Sunday, 8 January 2012

Tratados de Libre Comercio en América Latina (Versión en inglés)

Bilateral Free Trade Agreements and Environmental Regulation: Appraising the Latin American Experience.
Mayke Santos
The rise of bilateralism during the past decade has brought into existence a new dynamic between trade and environment in the Latin American context. This dissertation explores in first place how this new phenomenon has shaped environmental standards in the region and what we can expect in the future. By analysing the main motives for the surge of bilateralism and the events that have made this possible, the dissertation argues that bilateral free trade agreements (BFTAs), trade promotion agreements (TPAs) and the collision between trade and environment, are the logical outcome of hegemonic practices and power asymmetries. In the context of countries whose economies rely heavily on natural resources exploitation, the inclusion of environmental clauses in recent BFTAs or TPAs could play an important role in the conservation and exploitation of such resources; nevertheless, difficulties arise when notions of social sustainability, in contraposition to the emphasis put just on conservationism in those environmental clauses, are not integrated, exacerbating social problems. By reviewing and analysing the environmental clauses included in the Chile-US FTA, CAFTA-DR and Peru-US TPA, the dissertation argues the insufficiency of such clauses to “promote Sustainable Development” as one of the purposes of the aforementioned BFTAs; concluding that BFTAs may not as beneficial for the Latin American countries as they have been promoted.  
When the ministerial meeting of the WTO collapsed in Cancun in 2003 a new dynamic between North and South emerged. The delicate balance that GATT and the multilateral trade forces had achieved in the post war global order was in shambles; and its maximum representation, the United States of America, was in serious troubles to assert its hegemony in a world that, after the collapse of the Soviet Union, had become multipolar against all forecasts.
The multilateral approach embraced by the Global South has brought back bilateralism as a way to counter the increasing strength of developing countries in shaping the multilateral system. This dissertation explores in the first chapter ‘The Rise of Bilateralism in historical Perspective’ the variables that marked the evolutionary process from a multilateral system to a bilateral one, from a historical perspective seen from the light of the third world, represented through the Latin American eyes.
The second part ‘FTAs and Environmental regulation in Latin America’ is aimed at describing, through a comparative legal analysis, the evolution of environmental law in three Latin American countries: Chile, Costa Rica and Peru; and how the intricacies of U.S. domestic policies have shaped the inclusion of environmental standards in FTAs and PTAs. It also examines the question of whether the inclusion of environmental clauses has been the conclusion of fair negotiations with developing countries, and whether this process has harmonised environmental regimes across the region.
The third part of the dissertation ‘Bilateralism and Environmental Law’ argues the suitability of the instruments of bilateralism, namely FTAs and PTAs, as the right instruments to address environmental issues. How the principle of ‘Mutual Supportiveness’ has brought about some changes in FTAs and PTAs environmental clauses; but also dissects the role of Chapter 11 (investment) of NAFTA in shaping the successive FTAs in the region.
The last part ‘General Principles of International Environmental Law as the Baseline for a Substantive and Balanced Relationship’ attempts to highlight the positive role of international environmental law and multilateral institutions by arguing a ‘back to fundamentals’ in the trade and environment debate.
Overall, the dissertation looks to clarify the relationship between bilateralism and environmental regulation in Latin America through a ‘history matters’ perspective, reinforced by a comparative analysis of legal instruments closely related to trade and environment.   
II. The Rise of Bilateralism in Historical Perspective 
From a historical point of view, it can be said that the multilateral trade system in place has its roots in an entanglement of treaties signed by European countries back in the nineteenth century. Although principles such as reciprocity and most-favoured-nation can be traced to the very beginnings of trade among nations, it would not be until the onset of the industrial revolution and the rise of Britain[1] as an empire, that they would reach the status of national policy (Brown, 2003, p. 49).[2]
During the 20th century a succession of trade retaliatory measures would exacerbate the political rivalries in the interwar period that would end up unleashing WWII; and are widely believed to have spread the symptoms of the Great Depression across the world, by making any coordination effort among the principal nations impossible. It is in this state of affairs that, following the conclusion of WWII, the victorious powers[3] under the exceptional aegis of the United States would launch a “new world order” in Bretton Woods. The accord, negotiated under the leadership of Secretary of State Cordell Hull and President Franklin D. Roosevelt, was aimed at finishing with the fundamental causes of the two world wars; namely, economic discrimination and trade warfare, enhancing the American conception of ‘economic security.’[4] With a strong necessity for international coordination in matters such as currency fluctuations, balance of payments deficits, adequate supply of monetary reserves and reconstruction, the delegates set for Bretton Woods in 1944 with the idea in mind to create a new bilateral regime based in cooperation and coordination. The main outcome of the negotiations was the Bretton Woods system, materialised by the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD). Nevertheless, something was left out of the Bretton Woods conference, a trade agreement that could lower tariffs and set a fairer international climate for trade; since the conference was attended mainly by Finance Ministers, detailed negotiations regarding trade were postponed, much to the relief of British negotiators that were under strict orders not to discuss any trade policy with its American counterparts (Dominguez, 1993).[5]
It is in this way that GATT (1947) became the main instrument and institution (through its small secretariat) to regulate and deal with international trade until the Uruguay round was completed in 1994.[6] In spite of all the aforementioned variables and the institutional weaknesses of the GATT, it managed to become a successful facilitator of multilateral trade negotiations, and between 1949 and 1979 reduced tariffs among developed countries from an average of 40% to 13%; and between the Tokyo round in 1979 and the Uruguay Round in 1994, tariffs were reduced further up to 85% (Dominguez, 1993, p. 378; Buono & Lalanne, 2009, p.10; Stern, 2007, pp. 5, 44).[7]
By 1975 the ‘golden age’ had come to an end for the United States, inflation had picked to 10% in 1974 (although it had gone down to 6% in 1975) and unemployment to 8%, international competition was soaring, the Yom Kippur war would increase oil prices fourfold and productivity in the homeland was in decline and so profitability; additionally, workers whose salaries were being ‘diluted’ by inflation and high energy prices would start an offensive for higher wages, aggravating the productivity crisis. A new economic phenomenon called ‘stagflation’[8] had appeared and orthodox economics seemed useless to fight it. By 1979 the second oil crisis triggered by the Iranian Revolution had shattered any expectations of economic recovery without radical structural changes;[9] mainstream Keynesian economics were under heavy attack from various fronts, but particularly from an attractive alternative: Monetarism (Reuss, 2009).
The advent of the monetarists in positions of power in the United States[10] (Helleiner, 1994, pp. 131-135) has to be seen as the beginning of a radical change in the structure of the international economic order, and the definitive defeat of Keynesianism and other radical forms of state intervention, such as ISI and dependency theories. The rise of new actors in the international trade arena would mean a suffocating competitive environment for North American firms; South Korea, Taiwan, Singapore, Honk Kong (the NICs of the 70s and 80s) and later India, China and Brazil,[11] all integrated into the global economy in a way that threatened traditional markets for USA and Europe. The rise of Brazil and India was, as China’s, slower, and therefore impacted later in the 1990s. Nevertheless, it had been foreseen by several critical economists, who had pleaded for a radical change in the economic structure of the USA.
The 80s also signalled a turning point regarding the impact of technology and finance in economic policies. After a slow but sustained period of expansion during the 60s and 70s, financial markets had succeeded on integrating capitals into a global system. Although the United States had endorsed capital controls during the negotiations of the Bretton Woods system, as it has already been stated; this policy was readily abandoned in the mid-50s. ‘[T]he relative attractiveness of US financial markets, the pre-eminence of US financial institutions and the dollar in global markets, and the relative size of the US economy’ made the United States to retain a dominant position in the international financial order (Helleiner, 1994, p. 13). With a declining balance of trade,[12] but with a powerful financial system, along with a high-tech, pharmaceutical and media sectors securing innovation and information products as sources of comparative advantages, the United States (followed by most OECD countries) decided to undertake a U-turn in its trade policy.
Until the Tokyo round (1973-1979) the main issue at stake was tariff reduction, with some negotiations regarding anti-dumping measures (Kennedy round) and non-tariff measures (Tokyo round). In order to overcome the restrictive framework of GATT, which was rightly interpreted as being a mechanism that could only be applied to trade in merchandise goods, the United States tried to extend such interpretation as to cover intellectual property rights (Abbott, 1989, pp. 693-694); faced with the resistance of the majority of members of the GATT, and with the weakness of its argument, the US decided then to shift towards a more comprehensive strategy: the creation of a long time forgotten international trade organisation.
In 1982 the US launched a proposal for a new multilateral negotiations round, and this one will differ substantially from the previous GATT rounds. According to Schott (1994), the US proposal was meant to ‘reverse the erosion of support for the multilateral trading system and to bring the GATT up to date by extending its coverage to areas of international trade of growing importance that were not yet subject to existing provisions.’ Namely, 1) services, 2) investment and 3) intellectual property. Although Schott’s argument regarding the updating of GATT is sufficiently strong, the literature of GATT during the 1960s and 1970s is vague regarding which countries were engaged on trade measures that tended to debilitate GATT. The biggest competitors and enemies of the GATT model seemed to be its creators USA and Britain; who abandoned most of capital restriction policies implemented in GATT and opened the Euro-Market in the 1960s (Helleiner, 1994, p. 81). It seems to be more plausible the idea that GATT, as an accessory and temporal agreement of the ITO, did not count with the institutional background to become a kind of self-contained regime[13] that could balance and bound member countries to a set of rules equally applicable to all. Moreover, faced with ‘scant support,’ as Schott puts it, to launch a new round of negotiations, the US decided to pressure by initiating bilateral negotiations with Israel and Canada to establish new free trade areas with those countries.[14]
The ‘fears’ expressed by developing countries were up to certain point understandable, if seen from the point of view that such inclusions in the new round would deviate the attention from the old trade barriers they were fighting against. Nevertheless, the counter-argument of the US regarding that point was that the new round would ‘integrate the developing countries more effectively into the world trading system.’ To placate the roars, a new vocabulary was introduced in the negotiations: ‘special and differential treatment’ (S&D). But fears in the developing world were beyond that; it was obvious from the beginning that the proposal to include new, and complicated, areas into the round would effectively interfere with the development policies these countries were pursuing. Although the debt crisis of 1982 and the consequent banishment of ISI policies had shifted the development model towards the export-led growth paradigm, these events were not sufficient to convince the majority of developing countries[15] that liberalisation of investment, services and strengthened intellectual property would accrue to their economies. As put it by Stern:
This represents a new paradigm in trade relations. It is advocated by those who lean toward a cosmopolitan view of the global economy, one that sees the emergence of an increasingly integrated world market governed by common rules that regulates transactions in this single market. It is a view that coincides with exporting interests, and especially those of multinational corporations. But almost all countries have also national aims that they are not willing to surrender in order to accommodate their trading partners (Stern, 2007, p. 9).  
