Regional Trade Agreements

Environmental provisions in preferential trade agreements (PTAs) are increasing in terms of their number and variety. The economic effects of these environmental provisions remain largely unclear. It is, therefore, necessary to determine whether the trend to incorporate environmental provisions in PTAs counteracts the goal to spur economic development through trade via these PTAs. This is the first article in which the trade effects of environmental provisions in PTAs are thoroughly investigated. The
spotlight is put on developing countries for which the assumed trade-off between economic development and environmental protection is particularly acute. This article uses a new fine-grained dataset on a broad range of environmental provisions in 680 PTAs, combined with a panel of worldwide bilateral trade flows from 1984 to 2016. We show that environmental provisions can help reduce dirty exports and increase green exports from developing countries. This effect is particularly pronounced in developing countries with stringent environmental regulations. By investigating how environmental provisions in PTAs affect trade flows, this article contributes to the literature on the following topics: international trade and the environment; design and impacts of trade agreements; and greening the economy in developing countries. It also shows that the design of trade agreements matters. Environmental provisions can be used as targeted policy tools to promote the green transformation and to leverage synergies between the economic and environmental effects of including environmental provisions in trade agreements.

The shift from multilateralism to regionalism, plurilateralism and bilateralism in international trade negotiations, amongst others, changed the focus of the academic debate. The challenge of free trade agreements rather than of the WTO now occupy most of the discussions of the relevant epistemic communities all over the world; a trend that is likely to intensify since the conclusion of the TTP and the advancement of the negotiations on the TTIP. This special issue of the British Journal of American Legal Studies, conceived just before the unexpected conclusion of the TTP negotiations, responds to the need for research on the recent U.S. free trade agreements. It does not intend to provide a comprehensive analysis of the problems related to the rise of these agreements or of the content of the agreements themselves. Its aim is rather to focus on selected issues arising from the different obligations included in these agreements.

Twelve distinguished international trade and investment law scholars across the world were invited to explore key aspects of particular U.S. free trade agreements. In his introduction David A. Gantz explores the historical changes in U.S. trade policy and the shift from the support of multilateral rules to the embracement of regional and bilateral trade agreements. Christian Pitschas focuses on the on-going negotiations for the TTIP and on the possible impact of the TTIP on the multilateral trading system and developing countries. Tania Voon and Elizabeth Sheargold analyze the motives and the negotiation dynamics of the chapters relating to investment, services, intellectual property and regulatory coherence of the recently concluded TPP. Rodrigo Monardes analyzes the liberalization of trade in services under the NAFTA negative list approach on the basis of the Chile-United States Free Trade Agreement. Relying on the experience of the Australia-United States Free Trade Agreement, Stephen R. Tully discusses the standards of intellectual property protection and their impact for U.S. trading partners. Haydn Davies analyses the effects of investor-state dispute settlement mechanisms of NAFTA, the European Union-Canada Comprehensive Economic Trade Agreement, the TTP and the draft TTIP on national environmental rules and, in particular, on the precautionary principle. Stephan W. Schill and Heather L. Bray focus on the influence of NAFTA and U.S. practice on the substantive rules governing investor-state relations of the Mega-Regionals. Jaemin Lee explores the dispute settlement’ provisions of the free trade agreements concluded between the United States and Korea, Peru, Panama and Colombia. Using the TPP as her primary example, Phoenix X. F. Cai analyzes regulatory coherence obligations and the role of international standard setting organizations. Maria Panezi, finally, examines the relation between preferential trade agreements and WTO rules with particular focus on the problem of transparency and the limits of the Doha Transparency Mechanisms.

Asia has considerably increased its regional share on world GDP over the past decade, and this trend is expected to continue. It has become the most dynamic region in international trade and the rapid industrialisation of the area can potentially impact the Asian pattern of trade: a doubling of the share of manufactures in world exports is predicted by 2030, while the share of primary products in world imports is expected to rise. Moreover, regional participation on global value chains (GVCs) has substantially expanded, with China playing a leading role. The European Union is among the most important partner for Asian countries in these GVCs, but it has been generally less active in cultivating economic ties in the area compared to large countries in the region and to the USA. Starting from 2001, we report a proliferation of RTAs/FTAs among APEC countries, culminating with the TransPacific Partnership (TPP), a mega-deal including the US and other 11 countries of the area. The growth of preferential trade agreements is likely to continue in the future, given the centrality of Asia in the world markets.

Preferential trade agreements (PTAs) increasingly include environmental provisions. While the existing literature documents these provisions' environmental impacts, this paper sheds light on their relation with aid flows. Using an event-specification and data on bilateral Official Development Assistance (ODA) commitments for a sample of 147 developing country recipients in the period from 2002-2017, we find evidence that the number of environmental provisions in PTAs is positively associated with aid during negotiation phases. With high-income countries typically predetermining the extent of environmental provisions in their upcoming PTAs, this suggests that aid serves as a side-payment for recipients to sweeten the pot and agree upon already formulated PTA content. While both aggregate ODA and its subcomponent environmental aid a priori qualify as candidates for pre-signature sidepayments, we find that only the former fulfills this expectation, presumably reflecting more leeway to exploit aid fungibility.

