By Marie-Claire Cordonier Segger, Micha Schwartzshtein and Matheus Garcia
Trade policies can considerably impact biodiversity, carrying the ability to improve or undermine biodiversity.1 They can also affect state commitment towards National Biodiversity Strategies and Action Plans (NBSAPs) and Nationally Determined Contributions (NDCs). There are ample studies that suggest that unrestricted trade liberalisation under regional and bilateral trade agreements can result in economic advancement which threatens biological diversity and conservation.2-5 Various sustainability impact assessments, environmental assessments and reviews conducted in recent years have considered the normative impacts of trading activities on sustainable development, raising concerns about the adverse effects of increased trade on environmental protection and biodiversity.6 Those assessments have affirmed that without the adoption of adequate measures aimed at mitigating such environmental harm, trade and investment agreements concluded between States can undermine rather than promote sustainable development objectives concerning biodiversity.7
Given the adverse impacts which trade activities can pose on the preservation of biodiversity, strengthening existing trade regulations and promoting compliance with international environmental standards, across both local and global economic forums, is critical. As was noted by Rebecca Grynspa, the Secretary-General of UNCTAD, at the 7th BioTrade Congress in Geneva: “Let us trade, yes, but let us trade in a way that enriches our forests, revitalizes our oceans and purifies our air”.8 Members of the UN have made similar observations in the recently adopted “Pact for the Future”, noting that global trading systems can promote sustainable development by advancing the Sustainable Development Goals (SDGs).9
This delicate balance has also spurred debates as to whether modern climate regimes such as the Paris Agreement operate within a neo-colonialist regulatory paradigm. In this regard, it has been suggested that climate change protection developed under national constitutions, treaties, and transnational jurisprudence has become a means for developed and historically polluting states to undermine prospects of intergenerational justice by metropolising the economy of colonized states.10 Considering the challenges set out above, this article explores the intersections between trade agreements, multilateral environmental agreements (MEAs) and biodiversity and climate change regulations, with a view to identifying potential ways through which biodiversity can be preserved and protected within the realm of international trade.
Evolution of trade agreements to include environmental provisions that protect ecosystems and promote sustainable practices
The inclusion of provisions in trade agreements, which commit parties to protect and preserve biodiversity is a fairly recent development, nascent in its scope, substance and application. Within some trade agreements, States expressly commit to protect biodiversity while others omit to include such commitments altogether, or only insert unenforceable biodiversity commitments which are aspirational at best. For instance, the African Continental Free Trade Area (AfCFTA) lacks strong enforceable commitments on biodiversity.13 Nevertheless, specific biodiversity commitments are gradually becoming more widespread and heterogeneous across different trade agreements globally. Critically, including biodiversity-related provisions in trade agreements serves to reinforce and strengthen compliance with existing environmental commitments under key MEAs. This, in turn, serves to enhance the enforceability of important regulatory standards concerning the protection of biodiversity mandated under international environmental law.
For instance, the EU and its trading partners commit to “cooperating in other fora to promote the conservation and sustainable use of biological diversity”14 – as is the case of Article232.2(d) of the EU-Georgia FTA – as well as “adop[ing] and implement[ing] appropriate effective measures (…) leading to a reduction of illegal trade in wildlife”, in the case of Article13.7.3(d) of the EU-Viet Nam FTA.15 Similarly, the EU-New Zealand (EU-NZ) FTA expressly recognises the pivotal role which trade assumes in the pursuit of the conservation and the sustainable use of biological diversity in Article19.8(1).16 In relation to sustainable practices, the EU-NZ FTA notes that each Party “shall promote trade in products derived from the sustainable use of biological resources”, as per Article19.8(2)(c) with the view to contributing towards the conservation of biodiversity.16 In a similar vein, the Parties to the EU-NZ FTA agree to promote the conservation and sustainable use of CITES-listed species and the inclusion of animal and plant species in the Appendices to CITES.16
How CITES and the Paris Agreement can regulate trade to support biodiversity and mitigate climate change.
To enable us to better understand and assess the relationship between trade regulation, NBSAP and NDC ambitions related to biodiversity, it is imperative that we examine the key MEAs governing the protection of biodiversity.
