The Trans-Pacific Partnership ("TPP") is a trade liberalization agreement signed by twelve countries on February 4, 2016. The signatories are: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Included in the TPP is a chapter relating to trade and the environment. This is not the first time that environmental protection has been ascribed as a goal of a bilateral or multilateral trade agreement. The TPP is different, however, in that it incorporates an enforcement mechanism that shows more teeth than seen in previous trade agreements.

Multilateral agreements have traditionally favored trade over environmental concerns. The General Agreement on Tariffs and Trade ("GATT") did allow that countries may legitimately undertake certain environmental measures as long as they did not result in unjustifiable discrimination on trade between countries or act as disguised restrictions on international trade. Article XX of the GATT accepts that legitimate measures may be undertaken as necessary to protect human, animal or plant life or health; or to conserve exhaustible natural resources. Similar measures were adopted in the General Agreement on Trade in Services ("GATS"). The WTO Agreement on the Application of Sanitary and Phytosanitary Measures expanded the scope for health-related environmental controls, but once again, subject to the limiting rules set out in Article XX of the GATT.

The North American Free Trade Agreement ("NAFTA") appended an environmental side agreement, the North American Agreement on Environmental Cooperation ("NAAEC"), with the aim of ensuring that lax enforcement of existing environmental laws would not be used by parties to obtain trade advantages. The NAAEC did allow for consultations, and if those failed, an arbitral panel to recommend the means of resolution. If such resolution could not be found, the Panel had the right to impose monetary penalties. To date, no arbitral panel under the NAAEC has ever been convened.

The TPP goes further than previous trade agreements in establishing a range of positive environmental obligations on member countries, and for the enforcement of these obligations through consultation and arbitral panels.

In addition to the usual bromides about public awareness, accountability and transparency, the TPP specifies obligations related to:

  • combating illegal fishing, logging and wild life trade; and
  • affirming commitments to multilateral environment agreements that have been ratified by the member states.

The multilateral environment agreements ("MEAs") cited include the Montreal Protocol on Substances that Deplete the Ozone Layer, the International Convention for the Prevention of the Pollution from Ships, and the Convention on International Trade in Endangered Species of Wild Fauna and Flora. Certain environmental commentators have expressed concerns that "climate change" has not been expressly addressed in the TPP; though arguably, the Paris Agreement would constitute an MEA, such that member states would be bound by the obligations they made once the Agreement is ratified.

In the event of a breach of responsibilities under the Environment Chapter of the TPP, there is a process for consultations between members. In the event that consultations are not sufficient to resolve the issue, the matter can be sent to an arbitral panel in accordance with rules relating to the broader TPP dispute resolution mechanism. Panel resolutions made pursuant to Article 28.18 of the TPP are enforceable by means of suspension of benefits accruing to the responding Party under the TPP, or payment of a monetary assessment.

Appendix A provides an overview of the major provisions of the TPP Environment Chapter on an article-by-article basis.

Conclusions

While the TPP is a trade agreement, it represents an evolution in the understanding of a need to balance trade liberalization with recognition that there are issues of environmental concerns that affect all of humanity, and that should not be sacrificed to the goal of trade liberalization.

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The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2016