On November 9, 2000, the Woodrow Wilson Center’s Latin American Program hosted the conference, “Paths to Regional Power: The Case of MERCOSUR.” The conference brought together key policymakers and policy analysts from Latin America and the United States to discuss the implications of regional integration, drawing on the Southern Common Market (MERCOSUR) as a case study. The seminar focused on MERCOSUR’s development, economic and political importance, and efforts to effect a “relaunching” of the common market enterprise.

This volume includes several of the papers presented at the conference which address topics such as: where does MERCOSUR stand today and where is it heading; what are the economic and political implications of MERCOSUR; and, how does MERCOSUR relate to other integration efforts such as the North American Free Trade Agreement (NAFTA) or the European Union (EU). Although these papers were written before the present crisis in Argentina, the lessons they offer provide great insight into the contemporary status of MERCOSUR.

The 2009 Lisbon Treaty transferred the competence over Foreign Direct Investment (FDI) policy from the national to the supranational level. This article analyses the impact of this transfer on the content of international investment agreements and, more broadly, the shape of the investment regime complex. Is the competence shift expected to have an independent impact or simply reproduce and continue existing trends? Exploring these two conjectures through a combination of text analysis, primary materials, and interviews, we are making a Historical Institutionalist argument focusing on the timing and sequencing of international investment negotiations. While the competence shift has allowed the EU to innovate in developing its own approach to negotiating international investment agreements, notably with the proposal to create an Investment Court System, the novelty may be only at the surface as the constraints of past, current, and future negotiations restrict the options available to EU actors‐ we call this the space‐time continuum. The result of this learning‐and‐reacting process is a new European approach which simultaneously duplicates and innovates and could eventually favour greater centralization within the investment regime complex.

The international community has acknowledged that international trade can be an effective means of helping to achieve the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs). Traditionally, preferential trade agreements (PTAs) were designed to promote trade flows. PTAs have become more comprehensive and now also cover non-economic policy areas, such as the environment. This chapter examines whether the inclusion of environmental provisions in PTAs changes the observed overall positive contribution that PTAs make to economic outcomes and thereby to the economic objectives of the SDGs. Specifically, we ask whether the inclusion of environmental provisions in PTAs reduces export flows between PTA partner countries. Using a novel data set on environmental provisions in PTAs, we estimate gravity type panel regressions. We find that membership in PTAs including more environmental provisions is associated with less trade among trade partners compared to PTAs that include less or no environmental provisions. This negative effect of environmental provisions is fully driven by the negative effect on South-North trade flows, i.e. exports from developing to high-income countries.

The field of international trade law, often highlighted for its unity and the strength of its dispute settlement and remedies systems, is itself no stranger to the phenomenon of the so-called ‘proliferation’ of dispute settlement mechanisms.  Regional trade agreements (RTAs) are increasingly prevalent and set up more and more solid and far-reaching dispute settlement systems, some of which are likely to come into direct contact with the multilateral system of the World Trade Organization (WTO). This article focuses on one particular type of such interaction between RTAs and the WTO: how should we address the issue of a trade countermeasure taken in the context of an RTA when such retaliatory action can be considered a breach of a WTO rule?A proper answer to this question requires an analysis of the flexibilities provided by the General Agreement on Tariffs and Trade and General Agreement on Trade in Services exception provisions allowing Members to maintain certain RTAs and of the nature of countermeasures often explicitly authorized by RTA dispute settlement mechanisms.  The range of issues, relevant international law rules and potential solutions discussed are set to become only more pertinent both within the changing field of international trade law and, as international legal regimes become more robust and increasingly come into contact with one another, in contemporary international law in general.

By focusing on the wider process of negotiations, this volume presents the first systematic analysis of the Transatlantic Trade and Investment Partnership (TTIP).

Contributors include Andrew Gamble, Robert Keohane, Julia Morse, Hartmut Mayer, Andreas Dür, Lisa Lechner, Michael Strange, Vinod Aggarwal, Simon Evenett,  Erick Duchesne, Richard Ouellet, Zhang Xiaotong, Petros C. Mavroidis, Jens Mortensen,  Sophie Meunier, and Joost Pauwelyn

Endorsement by Pascal Lamy, Honorary President of Notre Europe, former Director general of the WTO and European Commissioner for Trade :

"This volume addresses a crucial issue of global and interregional trade governance by including an international team of  leading scholars from a variety of disciplines and viewpoints. Collectively the authors identify the major stakes and provide a comprehensive and highly competent overview of the main political implications of the Transatlantic Trade and Investment Partnership  negotiations from both sides (North America and Europe), while keeping in mind the controversial interplay with global governance and emergent economies. Highly recommended for students, scholars, practitioners and informed citizens looking for critical and solid orientation in a very sensitive and uncertain matter."

