International Trade Committee
Oral evidence: UK trade negotiations: CPTPP accession, HC 13
Wednesday 22 February 2023
Ordered by the House of Commons to be published on 22 February 2023.
Members present: Angus Brendan MacNeil (Chair); Mark Garnier; Paul Girvan; Sir Mark Hendrick; Anthony Mangnall; Lloyd Russell-Moyle; Martin Vickers; Andrew Western; Mick Whitley.
Questions 93 - 139
Paul Baker, CEO, International Economics; Professor Clara Brandi, Head of Research Programme, German Institute of Development and Sustainability; and Professor Stephanie Rickard, Professor of Political Science, London School of Economics.
Written evidence from witnesses:
– Professor Stephanie Rickard, London School of Economics TP0012
Witnesses: Paul Baker, Professor Clara Brandi and Professor Stephanie Rickard.
Q93 Chair: Good morning and welcome to the International Trade Committee’s—or business and trade Committee’s—evidence session on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership environment chapter this morning. We have one panel of three witnesses today. We have Paul Baker, Professor Clara Brandi and Professor Stephanie Rickard. I will ask you all to introduce yourselves— name, rank and serial number—as you want, for the record.
Professor Rickard: I am Stephanie Rickard. I am a professor at the London School of Economics. I research international trade and subsidies.
Professor Brandi: My name is Clara Brandi. I am a professor of international economics and development economics at the University of Bonn. I run the research programme at the German Institute of Development and Sustainability in Bonn.
Paul Baker: It is a pleasure to be here. My name is Paul Baker. I am the CEO of International Economics Consulting, and I am also visiting professor at the College of Europe on the international political economy of trade.
Q94 Chair: Thank you very much, and thank you all for attending this morning from your various locations. To kick us off, and to Clara Brandi first, how do the environment provisions in the agreement compare to similar chapters in other agreements?
Professor Brandi: When we look at the environmental chapter in the agreement, we can find that there is a record number of environmental provisions; there are 137 different provisions. This is based on the TRade and ENvironment Database compiled by Professor Jean-Frédéric Morin and recently updated by us to include even more PTAs and their trade-related content. With our very comprehensive and fine-grain coding, we find that this agreement is really record-breaking in that sense.
There are several interesting contents in terms of the environment in this agreement. It is important that the agreement calls for high levels of environmental protection and effective enforcement. There are several duties to a number of multilateral environmental agreements. There are all kinds of provisions addressing several very important environmental problems, including the ozone layer and biodiversity. There is also an implementation mechanism and administrative best practices.
Q95 Chair: It is good in a lot of places. Is it world-leading or are there things that are still missing, even though it is record-breaking?
Professor Brandi: First of all, the agreement is not as innovative as it could be. Most of all the provisions that we find in there—this record number—are duplicates from previous agreements. There is only one really new provision in there, which is the one on fisheries. We will talk about this later, I guess. This is really interesting and important.
What is missing? That is an important question. While there is this record number of provisions in the agreement, there are also several provisions that are found in other agreements but that do not show up in this one. They include references to mercury emissions, organic food certifications, traditional ecological knowledge and natural heritage sites.
Then there is an important gap when it comes to climate change. The words “climate change” are not even mentioned in the agreement and there is no reference to the UNFCCC. While the agreement includes a very high number of environmental provisions, it is not as comprehensive and as detailed as it could be.
Q96 Anthony Mangnall: If I can stick with you, Professor Brandi, how much do you think needs to be added to this? In previous sessions, we have had conversations about trade deals not being Christmas trees to hang every issue and item on. If there are other international agreements that are out there that cover this topic, how far does CPTPP need to go?
Professor Brandi: That is a good question. It is not a Christmas tree. The agreement provides a very good basis for tackling environmental questions. It could be interesting to think about this issue of climate change at one point. That is really a gap that would ideally be addressed. At the same time, this could be addressed even by just referencing the Paris agreement or the UNFCCC. There do not necessarily have to be new, innovative provisions on climate change, although there could be, for example, when it comes to the reduction of fossil fuel subsidies.
Q97 Anthony Mangnall: But it is important to recognise that all the parties in CPTPP that have signed up to, say, the Paris climate accords are still beholden to it, regardless of whether the text is written into a trade agreement.
Professor Brandi: Exactly, yes.
Q98 Anthony Mangnall: Could I bring in Paul Baker? I was about to call you Professor, but I see you have done a huge amount anyway. Can I just ask about this bloc and its comparisons with other blocs that are out there—noticeably, the RCEP—and whether there are other similarities in Commonwealth agreements? Do you have a view on the new body that has just been founded by President Biden in the Indo-Pacific economic forum, which he started just at the end of last year, in which there are specific references to energy and to climate, and whether there are some similarities that we might be looking at there?
Paul Baker: We carried out a study for the Commonwealth Secretariat that looked at different FTAs signed by Commonwealth member states over the last 12 years since 2010. We found that around 35% of the FTAs contain a provision that addresses environmental issues more generally. Only 19% of FTAs signed between north and south countries—developed and developing countries—contain any such sustainability provisions, so it is still relatively rare to contain fully fledged environmental provisions.
Most of these do not contain any binding language, so they are very aspirational in the way that they have been formulated. That is not the case so much for the CPTPP. It is one of the few FTAs that really introduces a comprehensive framework to deal with environmental protection obligations. It has strong enforcement mechanisms as well, so that is quite critical, and I guess we will go through that later on.
Some of these obligations ensure levels of protection—that is article 20.3—and also obligations under international treaties, as well as provisions for public participation, consultation and submissions. Then there is the important dispute settlement chapter, which looks at binding panel findings and the ability to impose sanctions if there is non-compliance.
If we compare that to, say, EU-style FTAs, they tend to contain a dedicated chapter on trade and sustainability, so that covers issues of labour, human rights and environmental protection. However, the EU’s approach to TSD is generally considered much less enforceable than, say, the US approach. The US approach has influenced the design of the CPTPP tremendously.
The dispute settlement mechanism under EU FTAs, for example, does not provide an option for benefit suspension or sanctions in the case of non-compliance with a panel’s findings. That being said, a conflict arose in the EU-Korea FTA, and the EU was able to persuade Korea to ratify, for example, some of the ILO conventions that it was in breach of, as well as amending its own domestic regulation. It can still be effective without necessarily the dispute settlement provisions.
Unlike the CPTPP, the RCEP, which you asked me to discuss, does not contain a dedicated chapter or dedicated provisions on either the environment or, more generally, trade and sustainable development. There are some references to environmental protection in the RCEP, which make these environmental-related provisions much weaker than, say, in the CPTPP or some of the other UK FTAs. It does make some explicit references to the environment on a few occasions, such as under the general exceptions. In the preamble, there is an implicit reference to environmental protection by mentioning the three pillars of sustainable development.
