REGIONALISM VERSUS MULTILATERALISM:

ADDRESSING GLOBAL ENVIRONMENTAL THREATS

CEPS Policy brief, May 2004
David Kernohan and Enrica De Cian
Table of contents
Table of contents..............................................................................................................2
1. Overview......................................................................................................................3
2. Trade regionalism: whats new.................................................................................!
3. "lobal environmental #roblems: climate change........................................................$
!. % s&b'global a##roach to global iss&es: a #arado(....................................................$
). *T% and the environment............................................................................................+
).1 Trading bloc,s: the contin&&m from %-EC to the E.........................................../
Trade facilitation fora (e.g., ASEAN, APEC)............................................................../
Free-trade areas and customs unions with searate agreements on en!ironmental
co-oeration (e.g. NAFTA and "ercorsur)................................................................./
Economic unions with integrated en!ironmental dimension (i.e., Euroean #nion) 11
).2 0nter'bloc, agreements: enhancing environmental #rovisions..........................12
$. Concl&sions................................................................................................................1)
*eferences......................................................................................................................1+
2
1. Overview
Trade liberali1ation and climate change share common themes. The2 are both global
challenges calling for a global sol&tion3 which will re4&ire m&ltilateral coo#eration.
Climate change3 associated with the international e(ternalit2 of "5" emissions3 is the
first case of a tr&l2 global environmental #roblem and therefore can be tho&ght of as a
#rotot2#e transborder global threat.
6rom the establishment of the "%TT in 1/!+3 global free trade has been #romoted
m&ltilaterall2 thro&gh international trade negotiation ro&nds. The m&ltilateral trading
s2stem was legall2 instit&tionali1ed in 1//! at the concl&sion the .r&g&a2 *o&nd when
the 7arra,ech %greement established the 8orld Trade Organi1ation 98TO:3 the new
#illar of global governance in charge of #&rs&ing global free trade.
;2mmetricall23 an ideal sol&tion to global environmental iss&es wo&ld be a
7&ltilateral Environment Organi1ation. 5owever3 as this is &nli,el2 to become a realit2
in the near f&t&re we m&st acce#t m&ltilateral environmental agreements 97E%s: as the
best for&m for addressing environmental iss&es. 8hile there are a variet2 of m&ltilateral
treaties with s#ecific environmental ob<ectives3 trade'related #olic2 meas&res can also
have #ractical 9or =second best: environmental im#acts.

%ltho&gh #otential s2nergies e(ist between trade and the environment 9%nderson and
>lac,h&rst3 1//2? Est23 2@@1? "aleotti and Kemfert3 2@@3? -ana2oto&3 2@@@:3 to date the
8TO has not been ver2 s&ccessf&l in dealing with trade'environment iss&es and3 given
the c&rrent slow #rogress towards a m&ltilateral trading s2stem3 significant changes seem
&nli,el2 to emerge in the short r&n.
%t the same time3 regional trade agreements have become a #referred for&m in which
to accelerate and dee#en trade liberali1ation. %s a conse4&ence3 it ma2 be of interest to
anal21e how the trade'environment lin, is addressed within the regional trade dimension.
The 4&estion driving this #a#er is how a s#ecific ,ind of trade #olic2 A liberali1ation
thro&gh #referential regional agreements A interacts with the environmental regime and
ma2 #romote the &se of environmental meas&res targetted at global threats. 0n #artic&lar
we have tried to shed some light on what3 if an23 are the channels b2 which trade
regionali1ation can ma,e the im#lementation of climate #olicies more attractive and
therefore stim&late coo#eration and s#eed &# international negotiations. 0m#ortant related
4&estions are the following:
' %re *T% members more able to #rotect the environment locall2 rather than globall2
' Do regional trade agreements have a higher or a lower level of ambition for
environmental iss&es com#are to the 8TO
' 0n what different wa2s do *T%s deal with environment and climate #rotection
' 0s the emergence of regional environmental agreements more li,el2 to =loc, in a local
reg&lator2'environmental #rocess3 or do regional bloc,s merel2 re#resent a =ste##ing
stone towards a m&ltilateral agreement
3
2. Trade regionalism: whats new?
The 1//@s witnessed the beginning of a new wave of regionalism. 8hile the driving
force of the old regionalism was an im#ort s&bstit&tion strateg23 the new regionalism is
more o&tward'loo,ing and generall2 aimed at #romoting f&rther integration into the
global econom2.
D&ring the first half of the decade3 several ,e2 trading bloc,s have consolidated their
integration #rocess. The E. became a f&ll ;ingle 7ar,et and Borth %merica established
a free trade area 9B%6T%:? the %;E%B gro&# la&nched the %6T% free trade area and is
now contem#lating e(tending this to a c&stoms &nion 9%;E%B economic comm&nit23
%EC: b2 2@2@. %longside the vertical dee#ening within *T%s3 a hori1ontal #rocess of
interaction across different *T%s also began to ta,e #lace. 6rom the end of the .r&g&a2
*o&nd in 1//! no significant regional bloc,s have emerged3 b&t rather f&ll2'fledged
*T%s have started a #rocess of Cbilateral regionalismD either with a co&ntr2 or with a
region. 5ere we ado#t a broader inter#retation of the term Cbilateral regionalismD or
Cbilateral agreementD so as to incl&de not onl2 co&ntr2'co&ntr2 e(am#les3 b&t also
region'region and region'co&ntr2 cases.
;o defined3 bilateral agreements now acco&nt for more than half *T%s in force and
free trade areas are the #referred config&ration 9see >o( 2.1:. The E. has #la2ed a
leading role in this #rocess as more than half of *T%s notified at the end of 2@@@ were
concl&ded b2 the E.. The E. has been negotiating bilateral agreements with co&ntries
s&ch as 7e(ico3 Chile3 Central and Eastern E&ro#ean Co&ntries 9CEECs:3 *&ssia3
Canada and is involved in the first interregional agreement with 7ercors&r. The B%6T%
#arties are also engaging #rogressivel2 in bilateral relations: Canada established a 6T%
with Chile3 Costa *ica and the E.? .; as well has a 6T% with Chile and Eordan.
