Environmental Considerations in the FTAA and Other Trade Liberalization Agreements Dale Colyer West Virginia University

INTRODUCTION u Controversial Issue u Trade & Environment Interrelated u Became an Issue in Trade Agreements due to Dolphin/Tuna Dispute

GATTZILLA u THIS POSTER APPEARED IN WASHINGTON AFTER THE 1991 TUNA/DOLPHIN PANEL DECISION

INTRODUCTION (CONT’D) u Became an Issue in NAFTA u Impact on Uruguay Round u A Major Issue in Doha Round u Remains a Contentious Issue

THE ENVIRONMENT IN TRADE AGREEMENTS u Opposition based on belief that barriers to freer trade will result u Free trade is believed to promote economic growth u Higher Incomes make demand for and investment in improvements in the environment

Support for Inclusion u Belief that trade has environmental impacts that must be addressed u Belief that the impacts cannot be adequately addressed in separate environmental agreements u Belief that the trade dispute process is biased against the environment

ENVIRONMENTAL EFFECTS OF TRADE EFFECTS: u SCALE (+) u STRUCTURE (+/-) u TECHNOLOGY (+/-) u REGULATIONS (-) + Increases environmental damage - Decreases environmental damage

NAFTA’s ENVIRONMENTAL SIDE AGREEMENT u Created Trinational Commission u Agreed not to induce investment by becoming pollution havens u Established rules to protect the environment u Gave priority to multinational agreements (e.g., the WTO)

WTO & ENVIRONMENT u Resulted from the dolphin/tuna case u Activated the GATT Environmental Committee u Resulted in the Environment becoming an integral part of WTO u One of the working groups of TNC in the Doha Round (the CTE)

COMMITTEE ON TRADE AND ENVIRONMENT (CTE) u DETERMINE THE RELATIONSHIPS BETWEEN WTO AND MEA’S u ARRANGE FOR EXCHANGES BETWEEN WTO & MEA SECRETARIATS u REDUCE/ELIMINATE TARRIFS ON ENVRIONMENTAL GOODS u EU WANTS TO EXPAND CHARGE

FTAA & THE ENVIRONMENT u Most Countries Oppose Inclusion u No Separate Chapter on Environment u Not Included as a Negotiating Group u Zoellick: Will Include in Negotiating in the Other Chapters u Canada and U.S. Require an Environmental Analysis Prior to Approval

Article 19 COMMITMENT NOT TO RELAX DOMESTIC ENVIRONMENTAL LAWS TO ATTRACT INVESTMENT The Parties recognize that it is inappropriate to encourage investment by relaxing domestic environmental laws. Accordingly each Party shall strive to ensure that it does not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such laws as encouragement to the establishment, acquisition, expansion or retention of an investment in its territory.

AGRICULTURAL PROVISIONS u “PERTINENT ECOLOGICAL AND ENVIRMENTAL CONDITIONS” WILL BE CONSIDERED WRT RISK u PAYMENTS FOR RESEARCH, INFRA- STRUCTURE AND ENVIRONMENTAL PROGRAMS NOT TO BE CONSIDERED AS SUBSIDIES TO AGRICULTURE

ANALYZING THE IMPACTS u Complex and Complicated Process u CEC Framework u QWAG Recommendations u Quantitative Methods u Qualitative Approaches u Can Apply Most of Economics Toolbox

FTAA AGREEMENT u 34 COUNTRIES u VARY WITH RESPECT TO: SIZE OF ECONOMY STAGE OF DEVELOPMENT AGRICULTURE & FOOD ENVIRONMENTAL CONDTIONS LAWS & REGULATIONS

FTAA: SELECT COUNTRIES Country Population Millions Area 1000 km 2 Pop. Density GDP 1999 million $ GDP Per Capita $ Nicaragua , St. Kitts & ,000 Barbados ,58214,500 Canada429, ,44019,320 Brazil1688, ,0204,420 U.S.2739,364308,353,80030,600

AGRICULTURAL TRADE ALL AGRICULTURAL TRADE, 2000 (Million $) AreaExportsImportsBalance Caribbean1,1872,475-1,288 C. America11,80611, S. America35,83712,20123,636 US & Canada 67,38854,09613,292 FTAA115,87379,77536,097

U.S. AGR.TRADE WITH FTAA Trade in 2000 (million dollars) AreaExportsImportsBalance Canada7,6508, Mexico6,5455,0791,466 Caribbean1, C. America1,1182,131-1,013 S. America1,6424,779-3,137 FTAA19,22520,936-2,701

FERTILIZER USE & TRADE (mt.) Region Production Consump. Imports Exports Canada12,484,2002,583,000646,2289,963,130 U.S.22,044,31019,867,550132,8709,100,030 Caribbean326,000327,159278,292279,500 C. America1,498,3002,487,9381,656,273593,645 S. America3,614,1408,612,1195,870,412812,935 FTAA39,570,47232,065,02219,733,33220,749,240

FTAA PESTICIDE IMPORTS, $1000 Country Imports Exports Net Imports Canada879,072143,626735,446 U.S.493,9101,577,927-1,084,017 Caribbean179,04416,604162,440 C. America537,610143,403394,207 S. America951,649500,920394,207 FTAA2,918,4852,382,29556,190

FTAA LAND DEGRADATION AREATOTAL mil. ha. % OF TOT. % 0F AREA MOD+ mil. ha. WORLD1, ,215.4 N. AMERICA C. AMERICA S. AMERICA FTAA

Conclusions u Agriculture affects the environment (neg) u FTAA: increase production & trade u Can contribute to environmental damage u FTAA does not address environment u Except agree not to use to attract industry u Also excepts environmental payments u Leaves main issues to WTO