The prolific literature on the relationship between the trade and environmental regimes suffers from three shortcomings. First, it myopically focuses on multilateral institutions while the vast majority of trade and environmental agreements are bilateral. Second, when studies consider preferential trade agreements’ (PTAs) environmental provisions, they are often limited to US and EU agreements. Third, it examines how the trade and environmental regimes negatively affect each other, leaving aside their potential synergies. Conversely, this article assesses the potential contribution of PTAs to international environmental law. Several PTAs include a full-fledged chapter devoted to environmental protection and contain detailed commitments on various environmental issue areas. One possible scenario is that countries that are dissatisfied with traditional settings for environmental lawmaking engage in a process of “regime shifting” toward PTAs to move forward on their environmental agenda. The alternative is that PTAs’ environmental provisions are the result of “tactical linkages” and merely duplicate extant obligations from international environmental law to serve political goals. We shed light on this question by building on two datasets of 690 PTAs and 2343 environmental treaties. We investigate four potential contributions of PTAs to environmental law: the diffusion of multilateral environmental agreements (MEAs), the diffusion of existing environmental rules, the design of new environmental rules, and the legal prevalence of MEAs. The article concludes that the contribution of PTAs to the strengthening of states’ commitments under international environmental law is very modest on the four dimensions examined.

In this chapter, the authors examine the nature of the exception for regional trade agreements (RTAs) under Article XXIV:5 of GATT 1994. This exception, which aims to maximize the internal trade-liberalizing effects of an RTA while minimizing its external trade-restricting effects, applies specifically to measures adopted upon the formation of customs unions and free-trade areas. It can be used to justify a departure from other provisions of GATT 1994 (such as the obligation to provide most-favored-nation treatment to all WTO Members under Article I) and, in certain circumstances, the provisions of other WTO agreements. However, the exception is subject to detailed conditions. In particular, in broad terms, the restrictions that parties to an RTA impose on trade within the RTA must be eliminated, while restrictions on trade outside the RTA should not be higher than before the RTA was formed. In the case of a customs union, external trade restrictions should be substantially harmonized. In determining whether a given RTA meets these conditions, several questions arise, many of which are yet to be fully explored in dispute settlement or resolved by negotiation among the WTO Membership.

The European Union is a pioneer in terms of integrating climate issues into trade negotiations. It is the actor that includes the greatest number and range of provisions related climate change in its trade agreements. However, the EU model does not seem to be inspiring other actors in the trade system. Despite the recent proliferation of trade agreements and the exponential increase in provisions relating to the environment in these agreements, few countries are taking inspiration from EU standards. In order to foster an integrated approach to climate change, it would be useful to reproduce on a broader scale the small number of existing climate provisions, and to innovate based on progress made for other environmental issues.

The renegotiation of what US President Trump called “the worst trade deal ever” has resulted in the most detailed environmental chapter in any trade agreement in history. The USMCA mentions dozens of environmental issues that its predecessor, the North American Free Trade Agreement (NAFTA), overlooked, and in line with contemporary US practice, brings the vast majority of environmental provisions into the core of the agreement, and subjects these provisions to a sanction-based dispute settlement mechanism. It also jettisons two controversial NAFTA measures potentially harmful to the environment. However, this paper argues that the USMCA only makes limited contributions to environmental protection. It primarily replicates most of the environmental provisions included in prior agreements, and only introduces three new environmental provisions. Moreover, it avoids important issues such as climate change, it does not mention the precautionary principle, and it scales back some environmental provisions related to multilateral environmental agreements.

The regulatory contribution that Preferential Trade Agreements (PTAs) make to global climate governance is assessed through an analysis of climate-related provisions found in 688 PTAs signed between 1947 and 2016. Provisions are analyzed along four dimensions: innovation, legalization, replication, and distribution. Innovative climate provisions are found in several PTAs that are in some cases more specific and enforceable than the Kyoto Protocol and the Paris Agreement. Nonetheless, these climate provisions offer limited progress because they remain weakly ‘legalized’, fail to replicate broadly in the global trade system, and were not adopted by the largest greenhouse gas emitters. Despite the inclusion of innovative climate provisions in a number of PTAs, their poor design and weak replication position them as some of the weakest environmental provisions within PTAs.

An increasingly comprehensive set of environmental provisions is being integrated in preferential trade agreements (PTAs). Interestingly, while a number of these environmental provisions are included only rarely, others are duplicated in more than 100 PTAs. We still lack a convincing explanation for the conditions that fuel the uptake of specific provisions. This paper contributes to the growing literature on the design, interaction, and diffusion of international institutions and introduces two key innovations. First, our level of analysis is the provision level rather than the agreement level. Second, while the diffusion literature typically tries to explain how diffusion occurs, we investigate what makes diffusion more likely. We hypothesise that the initial conditions – relating both to agency and institutional factors – under which provisions first emerge determine the scope of their diffusion. Our results indicate that provisions originating from intercontinental agreements diffuse more often, and provisions first introduced by environmentally credible countries are more frequently duplicated than provisions introduced by economically powerful countries.