Economic Integration and Sustainable Development POLICY SERIES, NUMBER 6 — February 2005

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Economic Integration and Sustainable Development POLICY SERIES, NUMBER 6 — February 2005 ORGANIZATION OF AMERICAN STATESUNIT FOR SUST POLICY SERIES, NUMBER 6 — Economic Integration and Sustainable Development POLICY SERIES, NUMBER 6 — February 2005 OPPORTUNITIES FOR THE Central America, the priority areas for cooperation are listed in the ENVIRONMENT IN THE INTEGRATION agreement and include improvement of environmental manage- AGENDA ment systems, enforcement of environmental law, development Analyzing the Linkages between As previously mentioned, the economic integration agenda is of environmental goods and services, biodiversity conservation, accompanied by a number of opportunities for environmental and exchange of information concerning the implementation of Economic Integration and Sustainable cooperation. Consequently, trade could benefit institutional and multilateral environmental agreements. All these areas are highly capacity building for environment and sustainable development. In important, especially for countries where environmental institu- 1 the case of bilateral and regional trade agreements, many countries tions are relatively new. Development in the Americas have negotiated parallel environmental cooperation agreements. This is the case with the Environmental Cooperation Agreements However, some of the remaining key challenges are to improve institutional capacities and information for decision-making, to ECONOMIC INTEGRATION IN recognized that a key challenge for development is to ensure among Canada - Costa Rica, Canada - Chile, and United States - that trade liberalization and sustainable development are 11 anticipate changes in industrial and other pollution emissions, to THE AMERICAS Central America. In the case of the FTAA, a mechanism for AINABLE DEVEL put in place robust environmental regulations, and to improve For the past fifteen years numerous economic integration mutually supportive. This challenge has been strongly cooperation was approved during the last quarter of 2002: the echoed in the context of the Summits of the Americas Hemispheric Cooperation Program (HCP). Since its approval, the ability to anticipate other challenges such as how trade creates and free trade agreements (FTAs) have been signed and new pathways to alien invasive species, among others. Hence, it is negotiated in the Americas, including: process, as Heads of State and Government have committed OAS member States have been identifying their national needs to the integration of economic prosperity, poverty reduction, and priorities within different areas, including the environment. crucial to take advantage of the cooperation opportunities arising I the North American Free Trade Agreement (NAFTA), in different trade forums to begin working in concrete areas. rural development, equitable income, and sustainable use I the Mexico - Northern Triangle Agreement Improving access to information for decision making related to of natural resources. A number of organizations, including (El Salvador-Guatemala-Honduras), sustainable trade policy and directing the new opportunities of the OAS, the United Nations Environment Programme economic integration towards sustainability and environmental I the Canada - Costa Rica FTA, (UNEP), the World Bank and the Inter-American HEMISPHERIC COOPERATION Development Bank (IDB), continue to work with countries PROGRAM (HCP) benefits in the hemisphere. I the Canada - Chile FTA, at the national and regional level to translate that broad goal I the United States - Dominican Republic - “…The Program is intended to strengthen the For further information, please contact Claudia S. de Windt, of policy coherence between trade and sustainable develop- Central America FTA (DR - CAFTA), capacities of those countries seeking assistance ([email protected], telephone 202-458-6914) in the Office for ment into concrete, meaningful action on the ground. to participate in the negotiations, implement their Sustainable Development and Environment of the General Secretariat I the current US Andean FTA, and trade commitments, and address the challenges and of the Organization of the American States (OAS/OSDE). This I the Free Trade Area of the Americas (FTAA). CHART 1. maximize the benefits of hemispheric integration, OSDE Policy Brief Series provides a forum for discussion on issues NUMBER OF TRADE AGREEMENTS SIGNED including productive capacity and competitiveness in pertaining to sustainable development to help transfer good practices Trading blocs such as the Central and South IN THE WESTERN HEMISPHERE the region...” Paragraph 18, Quito Ministerial Declaration, OPMENT & ENVIRONMENT November 2002. and lessons learned from project design and implementation. This is American Common Markets (MCCA and the