CITES is an MEA that came into force in 1975 to protect endangered plants and animals from the threats of international trade.17 Signatories under CITES must identify threatened species, establish rules regarding their trade, and impose trade sanctions against violators. One of CITES’ most notable achievements was the ban on the ivory trade in 1989.18 Appendix I of CITES lists species threatened with extinction due to international trade and permits such trade only in exceptional circumstances.17 Appendix-II of CITES lists species that could become endangered through unregulated trade and imposes measures aimed at preventing unsustainable use and protecting ecosystems.17 Finally, Appendix-III of CITES lists species that are subject to domestic regulation by a party and requests the cooperation of other parties to regulate international trade in those species.17 Critically, by regulating the trade of endangered plants and animals, CITES seeks to ensure that international trade is more sustainable, complies with legal standards and is traceable.
In turn, the Paris Agreement under the United Nations Framework Convention on Climate Change (UNFCCC) was adopted in 2015 to transition the world to low-carbon and climate-resilient sustainable development pathways through “mitigation, adaptation, finance, technology transfer and capacity-building”.19 Fundamentally, the Paris Agreement serves to protect biodiversity given that climate change adversely effects biodiversity, and preserving biodiversity is essential to combatting climate change.20 Under the Paris Agreement, parties agree to submit Nationally Determined Contributions (NDCs) where they set their own emission reduction targets and associated policies.21 The implementation of economy-wide absolute emission reduction targets is recommended.19 The NDCs are national climate plans submitted by all countries under the Paris Agreement which can serve to promote sustainable trade and thus protect biodiversity.
Additionally, the Paris Agreement establishes regular reporting requirements for countries on anthropogenic emissions by sources and removals by sinks of greenhouse gases. This can serve to heighten scrutiny of relevant climate-related policies that impact trade. Notably, as established by Article 9 of the Paris Agreement, climate finance is integral to the successful implementation of the Paris Agreement as many developing countries depend on international support for the implementation of their NDC activities.22 Clear links have been established between financing NDC implementation and advancing climate action.23 Moreover, the Paris Agreement also encourages States to propel “economic growth and sustainable development” through ‘innovation’19 which can encompass trade innovations that promote the transition to a greener economy. Additionally, the Paris Agreement further promotes sustainable trade by encouraging States to “build the resilience of socioeconomic and ecological systems, including through economic diversification and sustainable management of natural resources.”19
Although the majority of NDCs do not contain explicit references to trade, many set objectives that carry significant consequences for the undertaking of trade activities.24 For instance, some NDCs establish technical regulations, which set out environmental standards or performance requirements aimed at advancing sustainability. These technical regulations directly affect trade by subjecting imports to compliance with environmental standards.24 Similarly, many members seek to develop green value chains, with a view to reducing the carbon footprint of a particular sector or product.24 Notwithstanding these illustrative examples, the absence of express references to trade within many NDCs indicates that there is still further scope for reform to better integrate and reconcile trading policies with NDC ambitions and global sustainability objectives. This warrants a discussion of some different mechanisms that can be integrated into existing international trade regimes to promote a more sustainable global economy, which better protects biodiversity, which this article will turn to now.
Other instruments have also historically leveraged trade to contribute to sustainability. Under the framework of the Vienna Convention Kigali and Montreal Protocols to the Vienna Convention for the Protection of the Ozone Layer, trade was used to reduce emissions related to hydrochlorofluorocarbons (HCFCs), which are substances that are harmful to the ozone layer. For instance, the Montreal Protocol prohibits Parties from importing and exporting controlled substances from non-Parties. The Kigali Amendment, added in 2016, inserted hydrofluorocarbons (HFCs) to the list of harmful substances and seeks to phase out these substances.
Proposals to strengthen these connections, ensuring that international trade contributes to a more sustainable and resilient global economy
To promote a more sustainable global economy and foster NBSAP and NDC ambition, integrating sustainable development considerations into the negotiation and drafting of trade agreements is integral to ensuring that trade activities protect the biodiversity of recipient States whilst simultaneously bolstering their economic growth. As such, this section examines some leading examples of States embedding different innovations into relevant trade agreements to promote a more sustainable global economy that protects, rather than threatens, biodiversity.
Impact assessments
The first type of innovation consists of impact assessments of trade and investment liberalisation policies and draft treaties.25 There are two main models of impact assessments that have been used to date: sustainability impact assessments and environmental reviews.