The c&rrent wave of new regionalism a##ears to have arrived alongside a slow'down
of #rogress in m&ltilateral trade negotiations. 0nternational trade ro&nds were 4&ite
s&ccessf&l at the beginning3 when dealing with the red&ction of tariff and 4&antitative
meas&res. 5owever3 as the trade agenda has widened to incl&de new more sensitive
iss&es 9=new areas: s&ch as s&bsidies3 antid&m#ing3 technical reg&lations and services3
the length and com#le(it2 of trade ro&nds have increased as well 9see Table 1:.
!
Box 2.1 Type of regional integration
6rom the establishment of the first trade agreement3 the "%TT in 1/!+3 the m&ltilateral trading s2stem acce#ts
#referential trade agreements that meet the criteria set o&t in "%TT %rt. FF0G and in "%T; %rt.G. *T%s can
choose the following config&ration:
Free trade area: trade restrictions are removed within the gro&# b&t each member retains its own tariff
str&ct&re towards non members.
C!to"! #nion: a free trade area with a common e(ternal trade #olic2.
Co""on "ar$et: a c&stom &nion which also allows for free movement of factors of #rod&ctions
Econo"ic #nion: a common mar,et which also ado#ts common macroeconomic #olicies and harmoni1es
national #olicies of member states.
Source$ %oe&man and 'oste&i, ())* and #rata, ())(.
Table 2.1 Measuring !e leng! "# ra$e r"un$s
%&ME 'F T(E )'#%* T)&*E &+E%*&
*#)&T,'%
-%#MBE) 'F .E&)S/
"EBEG%3%BBECH3TO*I.%H3"EBEG%3D0JJOB
T%*066; 1
KEBBEDH
T%*066;KBOB
T%*066;
!
TOKHO
T%*066;KBOB
T%*066;
$
.*.".%H
T%*066;KBOB
T%*066;
L
Jow tariffs have made the e(istence of different reg&lator2 s2stems more visible and
now the main trade concern is how to deal with domestic #olicies 9s&bsides3 technical
reg&lations3 #rod&ct standards: and domestic reg&lator2 meas&res 9services and
intellect&al #ro#ert2 rights: that can im#act trade and investment flows and red&ce mar,et
access. The =negative list a##roach &sed so far in addressing tariff and 4&antitative
meas&res is &nli,el2 to s&it these new iss&es3 which re4&ire dee#er integration and some
degree of harmoni1ation 95oe,man and Koste,i3 2@@1:. Dee#er integration and
reg&lator2 harmoni1ation are ver2 hard to achieve m&ltilaterall2 beca&se in most cases
the2 involve iss&es of a =bottom'&# nat&re.

%gainst this bac,gro&nd3 *T%s are li,el2 to be a more a##ro#riate for&m in which to
address non'tariff meas&res. The restricted membershi# within an *T% #resents the
advantage of having a smaller n&mber of #la2ers with #otentiall2 greater #reference
convergence. Th&s *T% negotiations can #roceed faster than m&ltilateral ones3 es#eciall2
on iss&es that have a strong regional dimension and are #oliticall2 sensitive3 which is the
case for man2 environment'related 4&estions. Therefore3 s&ccessf&l agreement at the
regional level ma2 facilitate the establishment of3 and com#liance with3 m&ltilateral
agreements. The lac, of #rogress at the 8TO level on the reg&lation of =new areas for
trade co&ld even constit&te an incentive for the creation of new *T%s 9.rata3 2@@2:.
"oing be2ond the assessment of the immediate welfare effects of *T%s3 recent st&dies
therefore em#hasi1e their s#ecific contrib&tion to the harmoni1ation of r&le'ma,ing with
res#ect to these =new areas.
0n several areas most *T%s are not onl2 =8TO'com#atible b&t also =8TO'#l&s
9OECD3 2@@3? ;am#son and 8oolcoc,3 2@@3:. One s&ch area is environmental reg&lation
and #rotection. % 4&estion that needs to be addressed is whether *T%s com#ensate for the
lac, of #rogress at the 8TO and whether the2 are s&ccessf&l in #romoting the
im#lementation of global environmental reg&lation.
0f *T%s #rove to be a better for&m in which to deal with non'tariff and domestic
reg&lator2 barriers to trade com#ared to the m&ltilateral s2stem3 there co&ld be a better
chance for more #rogressive environmental trade'related meas&res. 0n fact3 a broad gro&#
of domestic #olices aimed at #rotecting the environment ma2 have an im#act on trade and
for this reason are #artic&larl2 controversial 9e.g. eco'labelling and food safet2
reg&lations3 environmental standards: 0n these sit&ations an international agreement
wo&ld be desirable. *eg&lator2 harmoni1ation3 which is on the agenda of man2 regional
)
agreements3 ma2 be a first ste# in this direction. 8hat then are the im#lications for the
trade'environmental debate of the #rocess of regional harmoni1ation
3. Global environmental problems: climate change
Climate stabilit2 can be viewed as a global =#&blic good which means that there are
few incentives for &nilateral mitigation3 beca&se these can be fr&strated b2 the
o##ort&nistic behavior 9free riding: of other actors who wo&ld benefit from having
cleaner air at 1ero cost. 5ence3 in order to be effective3 climate change mitigation re4&ires
a global'coo#erative sol&tion. The fo&ndations of an international a##roach to climate
change were laid down b2 the .B 6ramewor, Convention on Climate Change in 1//!.
5owever3 while the entr2 into force of the international climate agreement3 the K2oto
-rotocol3 is still &ncertain3 different local climate a##roaches have now emerged.
8hereas the E. is stic,ing to the K2oto commitment irres#ective of its ratification3 the
.; is loo,ing for more long'term strategies.
