Trade liberalisation in Chile: How can sustainable development be safeguarded? Nicola Borregaard Workshop Brasilia, 29-30th March 2004 Organised by Tufts University and Ministry of the Environment

Five Points The evidence Summary of main results from existing studies Summary of policy recommendations from existing studies Going beyond the summary: strategic issues What does this all imply for regional integration?

The Evidence

The evidence Literature review of some 30 studies, 15 of which fall into the Environmental effect group 4 on trade agreements (EU, US, Mercosur) 6 sectoral studies (mining, forestry, transport) 5 general trade liberalisation studies Apply a wide definition of trade liberalisation Vary in methodologies Almost all are more focused on analysis than on participation Cover national level as well as different regions in the country Emphasis on environmental aspects rather than social aspects

Summary of main results from studies... Privatization, investment regulations, concessions, investment treaties and a whole range of other treaties have been important and complementary to tariff reductions –there is a sort of “vertical integration of liberalisation and other policies” Even though significant specific environmental effects were not identified, –the intensification of production and reinforcement of existing trends and pressures is emphasized –(resource exploitation more than pollution, situation of weak or marginalized actors SMEs, indigenous (forestry), artisanal (fisheries) (detailed analysis on the latter is not provided))

...Summary of main results from studies Scale effects are important (individual operations as well as overall production) Structural effects are diverse ( f.e. industry concentration (air transport) as well as more competition (road transport)) Liberalisation has contributed to upgrading regulation but not to more value added production In some sectors a lack of enforcement (forestry) has caused significant environmental effects Technological differences between firms are important

Summary of policy recommendations from studies Liberalisation

Summary of policy recommendations from studies Generation and accessibility of information –Construction of base line situations Domestic policy indications: –Strengthening of enforcement (forestry, agriculture) –Strengthening of regulatory framework –Introduction of market based instruments (transport, mining) –Support to transfer of technology to SMEs Trade policy indications: –Promotion of harmonization / mutual recognition –Integration of cooperation into trade agreements

Going beyond the summary: strategic issues... From tariff dominance to non-tariff dominance: –Certification / accreditation “Weak” policy context: –Enforcement in certain sectors –Lack of cross-sectoral policies (transport, energy, land use) –Lack of certain tools (risk assessment) Information –Systematic generation of information –Integration of different existing monitoring tools

...Going beyond the summary: strategic issues The new role of the State and the private sector: –How to make large companies accountable? –How to plan in a context in which the operators are private? –How to prevent long term environmental liabilities? –How to include SMEs? –How to promote value added production?

What does this all imply for regional integration? (such as ) Need for a study that provides overall orientation on aspects such as which are the sectors that are most protected (ranking across countries) Need for SIA – not as a study but as a process, a continuous forum with a small secretariat that brings together recommendations once a year on: –the strategic issues – cooperation, harmonization or common positions