Just to conclude, the CPTPP is a much more ambitious agreement and more vast than most other FTAs. It has the mechanisms embedded in it to try to remedy some of the situations where a country is non-compliant with some of the provisions of that agreement.
Q99 Anthony Mangnall: Just to be absolutely clear, the language is there and the enforcement mechanism is there. This is really an example to other blocs to follow, perhaps.
Paul Baker: Yes, it is. Sorry, I had not mentioned the Indo-Pacific agreement. It is still quite early days, but we know that the Indo-Pacific agreement is more about co-operation than having these dispute settlement mechanisms in place. It is more about trust and building co-operation and co-ordination amongst the different parties, rather than the traditional approach of FTAs.
Q100 Anthony Mangnall: If I can just have one last shot, how does this then compare for countries like New Zealand, which has introduced, in a fairly landmark way, its own clauses and terminology around climate change? We drown in abbreviations on this Committee and I cannot remember what it is, but it has its own specific terms and clauses that it would like to see on climate change. It has clearly not had the ability to put that into the CPTPP, so is it lessening is standards or is it going further with the CPTPP agreements and arrangements within this clause and this chapter?
Paul Baker: The CPTPP was negotiated some time ago, and so they are trying to advance further. Professor Brandi already mentioned the fact that there is not a reference to climate change under it. At the time, it was not quite clear how far advanced we would get while the Paris accord has been negotiated by many members, but the CPTPP is very weak in that area in comparison to what New Zealand would like to get to.
I would just say, though, that the CPTPP does have a clause for revision, although it is not a systematic clause, and so there is the opportunity for members to change the content of the CPTPP, if that is brought in front of the council. Again, it is meant to be a living document. That was the original idea of it. The idea would be that we could change it in the future.
Q101 Lloyd Russell-Moyle: Beside the environment chapter, which parts of the CPTPP are important in understanding how the agreement promotes, or otherwise, environmental considerations?
Professor Brandi: It is the environmental chapter that we talked about already. Key parts in this chapter, apart from the environmental provisions in there, have already been mentioned. For sure, it is clear that there is this stringent enforcement mechanism. It is also worth our mentioning co-operation. The creation of an environmental committee that will oversee implementation is also important.
Beyond the environment chapter, it is also interesting to look at this agreement, and one key chapter is the investment chapter that is sometimes seen as controversial. Especially the proliferation or the inclusion of ISDS—investor-state dispute settlement—provisions has stirred up controversy from an environmental perspective, among others. At the same time, it is to be noted that there is a broad shield for environmental measures foreseen in the ISDS in the agreement.
At the same time, it is not clear that this shield for environmental measures is always strong enough to really live up to the expectations of those who care about the environment and are worried about investor-state dispute settlement mechanisms—for example, generating some sort of regulatory chill effect that could cause claims to be brought by investors. That is one of the interesting chapters that also should be taken into consideration.
Q102 Lloyd Russell-Moyle: On article 9 or chapter 9—whatever it is—on investment and ISDS, is your judgment that it will or can create a policy chill? You said what the different views were, but what is your analysis of that? Are people too worried?
Professor Brandi: In research, it is really controversial. There is not a lot of strong evidence that an environmental chill can happen. At the same time, the environmental shield in this agreement is pretty broad. In order to really do the trick, it would be preferable if it was a bit more specific. For example, there could be many cases brought in the context of climate measures in the future, and more specific exceptions for climate policies, for example, could provide more regulatory space for members of the CPTPP.
Q103 Lloyd Russell-Moyle: This is where the lack of mention of climate change potentially causes some difficulties, because, if you have only a very broad exemption and you are not mentioning climate change explicitly, it is difficult to have the security. One of the areas is that we should be having progressively reduced customs duties for everything, barring a few exceptions—Japan on rice, et cetera. South-east Asia is the home to one of three major tropical forests rapidly being eroded, with the loss of biodiversity and the carbon release that that entails. If tariffs on tropical timber were reduced according to the CPTPP—and there is no exemption on tropical timber—will this not inevitably lead to an increase in deforestation?
Professor Brandi: There is potentially a risk. There will be a higher demand for tropical timber. At the same time, it is also up to the UK to think about what kind of timber to import and whether timber from certain sources should be in focus. There might be a higher demand, but there are provisions in the agreement that seek to support biodiversity. Whether they can really compensate for this higher demand for tropical timber is not quite clear.
Q104 Lloyd Russell-Moyle: I do not quite understand. You said that the UK would have to consider what kind of timber it wants to import. We do not have a centralised state planning authority.
Professor Brandi: Yes, it is up to consumers.
Q105 Lloyd Russell-Moyle: Individuals in the market will choose whether the tariffs are reduced on something that we know is particularly harmful. Article 8 or chapter 8 talks about the abolition of technical barriers on these things, and there is no exemption on tropical timber. Equally, palm oil is another example; we know it is causing huge amounts of deforestation, and there is no ability to put or maintain a tariff on that. Is there not a real danger that that undermines the environmental chapter? Whatever you do in the areas, if you are reducing costs, you are increasing the export of it.
Professor Brandi: It is a risk. At the same time, there is already demand for tropical timber and for palm oil from Malaysia and other countries as part of the agreement. One counterargument would be that at least an agreement like this, with a strong environmental chapter, can provide a basis for exchange about these issues. It is an open question whether this can really compensate higher demand, but at least there is an option, in the context of the environmental committee and also via other civil society channels, for these debates to be had and for exchange about these issues.
It is interesting to look at the example of the recent EFTA agreement with Indonesia, where tariff preferences were provided only for sustainably certified palm oil. This could, of course, have been an option in this agreement and could be something that the UK will try to push for once it has become a member.
Q106 Lloyd Russell-Moyle: So a particular agreement on palm oil and maybe tropical timber would be something that we should push our Government to negotiate in the accession process, possibly.
Professor Brandi: I think so, yes.
Lloyd Russell-Moyle: Unless there is anything burning from the other witnesses, I will hand back to the Chair.
Chair: Thank you very much. That was an interesting line of questions around how trade and the environment can come into tension at the very least. I turn now to a new Member. Welcome to the Committee, Andrew Western, the Member for Stretford and Urmston.
Q107 Andrew Western: Paul, what value does the environmental chapter provide to UK businesses seeking to operate in the region?
Paul Baker: That is a good question. From the previous conversation, just to say that there are some references to forest management under the agreement, but, of course, it is not very binding language at this stage, so we would perhaps have to have side agreements to try to enforce more environmental sustainability in forestry resources, for example.