;ince regionalism has #roved to be more far'reaching in its coverage of domestic
meas&res and environmental reg&lations3 might it also re#resent a reasonable o##ort&nit2
for strengthening the credibilit2 of controversial climate'related meas&res 0ndeed3 as
greenho&se gas emissions 9"5"s: relate to almost all h&man'economic activities3 climate
meas&res are li,el2 to have trade effects. This is the case3 for e(am#le3 in energ2
efficienc2 standards based on #rocesses and methods of #rod&ction 9--7s: and of eco'
labeling schemes which are li,el2 to be 4&estioned as disg&ised barriers to trade that
discriminate against Cli,e #rod&ctsD. Het3 trade frictions ma2 be red&ced b2 establishing
international common meas&res and methodologies? to this end coo#eration within the
K2oto framewor, in defining this ,ind of meas&re co&ld red&ce the sco#e of conflict
within the m&ltilateral trading s2stem. 5owever3 as the K2oto -rotocol has 2et to come
into force *T%s3 b2 re4&iring regional harmoni1ation for e(am#le in #rod&ct standards
and technical reg&lations3 can re#resent a =second best wa2 to attain the same o&tcome.
4. s!b"global approach to global iss!es: a parado#?
8e have seen that trade liberali1ation and climate change share the common
characteristic of being global iss&es: in both cases3 the first best sol&tion wo&ld be a
m&ltilateral agreement. 5owever both international trade and climate negotiations are
#rogressing slowl2. The increasing tensions within m&ltilateralism have been ill&strated
b2 the brea,down of the 8TO 7inisterial 7eeting ;eattle in 1///3 b2 the fail&re in
Canc&n in 2@@33 b2 the withdrawal of .; from the K2oto -rotocol and b2 the
&ncertainties s&rro&nding the debate over the #ost'K2oto architect&re.
-arado(icall23 it might be more realistic to aim for worldwide coo#eration in a
se4&ential wa2 rather than in a large m&ltilateral ste#. %s regards trade liberali1ation3 it is
broadl2 acce#ted that regionalism is com#lementar2 to m&ltilateralism and that it co&ld
s&ggest to the 8TO how to deal with the controversial new iss&es s&ch as investment3
governmental #roc&rement and reg&lator2 meas&res on which it has limited e(#erience.
$
;ince regional negotiations are easier and faster to concl&de3 the coo#erative attit&de on
trade might even s#illover to the environmental domain. 7oreover3 now that trade tal,s
are going dee#er3 regional trade negotiations offer an o##ort&nit2 to develo# a more
coo#erative c&lt&re es#eciall2 in the more sensitive iss&es where co&ntries have often
been more rel&ctant to ma,e concessions d&e to fears of a red&ced abilit2 to #rotect their
domestic #references.

Environmental coo#eration co&ld also come abo&t as a side'effect of reg&lator2
harmoni1ation. On the one hand3 there is a ris, of =reg&lator2 regionalism of having
several *T%s with heterogeneo&s reg&lator2 s2stems: environmental concerns are dee#l2
sha#ed b2 domestic #references and th&s *T%s might be seen as a =fortress in which to
better #rotect local interests. On the other hand3 reg&lator2 harmoni1ation and
convergence is occ&rring not onl2 within *T%s themselves b&t also across different
regional bloc,s. 0ncreasingl23 harmoni1ation is an im#ortant cha#ter in man2 trade
agreements3 es#eciall2 when involving the E.. >eing increasingl2 lin,ed with each
other3 *T%s are more li,el2 to #ave the wa2 for broader reg&lator2 coo#eration rather
than close reg&lator2 regionalism. ;&ch a res&lt co&ld lower the frictions between trade
and the environment3 as there wo&ld be less criticism against environmental meas&res
commonl2 established.
>2 enhancing the o##ort&nities for &sing environmental meas&res3 regional trade
agreements might be a more #romising channel thro&gh which trade #olicies co&ld have a
#ositive im#act on diffic&lt to#ics s&ch as climate change. This #ossibilit2 will be
investigated in the ne(t section.
$. %T and the environment
%s regional integration has become e(tremel2 to#ical in the #ast decade3 the foc&s of
o&r research to#ic is the e(tent to which increasing regional integration will am#lif2 or
&ndermine the m&ltilateral agenda with res#ect to environmental #rovisions.
7ost *T%s follow the lang&age of 8TO r&les3 recognising the same broad #rinci#les
and e(em#tion cla&ses as the "%TT
1
. 7an2 contain lang&age in their #reambles
recognising the need for environmental #rotection and the achievement of s&stainable
develo#ment ob<ectives. 5owever3 the2 differ significantl2 in the instit&tional str&ct&re
thro&gh which these #rinci#les are administered. 8hereas in the 8TO3 #rovisions for
environmental meas&res are integrated into the vario&s agreements and addressed in
Committees3 in a n&mber of *T%s the environment is also the s&b<ect of se#arate
agreements on environmental co'o#eration. 0n addition3 several *T%s that did not initiall2
contain s#ecific #rovisions on the environment have since created se#arate #rotocols or
instr&ments to deal with the environment in general3 or with s#ecific environmental
#roblems.
1
Either in own wording 9i.e.3 E6T%: or with direct reference to "%TT %rt. FF b3 g 9i.e. in bilateral .; and
Canadian agreements:.
+
The degree of harmoni1ation arrived at varies3 de#ending on the general motives
&nderl2ing a given regional integration #ro<ect3 from trade facilitation to economic
integration 9>oas3 1///? OECD3 2@@3:. *T%s can be broadl2 gro&#ed into three =ideal
t2#es according to their sco#e and instit&tional characteristics along a contin&&m of
!ertical integration 9see 6ig&re 1: r&nning from a #&re trade motivation s&ch as in %-EC
and %;E%B to a f&ll incor#oration of trade with environmental standards s&ch as in the
E..