The first assessment model has mainly been used by the EU and involves the undertaking of sustainability impact assessments (SIA), both before and during the negotiation of trade and investment agreements, to identify potential economic, social and environmental impacts of the relevant agreement.26-27 For instance, in the EU-Africa Economic Partnership Agreement (EPA) SIA, the consultant recommends “strengthen(ing) awareness and enforcement of CITES rules”,28 so as to better protect biodiversity in the context of trade. Similarly, the EU-Philippines Agreement SIA dedicates an entire section to analysing the impacts of the contemplated trading activities on biodiversity.29
The second assessment model involves the undertaking of environmental reviews (ER) to identify possible adverse effects of certain trading and investment activities on the environment. Conducting environmental reviews can serve as a useful tool for States to readily identify material environmental risks arising from their contemplated trade activities such as the over-exploitation of fisheries and forestry resources,30 or threats posed to biodiversity,31 with a view to adopting mitigating measures aimed at protecting the environment against such risks.32 Some environmental reviews conducted by the United States include biodiversity considerations, such as the ER for the US-Bahrain FTA.33
Consistent with the above examples, States are encouraged to deploy impact assessments and reviews to gear their trade negotiations toward biodiversity preservation. With greater clarity about the potential impacts of trade agreements on biodiversity, trade provisions can be drafted to better channel trade flows towards the preservation of vegetation whilst increasing the level of ambition contained within NDCs and NBSAPs.
This is particularly vital given that there are only a handful of States that conduct impact assessments Indeed, as early as 2003, developing countries have signaled their reluctance to conduct such assessments. Some WTO Members have noted the “constraints facing developing countries” in conducting environmental reviews.34 Notwithstanding this hesitation, developing countries could benefit from such assessments to channel their trade relations towards protecting the environment, particularly where high levels of biodiversity are at stake.
Consultation and Cooperation provisions
An additional procedural innovation evident in some trade and investment treaties is the insertion of consultation provisions, which require States to consult with relevant bodies on the development and implementation of certain trade and investment activities, especially as they relate to matters of environmental concern. For instance, Article 5.12.2 of the EU-Singapore FTA provides that “where a Party has serious concerns regarding a risk to human, animal or plant life or health, affecting commodities to which trade takes place, consultations regarding the situation shall take place as soon as possible. In such case, each Party shall endeavour to provide all necessary information in due time to avoid disruption in trade.” To better protect biodiversity, States should be encouraged to include provisions within their trade agreements that impose an obligation on parties to consult and cooperate on environmental issues concerning biodiversity which are covered under key MEAs (such as CITES). Article 18.11 of the US-Peru Trade Promotion Agreement serves as a prime example in this respect by requiring that parties “recognize the importance of public participation and consultations, as provided by domestic law, on matters concerning the conservation and sustainable use of biological diversity”, as per Article18.11(4).35
Promoting biodiversity in the context of international trade can also be achieved through express cooperation provisions where States are able to collectively address sustainability challenges concerning biodiversity by sharing resources, information and best practices with each other. In a broad sense, the cooperation provisions which States have included within their trade and investment agreements to date have been highly variable, often differing in their form, scope and operational purpose. For instance, forms of cooperation provisions evident in trade and investment agreements include provisions which (1) promote regional cooperation to harmonise national legislation and policies,36 (2) encourage cooperation on conformity assessment procedures,37 (3) incentivise cooperation on specific issues concerning sustainable development,38 (4) require corporation on the exchange of information,39 (5) invite cooperation with civil society40 and (6) strengthen cooperation regarding the implementation of specific commitments under key multilateral instruments.41 In relation to biodiversity specifically, the 2009 EU-ESA Interim EPA provides an illustrative example of an agreement that imposes cooperative obligations on its signatories directed towards ensuring biodiversity. For instance, Article 49 of the 2009 EU-ESA Interim EPA provides that the “scope of cooperation in natural resources and environment will cover natural assets, including water resources, and environment, including biodiversity, as well as enhancing the linkages between trade and environment. It will also cover support for the implementation of international environmental agreements, conventions and treaties.”42
Additionally, cooperation between State Parties can provide a strong foundation for the incorporation of further cooperative measures related to the protection of biodiversity within NDCs and NBSAPs.
