[PPT] - Considerations for promoting regional cooperation on environment, PowerPoint Presentation

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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

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Outline

Regional Context Environmental Provisions in Japan’s RTAs Overall Considerations on Environment and Trade Way Forward

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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

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Korea Japan China

TPP EU

RCEP

WTO

TTIP FTAAP

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Comparison of FTA Coverage Ratio

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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

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ENVIRONMENTAL PROVISIONS IN JAPAN’S RTAS

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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)

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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

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Environmental provisions in Japan’s RTAs as of 2012 (Yanai 2014)

Country Date Pre- amble Side Agreem’t Chap- ter Invest- ment Env. Coop Specific Other Provisions 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*

N Y N Investment dispute settlement 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 N Y General exceptions Notification (technical regulation) Government procurement

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* Joint statement

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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

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* TPP began in 2010 but Japan joined in 2013

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OVERALL CONSIDERATIONS ON ENVIRONMENT AND TRADE

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Overall Considerations on Environment & Trade

Reduced formal trade barriers Increased trade effects

f economic &

environmental regulation

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Focus Areas of New Trade Agreements

Expand scope to “economic

partnership”

Continued liberalization of

traditional “difficult” sectors like agriculture & autos

Liberalization of new sectors

like data

New, broader issues like

intellectual property

Domestic regulatory issues

(environment & labor) Economic Benefits of New Trade Agreements are Modest or Low, Not Clear

Usually less than 1 or 2 % of DGP, esp.

for large countries

Formal trade barriers are already low,

especially for goods (some exceptions for agriculture, services) So Why Bother With New Trade Agreements?

Low tariffs may still have effects
Economic and environmental impacts

may be concentrated in a few sectors.

Focus on new sectors & areas

Creates winners & losers, but losers usually not compensated

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Long Run Considerations of Environment & Trade: EU Experience

Lower formal trade barriers Greater importance of non-tariff barriers Greater importance of non-trade related policies Pressure for policy harmonization (esp. various regulatory policies) Pressure for formal economic integration

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Environment
Finance
Competition

(antitrust)

Etc.

European Union Economic pressure for neighbors to join

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TPP Highlights

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TPP Highlights: Moving beyond specific goods Sectors

Pharmaceuticals
Autos
Agriculture
Internet data

Issues

Intellectual property
State owned enterprises
Dispute settlement
Labor
Environment
Tobacco

Difficult sectors New sectors Beyond trade Domestic regulation Non-tariff barrier beyond regulation Special case: excluded from dispute settlement

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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

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 Sources: New York Times Oct. 5, 2015; USTR website

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WAY FORWARD

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Traditional Ways to Address Trade & Environment

Measures Limitations

1. Environmental clauses in trade

agreements and/or side agreements

Vague & general
Difficult to enforce
Could be circumvented
2. Trade liberalization of

environmental goods & services

Difficult to define and agree on what is

“environmental”

3. Environmental impact

assessment of trade agreements

Few countries do it (EU, US, Canada)
Only focuses on new agreements
Typically finds limited impacts
How to address impacts
Timing (before, during, after negotiation?)
Needs technical capacity

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Overall Strategies to Consider for Northeast Asia

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Strategies Rationale

1. Focus on promoting

environmental cooperation

2. Cooperation on promoting

green economy, sustainable production & consumption, etc.

Emphasize before RTA negotiations

accelerate or become concrete

Environment should be the leading field
f economic integration
Earlier cooperation will reduce the

potential for future trade agreements to undermine environment

3. Continue traditional trade and

environment measures

4. Promote stronger trade and

environment measures

Environment ministries need to become

involved before and during trade negotiations not at the end.