Generally, the provisions in the CPTPP can give some assurances for UK businesses operating in the region, because one is through the transparency of information and access to fair, equitable and transparent proceedings, as well as opportunities for public participation and public submission. In the example that we had just earlier, if there are any cases of contravening some of the conventions in any environmental areas, there is a process that has been put in place in every CPTPP country to ensure that civil society has access to present and submit its positions, and these have to be taken into account. That is also quite novel for some of the countries in that area.
Businesses in general that are operating in foreign markets want to have some sort of predictability in the legal framework of the country in which they are operating, as well as guaranteed mechanisms for protecting investors’ interests.
When it comes to the environmental law areas, the current trend towards low-emission economies and fulfilling net zero commitments can be expected to lead to more legislative reforms in the CPTPP countries. Having clarity and predictability is going to be important for this transitional period when these reforms are taking place. That can affect businesses’ ability to meet the compliance requirements as well as the monitoring and reporting that will be required on businesses at the time.
The transparency requirements in the CPTPP, as well as most of the countries’ legislative procedures, will allow this transitional period for businesses and allow them to be more proactive in shaping up that legislation as well. That has its benefits and perhaps its challenges as well.
The CPTPP does provide channels for businesses to engage in that process and, as I said, there are contact points that have to be established under article 20.9 in every single one of these countries, so they can work through their associations or trade attachés to try to also share their views in that process.
If there is any violation of the environmental laws that affect businesses’ interests, businesses can also ensure that they have access to judicial or quasi-judicial administrative proceedings for the enforcement of their rights under the host country’s laws. The proceedings will be fair, equitable and transparent and will comply with due process of law, as contained in article 20.7.
That is one angle on the environmental law. The other one is what we discussed earlier with the ISDS framework. The foreign investor can use that framework to also seek compensation if there are certain breaches in the country’s investment obligations. There is a non-derogation clause in the CPTPP, so countries are not allowed to lower their environmental standards to try to attract investment or to promote trade. That is categorically not allowed under the agreement. If Governments do something that is not covered by the agreements and goes against the investors’ interests, the investors would have access to a fair tribunal and investigate the issues. This is what can give some assurances to investors and traders in the region.
Q108 Andrew Western: Overall, would you suggest that there is enough mitigation in there for businesses against the potential reputational impact of operating in the region?
Paul Baker: There is, because there is access to information, transparency and the due diligence processes that are embedded in it. That does not mean, of course, that, in practice, this will always be 100% fulfilled. It is not even in more advanced economies. We know that some of the more developed economies perhaps struggle with some of these areas. Nevertheless, this is virtually as far as any agreement that I know has gone to try to promote more confidence in the region.
Chair: Thank you very much. That is Andrew Western off to a flying start after coming into Parliament recently, taking over from the much respected Kate Green. It is nice to have you.
Q109 Mark Garnier: Paul, the chapter includes an article on encouraging what we would refer to as ESG. Do you think that this is going to put an onus on British businesses to perform better than they already are, or do you think that our current ESG requirements, such as they are, are enough to keep this agreement happy?
Paul Baker: That is again a very good question. Generally, under the CPTPP, there is only the encouragement and not the obligation to use these voluntary mechanisms such as CSR or ESG. They try to encourage it through PPPs or market-based incentives, as well as the sharing of information and expertise and voluntary audits, to try to maintain high environmental protection.
In the case of the UK, which has quite high environmental standards in general in comparison to some of the other CPTPP members, it would be enough. There are some members in the CPTPP, such as Canada, that perhaps have higher standards in certain sectors, and so perhaps the level will have to be increased in that case.
If we compare this to other FTAs, this is no different. EU FTAs also encourage a similar level of voluntary initiatives such as fair and ethical trade schemes and ecolabelling schemes, and so this is pretty much aligned to what we have seen in other types of trade agreements.
Q110 Mark Garnier: I would be very interested to hear your thoughts about the economic dynamics that are driving better corporate responsibility. One of the things that I have noticed is that, if you Google ESG, for example, you will see that the first 10 or 20 hits are fund managers offering responsible investment into businesses.
As a wider point on this, I am just wondering if you have noticed that the cost of capital for businesses needing in particular equity funds but also debt funds is lower for those businesses that could be demonstrably ESG-compliant than for those that are not? For example, would an oil and gas company have to pay more for its capital—it may buy or sell equity at a lower price-to-earnings ratio, for example—than somebody who is demonstrably very good at green energy? Have you noticed that at all?
Paul Baker: I certainly do not have any evidence on that. My feeling is that there are other factors at play that affect the intrinsic risk of different investments, so it plays a very small part in the equation at this stage. Other factors will be leading to the differences in borrowing costs or returns on investment for different players at this stage.
Q111 Mark Garnier: Looking at that from the other end of the telescope, it is very important to have this type of thing in these international deals, because we cannot necessarily rely on market forces to drive better responsibility from businesses. Businesses still need to be told that they have a responsibility one way or the other.
Paul Baker: The demand for Fairtrade products and Ecolabel products is increasing, and we know that the price of those products is also slightly higher than other types of products. There are some returns to that type of investment, but it is still a relatively niche market. It is more developed in more advanced economies than it is in developing economies, so there are perhaps fewer opportunities in the CPTPP context, where most of the larger markets are in developing countries, to be able to develop ESG labelling. That is true.
Q112 Mick Whitley: My question is to all the panel. There are commitments to transparency that run throughout the environmental chapter. How important are these for stakeholders looking to engage with the chapter’s provisions?
Professor Rickard: With regard to fishery subsidies, the transparency rules are very ambitious and very important. They ask signatory states to report their fishery subsidies every two years. They ask for very detailed information, so subsidies for a particular species on a particular catch state. They even ask signatories to provide information about their fuel subsidies. This is a very ambitious area of transparency in this agreement. Other parties can interrogate other parties about their fishery subsidies. There are real efforts here to improve transparency, both for signatory members and also for stakeholders.
There are two potential problems. One is that there is no secretary. Unlike the WTO, where there is a secretary in Geneva, where you go to Geneva and you deposit your information about your subsidies, the CPTPP does not have that, so that could provide something of a bureaucratic challenge.
The second challenge is, “What are the states’ incentives to provide this information?” The WTO has long had rules requiring states to notify their subsidies, but many do not. Compliance with these rules is very low at the WTO. A third of WTO members have not made any notifications for the past two decades. One of the challenges will be to think about how we incentivise signatories to the CPTPP to comply with these rules on transparency.