0n addition to the #rocess of vertical integration within regions3 *T%s are increasingl2
lin,ed with each other3 bringing abo&t a #arallel #rocess of hori+ontal interaction 9see
6ig&re 1: across regions. %s inter'bloc, agreements are b&ilt on the #revio&s integration
e(#erience of each *T%3 the2 are li,el2 to be wider in coverage and de#th. ;ince the2
deal with new iss&es on which the 8TO is lac,ing in e(#erience3 the main contrib&tion
the2 can bring to the m&ltilateral regime is to #rovide a bl&e#rint of how to address non'
tariff barriers to trade.
0nter'bloc, agreements3 b2 lin,ing different *T%s3 have the chance to bring abo&t a
#rocess of reg&lator2 convergence across different bloc,s. >2 enco&raging the ado#tion
of common standards that in the long r&n might become international standards3 bilateral
agreements ma2 even #ave the wa2 for global agreement on environmental reg&lations.
;ince reg&lator2 #olices are im#ortant environmental #olices3 harmoni1ation can bring
abo&t a #ositive contrib&tion in terms of environmental #rotection. 0t is m&ch easier to
acce#t a meas&re which res#onds to criteria agreed regionall23 rather than reflecting
s#ecific national #rovisions.
0n the ne(t section we review vertical integration along three main t2#es of *T%s
9trade facilitation fora3 free trade areas and c&stoms &nions3 economic &nion3 see also
Table !.1: and the #rocess of hori1ontal interaction3 giving some e(am#les.
%igure 1 Veri&al inegrai"n 'ersus !"ri("nal inera&i"n
Veri&al inegrai"n )i!in RTAs H"ri("nal inera&i"n a&r"ss RTAs

A*E+

ASEAN EU,RUSSIA EU,+ANADA +ANADA,+HILE EU,MER+ORSUR
MER+ORSUR
NA%TA
EU
L
5.1 Trading blocks: the continuum from APEC to the EU
Trade facilitation fora (e.g., ASEAN, APEC)
Trade facilitating *T%s s&ch as %-EC
2
and %;E%B
3
started as trade initiatives aimed
at enhancing regional #olitical stabilit2 and economic #ros#erit2 of their members. %-EC
cannot be strictl2 considered a trading bloc, and its integration #rocess is based on the
conce#t of o#en regionalism. %ltho&gh environmental #rotection was not a #riorit2 when
%-EC was originall2 established3 s&stainable growth has become a goal3 at least in
#rinci#le3 and to some degree %-EC has shown an interest in #romoting the com#atibilit2
between trade and environmental #olicies 9Honghai et al.3 2@@@:.
>eing #artic&larl2 concerned with economic growth3 %;E%B fo&nded its #olicies on
the #rinci#le of =grow now3 clean &# later 9>oas3 1///:. Concerns for the environment
emerged grad&all2 and in 1//! %;E%B la&nched the ;trategic -lan of %ction on the
Environment. 0n 2@@2 this was followed b2 the %;E%B Co'o#eration -lan on
Transbo&ndar2 -oll&tion. %ltho&gh not e(#licitl2 targetted at res#onding to climate
change3 it can be e(#ected to have #ositive im#lication also in terms of "5"s red&ction.
!

Com#liance monitoring does not rel2 on binding r&les and environmental coo#eration
is coordinated b2 three wor,ing gro&#s on the environment. Het3 one of the first goals of
the -lan is to enhance its
instit&tional ca#acit2 in order to strengthen the environmental enforcement
mechanism. %;E%B seems to be more E.'minded rather than B%6T%'minded since it
has as#irations to harmoni1e different environmental #olicies and standards and it is in
favo&r of &nderta,ing <oint actions. The %;E%B -lan seems to have overcome the
original rel&ctance towards trade'environment lin,s e(#ressing at least the intention of
coordinating trade and environmental #olicies: for e(am#le3 recogni1ing the val&e of
st&d2ing the environmental im#lications of %6T%.
)

Free-trade areas and customs unions with searate agreements on en!ironmental
co-oeration (e.g. NAFTA and "ercorsur)
The Borth %merican 6ree Trade %greement between the .;3 Canada and 7e(ico
entered into force in 1//!3 <&st when the .r&g&a2 *o&nd was being com#leted. Therefore
B%6T% contains #rovisions similar to the "%TTM8TO3 altho&gh it is more far'reaching
when dealing for e(am#le with services3 investment and environmental r&les. % first
commitment to #romoting s&stainable develo#ment is incl&ded in the -reamble of
B%6T%: to this end the need for strengthening the develo#ment and the enforcement of
environmental laws and reg&lations is e(#licitl2 recogni1ed. The monitoring and
2
6or&m for %sian'-acific Economic Co'o#eration. Established in 1//) it brings together >r&nei3 0ndonesia3
7ala2sia3 the -hili##ines3 ;inga#ore3 Thailand3 Gietnam3 Jaos and 72anmar andN
3
%ssociation of ;o&th'East %sian Bations. Established in 1/$L3 it com#rises >r&nei3 0ndonesia3 7ala2sia3
the -hili##ines3 ;inga#ore3 Thailand3 Gietnam3 Jaos and 72anmar.
!
The -lan #rimaril2 addresses air #oll&tion related to agric&lt&ral bad #ractices and forest management.
%;E%B Coo#eration -lan On Transbo&ndar2 -oll&tion
Ohtt#:MMwww.aseansec.orgML/3L.htmP
)
;trategic -lan of %ction on the Environment 1//!'1//L
O5tt#:MMwww.aseansec.orgML/)@.htmP
/
im#lementation of environmental reg&lations has then been delegated to a s#ecific side'
#rotocol3 the Borth %merican %greement on Environmental Co'o#eration 9B%%EC:.