sixth in a series that includes topics on: MERCOSUR), are key examples of achieve- — Biodiversity Conservation ments in economic integration. The Central — Water Resources Management American region alone has negotiated 5 free MERCOSUR also included environmental cooperation in its — Transboundary Aquifers trade agreements in less than 6 years, as a environmental framework agreement12 signed in 2001. Discussions — Natural Hazards Management result, tariffs in the region have been reduced in this area are actively taking place in the context of its working — Renewable Energy from an average of 54 percent at the begin- group 6 on environment (SGT 6). — Public Participation in Environmental Governance. ning of the 1980s to less than 7 percent to date.2 In the case of MERCOSUR, 11 trade The cooperation agenda places the environment in a beneficial agreements of different nature were signed in position compared to other sectors. In regards to the less than 7 years, with a current average for tariffs in the THE TRADE AND ENVIRONMENT Environmental Cooperation Agreement between the US and region ranging between 11 and 14.3 percent. RELATIONSHIP The relationship between trade and In the last decade these efforts in the economic front have environment is dynamic and complex; coincided with initiatives within the region to strengthen a straightforward approach to under- existing national environmental regulations and standards, standing this relationship is to look such as expanding protected areas to safeguard the hemi- at the basics: the physical and the sphere's rich endowment of biological diversity, as well as to policy-to-policy linkages. introduce new commitments at the national, regional, and global levels. Economic activities, including trade, are often dependent on the environment and natural Unit for At the 1992 UN Conference on Environment and resources. In the Western Hemisphere this is particularly Sustainable Development held in Rio de Janeiro, leaders of the Americas relevant given the share of agriculture in the Gross Domestic Development & 11.This agreement has not been executed to date. Environment 1. By Claudia S. de Windt, Legal Specialist, with collaboration from Oscar Ceville and Alejandra Henao, Consultants, Office for Sustainable Development 12. Acuerdo Marco sobre Medio Ambiente del MERCOSUR, Decisión N°2/01 and Environment, Organization of American States (OAS). 2. Murillo, Carlos, Promoting Sustainable Development through Mutually Supportive Policies. (Paper presented during the Canada and Costa Rica www.oas.org/usde Public Workshop on Trade and Environment). San Jose, Costa Rica, 2004. 4 PRINTED ON POST-CONSUMER RECYCLED CONTENT PAPER 1 POLICY SERIES, NUMBER 6 — Economic Integration and Sustainable Development ORGANIZATION OF AMERICAN STATESUNIT FOR SUST Product (GDP) of the region. The trade-environment nexus has Progress has been made regarding the incorporation of environ- These examples show that increased trade can been shown empirically to create new challenges in several ways. mental issues to regional and bilateral trade agreements,5 such as and does lead to different kinds of environmental CHART 3. Trade-related production specialization, linked to the reallocation the NAFTA, United States - Singapore, United States - Jordan, pressures. However, the purpose of this analysis CENTRAL AMERICA: of production resources, can create additional environmental United States - Chile, Canada - Chile, CARICOM - Dominican is not to halt or condition trade liberalization, USE OF WATER RESOURCES, 2000 pressures associated with scale effects. At the same time, scale Republic, CARICOM - Colombia, and in the recently signed but rather to ensure that trade and environmental effects are offset or mitigated by a number of other variables, Canada - Costa Rica, and DR - CAFTA agreements. Since the policies work in tandem, given the cross-cutting including the compositional effects that trade liberalization execution of these agreements, signatory countries in the region nature of both areas and their interaction. brings about in a national economy for instance, from agricul- have begun to seriously consider the environmental issues related ture to industrial goods to the services sector, as well as increased to specific key sectors such as energy, transportation and agricul- The assessments (available for review and capital turn-over with increased trade in technologies. ture. They have also begun to focus on priorities and capacity comments at http://www.oas.org/usde/fida/) have building needs at the national and regional levels. been developed in a participatory and coopera- In addition to direct environmental effects, a great deal of tive way between the governments, civil society attention during the past decade continues to focus on the THE EFFECTS OF TRADE ON THE and key stakeholders at the
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