After some years of initial disagreements the new round was launched in 1986 in Punta del Este, Uruguay in September 1986. As a result of the implementation of emergency measures to contend the debt crisis of 1982, many developing countries had already undertaken most of the measures that were seen as part of the adjustment program to implement the new Uruguay round. Thus, a big part of the opposition to the Uruguay round was diluted thanks to unilateral measures from the developing countries; with their support diminished, hard-core opposition countries such as Brazil, Argentina, India, Egypt, Yugoslavia and some others decided to give way to the new agenda, including the creation of the World Trade Organisation and the foreseen Dispute Settlement Understanding (DSU). But negotiations soon reached a stalemate regarding agriculture; a coalition of fourteen agricultural exporting countries called the Cairns group,[16] sought to break the hegemony of the US and the European Community (whose common agriculture policy was seen by many as an aberration in the trade system) in the agriculture negotiations by requesting the reduction of agricultural subsidies. Due to grievances regarding agricultural matters, the GATT ministerial meeting in Brussels in 1990 collapsed, rendering impossible to complete the round within the deadline (Schott, 1994, pp. 5-7).[17]
The United States kept its unilateral approach while also strengthening any alliance that could push for an immediate resolution of the Uruguay round; President Clinton chaired the first meeting of the Asia Pacific Economic Cooperation (APEC), as to signal Europe that there were other alternatives to GATT. Clinton, decided to play his last cards to complete the round, asked the congress for ‘fast track’ negotiation authority until December 1993 to complete negotiations or walk away the round. With the most stubborn countries under ‘special 301’ hands, and with Europe concerned about the possibility of being left out of APEC (which encompasses 40% of the world economy) if failing to advance in the Uruguay round,[18] the last negotiations took place in December 1993, reaching some agreements regarding agriculture and antidumping. The final agreement to create the WTO was grudgingly signed by the developing countries on April 1994 in Marrakesh.

After the successful conclusion of the Uruguay Round, the United States wanted to expand issues whose outcome during the last round was not at the expected level; this was the case of agriculture and services (due mainly to the non-binding nature of trade related investment measures [TRIMS] included in GATT 1994). Thus, a ministerial meeting of the WTO in Singapore in 1996 opened talks on the following issues: 1) transparency in government procurement, 2) trade facilitation, 3) trade and investment and 4) trade and competition; this agenda was later known as the Singapore Issues (Ferguson, 2008, pp. 2-4; 17). 
With no agreement regarding the Singapore Issues among Europe, Japan, Korea and developing countries in one side, and the US pushing for agriculture and investment talks, the negotiations were supposed to start at the Ministerial Conference in Seattle in 1999, in what was christened as the Millennium Round. Seattle meant a huge blow for the newly born WTO, poorly organised and besieged by a never seen army of protesters, whose anger was released by the leakage of a document in 1995 from the OECD and supposed to be used by the European Commission at future WTO meetings; the main document was a draft of the Multilateral Agreement on Investment (MAI). This was seen as an effort to conclude investment negotiations at the OECD level if failing in the WTO next round.
The collapse of Seattle just reinforced the cooperation between developing nations. Already since the conclusion of the Uruguay round most developing countries had been feeling that their voices were not equally represented in most of the work groups, where decisions were mainly dealt among developed countries:
Since the beginning of the GATT, the major decision-makers were almost exclusively developed countries. At the preceding Ministerial Conference (Seattle, 1999), developing countries became more forceful in demanding that their interests be addressed. Some developing countries insisted that they would not support another round of multilateral negotiations unless they realized some concessions up-front and the agenda included their interests. Because of the greater influence of developing countries in setting the plan of action at Doha, the new round became known as the Doha Development Agenda (Ferguson, 2008, p. 3).  
Although there were at least six coalitions of developing countries during the Ministerial Meeting in Doha, I will focus just in the so called ‘G-20’ or ‘G-22’.[19] There are various reasons for that: the first is because this group included all the emerging powers from the developing world, China, Brazil, South Africa and India; the second is the proactive agenda it promoted, rather than the typical blocking coalition that developing countries used to construct; the third because although the fact of being the biggest coalition, it insisted on coordinate its actions with the rest of coalitions of developing countries, adding a bigger strength to the developing world bloc in the Meeting; fourth because it contained 69% of the world farmers; fifth because it represented half of the world’s population and, sixth because it survived until the very end of the talks, even when some commentators and delegates were predicting fragmentation when the carrots were shown by the big players (Narlikar & Tussie, 2004, pp. 951-954).[20]
The EU had to review its CAP in 2013, which made (and makes) almost impossible any further push in liberalising the farming sector in Europe before that date. In the U.S., any serious effort to eliminate tariffs and subsidies in the agro sector would mean an insane battle in the congress, at the cost of enormous political bargaining power, something just few in the United States dare to risk while being in government. Bearing this in mind, it was obvious that the promises of market access in agricultural products for the developing countries was, to say the less, a chimera in the WTO; thus the importance of the G-20 in putting the problem in its real dimension: one in which developed countries (the so called Quad of the rounds) were engaged in a double standard demagogy, while remaining ‘fiercely protectionist’ in the areas where ‘developing countries have the greatest comparative advantage’ (Arrighi , 2005a). The magazine Newsweek expressed this bluntly in 2003:
‘The two economic superpowers, the United States and the European Union, still say free trade is among their highest priorities, because if they say anything else, financial markets will panic. But the fact is they don't care as much as they used to--certainly not enough to face down their powerful farm lobbies at a time of slow growth and high unemployment at home’ (Garten, 2003).
With a solid and cohesive block the southern alliance set for some changes in one of the most polemic of WTO agreements, the trade-related aspects of intellectual property rights (TRIPS). Article 31(f) of TRIPS stipulated compulsory licensing for health crisis, but many least developed countries (LDCs) did not have pharmaceutical sectors, they were forced to import generic medicines from other countries. The HIV crisis in Sub-Saharan countries was the most patent of all; with the big pharmaceutical companies and their governments behind blocking attempts to prevent the implementation of measures that were compatible with TRIPS, and Brazil being threatened by the USTR regarding an anti-retroviral treatment for HIV patients in the country, the G-20 decided to act in coordination with most of the African Nations that were not in the group. The result was the Doha Declaration on the TRIPS agreement and Public Health, considered by many developed countries as a U-turn in the WTO, and by few commentators as a Coup d’état against the hegemony of developed countries in international negotiations. As expected the Cancun Ministerial Meeting collapsed without any results and, the then USTR Robert Zoellick made clear what path laid ahead: ‘We are going to keep opening markets one way or another’.[21]
Consequent with the Monroe doctrine[22] (America for the Americans; whereas ‘Americans’ means the people of the United States), the United States has always seen Latin America as a region of its own right; therefore its policies in the continent have been of containment, regarding any external influence that can undermine the monolithic leadership of US in the whole continent.
Traditionally, the Latin American countries have been treated as second category allies by the U.S., due mainly to the challenges of its raise as the sole superpower after WWII. The foreign policy applied to Latin America was almost of disregard,[23] when lenient leaders were in charge; in the event of any ‘democratic surge’ or revolutionary event, the order was, in most cases, undercover intervention; in less of them, marines landings.[24]
In 1990 President George H. W. Bush launched the Enterprise for the Americas Initiative (henceforth EAI), an ambitious free trade area that would stretch from Fairbanks to Ushuaia, encompassing the whole American continent with a small exception: Cuba. The idea was in the minds of several US politicians, and was the biggest US plan for Latin America since President Roosevelt’s ‘Good Neighbour Policy’ and John F. Kennedy’s ‘Alliance for Progress’. President Reagan could not advance further the idea of the FTAA due to the collapse of Latin America during the debt crisis 1982. The EAI came as a vague promise in time when the collapse of the Soviet Union made Latin Americans to think that focus would shift to Eastern Europe and the ex-soviet territories, and that without the restrains of the Cold War the United States would behave more predatorily than during the Cold War (the invasion of Panama in 1989 had just sparked such concerns among Latin Americans).