This is where the UK could be world-leading, in two ways. The first is leading by example and being very clear and very transparent about its own fishery subsidies, and making sure that it provides all the information that is requested in the agreement. The second way is a more capacity building or bureaucratic way. The UK’s subsidy control regime requires public bodies in the UK to report information about the subsidies that they are providing above a certain threshold. The UK has already developed a database where all of this information is stored and populated, and so, as a new member, the UK could provide this expertise to the membership in order to increase further transparency on fishery subsidies.
Professor Brandi: This is a very good question. I agree that the transparency provisions in the CPTPP are good. The environmental chapter in particular requires all parties to commit to high standards of transparency and to consultation with respect to environmental loss, for example. It is important for civil society and for other stakeholders to engage with the content of the agreement, and the example of the fishery subsidies case just underlines this.
At the same time, we know that other agreements—for example, EU agreements—have even more institutionalised channels for civil society involvement, and so there is still potential for this stakeholder involvement to be upgraded. For example in the EU, domestic advisory groups represent various branches of civil society and are set up in the context of these agreements and in each partner country to help monitor and provide advice on implementation. It is good to have these very institutionalised forums, which meet roughly once a year to really ensure that stakeholders are engaged in the different stages of the implementation of the agreement.
Paul Baker: I absolutely agree with Professor Rickard and Professor Brandi on the transparency aspect. In addition, transparency is not just about information sharing. It is about empowering stakeholders, and Professor Brandi referred to that. In the CPTPP, there are different avenues for businesses and civil society to be more proactive and engaged in those rules.
Article 20.8, as I mentioned before, looks at public participation and each of the parties is mandated to use consultative mechanisms, so that is quite new for many of the countries in the CPTPP. They have to set up, for example, a national advisory committee to try to get views related to the implementation from the different parties as environmental commitments.
There are public submissions. Article 20.9 looks at making it mandatory for each party to designate a body that is responsible for accepting and considering written submissions from the public, so these have to be taken into account.
Lastly, under article 20.19, each party has to designate a contact point and notify the parties of this designation. These are mechanisms that encourage public submissions and for these submissions not to get lost. There is a trail and there is action that needs to be taken after these submissions. These public submission channels are what are quite critical and quite helpful in the CPTPP.
We did some work for the Canadian Government last year looking at the institutions established by Vietnam as a result of the CPTPP. What we found is that Vietnam has been clamouring to try to set up these different institutional frameworks that are required in the CPTPP to be compliant with it. It is struggling with some of these committees that need to be established, but is moving forward in terms of doing so. There is some evidence that this kind of agreement is changing practice in these countries.
Q113 Martin Vickers: Professor Brandi, the UK has not committed to an environmental impact assessment of CPTPP. How might an assessment help in focusing environment-related policymaking?
Professor Brandi: That is also a very good question. There is an important role for impact assessments. On the one hand, we have different kinds of impact assessments. We have assessments that are ex ante, which are interesting but can be highly uncertain and imprecise. Especially ex post environmental assessments are really promising.
It would be really helpful to conduct them regularly, say every five or 10 years, because these kinds of ex post environmental impact assessments can provide a space for better learning opportunities and trying to understand what has worked and what has not, what might have been disappointing, and where there might be the potential to improve what is on the table. It would really be recommended for the UK to push for ex post assessments in the context of the CPTPP.
Paul Baker: Amongst all the members of the CPTPP, only Canada conducted an EIA. Other countries did more general impact assessments, such as sustainable impact assessments, to look at the economic implications of the agreement. One of the shortcomings of the CPTPP is that there is no provision that obliges or even encourages members to undertake sustainable impact assessments, while that is a requirement, for example, in many of the UK FTAs, such as the UK-Japan FTA or the UK-Vietnam FTA, so it is a legacy of the European Union’s policies with regard to FTAs.
I agree with Professor Brandi that EIAs should be conducted ex ante, so at the beginning. We need a baseline to know where we are at, but also where we expect to get to, and we also need to do it at regular intervals as the agreement is being implemented. The EU, for example, undertakes them every five to 10 years. This ensures that we try to monitor what is happening at the environmental level through the implementation of the agreement and ensures that all the different environmental obligations and impacts are fully understood, so that we can address them and try to mitigate them.
I agree with Professor Brandi that we need to have this process in place longer term. To answer your question, yes, the UK should, ideally, do an environmental impact assessment.
Q114 Anthony Mangnall: Could I just ask the whole panel whether any side letters or reservations have ever been used within CPTPP members around environmental matters and policies? Do you know of any? It is not a trick question. I do not know that there have been, but I am just interested to see whether they have been used at all. No one is answering, so I am going to move that on and presume that there is nothing there. I am interested because there are these mechanisms where you can find carve-outs, and I am wondering whether you might ever find or expect that to be used in and around this chapter regarding environmental policy.
Mr Baker, the chapter has given a huge amount of scope for co-operation. How do less developed economies and countries look at this, especially when you have Australia, New Zealand, Canada and the UK perhaps pushing this on some of the less advanced economies? Does this look like interference? Does this look like the west once again trying to trample over the development of other countries? How is it going down?
Paul Baker: There is a political economy element to it. Generally, these provisions are, indeed, pushed by more developed countries. The CPTPP allows a lot of opportunities for co-operation and dialogue. The area of environment, particularly to do with economic growth, is quite sensitive. It will potentially impact on economic growth for some of the more rapidly developing countries like Vietnam. A co-operative approach, which is the one adopted by CPTPP, can be more beneficial, and so this idea of having a co-operation committee is quite helpful.
It is also helpful to try to harmonise some of the standards and to have a common regulatory approach to deal with, for example, the carbon tax or border carbon taxes that are being developed by some of the more advanced members of CPTPP. We are also going to see developing countries applying that. Depending on the application, that might become restrictive of trade as well.
In the agreement, there are many instruments to try to encourage this public participation as well in order to try to promote co-operation between the different parties and, within the countries, different civil society organisations.
It is relatively welcome. Technical co-operation has been used as an instrument for years by the EU, the UK and other member countries to try to promote good environmental practices. That is also what is foreseen in the CPTPP and is relatively welcome, but just to emphasise that, indeed, it can be quite sensitive in some countries of the CPTPP.
Q115 Anthony Mangnall: Specifically looking at the United Kingdom, which has done pretty well on the global stage in terms of leading in environmental policy and enacting new policies, how is that going to impact other members within the CPTPP? Is this going to speed things up or is it going to irritate other members?
Paul Baker: The UK is free to introduce any types of legislation that it wants. It will depend on whether that legislation is then pushed further in the CPTPP. For the UK to do so, it has to bring that forward into one of the working committees and try to propose new areas in those committees. That is not a done deal at all, even if it is promoted.