Dispute settlement
Further, some trade and investment treaties introduce a procedural innovation: the inclusion of dispute settlement mechanisms. It bears noting, however, that while many trade and investment treaties contain dispute settlement mechanisms, not all commitments concerning sustainable development are legally binding and subject to dispute settlement.43 At best, most trade and investment agreements to date favour methods of engagement and consultation, with legally binding dispute settlement procedures to be used only as a last resort.44 Notwithstanding this general trend, the recent EU-NZ FTA has made an innovative first step in this regard by subjecting the entirety of its Trade and Sustainable Development (TSD) chapter to dispute settlement if obligations are breached.15 Indeed, under the EU-NZ FTA, all TSD commitments are legally binding.15
Nevertheless, while the EU-NZ FTA is indeed promising in this respect, it bears noting that not all TSD commitments under the EU-NZ FTA are “sanctionable”. For instance, while commitments to the Paris Agreement and core labor standards of the International Labour Organization (ILO) are sanctionable, other TSD commitments such as those relating to trade and gender inequality and fishing subsidies are not.15 As such, further scope for procedural reform in this area remains. Furthermore, recourse to dispute settlement in trade and investment agreements is often subject to a high evidentiary bar which may be difficult for States to meet. Indeed, this was a factor that contributed to the US’s loss in the US-Guatemala case which was decided in the context of the CAFTA-DR-FTA.45
Other innovative procedural measures which have been incorporated into trade and investment treaties to date include, inter alia, (1) the appointment of experts to handle disputes with specialised knowledge in areas concerning trade and development,46 (2) the acceptance of amicus curia briefs47 and (3) the adoption of methods to ensure transparency and public participation in trade negotiations, the implementation of sustainable development mechanisms,48 domestic rule-making processes49 and hearings.50
Conclusion
Ultimately, trade regulation and the protection of biodiversity are linked and can be mutually supportive. However, without incorporating sufficient measures aimed at environmental protection into the framework of trade agreements entered into between States, there is a serious risk that continued trade activities will threaten, rather than preserve, biodiversity. This presents a serious risk given that biodiversity is essential to all processes that support life on Earth. Humankind depends on biodiversity for its existence, continuity and survival. To mitigate against this risk, there is scope to encourage more widespread inclusion of innovations into trade agreements to promote more sustainable trade practices, including further ambition in NDCs and NBSAPs.
Notably, further research may be required to assess the efficacy of these innovations in protecting biodiversity over time. Moreover, there is certainly room for further development in relation to the breadth and scope of these innovations. Furthermore, a growing number of MEAs carry significant implications for international trade and seek to promote more sustainable trade practices that protect biodiversity across multiple sectors and industries. However, to enforce compliance with these international environmental commitments and standards, States are encouraged to incorporate international environmental commitments concerning the protection of biodiversity into the design, negotiation and implementation of their trade regimes. Measures such as these will be essential to protecting all forms of life on earth, as we pave our way towards establishing more sustainable trade regimes for the benefit of all humanity.
About the authors:
Micha Schwartzshtein is a lawyer at Clifford Chance, specializing in international arbitration, investment law, and commercial litigation. She has served as a research assistant to notable figures, including the former Chief Justice of Victoria, Marilyn Warren AC KC, and Dr. Gavan Griffith AO KC, contributing to key international law publications. Micha was recently recognized as a ‘Young Scholar’ by the International Law Association and co-founded Australia Very Young Arbitration Practitioners (AUS VYAP) to support emerging professionals in arbitration.
Professor Dr. Marie-Claire Cordonier Segger is a pioneering jurist and scholar of sustainable development law, serving as Chair in Sustainable Development Law and Policy at the University of Cambridge, Senior Director of the Centre for International Sustainable Development Law and Executive Secretary of the UNFCCC COP29 Climate Law and Governance Initiative. She has authored over 26 books, published 160+ papers, and leads major international law collaborations on climate, biodiversity, trade and rights for the Sustainable Development Goals. Prof Cordonier Segger is Fellow of the Royal Society of Canada, President of the Sustainable Development Law Association, Vice-President of the International Law Association of Canada, and Laureate of the Weeramantry International Justice Award and other honours for her contributions to global sustainability and justice.
Adv. Matheus Garcia is a Project Coordinator for the Centre for International Sustainable Development Law (CISDL) and holds a Master’s degree from the Geneva Graduate Institute and a Law degree from the University Centre of Brasilia. With experience in civil and tax law in Brazil, his research explores the intersection of trade and environmental agreements, particularly regarding Nationally Determined Contributions (NDCs). Matheus has contributed to forthcoming publications, including chapters on investment and climate action, articles on the EU’s Sustainability Impact Assessments, and reports evaluating sustainability commitments in EU Free Trade Agreements.
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See, for example Second Draft Protocol Additional to the Abidjan Convention Concerning Land-based Sources and Activities in the Western, Central and Southern African Region—Introduction to the Abidjan Convention and Its Related Protocol, stating that “The Contracting Parties shall cooperate in harmonizing national legislation and policies for the effective discharge of their obligations under this Protocol.”