Peter Hakim (1992) argued that the shift towards regional and bilateral free trade agreements could not be linked to the slow progress of GATT negotiations along the 1980s, and that the FTAA presented instead a poor U.S. economic gaining in such arrangements, and was not a threat for Europeans and Japanese to accept more concessions in GATT (Hakim, 1992, p. 96). I may agree with Hakim from a short term perspective and taking into account that he wrote this in 1992, and solely talking about the FTAA;[25] but in lieu of his argument, I would propose that, at present, the FTAA would represent the biggest economic block in the world, and with all the ingredients to make all the structural adjustments possible, which the US economy has to undertake in order to overcome its debt and balance of payments deficits[26] in the long term.[27]
The real push for the FTAA started in December 1994 in the Summit of the Americas in Miami; President Clinton had come into office with a troubling agenda on NAFTA (a legacy of the previous republican administration) and with the Uruguay round in danger of collapsing.[28] Clinton would show he was a hard negotiator, saving NAFTA at the very last moment thanks to the side agreements on labour, environmental standards and upsurge imports; also saving, thanks to fast track authorisation, the GATT negotiations and creating the WTO; but with the FTAA, Clinton found a real wall coming from Latin America. It was clear this time that Latin Americans were not willing to negotiate on investment, intellectual property and trade and services outside the WTO, risking ending up signing WTO-plus measures. With the prospect of a daunting Doha Development Round and with negotiations for a continental trade block stalled thanks to Latin American stubbornness, the United States decided to play hard this time; it would individualized every single country for their animadversion against the U.S.
When developing countries brought down the Cancun Ministerial in 2003 the U.S. started with its policy of unilateral pressure against those identified with the G-20; through the Caribbean Basin Economic Recovery Act (CBERA) and the Caribbean Basin Trade Partnership Act (CBTPA) in one side, and the Andean Trade Preference Act (ATPA) and later ATPDEA (Andean Trade promotion and Drug Eradication Act), the U.S. recognised seven countries that were enjoying unilateral tariffs benefits from the United States, but were unwilling to preach Free Trade and side with them. Accordingly, President Bush declared that will not renew CBERA and CBTPA in Central America (since all these unilateral mechanisms have clauses specifying until when they were effective) and that ATPA and ATPDEA would be reviewed carefully. In 2003 the Bush administration informed the congress it would start negotiations with Peru, Bolivia, Ecuador and Colombia (all of them members of the G-20) for FTAs; while in Central America, Costa Rica, El Salvador and Guatemala (plus Honduras, Nicaragua and Dominican Republic) were all entering into negotiations for the Central America Free Trade Agreement (CAFTA-DR[29]), targeting the two countries of the block that were members of the G-20. The results were that Colombia, Ecuador, Peru, Costa Rica and El Salvador all left the G-20 and Bolivia was removed in 2008 from ATPDEA.[30]        
I cannot say that the United States has resigned to its FTAA project, but along with the failure to impulse a model of regional integration by riding on the wave that NAFTA created in the early 90s, Latin America has undertaken political developments of seismic proportions.[31] Hugo Chavez was elected in 1998 in Venezuela, Luiz Inacio Da Silva in Brazil in 2003, Nestor Kirchner also in 2003 in Argentina[32], Evo Morales in 2006 (a coca workers union leader), Michelle Bachelet[33] in Chile in 2006 (a soft and moderate left leader within the Concertación movement) and Rafael Correa (an unorthodox economist graduated in the United States) in Ecuador in 2007. Most of these governments enjoy good relations with the U.S., but they also seem to follow a pattern of institutionalisation of Latin American close team work. The creation of UNASUR (Union of South American Nations) points at a scenario of close integration and coordination in a vast array of issues (the most important for UNASUR until now seems to be security); and it is very unlikely that will succeed on imposing the agenda of the FTAA at the Summits of Americas scenario.[34]
 The introduction of environmental standards in trade agreements is a relatively new phenomenon in the Latin American context, and it ought its raison d’être to the quarrels of NAFTA negotiations on the eve of a Presidential campaign in the US political establishment. I do not attempt to make a description here of the debate about trade and environment (henceforth T&E) in the context of the WTO; it should suffice to say that the debate regarding this matter is as old as the GATT itself; and although the conditions that set the inclusion of Art. XX (particularly paragraphs b and g) have substantially evolved, I would argue that the increasing uneasiness from environmental groups observed during the years of NAFTA negotiations in the U.S., has a correlation with the famous environmental dispute in the context of GATT in 1991[35] (Tuna-Dolphin Case).[36] Particular political circumstances in the United States made environmental groups to agree on NAFTA negotiations to advance some of their interests; again, the political battle was set at the Senate with approval for ‘fast track negotiation’ at stake, making environmental and labour groups very powerful, albeit momentarily, and influential in the negotiations (Destler, 2005, p. 100).
Traditionally, environmental law in Latin America ‘have suffered    a long legacy of neglect’ (Carruthers, 2001, p. 347); this seems not to be the case in some countries. To understand the changes that environmental regulation could cause through FTAs or PTAs, I would like to move on and revise the estate of Environmental Law in some case study countries prior the entry into force of the agreements; before get into legal considerations regarding harmonisation of environmental law.
Chile has a relatively well endowed environmental legislation. Thanks to the vision of some pioneers like Benjamín Vicuña Mackenna and Rafael Elizalde MacClure, Chilean ecological problems have been foreseen and treated in early ecological papers. The most exhaustive in historical context is The Survival of Chile, written in 1958 by MacClure, and enlarged in 1970 to engulf more recent problems. Chile counts with a Forestry Law that dates from 1872; a Law on Fauna and Conservation from 1929; a Fisheries Law from 1931; a Law for industrial waste from 1916; a Law preventing smoke, dust and gases from industrial manufacturing and mining activities from 1948; a Sanitary Code from 1968 among others.
Chile is the only one from the case study countries that has been exposed to massive trade liberalisation since the early 1970s. Notwithstanding this fact, scientific studies made to clarify the role of trade on environmental degradation have failed to establish a causal link; above all, for the lack of environmental indicators that could back a possible either negative effect of trade on environmental degradation, or a positive one in reducing environmental damage (Hartje , Gauer, & Urquiza, 1994, p. 99). An increase on exports, derived from an export-led growth model and a liberalise economy, from the manufacturing, agricultural, forestry and fishing sectors as well as mining, also means an increase of the rate of environmental degradation because most of the export products are either raw materials or exhaustible natural resources.
Accordingly, Chile’s environmental problems remain acute in those areas of intensive economic activity, i.e. soil degradation, desertification, salinization and exposure to flooding are direct consequences of agricultural activity (Hartje et al. 1994, p. 110-113). Forestry activity is widely blamed for the disappearance of native temperate forest, or the substitution of the latter one by commercial species; this in turn, exacerbates problems like loss of biodiversity and exhaustion of water resources and soil fertility. Chilean fisheries are widely responsible for the nearly exhaustion of the Southern Blue Whiting, the Patagonia Grenadier, the South Pacific Hake, the Southern Hake, the Anchoveta, the Araucanian Herring, the South American Pilchard and the Chilean Jack Mackerel (FAO, 2004). Acid rain and heavy metals contamination in several river basins are another big problem in Chile.
At present, the environmental legal framework in Chile comprises thirteen general laws, the Environmental National Commission (CONAMA by its acronym in Spanish), the regional offices of CONAMA called COREMAS (Environmental Regional Commissions), the Forestry National Corporation (CONAF) and the National Council for Indigenous Development (CONADI). The most relevant environmental laws are as follows:
·         General Bases for the Environment (Law 19300, 1994)
·         Code of Mining (Law 18248, 1983)
·         Creation of the coastal marine space for indigenous peoples (Law 20249, 2008)
·         Creation of CONAF (Law 18348, 1984)
·         National system of protected wild areas (Law 18362, 1984)
·         Creation of CONADI (Law 19253, 1993)
·         Protection of native forest and forestry development (Law 20283, 2008)
·         Waters Code (Decree Law 1122, 1981)
·         Sanitary Code (Decree Law 725, 1968)
·         Creation of the Consultative Council of Fisheries and Hunting (Decree Law 208, 1953)

There is a visible evolution within the Chilean environmental framework from fundamental laws promulgated before the dictatorship; through the creation of an environmental framework that could facilitate the State-Market-Society relationship during the dictatorship (Mining, forestry and water laws were enacted during this period); and lastly, a period of institutionalization during the democratic return (new environmental law code, creation of CONAMA, CONADI and protection of indigenous spaces and native forests). As Carruthers (2001, p. 349) argues, the aforementioned environmental legislation (from the dictatorship period onwards) ‘have been constructed and put into practice in a polity and society in which elitist and neoliberal principles, practices and priorities prevail. That contradiction tends to render their best intentions stillborn.’ Lastly, it is important to say that the consequence of long-lasting exposure to neo-liberal policies in environmental matter is the free-market environmentalism that prevails in Chile.
Costa Rica’s environmental laws are widely regarded as models for the region; the country was also the first in Latin America in which an environmental court held liable a company from damages based on the economic value of the lost of ecosystems  (biodiversity loss).[37] Special mention must be done regarding forestry management, reforestation and sustainable management of forest resources, along with new laws and institutions are responsible for bringing down the average annual rate of deforestation from 0.73%, between 1990 and 2000, to 0.13% between 2000 and 2005 (, 2010). At present 25% of Costa Rican territory is under protection.  The Forestry Law 7575 (1996) sets the baseline for the implementation of the Payment schemes for Environmental Services (PES), this mechanism allows the ‘financing of sustainable management of land and water resources’ (FAO; REDLACH, 2004). The development of the institutional framework within the forestry sector is breathtaking; at least five institutions are signalled by the law to administrate and protect the forest resources of the country: State Forestry Authority (AFE[38]), National System of Conservation Areas (SINAC), National Fund of Forestry Financing (FONAFIFO), the National Forest Office (ONF) and the Ministry of Environment and Energy (MINAE). But this is not all, another six private institutions (among them NGOs and Business chambers) are deeply involved with the government in policy-making, to bring effective coordination and maximisation of resources: the Costa Rican Forestry Chamber (CCF), the Central Volcanic Range Forestry Development Foundation (FUNDECOR), the Peasants National Forestry Council (JUNAFORCA), the Commission for the Forestry’s Development of San Carlos (CODEFORSA) and the Association of Industrialists and Re-foresters of the Atlantic (ASIREA).       