It will then depend on the type of assistance that is provided. If a good enough case is made to show what the benefits of it are—we see that, in renewable energy, for example, or the green economy, where there is a lot of effort that is being made to try to show what the economic returns to this could be, and that it is not just a cost—then some of these countries can also see the benefits of it. There is a problem of pollution in these countries. Society is a little bit fed up with that, so Governments in these countries also see the benefits of introducing such legislation.
Q116 Mark Garnier: Professor Brandi, the chapter outlines several issues that the parties would seek to co-operate on, but none has any prescribed specific course of binding actions on the party. How do we evaluate the strength of this sort of agreement? It is very worthy, but it does not really seem to stack up to a hill of beans.
Professor Brandi: From an environmental perspective, it would, of course, be preferable if these issues were included in a binding manner. At the same time, it could still be very valuable to have these issues in there in this non-binding way. While, at first sight, these provisions seem less strong and less stringent than the binding ones, it can, as we just heard, be very valuable to have ongoing co-operation on issues such as energy efficiency, ship pollution and deforestation. It might not be possible at this point to agree on binding provisions, but having dialogue and co-operation channels can really make a difference, so it is still definitely worthwhile to have these issues in the agreement.
Q117 Mark Garnier: I am not convinced. As I say, it sounds very well-meaning but, apart from anything else, different countries will have different interpretations of standards. If a country has a very low interpretation of a standard, how does another country that has a higher one try to persuade them to catch up, apart from just being nice to them?
Professor Brandi: To some extent, as Mr Baker just pointed out, it is also about being in dialogue about the potential benefits of investing more in renewable energy and reducing fossil fuel subsidies. It is not only about carrots and sticks; it is also about exchange, learning and socialisation.
Q118 Mark Garnier: Why would that need to be in an agreement like this? I agree with you entirely. My background is in investment banking and investment management, so I really like economic rewards, if you like, for good behaviour. It is a very good way of driving good behaviour, but why put it in a deal where it is not at all obvious how it is enforced or even encouraged? Everything you have described can happen anyway. It does not need to be here.
Professor Brandi: Yes, but we talk about the participation of other stakeholders and of civil society. They can refer to these contents and, even if they are not binding, they can refer to these contents and foster discussion about this. A quick and immediate change will not be the result, but we know from research that these kinds of co-operative channels make a difference. We also know that, in the context of EU agreements, empirical findings suggest that these co-operative mechanisms can generate some change. I can understand the scepticism. Of course, a binding inclusion would be preferable, but it is still not a lost cause to have these issues in there in this non-binding manner, focusing more on co-operation.
Q119 Mark Garnier: Do either of the other two witnesses disagree with that?
Paul Baker: I certainly would not disagree with it. If you have it binding in some areas, it just would not be passed through, so you would actually have it omitted completely. I agree that it is very flimsy language, but the fact that it is in the agreement means that it should be tracked and monitored. These assessments should be looking at whether this is getting done or not. If it is not, then it will be brought to the attention of the parties and they will try to discuss it. The idea is to try to resolve it, but at least it is on their mind and it is being tracked by having it incorporated into the objectives of the agreement.
It is the theory of change of what the agreement will achieve. We would like to make sure that it is being achieved, and so we use this language to try to see whether it is being achieved. Then we discuss it amongst the parties and provide assistance where needed. It is relevant to include it, but it obviously will not have the same impact as it would have if you had penalties for being in breach of it.
Q120 Anthony Mangnall: This is pretty closely linked to Mr Garnier’s point. If the language is weak, it is not particularly effective and the chapter does not even say that parties should co-operate, what exactly is the point in it?
Professor Rickard: There is binding language on fisheries subsidies. There are prohibitions on two types of fisheries subsidies: subsidies that support IUU fishing—illegal, unreported and unregulated fishing—and subsidies for fishing in overfished stocks. These are two important binding regulations. A third of the global fish stocks around the world are currently overfished, and 20% of fish landed involves IUU fishing. There are some binding parts of this agreement and that is really, at least on fisheries subsidies, as far as they could go. It is about getting things down on paper and continuing the conversation. They say they are going to re-evaluate this and come back every five years, so, in a sense, it is building momentum towards more binding regulations.
Q121 Anthony Mangnall: You have touched on my hot topic, which is fishing. That is clearly a way to my heart, given my constituency. Is that not the precise problem? You are being very specific about fisheries. It is not wide-ranging enough. The problem is that the language is not going far enough to ensure that there will be co-operation and development of this policy, so should we not be a bit more worried about this? Again, I keep coming back to this Christmas tree suggestion, but it is a gimmick. It is not really working. It is not specific enough to make a meaningful difference.
Professor Rickard: I would push back a little bit. It is specific in fisheries subsidies. I agree that the rest of the agreement is not as specific. It is curious how they were able to reach agreement on fisheries subsidies and not these other issues. Of course, whenever you restrict fisheries subsidies, as you know, there are benefits to the environment and the sustainability of fish stocks, but there are costs. It means these signatory national Governments cannot use certain policy tools to support their domestic fishing industry.
It is curious that this group of countries was able to reach agreement on these prohibitions and not in other areas, but we do have some concrete achievements on fisheries subsidies. Again, we have this environmental committee. They will meet, talk and continue to push forward, and that is how these negotiations often happen. We saw it at the WTO, and potentially we are going to see it at the CPTPP as well.
Q122 Anthony Mangnall: It is more of a case of it being better to have a little now and to see how it evolves. Mr Russell-Moyle’s point was about deforestation. Deforestation is a perfect example of where this is not covering the ground that it needs to cover. It is, “Watch this space and see how it evolves”, but the language is not necessarily encouraging that evolution.
Professor Rickard: It is saying, “We are going to meet as a committee and review these commitments”, so there is the sense of bringing everybody back together, coming to the table and talking further. They are not writing this agreement and walking away. They are writing this agreement, taking what they could get at the time and agreeing to meet and go further in the future. It is not quite as bleak, perhaps.
Q123 Anthony Mangnall: I am a politician. More talk is always a good suggestion. I will bring you in, Mr Baker. This is why you need to have greater focus in other agreements rather than trying to tack on in trade agreements.
Paul Baker: Professor Rickard knows the fisheries sector much more than I do, but certainly I read it in exactly the same way that she does. There are plenty of provisions there that indeed enforce that. Outside of fisheries, we have article 20.6, which is looking at protecting the marine environment from ship pollution. We have protection of the ozone layer in article 20.5. We have conservation and trade in 20.17. Most aspects related to trade and linking it to different multilateral environmental agreements have been covered in the CPTPP, and so there is a requirement to at least adhere to those standards. It is not just related to fishing, but also in other areas as well.
