CETA Joint Committee Adopts Recommendation on Trade, Climate Action and the Paris Agreement
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Methods of horizontal integration can help understand provisions of public international law as it stands at that moment.

Climate change references in EU Trade Agreements are standard practice, and CETA Joint Committee’s Recommendation on Trade, Climate Action and the Paris Agreement contains such references.

Twenty years ago, critics of free trade and global investment policies mobilized against the negotiations launched by the Organisation for Economic Co-operation and Development (OECD) towards a multilateral agreement on investment, which were followed by the 1999 Seattle World Trade Organization (WTO) protests. Civil Society groups demonstrated their concerns about labor issues and the protection of the environment, among others.

Conflicts between economic and environmental policies have also been addressed in a number of international investment disputes involving trade agreements. In such disputes, references to Parties’ obligations to protect the environment set out in multilateral environmental agreements (MEAs) are not uncommon. Treaty-specific references in particular, as well as interpretive statements can support a horizontal integration between different fields of public international law, which aims at avoiding conflicts and allowing for mutual supportiveness of seemingly conflicting norms. Methods of horizontal integration can also help understand provisions of public international law as it stands at that moment.

Horizontal Integration of Trade and Climate Change in CETA

An exercise of such horizontal integration can be seen in recent EU trade agreements which systematically include provisions on trade and sustainable development. For example, what horizontal integration could be observed between the Comprehensive Economic and Trade Agreement (CETA), signed on 26 October 2016 between Canada and the EU and its member States, and the Paris Agreement on climate change which entered into force two weeks after that?

Last month, on 26 September 2018, the CETA Joint Committee drew attention to this when it issued its Recommendation on Trade, Climate Action and the Paris Agreement. In its statement, the Joint Committee recalls Parties’ recognition of the mutual supportiveness of environment and the economy, and that ambitious climate action will protect the environment, spur clean growth and sustainable development, create jobs, and improve human health. It also draws attention to Parties’ recognition of the importance to further step up the role of the Paris Agreement in their bilateral cooperation with a view to promoting mutually supportive trade and climate change policies.

The Committee also refers to the Joint Interpretative Instrument on CETA, which, as the statement highlights, recognizes the right of the Parties to set their own environmental priorities, to establish their own levels of environment protection and to adopt or modify their relevant laws and policies accordingly, mindful of their international obligations, including those set by MEAs. The reference to the Joint Interpretative Instrument on CETA also emphasizes commitments to cooperate on trade-related environmental issues of common interest, such as climate change, where implementation of the Paris Agreement is an important shared responsibility for the EU and its member States and Canada.

In addition, the September Joint Committee Statement highlights treaty-specific references in CETA Chapter 24 (on trade and environment). The Committee notes that Parties reaffirm their commitment to effectively implement MEAs to which they are party, including the Paris Agreement. The statement quotes from treaty text as follows: “Parties commit to cooperate in trade-related aspects of the current and future international climate change regime, as well as domestic climate policies and programmes relating to mitigation and adaptation, including issues relating to carbon markets, ways to address adverse effects of trade on climate, as well as means to promote energy efficiency and the development and deployment of low-carbon and other climate-friendly technologies.”

What stands out in the Joint Committee’s three-part recommendation is the atypical juxtaposition of mutual supportiveness between economic and environmental objectives on the one hand and the importance and urgency to achieve the goals of the Paris Agreement on the other hand. The above CETA citation emphasizes Parties’ commitment to cooperate in “ways to address adverse effects of trade on climate” (emphasis added). Usually, one sees references to economy-specific objectives in any given free trade agreement (FTA) text. Opportunities for a more typical and narrow approach are provided in CETA’s provision on the objective, which states that “Parties shall progressively liberalize trade in goods,” or in the context and objectives of CETA Chapter 24 (trade and environment). For example, Article 24.2 provides that Parties: recognize the contribution that trade could make to sustainable development; and stress that enhanced cooperation to protect and conserve the environment brings benefits that will complement the objectives of this Agreement, among others.

In its recommendation, the CETA Joint Committee first recognizes the importance of achieving the purpose and goals of the Paris Agreement, in order to address the urgent threat of climate change, and the role of trade to this end. Next, the Committee quite specifically “affirms the Parties’ commitment to effectively implement the Paris Agreement, as an MEA within the meaning of CETA Article 24.4, with the aim of strengthening the global response to climate change and holding the increase in global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels. In this regard, the Parties are committed to progressively increase their efforts to mitigate climate change.” The Joint Committee then concludes, with the arguably broader recommendation, that the Parties cooperate, work together and take joint actions as relevant to address climate change and promote the mutual supportiveness of trade and climate policies, rules and measures, thereby contributing to the purpose and goals of the Paris Agreement and the transition to low greenhouse gas (GHG) emissions and climate-resilient development.

