Considerations for promoting regional cooperation on environment, trade, and the economy in Northeast Asia Mark Elder Institute for Global Environmental Strategies October 14, 2015 International Workshop on FTA and Integrated Cooperation of Environment and Economy Seoul, Korea
Outline Regional Context Environmental Provisions in Japan’s RTAs Overall Considerations on Environment and Trade Way Forward 2
Regional Context • Notheast Asia is not the main stage for action on trade or environment – Countries focus more on global or wider regional levels & frameworks – Other global/regional initiatives influence NEA • Regional trade agreements in Northeast Asia might not be prioritized WTO Korea TTIP EU TPP China Japan FTAAP RCEP 3
Comparison of FTA Coverage Ratio In Force Under Negotiation Trade Value (bil. USD 2013) Japan 18.2%* 84.2% 1,548 China 27.1% 53.0% 4,160 Korea 36.0% 82.9% 1,075 US 39.8% 70.8% 3,846 EU28 28.4% 68.0% 4,537 *Including substantive agreement: 22.6% Source: METI 2014 4
ENVIRONMENTAL PROVISIONS IN JAPAN’S RTAS 5
Background • RTAs will become more important for Japan • The Japan Revitalization Strategy (the Cabinet decision on June 14, 2013) also stipulates that “the government will raise the FTA coverage ratio (proportion of the value of trade accounted for by trade with FTA counterpart countries) from the current 19% to 70% by 2018.” (METI 2014, p. 464) 6
Overall characteristics of Japan’s RTAs with Developing Countries • Overall, few relevant environmental provisions • Often include environment only in preamble and/or provisions on investments, standards, and economic cooperation • Most typical provision in investment chapter, prohibiting encouraging investment by relaxing environmental regulation • No environmental chapters or side agreements 7 Source: Yanai 2014
Environmental provisions in Japan’s RTAs as of 2012 (Yanai 2014) Country Date Pre- Side Chap- Invest- Env. Specific Other Provisions amble Agreem’t ter ment Coop Singapore 2002 N N N N N Exceptions (mutual recognition) Mexico 2005 N N N Y Y Investment dispute settlement Public comment procedures Malaysia 2006 N N N Y Y Chile 2007 Y N Y N Investment dispute settlement N* Thailand 2007 N N N Y Y Exceptions (mutual recognition) Indonesia 2008 N N N Y Y Energy & minerals (env consid) Brunei 2008 Y N N Y Y Energy ASEAN 2008 N N N N Y Exceptions (standards) Philippines 2008 N N N Y Y Conformance of env. standards Exceptions (mutual recognition) Switzerland 2009 Y N N Y N Environmental products Patents Vietnam 2009 N N N N Y Exceptions (standards) India 2011 Y N N Y Y Levels of protection Enforcement of env. laws Relation to other int’l regimes Peru 2012 Y N N Y General exceptions N* 8 Notification (technical regulation) Government procurement * Joint statement
Japan’s RTA’s in negotiation (as of 2014) Negotiation Partners Start of Negotiations South Korea 2003 (Negotiation suspended) Gulf Cooperation Council 2006 (Negotiation postponed) Australia 2007 (Completed 2014, in force) Mongolia 2012 (Completed 2015, signed) Canada 2012 Colombia 2013 China-Japan-South Korea 2013 EU 2013 RCEP 2013 TPP 2013* (Completed 2015) Turkey Discussing the possible scope * TPP began in 2010 but Japan joined in 2013 9
OVERALL CONSIDERATIONS ON ENVIRONMENT AND TRADE 10
Overall Considerations on Environment & Trade Focus Areas of New Trade Economic Benefits of New Trade Agreements Agreements are Modest or Low, Not Clear • Expand scope to “economic • Usually less than 1 or 2 % of DGP, esp. partnership” for large countries • Continued liberalization of • Formal trade barriers are already low, traditional “difficult” sectors especially for goods (some exceptions for like agriculture & autos agriculture, services) • Liberalization of new sectors like data • New, broader issues like So Why Bother With New Trade intellectual property Agreements? • Domestic regulatory issues • Low tariffs may still have effects (environment & labor) • Economic and environmental impacts may be concentrated in a few sectors. Creates winners & losers, but • Focus on new sectors & areas losers usually not compensated Increased trade effects Reduced formal trade of economic & barriers environmental regulation 11
Long Run Considerations of Environment & Trade: EU Experience Lower formal trade barriers • Environment • Finance Greater importance of non-tariff barriers • Competition (antitrust) Greater importance of non-trade related • Etc. policies Pressure for policy harmonization (esp. various regulatory policies) Pressure for formal economic integration Economic pressure for 12 European Union neighbors to join