The GDP of the country is divided between agriculture (6.4%), Industry (24.9%) and a massive services sector that absorbs 68.7% of the total GDP. From the services sector, tourism is the lions’ share of the country; with $ 2.2 billion a year and two million of foreign visitors, the tourism sector is totally reliant on pristine forests and coastlines to sustain this rate of growth. During 2007, 70.7% of the total amount of tourists that flooded the country were in some protected forest area. There are 120 private forestry reserves in the country and 40% of them dedicate exclusively to tourist activities.
The most relevant laws regarding environmental protection and management are as follows:
·         Forestry Law (No 7575, 1996)
·         Biodiversity Law (No 7788, 1998)
·         Conservation of wild life (No 7317, 2001)
·         Environment Organic Law (No 7554, 1995)
Costa Rica has also a very low tax regime and its main tax policy does not discriminate between residents and non-residents. The presence of Export-Processing-Zones have brought some electronic companies to the country; that is the case of Intel, whose plant in Costa Rica produces nearly $ 2 billion worth of chips each year. But the real value for these companies resides in a well educated population (most of it bilingual); Costa Rica is plenty on engineers and software programmers/designers. This is one of Costa Rica’s most reputed achievements, the abolition of its army to invest in education (rather than in civil wars, as its neighbours Salvador and Guatemala). Costa Rica is the classical example of the emergence of new comparatives advantages such as a well-educated work force, cheap in labour terms and relatively openness to investors that is emerging in Latin America, after the push of the Washington Consensus. Costa Rica is the best-off of the CAFTA-DR countries, and an exception in the Central American region, regarding education and environmental policies.
Peru did not have a coherent body of environmental law before 1990, although a constitutional clause from the 1979 National Constitution (Art. 123) granted ‘the right to live in a healthy environment’. It would not be until 1984 that the Congress would embark upon making an Environmental Code, and this would not be ready until 1990 (Decree law 613). This does not mean that Peru lacked of laws that in some way overlapped environmental problems whatsoever; but before 1990 it seems as it environmental problems did not exist, or they were not relevant; at least for businessmen and mining interests, who successfully avoided any liability regarding environmental damage.
In this sense most of Peru’s environmental legislation is post 1990; just the Water code dates from 1969. The Environmental code was enacted in 1990, the laws that regulated fisheries, natural resources and indigenous knowledge were enacted in 1992, 1997 and 2002 respectively; conservation of wildlife in 1997. Institutionally, the Environmental National Council (CONAM) was created by law in 1994; and the Ministry of Environment was as recently created in 2008.
Peru is also part of the Andean Community (CAN), which has been in force since 1969; the CAN has enacted important legislation regarding environment and natural resources management, among them Decision 345 (Protection of the rights of breeders of new plant varieties), Decision 391 (Common regime on access to genetic resources), Decision 486 (Common intellectual property regime), Decision 523 (Regional biodiversity strategy for the Tropical Andes), Decision 524 (Rights of indigenous peoples), Decision 596 (Andean Community’s council of environmental and sustainable development ministers) and Decision 602 (Control of chemicals used in the illegal manufacturing of narcotic drugs). The majority of these decisions were establish after 1990 and they had to be integrated into the legal system of each country in order to be valid, which means that each country had to enact laws that contained the provisions of the CAN.
The lateness of Peru in enacting environmental legislation would have its consequences; the country has serious environmental problems regarding deforestation, widespread contamination derived from mining operations and massive human rights abuses on the person of indigenous peoples, who had been in the front line of an on-going battle to save the Peruvian Amazon (by far, the most affected of all Peruvian regions in ecological terms). If this would not be enough, tougher military actions in Colombia to prevent and eradicate illicit crops and guerrilla’s activities have spilled over the region; affecting Venezuela, Brazil, Ecuador and Peru (in this last country coca crops are perfectly legal); so organised crime is moving fast in Peru to establish laboratories and drug processing facilities. In eight years (2000-2008) the country has doubled its potential cocaine production, and increase coca plantations from around 40,000 ha to almost 60,000 (UNODC, 2009). Although the coca plantations are traditionally located outside the Peruvian Amazon, its inaccessibility makes it the perfect location for pasta processing,[39] in which several high-contaminants and high-flammable chemicals are used, and after the complexion of the process, are just simply dumped into the jungle and its rivers.
Another big trouble for the Peruvian Amazon and its tribes is oil exploration; 64 oil and gas blocks have been created, from which 80% is from 2004 onwards; 72% of the Peruvian Amazon is been given out in concessions to oil and gas companies. The presence of not contacted tribes in this part of the Amazon (is reputed that of an estimate of hundred not contacted tribes, 67 remain in Brazil and another 15 in Peruvian side of the Amazon), has been dismissed by the government as a ‘fantasy’ of environmentalists, and mocked by President Alan Garcia as ‘unconnected’,[40] rather than not contacted, in an article for the Peruvian newspaper El Comercio.[41]   
As I pointed out before, the inclusion of environmental clauses in trade agreements (FTAs, BITs, PTAs and the like) has more to do with the swing of power in the US Congress than with international trends. The basics of such changes are engulfed by the nature of the relation between the Congress and the executive branch according to the US constitution; the US Congress has absolute power on tariffs and deciding the terms of commerce with other countries; whereas the executive has exclusive authority to conduct international relations. More importantly, ‘Congress was elected by local interests that often benefited from protection against imports […] On the other hand, because the President was accountable to a broader constituency than members of the Congress’, it was a logical idea that he could negotiate reciprocal tariff reduction (Sek, 2003, p. 1)  
 In order to negotiate tariff reduction and trade agreements, the administration needs special authorisation called ‘Fast Track’. Looking back to President Roosevelt’s times, the first initiative to allow the executive to negotiate tariffs and trade agreements was the Reciprocal Trade Agreements Act (RTAA) enacted in 1934. Originally a provisional legislation for a three-year period of time, it was extended several times and thanks to it, GATT and ITO negotiations took place. But it was always seen as a loss of power for the Congress in general, so diatribes have remained among congressmen and surfaced each time the President needs to be blessed with Fast Track authority, which is better known as Trade Promotion Authority (TPA) (Tucker & Wallach , 2009, pp. 118-132)
TPA cannot be amended by the Congress, since is an extension of its power to the executive branch; thus, Congress can just approve whatever has been negotiated, or simply disapproved it (Von Roozendaal, 2009, p. 435). The core of the dispute regarding trade and environment seemed to have surfaced in 1991, when fast track negotiation was granted to the Bush administration to finish WTO and NAFTA negotiations; the Presidential campaign in 1992 brought further the issue into the public opinion scope, thanks to Clinton’s insistence[42] that environmental and labour provisions of NAFTA were not sufficient and therefore he would seek for a more balanced agreement (thus the side agreements of NAFTA on environment, labour and import surges).[43] The first years of NAFTA were perceived as a disaster in the U.S., and gave the much needed fuel to free trade critics; President Clinton had particularly felt the damage within unions and business sectors, while the scaremongering continued apace in the U.S. media. By 1994 the situation in the Congress was almost irreconcilable; business sectors and most republicans had aired their discontent with the labour and environmental language of the USTR. They argued that it was simply a political language and not substantive; they were right.
In the other corner of the debate were the environmentalists, arguing that FTAs with developing countries, particularly in Latin America, will create ‘Pollution Heavens’, or countries wide open to dirty industries, flying away from stronger environmental standards; but they hit the roof when the GATT panel decided in favour of Mexico in the Tuna-Dolphin case. Although is difficult to homogenise the different environmental groups that have a voice in the policy-making agenda, Destler speaks about a ‘disparate coalition loosely coordinated by Public Citizen’[44] to explain somehow the wide attack on NAFTA; the point is that most of them were wrong on their appreciation of the GATT Tuna-Dolphin decision, and moreover, their argument on pollution heavens did not reach consensus among researchers and still remains polemic.[45] It is also important to note that what NGOs in the US call advocacy, is not more than the lobbying that interests groups have always practiced in the Congress; lobbying relations are determined by three factors: 1) money, 2) votes and 3) the media. In this sordid battle for power in the Congress not always the most reasonable argument wins. It is disturbing, for example, that pushes for stricter labour standards in developing countries are not accompanied by pressure to ratify the ILO conventions in the U.S. itself; of what the ILO has catalogued as the eight fundamental conventions to the rights of workers, the U.S. has just ratified two;[46] and 9 of a total of 161 ILO conventions. Also arguable, was their position regarding the GATT panel decision of Tuna- Dolphin. Leaving aside the PPM issue,[47] it is obvious that of the upmost concern for the panel was the fact that one country could impose its domestic laws upon a trade partner, in the name of Art. XX (b or g) of GATT. As I have argued along this dissertation, that was neither the original purpose of the multilateral trade system, nor that of Article XX. In this sense, it cannot be said that GATT original purpose was to extend the jurisdiction of some powerful countries over the less developed ones; neither to protect fisheries and wildlife animals in general since, as Mexico argued in the panel case, these matters were particularly excluded of the GATT by the preparatory group for the ITO Charter.[48] Moreover, the panel itself found the US as not having ‘exhausted all the options reasonably available to it to pursue its dolphin protection objectives through measures consistent with the General Agreement, in particular, through the negotiation of international cooperative arrangements…’[49] ‘The best way of protecting the lives and health of dolphins’, Mexico argued, ‘was international cooperation among all concerned, not by arbitrary, discriminatory and unilateral trade measures.’[50]
It is therefore obvious that some environmentalist groups in the US were pressing in the wrong way, and that both the government and the Congress were entangled with ‘demands [that were] presumptuous and politically self-serving, […] appear[ing] to be placating domestic groups that either represent sectional interests or are not well informed’ (Stern, 2007, p. 33).  They all seemed to have forgotten that ‘[t]he transplant of social norms from one society to another is exceedingly difficult to accomplish. Everywhere, changes in domestic regulations embodying new norms of behaviour take place in response to demands from coalitions of politically influential groups within the country.’ (Stern, 2007, p. 34)
Since 1995 support for free trade policies and deals have eroded substantially in the U.S. Congress and public; the farm bill has almost doubled since 2000, and after 15 years NAFTA is still under heavy attack. In the 2008 campaign both democrat nominees, Hillary Clinton and Barack Obama, stated their intentions of not ratifying any new FTA that did not included stronger labour and environmental standards; a reflection of what their constituencies stand for. Obama for example, said in a speech in the Janesville plant of General Motors that ‘decades of trade deals like NAFTA and China have been signed with plenty of protections for corporations and their profits, but none for our environment or our workers who’ve seen factories shut their doors and millions of jobs disappear’.[51]
To finish with this chapter I would like to revise some of the economic impact of NAFTA and the subsequent FTAs in relation with the U.S. economy; Gantz (2008) argues that the impact of NAFTA has been negligible on the U.S. economy, amounting for just over $ 900 billion of intra-regional trade. He goes further on to say that the impact of further FTAs with small developing countries will be much less than that of NAFTA. (Gantz, 2008, p. 127).[52] If this is all true, as the wide academic consensus seems to admit, why to bother then on squandering all that political effort on trade negotiations? Is it just to gain electorally by satisfying constituencies interested on trade issues? As I have argued in previous chapters, the signing of FTAs with developing nations, particularly Latin American states, is part of a long term strategy to break the consensus around Brazil and India. The “poor” economic gain the U.S. receives from these FTAs is the best proof that the U.S. has not abandoned its idea of the FTAA,[53] and that by signing countless ‘comprehensive’ FTAs is looking to unravel, unilaterally, the deadlock at Doha.