B%6T% members have agreed on a so#histicated instit&tional set'&# to ens&re their
environment'related obligations are res#ected. B%%EC has created the Commission for
Environmental Coo#eration 9CEC: which3 besides #romoting environmental coo#eration
between the three co&ntries3 is in charge of investigating cases of la( or non'com#liance
that ma2 &ltimatel2 be enforced thro&gh the &se of trade sanctions. The CEC sho&ld also
eval&ate and monitor the environmental effect of B%6T% and of the bilateral agreements
of its members.
%ltho&gh the B%%EC #rovides a &ni4&e instit&tional basis for effective3 2et fle(ible
com#liance control3 it is not o#enl2 aimed at develo#ing common regional environmental
reg&lations. 8hereas the E.3 7ercors&r 9see below:3 and even %;E%B have re4&ired
their #arties to coordinate environmental meas&res3 the B%%EC does not: the CEC has to
ens&re their enforcement3 b&t each co&ntr2 remains free to choose the level of #rotection
that best s&its its domestic #references. 5owever3 a de facto #rocess of &##er
harmoni1ation towards .; levels is occ&rring 9;am#son and 8oolcoc,3 2@@3:.
B%%EC instit&tions and a##roaches are then re#licated in the bilateral agreements of
B%6T% members3 for e(am#le the bilateral Canada'Chile agreement and the bilateral
Canada'Costa *ica agreement.
7ercors&r3 the c&stoms &nion between %rgentina3 >ra1il3 -arag&a2 and .r&g&a2 was
established in the 1//1 b2 the Tractado de Asuncion
$
9Onestini3 1///: with the &ltimate
goal of accelerating the social and economic develo#ment of its members and increasing
their #artici#ation in the world econom2. This is to be achieved thro&gh dee# integration
along E&ro#ean .nion lines rather than the B%6T% model.
Des#ite the stated ambition of #&rs&ing economic growth in a s&stainable wa23
+
a
se#arate environmental agreement3 the Acuerdo "arco so,re "edio Am,iente del
"ercorsur3 was reached onl2 later in 2@@1.
L
Contrar2 to so#histicated environmental
str&ct&re of B%6T%3 7ercors&r does not have rigoro&s environmental instit&tions:
environmental actions are managed and coordinated b2 the Environmental 8or,ing
"ro&# of the Common 7ar,et 9;"T$: and b2 the -eunion de "inistros de "edio
Am,iente3 established in 2@@3. Controversies that arise between 7ercors&r -arties as to
the im#lementation and inter#retation of environmental #rovisions have to be resolved
within the 7ercors&r s2stem of resol&tion as o&tlined in the Protocol de .rasilia ara la
Soluci/n de Contro!ersias3 1//1.
$
0ts instit&tional str&ct&re was defined later in 1//! b2 the Protocolo de 0uro Preto. The decision'ma,ing
bod2 consists of the ;o&thern 7ar,et Co&ncil 9C7C:3 the Commerce Commission 9CC7: and the
Common 7ar,et "ro&# 9"7C:. The latter is the e(ec&tive bod2 and it was originall2 made &# of ten
8or,ing "ro&#s 9Su,gruos de tra,a1o' ;"T:.
+
The -reamble of Tratado de Asuncion establishing the ;o&thern Common 7ar,et recogni1es that the
ob<ective of accelerating the social and economic develo#ment of its members CNm&st be achieved b2
ma,ing o#tim&m &se of available reso&rces3 #reserving the environment3 im#roving #h2sical lin,sND.
L
The Decision n.2M2@@1 of the Co&ncil of Common 7ar,et 9C7C: established the Acuerdo "arco so,re
"edio Am,iente del "ercorsur.
1@
The reci#rocit2 and the com#le(it2 between the trade and environmental #olicies are
o#enl2 ac,nowledged b2 the environmental agreement of 7ercors&r. The -reamble
recogni1es that trade and environmental #olicies m&st be com#lementar2 and not
s&bstit&tes beca&se trade liberali1ation3 if wisel2 managed3 can be good for the
environment. 7oreover3 environmental #olicies have to be neither restrictive nor
distorting for trade in goods and services.
Economic unions with integrated en!ironmental dimension (i.e., Euroean #nion)
0n the conte(t of a more #oliticall2 integrated entit23 the E. offers the most
com#rehensive coverage of the trade'environment lin,age. 0n 1/L)3 the ;ingle E&ro#ean
%ct 9;E%: integrated Comm&nit2 environment #olic2 into the Treaties 9%rt. 1+)3 TEC:.
;ince then3 #rotection of the environment has become one of the .nions central #olic2
ob<ectives. 0t is incl&ded in the Comm&nit2s #rinci#les and tas,s 9%rt. 23 3 TEC: and
m&st be ta,en into acco&nt in all Comm&nit2 #olicies incl&ding trade 9%rt. $ TEC:. 0n
contrast to the 8TO framewor,3 environment no longer has the stat&s of an e(ce#tion
which m&st be #ositivel2 arg&ed for within strict constraints3 b&t is Ca com#eting or co'
e4&al #olic2 in its own rightD 9De >&rca and ;cott3 2@@@:.
0n contrast to other Comm&nit2 #olicies s&ch as trade3 the E. com#etence in
environment is not e(cl&sive b&t the res#onsibilit2 is shared with the member states. The
E. has set &# a s2stem of common standards and binding norms that can be enforced b2
the E&ro#ean Co&rt of E&stice. Directives are the ma<or legislative instr&ment &sed to
translate E&ro#ean environmental ob<ectives into concrete national #olicies and meas&res.
0n fact3 E. environmental legislation is ver2 broad and covers more than 3@@ items3
dealing with ever2 as#ect of environmental #olic2 9.BE-3 2@@@:.
E. s&stainable trade is an emblematic e(am#le of trade'environment integration. The
trade'environment lin, is addressed not onl2 within environment #olic23 b&t all
Comm&nit2 #olicies sho&ld be integrated with the environmental dimension.
