ENVIRONMENT AND INTERNATIONAL TRADE Diplomacy – IMA 2 12.12.2013 GATT ECONOMY BUSINESS MNEs SUSTAINABILTY GLOBAL COMPACT WTO VALUES PROFITS COOPERATION multilateral AGREEMENT negotiation REALISM perspectives governments ineffectiveness KYOTO UNEP awareness CIVIL SOCIETY education NAFTA NGOs DIPLOMACY Doha WEO stakeholders TRADE Environment Developed Countries Developping countres EU USA China WETO SME green
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ENVIRONMENTAND
INTERNATIONAL TRADEDiplomacy – IMA 2
12.12.2013
GATTECONOMY
BUSINESS
MNEs
SUSTAINABILTY
GLOBAL COMPACTWTO
VALUES
PROFITS COOPERATION
multilateral
AGREEMENT
negotiationREALISM
perspectives
governments
ineffectivenessKYOTO
UNEP
awarenessCIVIL SOCIETY
education NAFTANGOs
DIPLOMACY
Doha WEO
stakeholdersTRADE
Environment
DevelopedCountries
Developping
countres
EU
USA
China
WETO
SME
green
Environment and International Trade
Case Overview Problems related to Environment and International Trade
- What impact do trade have on the environment?
- Responsible?
- Should trade rules be changed to meet the Environmental standards?
Evironmental and Trade ConflictsOrganisation Date of Establishment Who was involved Conflict/discussion Did it work out? (problems)
NAFTA Official negotiation 1990, Approved agreement in 1993
Governments& Environmentalists from all three countries(U.S, Canada & Mexico)
Free trade agreement among US, Canada & Mexico • Objections about maquiladora
factories• Increased trade & economic growth=
more pollution• lower environmental and health
standards in U.S & Canada• Jobs lost in US
• The right of every country to establish its own standard as long as it sought legitimate environmental objectives
• First agreement with connection of trade and development. NAAEC (North American Agreement on Environmental Cooperation)
EC Directoratesfor Environment and Trade
From mid 1980s Several nations in EC • EC as the authority to set the same directives to every nation
• Economic reason which led to a Harmonization of member-country standards (recycle law Germany)
• Solutions of standardization disrupted trade, made it ineffective or raised the trade barriers (German recycling law =no effect)
• Over 200 directives and regulations (2000)• Act as a single neglecting unit of its
members
GATT Circulated from 1988, never adopted GATT, MMPA, Mexico and US US MMPA Regulations to ban import of tuna caught with fishing methods fatal to dolphins.
Mexico as the exporter to US, opposed the agreement and said they was discriminated by the rules
MMPA was incompatible with GATT precepts and the “global common of the world” was beyond control of one single nation
• US could not prohibit imports of tuna products from Mexico because it did not match the US regulations .
• GATT U.S. could not use domestic legislation to protect dolphins outside its own territorial limits.
States & Government• Ruling their country & focusing on their country’s
interests
• Enacting laws which could either support the environment, international trade or combine both
Environmentalists• Protecting the natural environment
• Economic development leads to more intensive use of global resources and greater volume of pollutants
• Wish a international cooperation
Economists• Support free trade
• Some reject the bad influence of international trade on the environment (i.e. indirect effect of trade could be environmental beneficial)
Business Community• Conflicting interests
• free trade enables growth & increases the # of competitors
• implementing environmental rules cause costs, but prevention costs are often lower than remedial measures
NGOs• Perspective of NGOs differ. But mainly NGOs are
representing the interests of a certain group of people (i.e. environmentalists)
• International Chamber of Commerce: open cross-border trade and investment and global economic integration for sustainable growth; job creation
• WWF: anti-growth policies; CITES; Creating awareness, finding members to sign & support
Institutions as WTO• Established at the closure of the Uruguay Round (GATT
negotiation 1994) to consider whether environmental provisions (i.e. green taxes) undermined free trade principles. It deals with the global rules of trade between nations.
• Main function is to ensure that trade flows as smoothly, predictably and freely as possible.
• Fundamental goals : sustainable development and protection and preservation of the environment
Civil society• Consumer is driven to fulfil their needs and wants
• Growing awareness on environment issues
Environment and International Trade
Diplomatic Processes
How did the diplomatic processes look like?
Hard power failed, soft power? Hard power: i.e. US banned imports of tuna 1988
Soft power: i.e. GATT installed WTO (diplomatic approach)
• UNEP, established in 1972 within the United Nations system
• global environmental authority
• UNEP acts as a catalyst, advocate, educator and facilitator to promote the wise use and sustainable development of the global environment.
• UNEP work encompasses:
• Assessing global, regional and national environmental conditions and trends
• Developing international and national environmental instruments
• Strengthening institutions for the wise management of the environment
ESG:
• ESG stands for Environmental, Social and Governance. There is growing evidence that suggests that ESG factors, when integrated into investment analysis and decision making, may offer investors potential long-term performance advantages. ESG has become shorthand for investment methodologies that embrace ESG or sustainability factors as a means of helping to identify companies with superior business models.
EITI:
• The Extractive Industries Transparency Initiative (EITI) is a global coalition of governments, companies and civil society working together to improve openness and accountable management of revenues from natural resources
Round of Trade Negotiations 2001-2013
Purpose:
• A more open market for environmental goods and services
• More coherence between trade and environment rules
• Better cooperation between the WTO and MEAs
Committee on Trade and Environment (CTE)
• 1995
• identifying the relationship between trade measures and environmental measures in order to promote sustainable development, and making appropriate recommendations on whether any modifications of the provisions of the multilateral trading system
• objective: sustainable development
UN Global
Compact
UNEP
Voice of the Environment
Business andEnvironment
Initiatives
Doha Round
Not compulsory, not much influence on international
level
Tool to negotiate, not usefulfor business issues, on
national level
Good starting point, need togo deeper (expand)
Non-discrimination dilemma, only framework setting
Environment and International Trade
• Developed countries have pressure from environmental interest groups to reconcile what they perceived as "incompatibilities" between trade and environmental policies
Consequence: no more market access opportunities for developing countries
• Proposals for the creation of a United Nations Environmental Organization (UNEO) have come as some question the efficacy of the current United Nations Environmental Program (UNEP) at dealing with the scope of global environmental issues.
• Created to act as an anchor institution in the system of Global Environmental Governance (GEG)
• Creation of an International evironmental agency who is taking the lead to set an international framework for the environmental issues concerning international trade
agreements
• (international level)
• Try to reduce the overlapping of the agreements, values
• increasing awareness of environmental issues amongthe MNE and SME, civil societies