A close look of the environmental instruments included in FTAs and NAFTA, sheds some light on the quality and the ambitions of such mechanisms. NAFTA,[54] CAFTA-DR,[55] Chile-US FTA,[56] and Peru-US PTA[57] all share common features such as close similarities on wording, ambiguity, clauses, institutions and ineffective language. Some of the modelling has changed, e.g. NAFTA environment and labour agreements were not included within the main body text; but this was corrected in successive agreements.
With very few additions, Chile, Peru and CAFTA-DR FTAs (also Colombia and Panama) environmental, labour and investment chapters are simple templates. All of them create, as a NAFTA legacy, an Environmental Affairs Council; in the Chile FTA comprises 4 articles, and the only main aim of such council is to ‘seek appropriate opportunities for the public to participate in the development and implementation of cooperative environmental activities’.[58] CAFTA-DR added two more articles (for a total of 6) and established that the council should set its own agenda, promote public participation and take all decisions by consensus. The Peru FTA offers a more comprehensive approach (albeit there is no binding clauses) setting more commitments to the council such as provide periodical reports to the free trade commission, resolve consultations and consider and discuss the environmental cooperation agreement. The problem with these ‘councils’ is that, as in NAFTA, such institutions are just ornaments for the trade agreement. The CEC in NAFTA had the same budget for ten years ($9 million annually), and besides from receiving complaints from environmental groups, it could do little to stop the excesses[59] committed by companies under Chapter 11. There can be an improvement in cooperation among the environmental and trade authorities, but there are no improvements on issues such as funding or enforcing of council’s decisions.  
The section in all FTAs called ‘Enforcement of Environmental Law’ contains two main provisions as follows:

a)       A Party shall not fail to effectively enforce its environmental laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the Parties, after the date of entry into force of this Agreement.
b)       The Parties recognize that each Party retains the right to exercise discretion with respect to investigatory, prosecutorial, regulatory, and compliance matters and to make decisions regarding the allocation of resources to enforcement with respect to other environmental matters determined to have higher priorities. Accordingly, the Parties understand that a Party is in compliance with subparagraph (a) where a course of action or inaction reflects a reasonable exercise of such discretion, or results from a bona fide decision regarding the allocation of resources.[60]
According to Gantz (2008) such provisions ‘restrict the enforceable FTA obligations to enforcing a country’s […] law; limit any dispute settlement actions to those that address a “sustained or recurring course of action or inaction,” rather than a single violation, regardless of how severe; and preserve relatively broad legislative discretion on the part of FTA parties, including the United States’ (Gantz, 2008, p. 137).
Another ‘important’ inclusion seemed to have been (after the Bipartisan Trade Deal in Congress) the addition of the ‘Environmental Agreements’ clause (18.2 in Peru and Colombia FTA, 17.2 in Panama FTA):
A party shall adopt, maintain, and implement laws, regulations, and all other measures to fulfil its obligations under multilateral environmental agreements listed in Annex ‘XX’ (“covered agreements”).
The Peru FTA included a much strong wording in Annex 18.3.4 or ‘Annex on Forest Sector Governance’; but nevertheless, it remains very similar to NAFTA’s Art. 104.[61]
It seems very suggesting that this homogeneity on FTAs (which is not exclusively on environment and labour standards, but in the whole text) could make things much easier when negotiating a bloc or regional agreement (again, something like FTAA), since countries with FTAs would have a very common platform, convincing enough for reticent countries. On the other hand, the inclusion of environmental and labour standards can placate the loudest voices back home, while strengthening wider political objectives in the regional and world scenarios.
d.                  Harmonizing or bypassing Environmental Law?
There are several problems when assessing the process of harmonisation of environmental law, also various examples of harmonisation at international level. GATT is an example of harmonisation, although it has to be taken into account its age (it came into force in 1947) and its original purpose; GATT set an international standard itself and in its various rounds it sought to commit several countries to international standards. The much criticised Tuna-Dolphin I case could be interpreted as an effort to regulate environmental matters in the right context, i.e. MEAs; rather than subsume them within a trade regime, with no structure, professionals and vision to include environmental and labour standards. GATT panels refused to validate the environmental argument in all the cases, being the dispute settlement mechanism a trade related one; these decisions relied on GATT purpose. But when as part of its preamble, the WTO embraced sustainable development as one of its objectives, things seemed to have turned around in Geneva. It is arguable in any case to what extent such U-turn was not the product of increasing pressure, thanks to the international outrage against the panel decisions on environmental cases (particularly against the U.S.); but in the end environmentalists had their small victory when the appellate body decided in favour of the U.S. in the Shrimp-Turtle[62] case. Curiously enough, when the dispute settlement body decided in favour of the environmental argument, environmental cases disappeared from the WTO.
NAFTA was another example of harmonisation; although very poor because it let parties to decide voluntarily such standards, while the bulk of the agreement was directed at free trade, leaving the parties with the expectation of repeal if any action constituted, even if accidentally, a barrier to trade.
The case of the EU is interesting because it encompasses more social and environmental criteria; for example, open trade among EU countries was accompanied with almost complete labour mobility, but more importantly, non-trade barriers were kept. So even when tariffs were dropped completely among these countries, labour, human rights, environmental standards and so on were kept in order to prevent the race to the bottom that international trade has provoked in most of the developing world. Bernabe-Riefkohl (1995) speaks about the Danish beer bottle case[63] to illustrate how the European Court of Justice found no contradictions between the Danish regulation regarding recyclables bottles and trade among the EU members, because one of the purposes of the EU was to protect the environment, even if such regulation would, indirectly, hurt trade (Bernabe-Riefkohl, 1995, p. 216). 
But unfortunately, FTAs do not rank with any of these agreements, and even NAFTA has failed shortly in honouring its harmonisation commitments. In many cases, harmonisation has been seen cautiously by developing countries; they know that in most cases FTAs clauses are made under the discrete scrutiny of private interests and away from public eye. It would be logical to think that NAFTA’s mistakes regarding investment clauses and environmental legislation have been overcome; just to find, sadly, that multinational corporations keep on suing states, based on investment clauses included in FTAs; verbi gratia Pacific Rim Corp. v. El Salvador.[64] The company, although being Canadian and therefore not covered by CAFTA-DR investment clauses, sued El Salvador through its subsidiary in Cayman islands to be covered by CAFTA, a very common strategy in Latin America at present.[65] The logical conclusion is that CAFTA-DR suffers the same maladies of NAFTA regarding investment and environmental protection, and therefore the makeup that environmental clauses have received in recent FTAs are neither affecting the broader template (namely investment protection erga omnes), nor are resolving substantive issues arising from the T&E incongruence.
Esty & Geradin (1997) argued that market access and competitiveness are the core areas where harmonisation needs to be included in order to avoid the more painful aspects of restrictions derivate from environmental regulation. Market access should encompass either uniforms standards or maximum standards; competitiveness on the other hand should have minimum standards or convergence standards among others. In practice, U.S. FTAs with Latin American countries tend to concentrate on technical cooperation, training, public participation and a commitment towards a more integrated and collaborative system. The aforementioned activities are of upmost importance for developing countries since it allows them to train their public servants and gain from technical assistance.
But the real problem that harmonisation faces is the lack of complementary measures regarding the dispute settlement mechanisms; in most FTAs once a party is accused of non-compliance, the complainant can chose the forum where to settle the dispute, in most cases disputes end up in the World Bank or UNCITRAL, two investment dispute courts with no expertise regarding environment. The dispute settlement rules of FTAs can even bypass the WTO dispute settlement mechanism, even if the dispute arises in the context of GATT or any other WTO treaty. As pointed out before, due to the latest case law regarding environmental disputes in the WTO, particularly the Shrimp-Turtle case, is difficult to imagine a party like the U.S. choosing the WTO in the event of an investment or trading complaint with environmental hints. In the EU the process of harmonisation has been less traumatic because a mixture of harmonisation of product standards and judicial bounding, whereas the European Court of Justice have assumed the role of a local court in a regional context; this contrast with environmental disputes being resolved in investment tribunals. Here, the main question remains on whether FTAs can successfully bring transparency on the issue of dispute settlement by clarifying the role of national courts; FTAs have not done this so far, diverting disputes towards Sanhedrin-like tribunals where the general public and advocacy groups are not represented in any way.