To concl&de3 can *T%s be said to contain environmental #rovisions that are more far'
reaching than those defined m&ltilaterall2 b2 the 8TO %s s&mmari1ed in the Table !.13
not onl2 have *T%s broadl2 covered the to#ic3 b&t the2 have raised the stat&s of
environmental #rotection from a mere e(ce#tion3 as is the case in the 8TO3 to a goal er
se that deserves a s#ecific agreement or a #rotocol. %ll *T%s here anal2sed have
instit&tionali1ed concerns for the environment onl2 as a secondar2 consideration:
therefore it can be inferred that the coo#erative attit&de on trade has enhanced the
willingness to coo#erate also on other items s&ch as environmental #rotection.
11
Table -.1 En'ir"n.enal /r"'isi"ns in ra$ing bl"&0s

*ESC),PT,'% &SE&% ME)C')S#) %&FT& E#
*&TE 'F
EST&B0,S(ME%T
1/$+ 1//1 1//! 1/)L
MEMBE)S
0ndonesia3 7ala2sia3 the
-hili##ines3 ;inga#ore3
Thailand3 >r&nei3
Gietnam3 Jaos3 72anmar3
Cambodia
%rgentina3
>ra1il3
-arag&a23
.r&g&a2
.nited ;tate3 Canada3
7e(ico
%&stria3 >elgi&m3
Denmar,3 6inland3
6rance3 "erman23
"reece3 0reland3 0tal23
J&(emb&rg3
Betherlands3 -ort&gal3
;#ain3 ;weden3 .nited
Kingdom K 1@ new
member states
E%1,)'%ME%T&0
P)'1,S,'%S
%;E%B ;trategic -lan of
%ction on The
Environment3 1//!'1//L
%c&erdo 7arco
sobre 7edio
%mbiente3 2@@1
B%%EC Borth
%merican %greement on
Environmental
Coo#eration3 1//!
%rt. 1+) TEC3 1/L)
,%ST,T#T,'%S F')
T(E
E%1,)'%ME%T
Three 8or,ing "ro&#s3
one on 7E%s
Environmental
8or,ing "ro&#
of the Common
7ar,et "ro&#
9;"T $:
Commission for
Environmental
Coo#eration A Co&ncil3
;ecretariat3 Eoint -&blic
%dvisor2 Committee.
The Co&ncil of
7inisters3 the E&ro#ean
-arliament3 the
E&ro#ean Commission3
the E&ro#ean Co&rt of
E&stice
C0,M&TE C(&%+E
P'0,C.
%;E%B ;trategic -lan of
%ction on Transbo&ndar2
-oll&tion 2@@2
Bational
meas&res
Bational #rograms
The common and co'
ordinated climate
change #olices K
national #olicies
#%FCCC
MEMBE)S(,P
0ndonesia3 the -hili##ines3
;inga#ore3 72anmar3
Cambodia3 7ala2sia3
Thailand3 Gietnam3 Jaos
Q Q Q
2.'T'
MEMBE)S(,P
7ala2sia3 Thailand3
Gietnam3 Jaos3 Cambodia
Q 7e(ico3 Canada Q
5.2 Interblock agreements: enhancing en!ironmental "ro!isions#
;o far we have seen how individ&al trading bloc,s have dealt with the environment in
s#ecific and se#arate agreements. 0ncreasingl2 toda23 we see bilateral regionalism as
defined above 9see section 2: s&ggesting a trend towards m&ltidimensional agreements
addressing different items s&ch as trade liberali1ation and environmental #rotection
sim&ltaneo&sl2. One reason for this is the greater com#le(it2 of the new trade iss&es.
8hile tariffs and 4&antitative meas&res co&ld easil2 be bro&ght down b2 the =negative
list a##roach3 in order to address non'tariff meas&res harmoni1ation and dee#er
integration are re4&ired 95oe,man and Kostec,i3 2@@1:. % second reason is that most
inter'bloc, agreements involve co&ntries that have alread2 had a regional integration
e(#erience at home.
12
>ilateral agreements established b2 the E. tend to share similar str&ct&res3
irres#ective of whether the trading #artner is a candidate co&ntr2 or an overseas #artner.
0ndeed3 the same #attern has been observed in different t2#es of agreements 9;ee Table
!.2:.
Table -.2 En'ir"n.enal /r"'isi"ns in !e iner, bl"&0 agree.ens
E#3C&%&*&
E#3CEEC!
-Erope &gree"ent!/
E#3
ME)C')S#
)
E#3)#SS,&
C&%&*&3
C(,0E
ST&)T 'F
%E+'T,&T,'%S
1/+$ 6rom 1//@s 1//) 1//+ 1//+
%'T,F,C&T,'%
T' T(E 4T'
BO OK BO BO OK
T.PE 'F
&+)EEME%T
6ramewor,
%greement for
Commercial and
Economic
Coo#eration3 1/+$
-artnershi# %genda
and Trade %nd
0nvestments
Enhancement
%greement 9T0E%:3
2@@!
6T% o services
agreement
0nterregional
6ramewor, Co'
o#eration
%greement
-%C
9-artnershi#
and
Coo#eration
%greement:
6T%
E%1,)'%ME%T&0
P)'1,S,'%S
Economic
Coo#eration3 1/+$
T0E%3 s&stainable
develo#ment?
-artnershi# %genda3
Coo#erating on global
and *egional
Challenges3 2@@!
Economic coo#eration3
1//@s
Economic
coo#eration3
1//)
Economic
coo#eration3
1//+
CC%EC3 side
agreement3
1//+
)E+#0&T').
C''PE)&T,'%
OK OK OK OK BO
>esides trade liberali1ation that in most cases covers services3 investment3 government
#roc&rement and intellect&al #ro#ert2 rights3 other areas of coo#eration s&ch as financial3
instit&tional3 c&lt&ral3 scientific and economic coo#eration are also envisaged.
