Environmental Provisions of U.S. FTAs with Korea, Colombia, and Panama Contain Dispute Settlement Mechanism, Commitment to Honor Existing Agreements

On October 12, 2011, the U.S. Congress passed three bilateral Free Trade Agreements (FTAs) with Colombia, Panama, and Korea.  The approval follows President Barack Obama’s submission of the implementing legislation for the FTAs to Congress on October 3rd.  The FTAs reduce tariffs and other trade barriers between the United States and Colombia, Panama, and Korea, and include provisions on goods, services, investment, government procurement, intellectual property, and electronic commerce.  Each FTA also contains chapters on labor and the environment.

The environmental provisions of the three FTAs are similar in that they all reflect the results of a bipartisan agreement on trade reached in May 2007 between Congressional Democrats and the Bush Administration.  In this Bipartisan Trade Deal, Congress and the Administration agreed that future U.S. FTAs would contain certain provisions on the environment, labor, investment, and other areas.  Fact sheets issued by the Office of the U.S. Trade Representative and the White House say that each of the three FTAs contains “groundbreaking” provisions developed in the Bipartisan Trade Deal to include “high environmental standards[.]”  Following is a summary of several of the major environmental elements found in the FTAs.

The structures of the environmental chapters in the U.S. FTAs with Colombia (Chapter Eighteen of the FTA), Panama (Chapter Seventeen), and Korea (Chapter Twenty) are roughly equivalent.  Early in the chapters the parties confirm that each has the authority to set its own environmental goals and policies, and that each will make efforts to improve its environmental protection laws.  The countries pledge that they will “effectively enforce [their] environmental laws,” and say they will not waive environmental rules for the sake of trade.  The trading partners further commit to observing a list of multilateral environmental agreements that they have both signed.  For each FTA, this list consists of the following seven agreements:

  • The Convention on International Trade in Endangered Species of Wild Fauna and Flora
  • The Montreal Protocol on Substances that Deplete the Ozone Layer
  • The Protocol of 1978 Relating to the International Convention for the Prevention of Pollution of Ships
  • The Convention on Wetlands of International Importance Especially as Waterfowl Habitat
  • The Convention on the Conservation of Antarctic Marine Living Resources
  • The International Convention for the Regulation of Whaling; and
  • The Convention for the Establishment of an Inter-American Tropical Tuna Commission.

The U.S. and Korea, Colombia, and Panama all confirm that they have legal frameworks in place to administer sanctions or remedies in response to violations of environmental rules.  They agree to facilitate the development of voluntary mechanisms, such as partnerships between businesses and communities, to promote environmental protection.  The parties establish Environmental Affairs Councils – one per FTA – to consider the implementation of the environmental provisions of the trade agreements.  The first Environmental Affairs Council meetings will take place no later than one year after the FTAs enter into force.  The FTAs also contain procedures to enable public participation in the Councils.

Under the FTAs, the U.S. and the three trading partners have access to an enforcement mechanism in the event that one party feels the other is not adhering to its environmental commitments.  The first step in the dispute settlement process is for one party to request consultations with the other “regarding any matter arising under this Chapter….”  If the issue has to do with a country’s implementation of its obligations arising under one of the multilateral environmental agreements, and the parties cannot resolve the issue through consultations, ultimately the complaining party has access to the remedies in the FTA’s dispute settlement chapter.  These remedies include access to a dispute settlement panel and the ability to suspend benefits under the FTA. The Bipartisan Trade Deal negotiated in 2007 describes the new enforcement process to be included in U.S. trade agreements:  “[f]inally, we have agreed that all of our FTA environmental obligations will be enforced on the same basis as the commercial provisions of our agreements – same remedies, procedures, and sanctions. Previously, our environmental dispute settlement procedures focused on the use of fines, as opposed to trade sanctions, and were limited to the obligation to effectively enforce environmental laws.”

The environmental chapters close by describing how to proceed in the event of an inconsistency between the FTA and a multilateral environmental agreement.  The FTA says the party faced with this conflict “shall seek to balance its obligations under both agreements,” but the inconsistency will not prevent the party from taking action to comply with the environmental agreement, as long as the underlying purpose of the action is not to restrict trade.

Sources:

All Three FTAs:

U.S. – Colombia FTA:

U.S. – Panama FTA:

U.S. – Korea FTA:

Written by: Cherie Tremaine, GIELR Staff

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