Lastly, two sharp issues remain untouched in FTAs regarding sustainable development and environment; the first is the scale effect over the economy of a developing country when entering a FTA. The second is the strength of the institutions and the judicial system or its legal capacity to deal with environmental damage and increase economic pressure for more natural resources. Entering a FTA or lowering tariffs all of the sudden occasions a rush in the exploitation of natural resources and an increase of economic activity; ill-equipped institutions will not keep pace with those changes and therefore environmental damage will be greater (See Wold, 2010, pp. 336-338; Vaughan & Block, 2002, p. 26; and Vaughan, 2004, pp. 65-67). Harmonisation and legal adaptation should occur before the coming into force of any FTA.
                                                                     IV.             Bilateralism and Environmental Law
Frederick Abbott (2007) refers to the main drivers of bilateralism as ‘a number of political and economic forces’.[66] Among the ‘forces’ he mentions (1) Geo-political movement, (2) redirection of the multilateral business community (technology as comparative advantage vis-à-vis with the Global South), and (3) seeking higher growth. Where is Environmental law to be found in the picture? Well, everywhere; although I do not pretend a theorisation of geo-politics regarding environment, it is hardly hidden that natural resources play an important, if not primordial, role on the composition of foreign relations and global geo-political moves. Although most of the geopolitical struggle of the 20th century has been fought in Eurasia, in what Halford John Mackinder (1904) called the ‘pivot area’ (The geographical pivot of history). Such ‘pivot area’ is made up by the Caucasian ex-soviet republics and its neighbours Iran, Afghanistan, and Pakistan; vast reservoirs of oil lay underground across this region; the powder keg of several empires has been located there since the silk road times. Accordingly, scarcity of natural resources, others than oil, such as water, fertile land, and a wide range of metals can trigger a race for the control of reservoirs. How the extraction of such natural resources affects countries and regions is a direct matter of environmental law; how this affects us all at global scale, is a direct concern of international environmental law. But how this geo-political giro can affect Latin America? Mackinder responded enigmatically to this:
The development of the vast potentialities of South America might have a decisive influence upon the system. They might strengthen the United States, or, on the other hand, if Germany were to challenge the Monroe doctrine successfully, they might detach Berlin from what I may perhaps describe as a pivot policy (Mackinder 1904, p. 436; in Hepple, 2004, p. 361).    
It is not necessary to describe what happened to Germany thereinafter, nor is needed to explain what gains the United States has profit from the Monroe doctrine along the 20th century. But considering that Mackinder wrote this in 1904, there is a subtle acknowledgement that vast potentialities laid in the sub-continent already by that time, which coincides with the time when the U.S. started to intervene heavily in Latin America. The redirection of the business community, as briefly mentioned by Abbott, seems to point to the effort to exploit large reserves of natural resources that lay in the whole continent. 
In this line of thought, the conflict between development and environmental law, classically represented by the ‘not so new’ debate on trade & environment, has arisen from human anxieties regarding landscape change, and the deterioration of our vital space. Ironically, such awareness rose first in the imperial periphery, when the Atlantic trade started putting excessive pressure on small islands ecosystems such as St Helena, Madeira, Maldives, Barbados and others; causing the first incipient forerunners of environmentalism.[67] How to harmonise the main reasons for the surge on bilateralism and environmental law seems a herculean task, but not impossible; I will try to identify in the following subsections where the core problems are regarding FTAs and environmental law.  
As we have seen before, the argument to include labour and environmental standards in FTAs has come from free traders in one side, claiming that low environmental and labour standards in developing countries are a source of disadvantage for companies in developed regions; and for environmentalists, who argued that the difference of standards would bring a race to the bottom and pollution heavens. Although there is no strong evidence to support the environmentalist’s claims, free trade does increment environmental problems due to scale and composition effects, as NAFTA’s evidence suggest (Wold, 2010, p. 337 and Gallagher, 2004, pp. 12-24). But as we have seen environmental clauses and side letters lack of mandatory and binding language; moreover, as the case of Peru demonstrates,[68] environmental clauses do not impede the regression of national environmental legislation when it is at odds with investment and IP rights.
A third problem of including environmental and labour standards in FTAs is that although transparency has been improved in the U.S., regarding the negotiations of FTAs and multilateral agreements, this agreements are negotiated by trade specialists and are pushed in the political agenda of each country by business lobbies. This problematic is well described by Wold:
‘The USTR and its negotiating teams are informed by more than thirty advisory committees that provide technical information and advice to USTR. Some of these committees are highly specialized, such as the Industry Trade Advisory Committee on Chemicals, Pharmaceuticals, Health/Science Products and Services. Others have broader scope and influence, most notably the Advisory Committee for Trade Policy and Negotiations ("ACTPN"), which provides "advice on virtually all aspects of trade negotiations and implementation of trade agreements and policies." These committees are composed primarily of affected industries and rarely of environmental or consumer groups. Environmentalists have long argued that these committees must be opened to broader participation so that "affected economic interests" cannot use these committees to lobby USTR "to protect or expand their markets." Although the Federal Advisory Committee Act ("FACA") requires representation to be "fairly balanced," environmentalists and consumer groups have frequently needed to litigate in order to compel USTR to provide more balanced representation on these advisory committees’ (Wold, 2010, p. 347).
Furthermore, the WTO has identified at least thirty two MEAs that contain trade-related measures;[69] the danger of these trade-related measures clashing with FTAs seems almost imminent; and although it has not yet happened, there are no reasons to think it will not occur in the future. This on-going augment of environmental clauses, treaties, side agreements, commissions and the like, in both the multilateral and bilateral systems is becoming increasingly difficult to unravel, adding more pressure to old problems of international law such as lack of codification and ‘treaty congestion’.
The logical solution then would be to deal with the trade & environment issue on the multilateral agenda, where the benefits of consensus would trade-off the intricacy and length of negotiations. It is not less true that the seriousness of most of the environmental problems that affect us globally deserve an expedite commitment, but this is also an advantage for multilateral negotiations. For if developed and developing countries alike start suffering the onrush of climate change, a kind of urgency in the negotiation process is expected. Another advantage of moving the T&E issue to the multilateral agenda is to neutralise the undesirable influence of U.S. domestic politics issues in the international trade agenda. This has been proved possible after Cancun; but the message from the U.S. has come also loud and clear. The fourth fleet was reactivated[70] in 2008 and put under the command of SOUTHCOM in Mayport, Florida. Also, when President Correa of Ecuador challenged the presence of U.S. troops in the military base of Manta, effectively refusing to renew the lease, the U.S. moved swiftly to Colombia were, under the guise of democratic elected President Alvaro Uribe, signed an agreement to put seven military bases along the country.[71] Notwithstanding the geo-political moves of the U.S., integration in the region has become a reality.
Regarding those FTAs that are already in place, the experiences of Mexico with NAFTA and Chile (although not exclusively due to the FTA, but for long term liberalisation) show that environmental institutions and laws have not been able to keep pace with growth rates of 6% or above. In other words, all the side environmental agreements and environmental chapters have been a failure. The case of Chile is well explained by a Chilean environmentalist, Sara Larraín:
‘Government and business officials claim that the country is able to sustain an annual growth rate of 6 to 7 per cent, but they are ignoring the inability of the ecosystem to continue tolerating the stress produced by the present rate of extraction, and the build-up of deposits of residues and emissions of industrial processes. To give a clear picture of the serious pressure of the Chilean export model over the environment, it is enough to note that at present, 64.8 per cent of Chile's competitive exports consist of only ten products: copper, gold, fish-meal, frozen fish, grapes, apples, raw and bleached cellulose, pine lumber and native wood chips. In the other hand, pollution and its impacts on environment and public health has forced the government to designate as saturated areas almost all mining sites where the impact of pollution on public health is serious, and some cities including Santiago, Chile's capital’ (Larraín, 1997).
 It must be noted that Larraín wrote this seven years before the US-Chile FTA came into force, but between 2003 and 2005 (the FTA was signed in 2004) Chile nearly doubled its bilateral trade with the U.S. from $6 billion to $11 billion; while FDI coming from the U.S. shrank from the historic 26.5% that had held since 1974, to 2.8% in 2005, lagging behind Spain, Australia, Canada and UK (Public Citizen, 2006, p. 16). As for 2010, Chile is battling an energy crisis against environmentalist and investors at the same time; the only possible solution to the crisis seems to be the installation of coal plants in the southernmost part of the country, rounded by pristine forests and natural monuments. Environmentalists are committed not to allow the government to approve such plans, endangering and saturating with pollution the south of the country, as already happened in the north desert areas with mining operations; citizen groups already pressed the recent elected President Piñera and obtained a victory in the Barrancones Thermoelectric plant project, successfully stopping it; but other project, the Mega Castillas coal plant, is going ahead.[72] Investors on the other hand, want cheap energy, regardless of what that could mean in environmental terms. Moreover, was not Chile supposed to sign the FTA precisely to prevent the diversion of FDI to Asian countries? Well, that is exactly what happened, even after signing the FTA. Finally the FTA imposed upon Chile that abolition of the few capital controls that prevented a bigger tragedy during the economic crisis of 1997; and even bigger investment protection means that private companies could challenge domestic legislation, as NAFTA did with Mexico.