Environmental coo#eration &s&all2 falls within the cha#ters dealing with economic
coo#eration3 b&t the degree of detail varies from case to case. 8hile E.'7ercors&r does
not address s#ecific environmental #roblems3 the E&ro#e %greements
/
and the
-artnershi# Coo#eration %greement with *&ssia 9-C%: are more com#rehensive and do
ma,e s#ecific commitments. The E&ro#e %greements as,ed former candidate co&ntries
1@
/
E&ro#e %greements were signed with >&lgaria3 the C1ech and ;lova, *e#&blics3 Estonia3 5&ngar23
Jatvia3 Jith&ania3 -oland3 *omania and ;lovenia. E&ro#ean Commision3 2@@!. >ilateral Trade *elations.
Candidate Co&ntries. Ohtt#:MMe&ro#a.e&.intMcommMtradeMiss&esMbilateralMregionsMcandidatesMinde(Ren.htmP
1@
%t the moment the remaining candidates that have a E&ro#e %greement with the E. are *omania and
>&lgaria.
13
to strengthen their coo#eration in combating &rgent environmental #roblems s&ch as
climate change. The ongoing E.'*&ssia negotiations have e(#licitl2 called for
harmoni1ing environmental standards and reg&lations? among the main #roblems to be
confronted is global climate change. The -C% recommends a s&stainable and efficient
#rod&ction and &se of energ2.
11
The Eoint 8or, -rogram in 2@@2 to tac,le the
environment strengthened the commitment towards climate change and e(#licitl2
foresaw "5"s red&ction in the conte(t of the K2oto -rotocol.
12

0n the E.'Canada relations the first commitment to environmental #rotection was
made in the 6ramewor, %greement for Commercial and Economic Coo#eration in 1/+$3
in the cha#ter on economic coo#eration. The E.'Canada -artnershi# %genda and T0E%
in 2@@!
13
has enhanced and strengthened the original agreement b2 adding more s#ecific
#rovisions on environmental coo#eration. The -artnershi# %genda has a s#ecific section
addressing Coo#eration on "lobal and *egional Challenges. 8ithin this conte(t3 the
im#ortance of environmental coo#eration is ac,nowledged and the E. and Canada have
committed themselves to wor, together in order to bring the K2oto -rotocol into force.
The E.'Canada trade initiative 9T0E%: also addresses s&stainable develo#ment and it
re4&ires coo#eration on environmental reg&lations.

The Chile'Canada relationshi# has a com#letel2 different str&ct&re3 which however
reflects the B%6T% a##roach. %s B%6T% has a side environmental agreement 9B%%EC:3
s2mmetricall2 C%6T% came along with the Canada'Chile %greement on Environmental
Co'o#eration 9CC%EC:. 0t m&st be said that the environmental instit&tions of the CC%EC
are advanced when com#ared to the E. bilateral agreements with non candidate
co&ntries
1!
which do not tend to set &# s#ecific environmental bodies. CC%EC relies on
activities of the Commission for Environmental Coo#eration and the enforcement
mechanism3 different from B%%EC3 is based on more coo#erative sol&tions instead of on
the &se of trade sanctions.
% common characteristic of most *T%s is the recognition of the val&e of information
e(change3 technical assistance3 ca#acit2 b&ilding3 training and ed&cation as f&ndamental
#ractices aimed at increasing the #erce#tion of environmental challenges and th&s at
creating a more favorable conte(t for environmental coo#eration.
%gainst this bac,gro&nd3 can inter'bloc, agreements be said to be ca#able of
enhancing environmental #rovisions 8hat is significant is the a##roach b2 which
bilateral trade liberali1ation has addressed environmental #rotection. 8hereas individ&al
*T%s have originall2 limited regional coo#eration to trade and e(tended it to the
environment onl2 later3 inter'bloc, agreements have sim&ltaneo&sl2 addressed
11
-C%3 %rt. $/
12
5owever3 the most recent E.'*&ssia negotiations have moved bac,ward and *&ssias ratification of the
K2oto -rotocol remains &ncertain.
13
The E.'Canada -artnershi# %genda of 2@@! is based on the former agreements and it was la&nched
alongside the framewor, for the Trade and 0nvestment Enhancement %greement 9T0E%:3 which deals more
s#ecificall2 with trade liberali1ation.
1!
Candidate co&ntries having bilateral agreements with the E.3 e(ce#t >&lgaria and *omania3 are now new
7ember ;tates and therefore share the com#le( s2stem of E&ro#ean environmental reg&lations and
instit&tions.
1!
heterogeneo&s items &sing the same coo#erative a##roach. 7oreover3 inter'bloc,
agreements did la2 the gro&nd for a grad&al #rocess of reg&lator2 convergence across
different bloc,s. 0n the E. bilateral agreements3 reg&lator2 coo#eration or legislative
a##ro(imation is often an o&ts#o,en goal 9Table !.2:. B%6T% in #rinci#le r&les o&t the
harmoni1ation of environmental standards and reg&lations? however an internal de facto
convergence towards the .; levels is ta,ing #lace 9;am#son and 8oolcoc,3 2@@3:.
&. 'oncl!sions
% motivation for this st&d2 has been to assess the im#lications of an2 shift awa2 from
m&ltilateral to regional trade agreements for the tradeMenvironment interface. The recent
fail&re at Canc&n has raised fears that =com#etitive liberali1ation might &ndermine
#rogress at the m&ltilateral level. The world trade s2stem can be tho&ght of as a fo&r'
wheeled vehicle3 in which the m&ltilateral ro&te re#resents one wheel3 the regional and
s&b'regional ro&te re#resents another while the &nilateral and bilateral ro&tes re#resent
the other two. Essentiall23 in this vision the vehicle #erforms best when all fo&r wheels
are driving forward together3 while #rogress can #robabl2 still be made when one wheel
is o&t of action. This is #artic&larl2 tr&e now that the trade agenda has dee#ened so as to
incl&de domestic reg&lator2 meas&res on which the 8TO has a limited e(#erience and on
which global coo#eration is m&ch more diffic&lt than it was for tariff red&ction. *ather3
*T%s seem to be a =better for&m in which to address these meas&res3 enhancing the
chances for more #rogressive environmental trade'related meas&res.
