upon this as a 2 way approach where both countries can learn and benefit from the arrangement. Within 2 years NZ has completed some valuable cooperation with our partner countries such as workshops on environmental impact assessments, vehicle emissions, information exchanges on coastal studies, waste packaging. Examples of the NZ approach to cooperative activities was presented by my colleague Kerryn Lang yesterday.

Guidelines “Environment Arrangement” Institutional Arrangements e.g. “the functions of the Environment Committee will include………” Consultation e.g. “where differences arise the Participants will resolve differences through consultation” The fifth element is the Institutional Arrangements. These are instructions that provide practical useful ideas on how the arrangement will happen in reality. It details what to do, and how to do it. It documents when officials should meet and what to discuss. NZ is a small country with limited capacity and finance so it aims to make these arrangements as resource and time efficient as possible. NZ is not interested in creating large institutional requirements or paper trails. For example in the Thailand and New Zealand agreement it mentions that we are to establish an environment committee of senior officials to meet within the first year to discuss environmental cooperative activities. Lastly NZ includes a consultation element. This provides a low profile way of resolving any concerns or difficulties that may arise from time to time. It is a practical approach that encourages resolution of any matter that is bought to the attention of both parties. The NZ approach does not involve dispute settlement or sanctions and safeguards essential issues of national sovereignty. It reinforces the importance of dialogue and discussion. These 6 elements are what NZ considers to be the structure and basic content for an environment arrangement.

New Zealand Approach Drafting Options Draft text with different options New Zealand Thailand Closer Economic Partnership, 2005. Trans-Pacific Strategic Economic Partnership, (Brunei, Chile, New Zealand & Singapore), 2005. The 3rd component of the NZ approach is to develop drafting options. We prepare these so that we have identified the scope of options available to use when at the negotiating table. NZ is a relatively small and distant market so we cannot rely on a heavy weight bargaining position to successfully negotiate environment provisions in our RTAs. Despite our challenges NZ has managed to accommodate our 6 basic elements and the different dynamics and concerns of the negotiating partner into our agreements. We have achieved this by having a flexible and creative approach, it is not a ‘must do’ recipe or a one-size fits all. This is evident in our 2 agreements which are different, the NZ Thai agreement is different from the Trans pacific Economic partnership with Chile, Singapore and Brunei the agreements. To date NZ experience with this approach to environment arrangements has been very positive and genuinely win-win for all the parties concerned. Countries looking to establish their own approach to environment and trade may want to use all the tools, use a combination or only 1.

Chile’s Draft Chapter Useful guidelines covering the 6 elements Would it be helpful to provide: examples & explanations? drafting options? Framework Guidelines – 6 elements Drafting options Now we can see that Chile’s draft chapter developed for the APEC meeting is an example of the 2nd tool or guideline from the NZ approach. This chapter contains develops a common framework and a very useful guideline. We support Chile on their proactive approach and consider it further legitimises the integration of environment and trade. We give it a big thumbs up. As the NZ approach includes a framework, guidelines and drafting options we wonder whether it would be useful to expand this chapter to provide drafting options, explanations and examples. This would allow officials to identify alternative approaches and prepare for and negotiate environment agreements. Any examples must be practical and add value to what already exists. If drafted in a collaborative forum it would also provide an opportunity for countries that have little experience to input to the document to ensure it is useful and valuable.

Conclusion – What’s next? Trade and environment is here to stay. NZ approach Chile’s draft chapter Useful to provide drafting examples and options? The OECD reports there will soon be more than 400 regional trade agreements world wide many with associated environment arrangements. With increasing global environmental degradation and a focus on climate change the interface between trade and environment will not go away. Environment and sustainable development is part of a modern trading approach that opens up a new range of opportunities and challenges. The NZ approach has a framework, 6 guidelines and drafting options. We find it useful to use all of these tools and have demonstrated we can be flexible to accommodate different concerns. We also consider Chile’s draft chapter an excellent guideline. NZ wonders whether it would also be useful to expand Chile’s draft chapter further to suggest drafting options and provide additional explanations and examples. Like NZ and Chile, each country could independently develop their own baseline guidance for environment and trade or another option is to collectively from our experience and provide a guide to different examples of what trade and environment may contain. This would ensure that Chiles chapter is used as as a guide not a one size fits all approach. Promoting Chile’s chapter and guidelines will improve consistency and transparency of trade and environment issues. It will increase knowledge and help countries discover common principles and understandings on trade and environment issues.