See, for example, Article 12.3 of Canada-European Union Comprehensive Economic and Trade Agreement (CETA), Protocol on Mutual Acceptance of Conformity Results which provides that “The Parties recognise that differences may exist between their respective standards, technical regulations and conformity assessment procedures. When such differences exist, the recognising Party may seek to satisfy itself that the nominated accreditation body is competent to accredit conformity assessment bodies as competent to assess conformity with the relevant technical regulations of the recognising Party. The recognising Party may satisfy itself based on the following: (a) an arrangement establishing cooperation between the European and Canadian accreditation systems; […]”
See, for example, Australia-United Kingdom FTA, Article 22.2 (where the parties “…recognise that enhanced cooperation to protect and conserve the environment and sustainably manage their natural resources brings benefits that can contribute to sustainable development”).
See, for example, Article 22.19 of the UK-New Zealand FTA where the parties commit “co-operate as appropriate with respect to environmental issues of mutual interest related to multilateral environmental agreements, in particular trade-related issues, including: (a) exchanging information on the implementation of multilateral environmental agreements to which a Party is a party; (b) exchanging information on ongoing negotiations of new multilateral environmental agreements…” See also Article 16.12 of the EU-Japan EPA where the parties recognize “the importance of cooperation on trade-related and investment-related aspects of environmental and labour policies in order to achieve the objectives of this Agreement, the Parties may […] (c) cooperate to facilitate and promote trade and investment in environmental goods and services, in a manner consistent with this Agreement, including through the exchange of information…”
See, for example, Peru-Chile FTA Article 5 which provides that “each Party may invite trade unions and employers’ organizations to participate, as well as non-governmental sectors and other organizations, to identify areas and cooperation activities”. See also Article 11 and 295 of the EU-Central America RTA which provides that “The Parties shall promote meetings of representatives of the European Union’s and of Central America’s civil societies, including the academic community, social and economic partners, and non-governmental organisations” and that “The Parties shall call for regular meetings with these representatives in order to inform them about the implementation of this Agreement and to gather their suggestions in this respect. […]”
See, for example, Article 19.6(5)(a) of the EU-New Zealand FTA which lists “policy dialogue and cooperation regarding implementation of the Paris Agreement” as a form of cooperation under the agreement. See also Article 19.8 of the EU-New Zealand FTA which encourages “cooperation on trade-related aspects of biodiversity policies and measures bilaterally, regionally and in international fora, as appropriate, including in the Convention on Biological Diversity and CITES.”
European Union-Eastern and Southern Africa (EU-ESA) Interim Economic Partnership Agreement (2009).
See, for example, Canada-Israel FTA, Article16.4 which encourages corporate social responsibility through dialogue and cooperation, and yet expressly notes that “a Party shall not have recourse to dispute settlement under this Agreement for any matter arising under this Article”.
See, for example, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Article 19.15 (providing that “no Party shall have recourse to dispute settlement under Chapter 28 (Dispute Settlement) for a matter arising under this Chapter without first seeking to resolve the matter in accordance with this Article.”)
Guatemala – Issues Relating to the Obligations (U.S. v. Guatemala), Final Report, CAFTA-DR Arb. Panel (2017).
See, for example, EU-New Zealand FTA, Article 26.3(6) (providing that “in disputes concerning the provisions of Chapter 19 (Trade and sustainable development) which relate to the multilateral agreements or instruments referred to in Chapter 19 (Trade and sustainable development), the Parties shall take into account information from the ILO or relevant organisations or bodies established under MEAs in order to promote coherence between the work of the Parties and those relevant organisations or bodies. Where relevant, the Parties shall seek advice from those relevant organisations or bodies, or any other expert or body they deem appropriate”).
See, for example, the US-Chile FTA, Article 10.19(3) which states that the tribunal may accept and consider amicus curiae submissions from non-parties.
See, for example, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Article 20.5.2 (where “the Parties recognize the importance of public participation and consultation, in accordance with their respective law or policy, in the development and implementation of measures concerning the protection of the ozone layer. Each Party shall make publicly available appropriate information about its programs and activities, including cooperative programs that are related to ozone layer protection”). See also EU-Chile Association Agreement, Article 11.
See, for example, Canada-Colombia Agreement on the Environment, Preamble (where the parties ‘acknowledge the importance of transparency and public participation in the development of environmental laws and policies and with respect to environmental governance.” )
See, for example, United States Trade Representative (USTR). US-Chile FTA, Article 20.2.