Again, it comes back to the fact that we have this non-derogation clause where you cannot lower your environmental standards to try to promote trade and investment, which is quite critical. You can be taken to dispute settlement if you try to lower it, so that is, again, an instrument that can be used.
The last point is about better governance and better regulatory processes in these countries because, again, you have this improvement in terms of promoting civil society to be engaged. Rather than Governments in the past doing everything without talking to anybody, now they are forced to actually engage with society and understand some of the different issues that they may not have captured before. All of this is really moving in the right direction for many of these countries.
Q124 Andrew Western: New parties to the agreement are permitted to outline areas of interest for co-operation under the environment chapter. Are there any particular environmental areas in which you would like to see the UK work with the other parties?
Professor Rickard: One area that the UK could make progress on and be world-leading on is the area of fisheries subsidies that generate overcapacity. These are subsidies that allow the fishing industry to fish above the level they would otherwise do without government support. These include things like subsidies for bigger boats, newer boats, bigger engines, bait, fish, bait ice, gear and stuff like that. These types of subsidies are not currently prohibited by the CPTPP. There is language in the agreement that says that parties should make best efforts not to provide these types of subsidies, but there is no formal prohibition, so this is an area that the UK could flag and work on as a new member.
It is an important area because 60% of fisheries subsidies currently lead to overcapacity, which leads to overfishing. A third of global fish stocks are currently overfished. A prohibition on overcapacity subsidies in the fishing industry is one of the UN’s sustainable development goals, so it would be a good effort to work on this goal and work to achieve this goal. Indeed, the UK has already committed itself to limiting some overcapacity fishing subsidies in its bilateral agreement with New Zealand, as this Committee will be well aware of. This is an area where the UK could be a world leader. The UK could work on it and hopefully get some forward progress as a new member.
Professor Brandi: The UK could also focus on environmental goods and services more extensively. This is both about the reduction of trade barriers but also more generally the promotion of trade in environmental goods and services. I see the UK being a promising leader in this regard, and I see some potential for the already existing provisions on environmental goods and services being expanded, specifically with a focus perhaps on climate-related goods and services.
Q125 Sir Mark Hendrick: The CPTPP’s environment committee is the principal vehicle for co-operation activities under the agreement. How could the UK best contribute to this committee following its expected accession?
Professor Rickard: I suggest two ways that the UK could contribute. First, when the UK is chair of this committee—it will go in alphabetical order, so it might have to wait a while—it should reopen negotiations on overcapacity subsidies to the fishing industry, as I have just described.
The second way it could contribute is that, without being chair, it could still make an important contribution on this issue of transparency. The UK subsidy control regime has already set up a system where public bodies notify their subsidies. This is up and running. The UK could offer to host the subsidy information. The UK could offer to provide its technology in terms of transparency in these subsidies. That would be a really concrete way that the UK could contribute right away as a new member and say, “We will be the depository for the subsidy information. Use the infrastructure that we have already built for the UK’s subsidy control regime and let us make this a very transparent system”.
Paul Baker: I agree with the process indeed. Sometimes the UK will be chair and able to set the agenda. Sometimes it will just be a member and, of course, it can still propose an agenda, so there are many opportunities for the UK to be engaged. As Professor Brandi said, at the level of the WTO there is, of course, the environmental goods agreement that they could try to push forward as well amongst the CPTPP members.
You also have the structured discussions on trade and environmental sustainability, and then of course we have the UK’s own policy agenda for net zero commitments as well. That might also try to be pushed amongst the members. Also, there is this emissions trading system that is going to become more and more significant as carbon border taxes are introduced. In the area of ETS, we could also see some role for the UK to try to push forward to help some of the more developing country members to have such a scheme in place as well.
Q126 Sir Mark Hendrick: The point has been made earlier that there will be no secretariat and, even where you have a secretariat like you have in Geneva with the WTO, they have trouble enforcing things. Transparency is one thing; getting countries to do things is another. Is this not a major weakness? As Professor Rickard said, it is alright saying, “Let us lead by example and talk about building momentum and coming out with good ideas”, but good ideas and good intentions do not necessarily lead to the outcomes that you want. Where are the teeth in all this?
Professor Rickard: It is a great question. On the issue of transparency and notifying subsidies, there are definitely no teeth, and this is why we see a third of WTO members not notifying their subsidies; 50% of WTO members did not notify their subsidies last year. This issue of transparency is a real challenge. The UK can lead by example. New Zealand will also be leading by example. There will be pressure from some of these countries to get other countries on board and to get them to notify. There could be work done to align the incentives and say, “You, as a state, have incentives to notify your subsidies”, but currently those incentives are not there.
Q127 Sir Mark Hendrick: A little like the WTO, the UK is going to be the new kid on the block: “Who is this new kid here telling us what to do? You have just joined the club and now you are holier than thou. Why should we follow what you are saying? We have been doing this for quite some time now. Why should we bother?”
Professor Rickard: The UK already has a good reputation in terms of transparency. You are right that there will be some teething challenges, but it is about saying, “Look, we have put all our subsidies online. You can see all our subsidies. It is all transparent. It is all clear. We are giving you information as a trading state about what we are doing behind our borders. We expect some reciprocity”. At this level, that kind of incentive is where we are at and what we are going to get.
It would be interesting to think about additional incentives to get states to comply. At the WTO, one thing they have done is to try to say, “If you notify your subsidies, we are not going to use these notifications as evidence that you are breaking the rules”. They are trying to remove a negative incentive. That is still not providing a positive incentive, but those positive incentives do not currently exist.
Q128 Sir Mark Hendrick: Professor Rickard, you make excellent arguments in terms of fisheries policies and things of that nature, but what about forestry management or climate change? These are very big issues that are really going to affect the future of the globe and not just the CPTPP area. How do we get some teeth into that rather than just good intentions?
Professor Rickard: That is the $10 million question and I do not have the answer. The challenge with both of those issues lies at home in domestic politics, where Governments are making decisions about the costs and benefits. In both of those areas that you flag, the benefits are clearly there, but the benefits are, in part, outside the national borders. The costs are incurred entirely inside the national borders.
In fisheries subsidies, the story is a bit different because the fishery industry realises that it needs a sustainable environment to continue. Sometimes the forestry industry or some of these other industries that are polluting know that there are long-term consequences, but the short-term benefits for them of not being regulated and not having these restrictions are so powerful that they are able to lobby their national Governments to resist them. Unfortunately, the resolution to these issues lies in domestic policies and at home, and there is limited ability of international agreements to be made and to have teeth because of these domestic politics. Unfortunately, we are a way off on those issues.
