Source: Carnegie
LETTER TO USTR
Trade, Equity, and Development Project
January 2003
Recommendations for the CAFTA Environmental Review
By John Audley and Vanessa Ulmer
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Summary
In a letter to Regina Vargo, Assistant United States Trade Representative for the Americas, John Audley and Vanessa Ulmer argue that the U.S. Government must broaden the scope of its environmental review of the proposed U.S. - Central America Free Trade Agreement (CAFTA) to include the agreement’s potential transboundary and global environmental impacts. They further recommend that the U.S. support its Central American trading partners to conduct their own environmental reviews of the CAFTA, and offer steps that federal officials can take to make the CAFTA environmental assessment(s) a more meaningful policy tool.
About the Authors
John Audley is a senior associate at the Carnegie Endowment for International Peace, where he directs the Trade, Equity, and Development Project. Before joining the Endowment in April 2001, he was the trade policy coordinator at the U.S. Environmental Protection Agency, where he was responsible for developing and presenting EPA positions on U.S. trade policy.
Vanessa Ulmer is a Junior Fellow at the Carnegie Endowment for International Peace.
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Recommendations for the CAFTA Environmental Review
January 15, 2002
Regina Vargo
Assistant United States Trade Representative for the Americas
Office of United States Trade Representative
Winder Building
Washington, DC
Communicated Electronically
Dear Ms. Vargo:
Federal agencies responsible for conducting environmental reviews of U.S. trade agreements are faced with a difficult challenge, but also with a chance to facilitate the development of trade agreements which contribute to the broader goal of sustainable development. Unfortunately, unless the United States Government modifies its approach in conducting the environmental review of the proposed U.S.-Central America Free Trade Agreement (CAFTA), in all likelihood it will be the fourth bilateral or regional trade agreement for which the U.S. determines that increased trade liberalization will result in a de minimis impact on the environment. While the direct effects of CAFTA on the U.S. environment may be de minimis, for Central American countries just the opposite will be true. As recent reports by the Inter-American Development Bank and the draft national action plans submitted by the governments of Costa Rica, Guatemala, and El Salvador demonstrate, our Central American trading partners recognize the importance of protecting their environment, but have not yet developed adequate infrastructures - such as sewage systems, waste water treatment plants, or solid waste disposal systems - necessary to mitigate the negative environmental impacts associated with export-led growth.
We therefore urge you to broaden the scope of the U.S. environmental review of CAFTA to include the agreement's potential transboundary and global environmental impacts, arising from effects in the Central American region. We further recommend that the United States Government encourage our Central American trading partners to conduct their own environmental review of CAFTA, with financial and technical assistance offered by the U.S. for this purpose. Finally, we offer a number of steps that federal officials can take to make the CAFTA environmental assessment(s) a more meaningful tool for policy makers and other interested stakeholders in both the United States and Central American.
Why Broaden the Scope of CAFTA's Environmental Review?
1. Build Public Support for Environmental Reviews and Trade Policy
Developing the implementation guidelines for the U.S. environmental review of trade agreements was a significant contribution made by the members of the Trade and Environment Policy Advisory Committee (TEPAC). TEPAC members and others within the environmental community concluded that the policy of conducting environmental reviews of trade agreements represented an important step towards reconciling trade and environmental policies. Since then, however, the environmental reviews conducted of the Jordan, Singapore, and Chile agreements have all found a de minimis effect on the U.S. environment.
Repeated de minimis findings from environmental reviews run the risk of undermining public support for this potentially significant policy tool, one that was codified into law with the passage of trade promotion authority in the Trade Act of 2002. This is especially true when the potential for negative environmental consequences of trade liberalization among less developed U.S. trading partners is very real. Citizens in the United States and elsewhere want government officials to take seriously the implications of trade liberalization on environmental quality, but officials cannot do so if they are only given half the picture - that is, if they are only provided with information on a trade agreement's domestic environmental effects.
The failure to broaden the scope of the U.S. CAFTA review to include transboundary and global environmental impacts - as well as the failure to support Central American countries' efforts to conduct their own environmental assessments for consideration - would represent a missed opportunity by the United States to demonstrate that trade and environmental policies can and should work together. Ten years ago the United States demonstrated leadership in this area by conducting environmental reviews of the North American Free Trade Agreement. That leadership fostered similar review policies in the European Union and Canada. More recently, by encouraging the Hashemite Kingdom of Jordan, Chile, and Singapore to conduct their own environmental reviews of FTAs, the United States is demonstrating to its trading partners and their citizens that trade policy negotiations can and should take the environment into consideration.
2. Promote Win-Wins for Trade and the Environment
U.S. commitment to considering CAFTA's potential environmental impacts both domestically and within the Central American countries would better facilitate the joint consideration of appropriate policy responses to these effects. Given the size of the U.S. economy, expanding trade with small Central American economies will rationally have no measurable effect on the United States' domestic environment, at least directly. On the other hand, the expanded production within Central America of goods for export to the U.S. market likely will have environmental consequences in the region. The U.S. and Central American countries have an established history of working together to promote sound environmental management in the region, most notably under the auspices of the USAID Ambiental Regional para Centroamerica (PROARCA) project. Environmental assessments of the proposed CAFTA should be used to strengthen existing partnerships for environmental protection, by suggesting areas where attention will be required to mitigate negative environmental impacts, as well as by highlighting ways that trade can be harnessed to directly promote sustainable development.
U.S. interest in promoting international sustainable development stems in part from the recognition that environmental challenges are often regional or global in scale. The geographic proximity of Central America and the U.S. - as well as our significant imports of Central American produce and the increasing movement of people across our national borders - signal that some environmental problems arising in Central America will directly affect the environment and public health in the United States. In order to correctly identify domestic impacts, the U.S. must address potential transboundary and global issues in its environmental review of CAFTA.