The principle of ‘Mutual Supportiveness’ has an interesting evolution in the international environmental law agenda; it has very close ties with the evolution of the concept of sustainable development in what Mukul Sanwal (2004) calls ‘the thirty years quest for sustainability’. Since 1970s developing countries were wary of elevate environmental concerns to the category of global issues, simply because they perceived them as a problem of developed countries, which had the moral responsibility to abate contamination. Following the Stockholm Conference on the Human Environment in 1972, recognition of the social dimensions of most environmental problems was brokered among developed and developing countries, to secure the advancement of the talks; but further concerns came ashore when developing countries saw that the social spectrum of the debate would hinder development. The focus shifted again in 1992, with the Rio Conference on Environment and Development (UNCED) and the effort to promote multilateral environmental agreements under which aegis environment and development could be compatible. A fragile consensus was the product of manifold historical events and it did not allow having a clear language on important issues of the debate; even the principle of ‘common but differentiate responsibilities’ was not recognised by some developed countries, among them the U.S. As Sanwal points:
‘Since Rio much of the scholarship on international environmental cooperation has been primarily concerned with the formation of regimes and their implementation. Generally adopting a state-centric approach, the focus has largely been on various aspects of effectiveness, including, more recently, the strategic use of incentives.’

But United Nations has been forced to admit that it has a very limited capacity ‘to solve problems involving the relationship between environment and development’, and therefore there has been, since the 2002 World Summit on Sustainable Development (WSSD), a focus on the activities that caused environmental degradation. This, continues Sanwal, ‘was based less on the principle of “common but differentiated responsibilities” and more on the principle of “mutual supportiveness” to determine “what should be done” rather than “who should be blame”’ (Sanwal, 2004, pp. 16-18).
One of the most striking situations environmental law confronts in the multilateral arena is the weakness of the environmental legal framework vis-à-vis what it looks as the almighty WTO. In this sense, the fragmentation, dysfunction and weaknesses of the former contrast with the coherence and institutional strength of the latter; there are several international institutions looking after different MEAs, but none of them (particularly those from the UN) can match the multilateral trade regime in place. Similarly, FTAs and PTAs resemble in their legal structure, the weaknesses of the multilateral environmental regime; weak environmental councils, excessive reliance on what the trade partners would consider the right balance between exclusive regimes; most of the time environmental mechanisms are subsumed in the investment or trade regime; but most strikingly, the last resort regarding environmental problems is sometimes an investment court.
Nevertheless, recent developments in FTAs after the mayday bipartisan deal in the U.S. Congress have shown valuable progress towards ‘mutual supportiveness’. Environmental obligations under the Peru-US PTA, Colombia-US and Panama-US FTAs (neither yet in force) are subjected to dispute settlement, if no agreement has been reached during consultations (provided in the environmental chapter). In applying the MEA obligation, dispute settlement panels convened under the FTA shall:
a)      Follow (i.e., defer to) all interpretative guidance under the relevant MEA; and
b)      Given all interpretative guidance, where a MEA obligation is open to more than one permissible interpretation, and a FTA party has chosen one of those permissible interpretations, accept that interpretation as being in conformity with the MEA obligation.   
In this respect there can be seen some progress regarding ‘mutual support’ from the environmental chapters of the aforementioned MEAs, but their novelty and the lack of environmental cases in these instances make any conclusion premature. In any case, a recent decision on the respondent’s (Republic of El Salvador) Preliminary objections under CAFTA articles 10.20.4 and 10.20.5 (preliminary questions) from the ICSID regarding the Pac Rim v. El Salvador case, has come out on August 2nd 2010n with and adverse decision for El Salvador.[73] Bearing in mind that CAFTA-DR dates from 2005, and that a very small amendments have been done in the subsequent FTAs, it remains to see how far investment clauses can challenge a MEA measure in the context of the newest FTAs.
NAFTA has been considered and portrait by many commentators as one of the most progressive and environmental friendly FTAs. Although the United States had signed before NAFTA two FTAs with Israel and Canada respectively, the North American Free Trade Agreement was in many ways progressive. But as we have seen before, the particularity of the agreement is based in a series of domestic restrains and realities regarding public policy in the U.S. The progressiveness consisted in two broad new areas included, one in the body of the agreement and other as a side agreement, that were later on to collude in a unexpected way; the investment chapter and the side agreement on environment.
Chapter 11 of NAFTA grants investors with substantive protections in the territory of another party. This substantive protections encompass ‘National Treatment’ (Art 1102), ‘Most Favoured Nation’ (Art 1103), and ‘Minimum treatment entitled under International Law’ (Art. 1106). For environmentalist however, the main problem of Chapter 11 resides on Art 1110:
1. No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ("expropriation"), except:
·  (a) for a public purpose;
·  (b) on a non-discriminatory basis;
·  (c) in accordance with due process of law and Article 1105(1); and
·  (d) on payment of compensation in accordance with paragraphs 2 through 6.
According to Baughen (2006) Art 1110 must be construed in the light of Art 1101, which defines the scope of Chapter 11 as follows:
1. This Chapter applies to measures adopted or maintained by a Party relating to:
·  (a) investors of another Party;
·  (b) investments of investors of another Party in the territory of the Party; and
·  (c) with respect to Articles 1106 and 1114, all investments in the territory of the Party. [74]
The phrase ‘relating to’ in Art 1101 was subject of interpretation in a preliminary hearing on jurisdiction in Methanex v USA (UNCITRAL),[75] in which the court interpreted it as ‘something more than the mere effect of a measure on an investor or investment and required a legally significant connection between them.’[76] The measure in this case enacted by the Californian State, affected mostly an additive in the gasoline, whereas Methanex was a producer of Methanol, which was one of the products of the additive MTBE, and therefore was affected indirectly; breaking the significant connection the tribunal asserted as essential.
Once the direct link between the government act and the investment has been established, it remains to study whether such governmental act is equivalent to an expropriation. In Pope & Talbot v Canada (UNCITRAL),[77] and S.D. Myers v Canada (UNCITRAL),[78] the claims of a broader interpretation of the phrase ‘tantamount to nationalization or expropriation of such an investment’ were rejected; for the tribunal, such construct did not broaden the ordinary concept of expropriation under international law, and meant ‘equivalent to’ in order to cover ‘creeping expropriation’.[79] Significantly, both decisions established a line between ‘interference’ and indirect expropriation; such ‘interference’ could encompass regulatory conduct, which, according to S.D. Myers v Canada, ‘[was] unlikely to be subject of legitimate complaint under Article 1110 of NAFTA’.[80]
This analysis bring us to the infamous Metalclad v Mexico case[81] (ICSID), in which the tribunal favoured a wide ratio of Article 1110, rather than the narrow interpretation of UNCITRAL in the aforementioned cases. In broad terms, a North American company with a subsidiary in Mexico bought a piece of land in which was planning to build a landfill; although having federal permission for such landfill, the local authorities attempted to halt the construction on the grounds of lack of local permits and an environmental impact assessment that determined the presence of an underground alluvial stream that could be easily contaminated and, subsequently, the local water supply. Mexico refused to settle the dispute and decided to litigate instead. The court found that Mexico had breached Articles 1105 and 1110. ‘The denial of a municipal permit to Coterin [Mexican subsidiary] had effectively and unlawfully prevented it from operating the landfill site, thus constituting a measure “tantamount to expropriation”’.[82]
The decision is polemic, to say the less, when one takes into account that previous case law in investment tribunals had narrowed the concept of ‘tantamount to nationalization or expropriation of such an investment’. Furthermore, Article 1114 of NAFTA tacitly states:
 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 in a manner sensitive to environmental concerns.[83]
The two underlined phrases engulf the main weaknesses of Art. 1114, the measures have to be consistent with Art. 1110 ‘public purpose’, which could allow including environmental regulation, and compensation for the investor, since the wording ‘otherwise consistent with this chapter’ subordinate, according to Baughen, the exception to the general principles of investor protection.
Another interesting point is that when Mexico paid the compensation to Metalclad, in fact inverted the ‘Polluter pays’ principle; since it had to compensate the company for not polluting in Mexican territory. Such reversal of a principle of International Environmental law internationally accepted just helps to undermine an already weak international regime.
Although the phrase ‘tantamount to nationalization or expropriation of such an investment’ has been deleted of NAFTA successors, not many concessions have been made. In the Chile-US FTA ‘tantamount’ has been replaced by ‘indirect expropriation’ (Art. 10.9), and further elaborated in the Annex 10-D of the same accord. Paragraph 4.b of the Annex stipulates that
Except in rare circumstances, non discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations.

It is a clear allusion to the reminiscences of NAFTA’s environmental cases under Chapter 11. The wording in the Investment Chapters of CAFTA-DR and Peru-US PTA are templates. Both have an Annex to further cover any gap left in the interpretation of expropriation that are copies of Chile Annex 10-D. Even when has been clearly stated that regulatory actions designed to protect the environment do not constitute indirect expropriation, the phrase ‘Except in rare circumstances’ is added as to leave an open window for litigation. It is unfortunate having to conclude this dissertation without a decision from the ICSID regarding the Pac Rim v El Salvador case, that could enlighten further my position of contempt towards the timid reforms made regarding investment and environment after NAFTA’s mistakes.
 As many Latin American countries try to develop themselves and increase their economic performance by adapting to the new realities of the global economy, they also confront the dilemma of leaving behind ancestral aspects of their culture and inflict a devastating damage to their environment in the name of progress. As the hazard of our ecological reality demands from us (people compromised with the idea of a peaceful coexistence between humans and nature) a dose of optimism and irreverent look into the future, there are no reasons to think that bilateralism, a phenomenon that has come to stay, and environmental law are exclusive and incompatible. In the following paragraphs I will attempt to outline which principles the bilateral relationship between the U.S. and Latin America should be based upon.