Q129 Paul Girvan: Last year, the WTO reached an agreement, after 20 years of negotiation, on fishery subsidies. It is significant that the CPTPP had already reached a similar agreement in 2015. How does the CPTPP tax compare with the WTO agreement and what are the differences?
Professor Rickard: You are right. It took 20 years for the WTO to reach an agreement on fisheries subsidies. The debates were intense. They could not even agree on the definition of a fish. They got a breakthrough after 20 years. They got an agreement after 20 years and, in part, the CPTPP played a role in that. The CPTPP was able to bring agreed text to the table and say, “Look, here are the prohibitions that we have agreed. We already have a coalition of the willing”. All the CPTPP states went into those negotiations at the WTO and said, “We have agreed to these restrictions. Get on board”. I believe that the CPTPP played a critical role in getting that agreement at the WTO.
There are differences between the WTO and the CPTPP. First and foremost, the WTO’s agreement is not yet in force. They have agreed it, but two thirds of the WTO members have to ratify it before it enters into force. So far, we are at country number two, and the two that have ratified it are landlocked, so we have a way to go. The WTO is not enforced.
The WTO also does not include language on overcapacity subsidies. The CPTPP, as I said, includes aspirational language that says states should make the best efforts possible not to provide these types of subsidies that generate overcapacity and overfishing. The WTO final text does not even include that aspirational language. It has been totally removed from the WTO agreement.
Finally, the WTO also gives states a bit more leeway in how they certify overfished stocks. Like the CPTPP, the WTO prohibits subsidies for the fishing of overfished stocks, but it allows each country to determine what is overfished using the best scientific evidence available in that country, so it gives the states a bit more leeway. Finally, a difference is that the WTO has language in it on prohibitions on subsidies for high-seas fishing where there are no territorial waters, management or fish stocks. There are some differences, but the CPTPP arguably goes further and is more ambitious.
Q130 Paul Girvan: On that point, it probably brings me back to an experience we have had with the European fishing policy. Effectively, because we complied quite well with it, we ended up getting done over by some of our neighbours who were supposedly partners with us.
I am just wondering how you deal with issues like bycatch, because different countries are going to be at different capacities in terms of the ability to deal with it. There is bycatch when people go after specific species and dump everything else over the side. How do we ensure that those sorts of measures are included within some of these new agreements that are being brought forward? How can they be policed in a way where we do not end up with the same problem of somebody fishing within waters that are controlled, but going outside those waters, into international waters, to offload to a factory ship from another country thousands of miles away?
I am just using that as an example because it does happen. Because they are not landing at a port where it is being monitored, it is actually going to another country where they flout whatever rules they want. How do you ensure that we have a global approach towards it? If we go beyond it, we could end up with a collapse of our entire fish stocks. In fact, we nearly did that with cod within our own waters. I appreciate that is an area we need to be very careful in. Sorry, I went on quite a bit there.
Professor Rickard: No, it is a really important point. The negotiators know that this is happening. They are aware that it is happening. There is some aspirational language in the CPTPP about it. There is some mention of it in the WTO agreement, but you are right that there are no binding rules at the global level on it. There is some language on it that is more ambitious in the UK-New Zealand bilateral agreement, as you will know, but there is a lot that needs to be done here.
One thing that could help is devoting more of the fisheries subsidy budget to monitoring and enforcement. When I looked at the data from 2008 to 2018, the UK was spending a much smaller share of their fisheries subsidy budget on monitoring, enforcement, stock management, research and development than some of the other CPTPP countries like New Zealand and Australia. Potentially, just beefing up that enforcement mechanism is one way to do it domestically. Now, that does not answer your question about international co-operation. Currently, the CPTPP is aware of this issue. They are aware that it is a problem but there is no binding language on it.
Q131 Anthony Mangnall: The WTO agreement has a sunset clause and will cease to operate four years later under the terms of the sunset clause unless members are able to agree on unspecified comprehensive disciplines. Should we be worried about that? I will stay with you, Professor Rickard, on this. Just out of interest, who would the UK be working with? Who would be our closest allies within the membership of the CPTPP on this issue per se?
My last question is about whether or not you think the CPTPP actually helped push the WTO in this direction. In the previous evidence session when we had Peter Ungphakorn here, he was saying that these blocs quite often help the development of policy within the WTO.
Professor Rickard: I will start with your first question about the sunset clause. We should be worried. This clause was inserted at the very last minute by states that were frustrated by the lack of a prohibition on overcapacity subsidies. It is borrowed from the textile agreement at the WTO. There are four years, but the four-year clock only starts once two thirds of the WTO countries have ratified. We still have time, but it is important to keep the momentum going and to keep talking so that this agreement does not disappear.
In terms of allies, in the CPTPP they have all agreed to these fisheries subsidies, but they have varied preferences. There are some countries that are much more ambitious in terms of environmentally friendly fisheries subsidies than others. Amongst the CPTPP members, there are four states that were part of a coalition known as Friends of Fish at the WTO. These were New Zealand, Australia, Chile and Peru.
New Zealand absolutely led the efforts at the WTO to get these restrictions on fisheries subsidies. They have 100% of their fisheries subsidy budget dedicated to green subsidies such as stock management, catch enforcement, research and development. They are clearly at one end of the continuum. They are the greenest. They are pushing this forward.
We can see this reflected in the UK-New Zealand trade agreement. This is certainly the most ambitious agreement out there on fisheries subsidies. My sense is that the UK would join the CPTPP closer to the New Zealand side of the continuum. That is who they have aligned themselves with in their bilateral agreement and the rules they have already agreed on fisheries subsidies. They are going to be closer to New Zealand, working with the Friends of Fish in that side of the agreement while understanding that there is variation amongst the CPTPP members.
Finally, in answer to your third question, yes, I absolutely think the CPTPP played a critical role in getting that WTO agreement across the line. The text in the WTO agreement comes, in part, from the CPTPP agreement. There is a text that we have agreed on regarding the definition of fish. There is text that we have agreed on regarding IUU fishing. It was really important to have this text and agreement agreed, and then to bring these member countries to the WTO as a coalition of the willing and say, “We have already committed to these restrictions”. That changed the dynamics of the WTO and helped the WTO agreement happen.
Q132 Chair: Given the UK is unlikely to trade fish or indeed share stocks with other TPP parties, given distances, how much interest is there from the other parties and other members of TPP in the UK’s compliance with the article on fisheries and fisheries subsidies?