"oing bac, to the 4&estions mentioned at the o&tset3 the evidence on *T%s #rovided
here allows &s to concl&de that *T%s do seem to am#lif2 the m&ltilateral environmental
agenda. 6irst of all *T% members seem to be more able ens&re environmental #rotection
and in most cases have shown a higher degree of attention to environmental iss&es
com#ared to the 8TO. 0n #artic&lar in three clear areas *T%s have act&all2 gone be2ond
the m&ltilateral trading s2stem in the sense of incl&ding #rovisions #reventing the
rela(ation of domestic environmental laws and the enforcement of those laws? in defining
the relationshi# between m&ltilateral environmental agreements and the *T%? and in
re4&iring each #art2 to #eriodicall2 #re#are and ma,e #&blicl2 available a re#ort on the
state of its environment.
%s regards different wa2s of addressing environmental #rotection3 individ&al trading
bloc,s s&ch as %;E%B3 7ercors&r and the E. have grad&all2 e(tended regional
coo#eration from trade towards to the environment b2 adding a side #rotocol or
agreement dealing s#ecificall2 with environmental #rotection. Contrastingl23 most inter'
bloc, agreements have encom#assed trade liberali1ation and environmental #rotection
sim&ltaneo&sl23 in the same agreement. Onl2 the Canada'Chile free trade area relies on a
side agreement which was however established along with the trade agreement3 e(actl2
following the B%6T% a##roach.
The fear of =reg&lator2 regionalism does not seem a real one and *T%s can
reasonabl2 be e(#ected to re#resent a =ste##ing stone towards m&ltilateral agreements.
*eg&lator2 coo#eration is of increasing interest not onl2 within individ&al *T%s3 b&t the
1)
#rocess of !ertical integration is #aralleled b2 growing hori+ontal interactions across
regions which in the long r&n might lead to a convergence between different reg&lator2
s2stems. ;ince significant environmental #olicies that #romote the red&ction of "5"
emissions are reg&lator2 meas&res 9e.g. energ2 efficienc2 standards3 energ2 labelling
schemes: harmoni1ation can contrib&te to a global res#onse to climate change b2
enco&raging3 in a =bottom'&# fashion3 the ado#tion of common standards that in the long
r&n ma2 2et become international standards.
0n this #rocess of #romoting reg&lator2 coo#eration3 the E. is #la2ing a leading role.
5ow far the #olitical stance of the E. in #romoting s&stainable trade and reg&lator2
harmoni1ation will go is the real iss&e. E&ro#ean member states have discovered that
o#erating with a &nified #osition can strengthen their bargaining #ower. 8hat ma2 be of
interest is whether the dee#ening of regional integration which is occ&rring in other
regions s&ch as %;E%B and 7ercors&r might have the same e(ternal effect that it had in
the E. case. These regions do seem to loo, at the E. as an e(am#le to be em&lated. 0f
the E. model of #ooling national strengths can s&cceed3 m&ltilateral regimes co&ld find it
easier to #rogress3 in the long r&n. %s regards both environmental and trade iss&es3 it
might become easier to negotiate when fewer actors are #la2ing on the negotiating stage.
1$
%eferences
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8<eatsheaf3 Bew Hor,MJondon
>oas3 7orten 91///:: CThe Trade'Environment Be(&s and the -otential of *egional
Trade 0nstit&tionsD3 #a#er #re#ared for the CS2- 5
rd
Annual Conference$ 6After the
2lo,al Crises$ 3hat Ne7t for -egionalism83 .niversit2 of 8arwic,3 1$'1L ;e#t. 1///
De >&rca3 "rSinne and ;cott3 Eoanne 92@@@:: CThe 0m#act of the 8TO on E. Decision'
ma,ingD3 %ar!ard 9ean "onnet 3or&ing Paer ):;))
Est23 D. 92@@1:: C>ridging the Trade'Environment DivideD3 9ournal of Economics
Persecti!es3 vol.1)3 ##.113'13@
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% ;&rve2D in Climate Change Polic<, 4nternational Trade and Economic 2rowth3
7ilan3 6onda1ione Eni Enrico 7attei
5oe,man 7.>. and 7ichel 7. Kostec,i3 92@@1:: The Political Econom< of the 3orld
Trading S<stem3 second edition3 O(ford .niversit2 -ress3 O(ford
OECD 92@@3:: C-egionalism and the "ultilateral Trading S<stem=3 OECD >oo,s3 -aris
Onestini3 7. 91///:: >The ?atin America Southern Common "ar&et ("E-C0-S#-)$
En!ironment and -egionalisation=. -re#ared for the C;"* 3
rd
%nn&al Conference
%fter the "lobal Crises: 8hat Be(t for *egionalism .niversit2 of 8arwic,3 1$'1L
;e#tember
-ana2oto&3 T. 92@@@:: "lobali1ation and Environment. C0D 8or,ing -a#er Bo. )33
En!ironmental and @e!eloment Paer No. *
;am#son3 ". and ;. 8oolcoc,3 92@@3:: -egionalism, "ultilateralism, and Economic
4ntegration. The -ecent E7erience3 To,2o3 the .nited Bations .niversit2 -ress
.BE-3 92@@@:: En!ironment and Trade$ a %and,oo&3 "eneva
.rata3 ;h&<iro 92@@2::C"lobali1ation and the "rowth in 6ree Trade %greementsD in Asia-
Pacific -e!iew3 /:13 ##. 2@'32
Honghai3 ;hi at al. 92@@@:: >APEC trade li,erali+ation and China$ coordination of
en!ironmental and trade olices=, Chinese %cadem2 of 0nternational Trade and
Economic Coo#eration
1+