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U.S., CAFTA-DR Countries Sign Two Supplemental Agreements to Facilitate Implementing the FTA's Environmental Provisions

WASHINGTON, DC - The United States, five Central American countries and the Dominican Republic today signed two agreements designed to complement and facilitate the implementation of environmental provisions in the free trade agreement that the seven countries have concluded (CAFTA-DR). The seven governments signed an Understanding establishing a secretariat to administer a public submissions mechanism and an Environmental Cooperation Agreement (ECA) to guide long-term environmental cooperation in the region. On behalf of the United States, Under Secretary of State for Global Affairs Paula Dobriansky signed the ECA and Assistant U.S. Trade Representative Regina Vargo signed the Understanding concerning the secretariat.

"The CAFTA-DR is an important agreement that will spur economic growth and development in all of our countries and will advance efforts to enforce environmental laws and increase levels of environmental protection," said U.S. Trade Representative Robert B. Zoellick. "We are very pleased that we’ve been able to include strong environmental provisions in our free trade agreements. In the CAFTA-DR, we have gone even further by including a number of environmental ‘firsts.’ These two supplemental agreements are evidence that strengthening our trade relationship can also strengthen our environmental relationship."

Previous FTAs – including those with Australia, Chile, Jordan, Morocco, Bahrain, and Singapore – all have strong environmental provisions that fully meet Congress’ objectives in TPA and are accompanied by environmental cooperation mechanisms. The CAFTA-DR goes beyond these FTAs, however, by establishing a ground-breaking and robust public submissions process that will allow members of the public to raise concerns if they believe that a Party is not effectively enforcing its environmental laws. It is the first free trade agreement to contain such a mechanism in the agreement itself. The ECA is innovative because it includes first-time provisions for establishing benchmarks for measuring environmental performance and outside monitoring of progress in meeting the benchmarks. The Administration consulted closely with interested members of Congress, particularly Senator Max Baucus, in developing the public submissions provisions and the benchmarking and monitoring provisions in the ECA.

Congress already provides to Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua preferential duty-free access to the U.S. market for thousands of products through the Caribbean Basin Initiative (CBI). The CAFTA-DR will provide reciprocal access for U.S. goods into these markets for the first time and, and because it has strict environmental obligations, while the CBI program does not, the CAFTA-DR goes much further towards promoting pro-environmental policies in the region.

In a January 31, 2005 letter to U.S. Trade Representative Robert B. Zoellick and Central American and Dominican Republic trade ministers, ten non-governmental environmental organizations in Central America expressed their support for the CAFTA-DR and the ECA. The groups agreed that "together, these Agreements ensure that the region will not only maintain current environmental laws but also strive to improve these measures without sacrificing environmental protection laws to free trade rules."

The Administration has conducted an environmental review of the CAFTA-DR and considered, among other issues, potential impacts on migratory birds, wildlife conservation and trade, and transboundary air and marine pollution. The review will be released shortly.


US FTAs and the Environment

In all of its recent FTAs, the United States has included environmental chapters that contain core obligations to provide for high levels of environmental protection and ensure effective enforcement of environmental laws, as well as recognition that it is inappropriate to derogate from these laws to encourage trade or investment. The effective enforcement obligation is enforceable through each FTA’s dispute settlement procedures.

Additionally, all recent FTA environment chapters include provisions to promote public participation, provide appropriate remedies for violations of environmental laws, and promote measures to enhance environmental performance. Environmental cooperation mechanisms are negotiated in parallel with all FTAs. Unlike standard commercial disputes, non-compliance with a decision in an environmental dispute cannot be offset by providing expanded market access in another area – the environmental problem must be resolved.

Understanding Establishing Secretariat to Administer Public Submissions

In addition to the environmental provisions contained in other FTAs, the CAFTA-DR establishes a ground-breaking and robust public submissions process that will allow members of the public to raise concerns if they believe that a Party is not effectively enforcing its environmental laws. It is the first U.S. free trade agreement to contain such a mechanism in the agreement itself. An independent secretariat will review public submissions and may develop a factual record in meritorious cases. Following the signing of the CAFTA-DR, the United States and the other CAFTA-DR countries considered a number of possible institutions to serve as a secretariat and conducted extensive public outreach.

In the Understanding signed today, the Parties agreed to request that the Organization for Central American Economic Integration (SIECA) create a new unit to serve as the CAFTA-DR Secretariat under the Environment Chapter. The Understanding contains provisions to ensure that the unit is independent and has appropriate environmental and regional expertise. While the unit will be organized under SIECA for purposes of infrastructure support, it will report solely to the Environmental Affairs Council established under the CAFTA-DR. The Council will also establish a roster of environmental experts that may assist the unit in preparing factual records. Further details of the process will be established through working arrangements to be developed by the Parties in consultation with the public.

Environmental Cooperation Agreement

The ECA provides a comprehensive framework for environmental cooperation between the countries that builds on previous environmental capacity building in the region. Among its innovative features, the ECA includes first-time provisions for establishing benchmarks to identify short-, medium- and long-term goals for improving environmental protection in the region. The ECA also provides for independent, outside monitoring of progress in meeting the benchmarks. Future cooperative projects will be set out in a work plan that will be developed by the Environmental Cooperation Commission established in the ECA. The Commission may also consider recommendations on appropriate capacity building activities developed through the CAFTA-DR’s public submissions process.

Priority areas for cooperation under the ECA include: reinforcing capacity to implement and enforce environmental laws; promoting implementation of obligations under certain multilateral environmental agreements such as the Convention on Trade in Endangered Species of Flora and Fauna (CITES); improving conservation of natural resources and increasing transparency in their pricing and regulation; and promoting clean technologies and environmentally friendly goods and services.