Transboundary pollution - for example from industry, pesticide use, or the open burning of solid waste - can contribute to ecosystem degradation, negative health effects, and the transport and deposition of persistent organic pollutants (POPs) in the United States. Current U.S. Environmental Protection Agency (EPA) programs in Central America lend insight into what types of issues might need additional attention in the context of CAFTA. With funding from USAID, the EPA has helped to:
- improve food safety for fresh produce imported from Central America;
- reduce the inventory of stockpiled obsolete pesticides throughout the region;
- launch projects on municipal wastewater treatment and integrated solid waste management;
- introduce cleaner production practices for private firms;
- and establish regional networks of environmental lawyers, experts, and environmental engineers.
Exploring the intersections between trade and environmental policy should not be limited to mitigating negative environmental impacts. As one example, the U.S. environmental review should consider the possible consequences of supporting Central American farmers to engage in sustainable agriculture for export to the U.S. niche market of organic foods. Research conducted by International Center of Economic Policy (CINPE) suggests that this would allow farmers to achieve a higher standard of living, while reducing the use of harmful pesticides and fertilizers. Supporting sustainable development and poverty alleviation in Central America is again sound foreign policy, as the U.S. will benefit from having more stable, prosperous neighbors.
3. Promote Good Governance and Capacity Building
The Bush Administration rightly links technical and financial support to its belief in good governance. Most of our Central American trading partners do not have a strong history of public involvement in policymaking, supporting their efforts to conduct a national environmental assessment of CAFTA would be an important step towards better governance. Conducting an environmental assessment involves engaging the public in discussion about trade's possible impacts on the environment. Public involvement in turn results both in stronger immediate data and in more effective implementation of subsequent policy. Through its domestic and international experience with environmental protection efforts, the EPA has "clearly demonstrated the importance public participation… in assuring meaningful and sustainable results." (US Environmental Protection Agency, "Best Practices for EPA's International Capacity-Building Programs," November 1999.)
Beyond promoting democratic governance, conducting environmental reviews builds the capacity of our trading partners to protect their environment for two additional reasons. First, the assessment process involves a transfer of skills and technology from one country to the other, as scientists, government officials, and civil society organizations explore the environmental implications of trade liberalization. Second, assessments encourage better interaction among government ministries, thereby improving efforts to coordinate policy. The draft national action plans submitted by the governments of Costa Rica, Guatemala, and El Salvador each demonstrate the need to strengthen interagency cooperation and coordination on trade policy, as well as to increase public involvement.
Steps Forward
Executive Order 13141 Section 5(b) states that, "As a general matter, the focus of environmental reviews will be impacts on the United States. As appropriate and prudent, reviews may also examine global and transboundary impacts." With these instructions in mind, we recommend the following steps:
1. Broaden the Scope of the U.S. CAFTA Environmental Review to Include Global and Transboundary Impacts: Executive Order 13141 Guidelines Section IV(B)(4) enables the Trade Policy Staff Committee to place a high priority on global and transboundary impacts of expanded trade. These impacts are at this writing not likely to be identified as part of the International Trade Commission's report on the potential impacts of trade liberalization with Central America, so federal officials should not wait for this report to initiate their own examination of the broader implications. Instead, consistent with Guidelines Section IV(B)(2)(f)(3), the Environmental Review Group should consult with environmental experts from Central America and the United States to obtain information that will help determine the potential global and transboundary environmental impacts of CAFTA.
2. Coordinate Technical Assistance: Under the auspices of the United States Aid for International Development's Ambiental Regional para Centroamerica (PROARCA) project, since 1995 U.S. federal agencies have assisted Central American nations to increase effectiveness in regional stewardship of the environment and key natural resources in target areas. PROARCA's contribution to the enhancement of Central American environmental protection efforts is consistent with the goals of the Central American-United States of America Joint Accord (CONCAUSA), signed on the margins of the 1994 Miami Summit of the Americas. Renewed in 2001, CONCAUSA covers cooperation in four major areas under an action plan: conservation of biodiversity, sound use of energy, environmental legislation, and sustainable economic development. As discussed above, a comprehensive environmental assessment of CAFTA has the potential to utilize and strengthen this existing cooperation. The Environmental Review Group should be in contact with U.S. PROARCA participants, and use their relationships to liaison with government officials and environmental experts in Central America. This exercise should take place as soon as possible.
3. Communicate through U.S. Embassies: It is important to conduct the U.S. review of global and transboundary impacts in a manner respectful of sovereignty issues that may be raised as a result of an extra-territorial review. Likewise, it is essential that the United States clearly communicate the types of support it is able to provide to help trading partners conduct their own environmental assessments. With these two objectives in mind, U.S. Central American embassy officials should be instructed to contact government officials at economic, environmental, and development agencies to discuss U.S. interest in a more comprehensive environmental review process.
4. Report findings early to Congress: Members of the Congressional Oversight Group should be briefed regarding this initiative. USTR and relevant federal agencies should also brief other committees with interest in this effort, in particular, the Senate Environment and Public Works Committee and the House Resources Committee.
USTR Ambassador Robert Zoellick has demonstrated that he understands the importance of factoring environmental issues into trade agreements. In our opinion, under his leadership the United States government has made progress in this regard and helped to overcome the interagency tensions that repeatedly surfaced during the administration of President Bill Clinton. To continue to move forward, the United States must now expand the scope of its environmental review process for trade agreements, both by considering global and transboundary impacts in all U.S. reviews, and by supporting U.S. trading partners' efforts to conduct and share their own assessments for joint consideration.
Sincerely,
John J. Audley
Senior Associate
Vanessa Ulmer
Junior Fellow