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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

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Ambient air quality standards for selected Northeast Asian countries (µg/m3)

Country PM2.5 PM10 TSP SO2 NO2 O3 CO 24-Hr Annual 24-Hr Annual 24-Hr Annual 1-Hr 24-Hr Annual 1-Hr 24-Hr Annual 1-Hr 8-Hr 1-Hr 8-Hr China: Gr. I

35 15 50 40 150 50 150 50 20 120 80 40 160 100 10

China: Gr. II

150 70 150 70 500 150 500 150 60 240 80 40 200 160 10

China: Gr. III
250

150

250

100

120

80 200

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Japan

35 15 100

262

105

75-

113

118

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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

b 0.5 ppm 3h

100

ppb

188 100

147

40 10

Sources: CAI Asia 2010, pp. 10, 12, and CAA 2014d, USEPA, EU. Data from China was updated from MEP cited in Lin and Elder 2014 (new standards for Grade I PM2.5, and Ozone 8-Hr; and Grade II PM2.5, PM10 annual, NO2, Ozone 8-Hr.)

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Comments

CJK standards

not so different

Some standards

have different formats

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Standards for sulphur content of fuels in Northeast Asia

Diesel Standard (ppm) Petrol Standard (ppm) Japan 10 10 South Korea 50 10 China (nationwide)* 50 50 Mongolia 5000 No info.

Sources: CAI-Asia 2011, UNEP 2014. * 10 ppm by 2017. Source does not indicate whether this refers to diesel or petrol or both.

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Early Involvement of Environment Ministries in RTA Discussions Is Important

RTA Scope: need to ensure an

environmental chapter and environmental provisions

Environment ministries may need capacity

building on trade and environment

EIA should be conducted before and

during the negotiations, not just after agreement is reached.

EIA should be incorporated officially into

the negotiation process from the start

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Ideas to Strengthen the Text of RTAs

1. Specific provisions on problematic trade-related sectors such as wildlife, biodiversity, fishing, logging, waste. 2. Shipping pollution (MARPOL) 3. Countries should strengthen and/or harmonize environmental standards 4. Countries should enforce their environmental laws & regulations 5. Countries should meet MEA obligations 6. Clause stating that the RTA will not be used to weaken environmental laws & regulations 7. Environmental provisions should be subject to dispute settlement 8. Citizen groups should have same rights as companies under dispute settlement 9. Green procurement

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References

Clean Air Asia. 2014. Compilation of Ambient Air Quality Standards: 21 Asian Countries. June 30.

Unpublished.

CAI-Asia. 2011. “Road Map to Cleaner Fuels and Vehicles in Asia.” CAI-Asia Factsheets, no. 17.
CAI-Asia. 2010. “Air Quality in Asia: Status and Trends 2010 Edition.” Pasig City, Philippines.

http://cleanairinitiative.org/portal/node/3869.

Elder, Mark. 2015. “Air Pollution and Regional Economic Integration in East Asia: Implications and

Recommendations.” In Greening Integration in Asia: How Regional Integration Can Benefit People and the Environment, edited by IGES, 117–47. Hayama, Japan: Institute for Global Environmental Strategies. http://pub.iges.or.jp/modules/envirolib/upload/6054/attach/IGESWhitePaperV2015_C07.pdf.

IGES. 2015. Greening Integration in Asia: How Regional Integration Can Benefit People and the
Environment. White Paper V. Hayama, Japan: Institute for Global Environmental Strategies.

http://www.iges.or.jp/en/pmo/wp5.html.

Lin, Xinyan, and Mark Elder. 2014. “Major Developments in China’s National Air Pollution Policies

in the Early 12th Five-Year Plan.” Hayama, Japan. http://pub.iges.or.jp/modules/envirolib/view.php?docid=4954.

METI. 2014. White Paper on International Economy and Trade 2014. Tokyo: METI.

http://www.meti.go.jp/english/report/data/gWT2014fe.html.

UNEP. 2014. “Status of Fuel Quality and Vehicle Emission Standards in Asia-Pacific.” UNEP.

http://www.unep.org/Transport/PCFV/pdf/Maps_Matrices/AP/matrix/AsiaPacific_FuelsVehicles_A pril2014.pdf.

Yanai, Akiko. 2014. “Environmental Provisions in Japanese Regional Trade Agreements with

Developing Countries.” 467. IDE Discussion Paper. http://www.ide.go.jp/English/Publish/Download/Dp/pdf/467.pdf. 23