Horizontal Integration of Trade and Sustainable Development in EU Trade Agreements

Recently, the media have highlighted Paris Agreement references contained in EU Trade Agreements. Some stories claim an active role of France in calling on the EU to make a new trade policy: “No Paris Agreement, no trade agreement”. What these authors may be overlooking, however, is the fact that CETA or the EU-Japan and EU-Mexico trade agreements are but some of a series of the new generation of EU FTAs, going as far back as to the EU-South Korea FTA, signed in 2010. That FTA includes a chapter on trade and sustainable development, which was innovative at the time. The chapter section on MEAs includes in Article 13.5(3) references to the commitment to reach the objective of the UNFCCC and its Kyoto Protocol, as well as to cooperate on the development of a future international climate change framework in accordance with the Bali Action Plan. Similar provisions are found in the EU-Georgia Association Agreement Article 230.4, and in the EU-Moldova Association Agreement Article 366.4, the latter agreement also containing a specific Chapter 17 on climate action. Other formulations with references to climate change and often to the UNFCCC or its instruments are included in the EU Trade Agreement with Colombia and Peru, the EU-Ukraine Association Agreement and the EU-Central America Association Agreement.

Moving along the timeline of EU trade agreement negotiations closer to when the Paris Agreement was adopted, we see text evolve accordingly. In the EU-Singapore FTA chapter on trade and sustainable development, for example, Article 12.6(3) refers not only to the commitment to reaching the objective of the UNFCCC and its Kyoto Protocol, but also “to work together to strengthen the multilateral, rules-based regime under the UNFCCC building on the UNFCCC’s agreed decisions, and to support efforts to develop a post-2020 international climate change agreement under the UNFCCC applicable to all Parties.” The EU-Viet Nam FTA mentions the Paris Agreement in its chapter on trade and sustainable development. Article 13.6(1) states in part: “Parties shall cooperate on the implementation of the UNFCCC, the Kyoto Protocol and the Paris Agreement. The Parties shall, as appropriate, cooperate and promote the positive contribution of this Chapter to enhance the capacities of the Parties in the transition to low greenhouse gas emissions and climate-resilient economies, in accordance with the Paris Agreement.” The EU-Japan Economic Partnership Agreement chapter on trade and sustainable development in its Article 16.4 on MEAs, mirrors that of the EU-Viet Nam FTA, with one notable difference. It omits reference to the Kyoto Protocol as Japan decided in 2010 not to take on obligations under the Protocol’s second commitment period after 2012. The EU-Mexico Global Agreement text also includes, inter alia, references to the obligations both sides undertook under the Paris Agreement on climate change. Reportedly, the draft of the EU FTA with Mercosur (Argentina, Brazil, Paraguay and Uruguay) also includes Paris Agreement references.

What’s Next: Translation into Climate Action or Defense Thereof in Multinational Investment Court

One can see how the new generation of EU Trade Agreements, starting with the EU-South Korea FTA, have included more specific provisions in chapters on trade and sustainable development and sections on MEAs therein. This is encouraging from the perspective that it advocates horizontal integration in public international law. This trend may also be supportive of ongoing work by the International Law Commission (ILC) which is celebrating its 70-year anniversary under the theme, ‘Drawing a Balance for the Future.’ What remains to be seen, however, is whether such developments in a State-centric international law process can generate the needed norm-transforming change to reach global environmental goals as well as temperature goals under the Paris Agreement.

The EU’s latest trade strategy, the 2015 ‘Trade for All: Towards a More Responsible Trade and Investment Strategy,’ only builds on a path it has already been following. Its aim “to maximize the potential of increased trade and investment to decent work and to environmental protection, including the fight against climate change, and engage with partner countries in a cooperative process fostering transparency and civil society involvement” is commendable. What is more interesting perhaps, just 20 years after the negotiations of a Multilateral Agreement on Investment were suspended with the withdrawal of France, the European Council, on 20 March 2018, adopted the negotiation directives for a multilateral investment court. Some scholars critical of current international investment dispute settlement procedures that also involve disputes challenging environmental policies, have been advocating the creation of a permanent international investment court. Whether a multilateral investment court, in combination with visible developments in trade agreements, will address civil society concerns raised in 1998 in protest against a multilateral agreement on investment remains to be seen.

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