TPP Highlights TPP Highlights: Moving beyond specific goods Sectors Difficult • Pharmaceuticals New sectors sectors • Autos • Agriculture Non-tariff • Internet data barrier Beyond trade beyond Issues regulation • Intellectual property Special • State owned enterprises case: Domestic • Dispute settlement excluded regulation from • Labor dispute • Environment settlement • Tobacco 13
TPP Environmental Provisions (Preliminary Information) • Environmental provisions are enforceable (USTR) • Effectively enforce environmental laws (USTR) • Follow existing MEAs – CITES, Montreal Protocol mentioned specifically • Wildlife protection – Enforce wildlife protection laws & regulations or face economic sanctions – Require cooperation among law enforcement agencies of participating countries, including information sharing Promote long term conservation of marine species (whales, dolphins, sharks, sea o turtles, others) • Limits fishing subsidies • Reduce/ eliminate tariffs on environmentally friendly products & tech. – Solar panels, wind turbines, wastewater treatment, air pollution equipment, water quality analyzers • Cooperative efforts – Energy efficiency, low emission technology, renewable energy, deforestation, resilient development 14 Sources: New York Times Oct. 5, 2015; USTR website
WAY FORWARD 15
Traditional Ways to Address Trade & Environment Measures Limitations 1. Environmental clauses in trade • Vague & general agreements and/or side • Difficult to enforce agreements • Could be circumvented 2. Trade liberalization of • Difficult to define and agree on what is environmental goods & services “environmental” 3. Environmental impact • Few countries do it (EU, US, Canada) assessment of trade agreements • Only focuses on new agreements • Typically finds limited impacts • How to address impacts • Timing (before, during, after negotiation?) • Needs technical capacity 16
Overall Strategies to Consider for Northeast Asia Strategies Rationale 1. Focus on promoting • Emphasize before RTA negotiations environmental cooperation accelerate or become concrete 2. Cooperation on promoting • Environment should be the leading field green economy, sustainable of economic integration production & consumption, • Earlier cooperation will reduce the etc. potential for future trade agreements to undermine environment 3. Continue traditional trade and • Environment ministries need to become environment measures involved before and during trade 4. Promote stronger trade and negotiations not at the end. environment measures 17
Possible ideas for promoting environment first, not trade first • Overall goal should be sustainable development (2030 Agenda for Sustainable Development) • Policy harmonization/ coordination, and/or mutual recognition – Pollution standards, emission standards – Ecolabeling – Waste & recycling (trading?) – Resource efficiency • Green economy, sustainable production & consumption – Green procurement – Circular economy – Green supply chain – CSR 18
Ambient air quality standards for selected Northeast Asian countries ( µ g/m 3 ) PM2.5 PM10 TSP SO2 NO2 O3 CO Country Comments Annual Annual Annual 1-Hr Annual Annual 1-Hr 24-Hr 24-Hr 24-Hr 24-Hr 24-Hr 1-Hr 8-Hr 1-Hr 8-Hr • CJK standards not so different China: Gr. I 35 15 50 40 150 50 150 50 20 120 80 40 160 100 10 - • Some standards China: Gr. II 150 70 150 70 500 150 500 150 60 240 80 40 200 160 10 - have different China: Gr. III - - 250 150 - - - 250 100 - 120 80 200 - 20 - formats Japan 35 15 100 - 262 105 - 118 - - 23 75- 113 Rep. of Korea - - 100 50 - - 392 131 52 188 113 56 196 118 28.6 10.3 Mongolia 50 25 150 50 150 100 - 30 10 85 40 30 - 100 30 10 WHO AQG 25 10 50 20 - - - 20 - 200 40 - 100 30 10 WHO IT-3 37.5 15 75 30 - - - - - - - - - - - - WHO IT-2 50 25 100 50 - - - 50 - - - - - - - - WHO IT-1 75 35 150 70 - - - 125 - - - 40 - 120 - - EU - 25 50 40 - - 350 125 - 200 - 40 - 120 - 10 US 35 12 150 - - - 7 5 p p - 100 188 100 - 147 40 10 0.5 b ppb ppm 3h Sources: CAI Asia 2010, pp. 10, 12, and CAA 2014d, USEPA, EU. Data from China 19 was updated from MEP cited in Lin and Elder 2014 (new standards for Grade I PM 2.5 , and Ozone 8-Hr; and Grade II PM 2.5 , PM 10 annual, NO 2 , Ozone 8-Hr.)
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