Environmentally Sustainable Trade: Project Update and Peer Review

Eric Dannenmaier, Director of the Tulane Institute for Environmental Law and Policy, opened the afternoon's discussion with a brief overview of the background and methodology of the Environmentally Sustainable Trade Project, an initiative of the Organization of American States (OAS) through the Inter-American Forum on Environmental Law (FIDA). This project works to provide direct support to OAS Member States to minimize negative environmental impacts, and to maximize environmental benefits, resulting from greater economic integration. Through country-based studies which facilitate partnerships between Member governments and non-governmental experts, the project emphasizes domestic issues and outcomes, including meaningful environmental assessments of trade policy, the development and discussion of domestic policy alternatives, and local capacity building for further action.

To date, country studies supported by the Environmentally Sustainable Trade Project are ongoing in Argentina and Brazil. Juan Rodrigo Walsh of the Fundación Ambiente y Recursos Naturales (FARN) reported on the progress of the Argentina country study, undertaken in partnership with FARN and focused upon on the potential impacts of the Free Trade Area of the Americas (FTAA). He described the application in Argentina of the three-phase process of analysis common across the Environmentally Sustainable Trade Project.

First, the Argentina study used economic analysis, including general equilibrium modeling and the Global Trade Analysis Program (GTAP), to project changing levels of production and trade flows in significant sectors under various economic integration scenarios. Mr. Rodrigo Walsh pointed out that modest variations in GTAP models yielded a considerable dispersion of results, and emphasized efforts made to cross-check model predictions through interviews with key actors in the government, the private sector, and academia.

Next, researchers conducted an Environmental Impact Assessment (EIA) of sectors identified as "winners" (i.e. expected to grow) and "losers" under the various trade scenarios, using both direct and indirect environmental indicators. They further cross-checked environmental impacts against economic data, and developed geographical maps to better understand the consequences of trade-affected economic activities (e.g. impact on delicate ecosystems, geographic concentration of effluents).

This integration of economic and environmental assessment techniques allowed researchers to identify areas at the intersection of high growth and high impact sectors, and in turn to prioritize such areas for the development of policy recommedations. Finally, researchers conducted a legal and institutional analysis to pinpoint weaknesses in existing environmental regimes, and worked to develop and disseminate policy alternatives for strengthening environmental protection in priority areas.

Mr. Rodrigo Walsh offered a number of conclusions drawn from the Argentina country study. He noted that models used to predict economic scenarios may not coincide with empirical findings, and that a lack of reliable data is often an important obstacle to the EIA process. He observed that in most cases EIA regimes are site specific; unfortunately, there are virtually no institutional capacities for evaluating the environmental consequences of macro-economic policies. Finally, he cautioned that an excessive bias exists in favor of evaluating the environmental impact of sectors expected to grow due to increased trade, rather than also considering the environmental liabilities of sectors which will lose under a liberalized trade regime.

Providing a broader context for the ensuing discussion, María Amparo Albán of Ecuador's Centro Ecuatoriano de Derecho Ambiental (CEDA) and Marcos Orellana of the Center for International Environmental Law (CIEL) commented upon recent efforts to promote civil society engagement in the challenges of integrating trade, environmental protection, and more equitable development. Information related to Ms. Amparo Albán's report on the Civil Society Environmental Forum held during the Quito Trade Ministerial is available on the Carnegie Endowment event web page: "Toward Civil Society Participation in the Americas: Workshops on Trade and Environment."

Summary by Vanessa Ulmer, Junior Fellow