Professor Rickard: It is an important question. In terms of the regulations included in the environmental agreement, there are trade issues about subsidies for fish. When you subsidise your fishing fleet, they are not paying the full cost of doing business, so they are able to fish more and sell their fish, potentially, at a lower cost. There are trade concerns, but the concerns driving these rules are primarily environmental. Indeed, if you provide an illegal subsidy to the fishing industry, you do not necessarily need to provide evidence that it has had trade or investment impacts. The violation itself is for subsidising IUU fishing or subsidising overfished stocks.
Q133 Chair: It is an environmental concern rather than a trade concern.
Professor Rickard: Yes, exactly. This is different from what we often see in international trade agreements, where you have to demonstrate that the violation has caused an injury for your domestic businesses. This is fundamentally different. I know that states that are not currently members of CPTPP but that are thinking of joining are watching the UK very closely. They are asking, “What is the UK doing to prepare its fisheries subsidies for membership? How is it bringing its fisheries subsidies into compliance?”
There are two audiences. One is the potential new members, who are watching to see what it takes to get into this club or to join. The second is the current members, who want to know how the UK is going to change the balance of power. Is the UK going to come in and weigh in with New Zealand, or is it going to come in on the other side of the spectrum and be a bit more resistant to further restrictions on fisheries subsidies?
Q134 Mick Whitley: Are there are any specific improvements to the article on marine capture fisheries that you would welcome?
Professor Rickard: As I have said, the next step that needs to happen and the best improvement would be to include restrictions on subsidies that generate overcapacity in the fishing industry. This would help to reduce overfishing. The current text says that states should make the best efforts not to provide overcapacity subsidies. Pushing forward and turning that ambitious language into a more binding prohibition would be the best way to improve the section on fisheries subsidies.
Q135 Lloyd Russell-Moyle: What is the significance of the CPTPP’s dispute resolution mechanism applying to the environment chapter? You talked a bit about this broad exemption earlier on.
Professor Brandi: Yes, it is remarkable that the dispute resolution mechanism of the entire agreement also applies to the environment chapter. This is not the case in all types of trade agreements that we see around the globe. It provides teeth, so to speak. It offers options for stringent enforcement.
At the same time, it is also welcome that the CPTPP includes many co-operative mechanisms because it is good to have both communication channels, with co-operative mechanisms as well as these more stringent enforcement mechanisms. We heard earlier how the EU has been thinking about reforming its approach to dispute settlement or enforcement and how they have also now foreseen a resort to these kinds of sanction-based approaches in the future, so overall this is to be welcomed in the CPTPP.
Q136 Lloyd Russell-Moyle: Is there any ability within that for public participation along the lines of the Aarhus convention, or are we just talking about state-to-state agreements and not state to population?
Professor Brandi: In my understanding, it is mainly state-to-state, but we heard several ways for civil society to also get involved in the participation during implementation or during disagreements. There are options, but my understanding is that it is state to state.
Q137 Lloyd Russell-Moyle: The environment chapter creates the possibility of disputes being raised around fisheries, but it does not really allow the possibility of disputes being raised around deep-sea mining, for example. Is it still limited in what it allows you to challenge on the environment that is very focused on trade?
Professor Brandi: We talked earlier about several issue areas that are included in a non-binding manner. Those are important environment issue areas including deforestation and renewable energy. Yes, of course, in a way, the teeth of the enforcement mechanism are still limited. At the same time, it is still relevant to have these issues in the agreement, as we talked about earlier, and to see their inclusion in the agreement as the basis, hopefully, for future co-operation on these issues, such as monitoring, tracking and potentially more binding commitments in the future.
Q138 Mark Garnier: What is the mechanism in the UK Government in order to bring a dispute to this in the dispute resolution? I can understand that if you have an obvious trade problem, the Trade Remedies Authority may raise it and enforce it. For fishing, it could be DEFRA. How do we go about bringing this? Where do we start here in the UK Government in terms of bringing an issue?
Professor Brandi: It does not have to only be a trade issue necessarily, but we mentioned several times the provision that keeps member countries from relaxing their environmental policies for the sake of attracting trade or investment. If this was to be witnessed, then yes, this would be a reason for the UK to become active.
Paul Baker: I would just add that there are these contact points. The UK would have to have a contact point and a dedicated person to deal with this. You would indeed be able to receive any complaints through that particular contact point. You would have to then deal with the matter. You have a system in place that would enable that.
On the dispute settlement mechanism, as Professor Brandi has said, it is indeed very rare to see environment covered in an FTA by the dispute settlement chapter. Beyond that, the other big advantage is the fact that you have penalties that emanate from an independent panel’s decision. If there is disagreement on the extent of compensation that is required, 50% of the value can automatically be levied by the complainant.
It is quite specific and impactful to have these kinds of systems in place. There are examples where this dispute settlement mechanism has been shown to be very effective. If we look at the US-Peru agreement, for example, it was effective in combating illegal logging through that dispute settlement mechanism in the past, so it is an avenue that will be quite significant in dealing with environmental issues.
Q139 Mark Garnier: Professor Rickard, I think you wanted to come in, but I will tell you what I am trying to get to the bottom of here with this. CPTPP is obviously a much wider agreement with a lot of outcomes in it. When I was a Minister, one of the problems we had in the trade Department was that we were looking at the whole issue of outcome-based trade deals. It is one thing to talk about tariffs, barriers, market access and all that kind of stuff, which is pretty straightforward, but when you are then entering into what is ostensibly a trade deal but it then has other outcomes beyond that, how do you go about doing it? Does the Department for International Trade then become the policer of the world’s environmental crimes? It is this that I am trying to get to the bottom of. How does it really work in practice?
Professor Rickard: That is the point I was going to raise. In a traditional trade agreement with traditional trade issues, you have, in effect, businesses monitoring it. You say, “There is a policy in another country that is hurting my ability to trade”. That is completely different. The logic is completely different on the environment. It is not clear to me who has the incentives to raise disputes or raise these complaints.
Your question really gets to the absolute heart of the challenge here. Who has the incentives to raise a complaint if there is a violation of the environmental rules? Who has the incentives to then enforce that complaint by either imposing a trade restriction or a trade barrier or some sort of consequences on the country? The entire logic of the dispute settlement mechanism is different here because we are talking about pure environmental commitments, even those without trade consequences.
Paul Baker: In the case of the EU-Korea agreement, the complaint came from civil society and then it was escalated to the state-to-state dispute settlement body. It came from civil society. I would envisage that it is not, primarily, Governments that are going to be monitoring this. They will look at it, but it is civil society that is going to be play a more active role. That is why civil society is given such prominence in the CPTPP. Governments are not going to have the resources or the incentives to deal with this.
Chair: Thank you all very much, panellists. Your attendance today is much appreciated.