RTIAs may feature either or both of two types of commitments with respect to domestic laws and standards.
The first type of commitment is to not weaken environmental laws, or fail to enforce existing laws, in an effort to boost exports and attract investment. This is often expressed as a commitment not to derogate from (weaken) or waive (not enforce) such laws. This is in effect two distinct commitments, and both should be present. Many recent agreements follow such commitments by also recognizing the parties’ sovereign right to modify environmental laws:
“The Parties recognise the sovereign right of each Party to establish its own levels of domestic environmental protection and its own environmental priorities, and to establish, adopt or modify its environmental laws and policies accordingly.”
Some texts cover any actions that affect trade or investment (“no derogating from environment laws in a manner affecting trade or investment”), while others cover only actions strategically intended to affect trade or investment (“no derogating from environment laws to encourage trade or investment”). Both will work, but the former is a stronger formulation since it does not involve the difficult task of demonstrating intent.
Any commitments of this type are also stronger when accompanied by enforcement or dispute settlement provisions.
The second type of commitment is a pledge to achieve high levels of environmental protection, often accompanied by a pledge to strengthen the relevant laws over time.
Both types of commitment are standard features of any RTIA with high environmental ambition.
Option 1:Commitment to not lower, or relax enforcement of, environmental laws in a way that affects trade or investment
Such a commitment is desirable from both the trade and environmental perspectives. If respected it would work to prevent the so-called pollution haven effect.
Examples
“The Parties recognise that it is inappropriate to encourage trade or investment by weakening or reducing the levels of protection afforded in their environmental law.
A Party shall not waive or otherwise derogate from, or offer to waive or otherwise derogate from, its environmental law, to encourage trade or the establishment, acquisition, expansion or retention of an investment in its territory.
A Party shall not, through a sustained or recurring course of action or inaction, fail to effectively enforce its environmental law to encourage trade or investment.” (CETA, Article 24.5)
How Commonly Used
Examples
“The Parties will faithfully enforce their environmental laws, regulations and standards.
Subject to Article [X] [on right to regulate and levels of protection], a Party will not:
(a) weaken or reduce the level of environmental protection provided by its laws, regulations or standards with the sole intention to encourage investment from another Party or to seek or enhance a competitive trade advantage of producers or service providers operating in that Party; or
(b) waive or otherwise derogate from, or offer to waive or otherwise derogate from, such laws, regulations or standards in order to encourage investment from another Party or to seek or enhance a competitive trade advantage of producers or service providers operating in that Party.” (EFTA – Hong Kong FTA, Article 8.4)
How Commonly Used
Examples
“Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken under its ecological or environmental laws.
The Parties recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. Accordingly, a Party shall not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such measures as an encouragement for the establishment, acquisition, expansion or retention in its territory of an investment of an investor. If a Party considers that the other Party has offered such an encouragement, it may request consultations with the other Party.” (Panama – Taiwan FTA, Article 10.15)
How Commonly Used
Option 2:A pledge to achieve high levels of environmental protection, and to improve those levels over time. These are aspirational commitments, not subject to enforcement.
Important in signalling intent to provide and improve high levels of environmental protection.
Examples
“ … each Party shall ensure that its own environmental laws and policies provide for and encourage high levels of environmental protection and shall strive to continue to improve those laws and policies.” (US-Morocco FTA Article 17.1)
How Commonly Used