The relationship between trade and effective enforcement.

• Author: Jones, W. Davis

1. FREE TRADE AND ENVIRONMENTAL ENFORCEMENT

   A. Trade Agreements to Achieve High Levels of Environmental Protection

   There is a worldwide movement toward greater liberalization of international trade. This is seen at a global level through the Doha round of negotiations of the World Trade Organization. Regional examples include the North American Free Trade Agreement (NAFTA) (1) between the United States, Canada, and Mexico, the agreement between five countries in Central America, the Dominican Republic, and the United States (CAFTA-DR), (2) and trading agreements between countries in other regions such as the Association of Southeast Asian Nations (ASEAN) and the Southern African Customs Union (SACU). (3) The United States has established bilateral agreements with Israel, Jordan, Chile, Singapore, Australia, Morocco, Bahrain and Oman, and continues negotiations or is in the approval process with South Korea, Peru, Panama, Colombia, Thailand, and the United Arab Emirates. The United States also is working toward comprehensive agreements that will create the Free Trade Area of the Americas. (4) It is a busy time at the Office of the U.S. Trade Representative and the associated agencies involved in these negotiations. The United States Environmental Protection Agency (USEPA) continues to be an active part of the negotiating team to ensure that environmental issues are appropriately addressed.

   The purpose of these agreements is to increase trade by reducing tariffs on traded goods and services and reduce non-tariff trade barriers that could include regulatory activities designed to protect or give advantages to domestic companies over foreign investors. Pursuant to executive order, the United States is obligated to level the economic playing field in a way that does not allow environmental protection to be imperiled by increased trade. The United States also may not allow low levels of environmental protection to create havens for polluting industries seeking to create competitive advantages by escaping the stringent American environmental rules. (5)

   B. Effective Enforcement of Environmental Laws

   There are significant enforcement concerns with the various environmental provisions of our free trade agreements (FTAs) and there have been a number of challenges to U.S. regulatory decisions. Other countries can challenge USEPA regulatory actions for violating trade rules, and investment provisions allow challenges from foreign investors that are allegedly locked out of the U.S. market by environmental rules. (6) Other provisions are included in FTAs to ensure that the lack of environmental enforcement is not used as an incentive for environmentally devastating activities. The USEPA and other government agencies have focused on capacity-building activities to improve the environmental governance of U.S. trading partners. (7)

   In all of its recent FTAs, the United States has included environmental chapters that contain core obligations to provide for high levels of environmental protection. These chapters ensure effective enforcement of environmental laws, as well as recognition that it is inappropriate to derogate from these laws to encourage trade or investment. (8) These provisions recognize that an environmental legal regime can only reach its goal of protecting human health and the environment if the regulated entities put the requirements in practice and comply with those requirements. Compliance cannot be achieved if there is not an effective compliance program to motivate people to change their behavior. Compliance programs use compliance incentives and compliance assistance together with compliance monitoring, sanctions and legal remedies when the regulated community fails to meet its obligations under the law.

   All recent...