FTAs are supposed to circumvent one of the problems of developing countries in their career to economic growth: market access. In this sense, tariff reductions and eliminating non-tariff barriers are the best ways developing countries can mobilise resources for economic growth; but as we have seen in previous chapters, empirical evidence force us to rethink the way trade liberalisation in been pursued through FTAs, at least from a Latin American perspective. The oldest FTAs the region has signed, namely NAFTA and the Chile-US FTA, are particularly telling regarding how the increment of economic activity brought by trade liberalisation has caused devastating environmental effects. A laissez faire approach would leave these things on the hands of a ‘Environmental Kuznets Curve’;[84] this approach is partially proved in the Chilean experience, where the activity and involvement of the civil society in environmental affairs is by far bigger than in any other Latin American country; but bigger participation does not necessarily mean a bigger involvement in governmental affairs in Latin America. With higher income not only comes better education, higher environmental consciousness and a deserved place in the middle class quintile of any society; it also comes a bigger appetite for exotic products, a desire for owning a car or travelling to other distant places and therefore higher patterns of consumption. 
These are exactly the themes that were addressed by Agenda 21 (Chapter 2) and the Johannesburg Plan of Implementation (Chapter V); emphasis is put on market access and diversification of developing countries’ economies, in order to prevent the pervasive effects of reliance on commodity exports. Sustainability also means that merely conservationist approaches are not the solution to environmental problems; Latin America is a huge region plague by inequality and poverty, between 28 and 43 million of people in Latin America are indigenous (Patrinos & Gillete, 2005); just in Peru there are 14 million of indigenous people. In this sense, commodities exported from these countries must reflect in their prices environmental and social costs; to become trade sustainable, MEAs play an important role, so upward harmonisation between FTAs and MEAs in which the highest environmental standards are taken as a minimum value are important part of the equation. Environmental institutions must be strengthened in each country, through better funding and capacity-building.
Increase inequality seems to have been one of the most enduring legacies of the economic liberalisation undertaken in Latin America along the 1980s and 1990s; an ECLAC report on the issue finds Latin America with the highest level of income inequality in the world; but particularly finds that the continent managed to reduce inequality during the 1970s, to reversed in the 1980s (Morley, 2001). In some countries such a trend has been reverted during the last decade thanks to a mixture of economic growth and social spending; the region has enjoyed a sustained growth between 2000 and 2010, regardless of FTAs, but closely related to price spikes in raw material and natural resources. Trade liberalisation cannot be accompanied by a reduction of the presence of the state in social expenditure; fight against poverty must mix sound macroeconomic policies with a well planned and rigorous applied poverty reduction policy. Chile, a country with an outstanding economic record has a high rate of income inequality even for Latin American levels, the highest in the world; Chile could have a much uglier picture would it not be by the implementation of several poverty reduction plans, aided by the World Bank and the International Monetary Fund.
Poverty and environment are often treated as separate issues, even though are closely linked. It is enough to mention that 20% of the world population has 86% of the total private consumption expenditure; the poorest 20% just 1.3%. The phrase seems contradictory since it does not blame the victims; a simplistic environmental approach that tends to blame overpopulation in the developing world as the source of hazardous pressure over natural resources is, simplistic, to say the less. The problem with poverty is that if the world is going to lift people up from poverty to comparable standards of life in the developed world, we are going to need two or three planets like the Earth in order to cope with consumption; considering that we are no able to even travel to Mars, we better start thinking on sustainability. Economists often overemphasised the capacity of economics to allocate resources efficiently and for undetermined periods of time, relying on technologies advantages to overcome production problems; this can mislead us on recognising that the planet can be reaching a tipping point from which, everything could start collapsing in a domino effect.
Is not only free trade that can help to find the necessary resources for development, debt relief could help Latin America in particular to concentrate human and monetary resources in sustainability, taking care of the vast forest resources like the Amazon (which not only benefits Latin America), the water and the air that produces, and the carbon it captures. It is the lack of resources what it does not allow the continent to have an aggressive policy of environmental protection; these resources can just be build up by international cooperation (technical and financial) and economic growth, but for this growth to be sustainable, international cooperation is first needed. All the FTAs studied in this dissertation have different degrees of technical assistance, but the lack of monetary resources for the environment is the common denominator. In the mean time, an acknowledgement from developed countries of their economic voraciousness as the core problem relating both environmental degradation and sustainability can help, at least morally.  
In order to effectively address environmental issues is necessary to support developing countries to develop and enhance institutional and individual capabilities. The development of a education facilities, in which not only scientific, but also socioeconomic and legal knowledge for the environment is taught, can represent a good start. UNEP has long been working on these schemes; it is based on the idea that regional organisations, national governments and civil society must be reinforced if the challenges of sustainable development are to be contested in a successful way. Capacity building (namely the transference of institutional knowledge), and technological transfer (a structural process of learning in which skills, abilities, knowledge and systems and processes are all bound) are the core pieces of the sustainable agenda for the developing world.
It is important that FTAs and MEAs work in building an understanding related to the transfer and use of technology to the developing countries. Also the incorporation of environmental protection to all levels of policy making is an important step. The Capacity Building Task Force on Trade and Environment (a partnership between UNEP and UNCTAD) has identified five main clusters to address capacity building on T&E:

·         Thematic Research
·         Country Projects
·         Training
·         Policy Dialogue and
·         Networking

The UN and its sectorial organisations have long been working on these issues and have advance further on implementation technicalities. High levels of coordination are necessary to obtain good results in these areas; in this line, FTAs secretariats should work along with international bodies such as UNEP, UNCTAD and the WTO to enhance and concentrate resources around the weak and ill-funded environmental institutions and social groups. Governments in the region should stress during any process of negotiation or revision of FTAs, the importance of involving UN bodies in the process of assistance and implementation. In a sense that back to fundamentals, rather looking for new ways, is the best way to tackle environmental issues in the region. Rescuing the multilateral bodies from oblivion and getting them involved in these bilateral processes must be a priority for developing countries, when pursuing the bilateral path, if they do not want to be override by the unilateral negotiations machine of the U.S. 
                                                                                                                               VI.            Conclusions
By analysing the multilateral trade system evolution from a historical perspective, two immediate conclusions emerge in this work. The first is that a system originally construed to reinforce international cooperation, as a way to evade the assumptions that gave way to the two World Wars, was abandoned as soon as the raise of new competitors threatened the hegemony of the U.S. in economic terms. The second conclusion is that the abandonment of Bretton Woods unilaterally by the United States and some European countries, did not debunk the original purpose of the multilateral trade system; the only part of Bretton Woods that remained in place after 1971. Seen from this perspective, the deepening of those new characteristics of the world economy in the post war period, such as competition at a global scale and the crises of production and stagflation the plagued most of the developed world during the 1970s, made the multilateral trade system increasingly difficult to deal with from a United States perspective. Accordingly, a unilateral approach had to be taken after the difficult completion of the Uruguay round, in order to overcome the reluctance of the developing world to be imposed with a new economic paradigm in which the U.S. was going to be by far the biggest winner. Bilateralism, or a unilateral approach in which the U.S. imposes its will to small trade partners, has necessarily changed the dynamics of regional integration in Latin America; those countries that could not afford to oppose the U.S. agenda have fallen in the vacuum of Free Trade Agreements.
This, unfortunately, has brought a negative effect in the already poisoned debate of Trade & Environment. The inclusion of environmental clauses in FTAs has not been the result of consensus or fair trade negotiations, but an imposition of U.S. domestic policies in the region. The critical point is that by including environmental standards in FTAs, much attention has been diverted from multilateral institutions that had advanced further in this debate, making them irrelevant in the bilateral relationship and weakening the international environmental law regime.
But bilateralism has come to stay, and in a world in which consensus about the effectiveness of multilateralism has been eroded badly, thanks mainly to the unilateral approach of the U.S., probably the only way to advance in resolving environmental problems is coordination at bilateral level, without forgetting what it has been achieved in the multilateral system. In this sense, mutual supportiveness and harmonisation of environmental regimes seem to be a promising way out of the chaos.
Another seemingly obvious conclusion is that FTAs look at weakening the positions of most of the developing countries regarding multilateral trade negotiations and, at the same time, to strengthen the position of business lobbies at the expense of policy and regulation prerogatives in developing countries. In this sense, environmental clauses in FTAs have suffered a makeup, in order to make them more palatable for the tastes of national advocacy groups and less repulsive for grassroots and opposition groups in developing countries. Substantive issues of the debate remain untouched.
Lastly, if FTAs are going to be the way to advance economic goals for the Latin American countries, it is good to recall that most of them include call for sustainable development and eradication of poverty; further bargaining is necessary in order to make real promises of sustainable development through trade. A copy of Agenda 21 and the Johannesburg Implementation Plan would be a good present for those involved in trade negotiations between developed and developing countries. The system of investment dispute settlement has been proved a catastrophe in environmental terms; further walking away from it, will strengthen, rather than weaken, the bilateral system.

London, September 13th 2010.     


[1]    Britain would be the first country to adopt in its legislation the principle of most-favoured-nation, by enacting the Reciprocity of Duties Act in 1823. Later in 1860, it would sign the Cobden-Chevalier Treaty with France, lowering tariffs between the two countries; a move that France would use to extend the MFN treatment reserved to Britain, to other European countries, ushering the first wave of free trade treaties across the continent (Brown, 2003, p. 53).
[2]     During the period between the two world wars negotiations were directed at re-establishing the previous order of monetary, financial and trade relations that had been severely disrupted by WWI. Nevertheless, as WWII would prove, the main outcome of the Treaty of Versailles was to increase the mistrust among the parties, particularly Britain, France and a humiliated Germany; and trade and economic relations, as diplomatic ones, would follow this path. To the imperial dimensions of the problem, given the size of the possessions in the hands of the belligerent powers, the United States of America would add its increasingly powerful economic and military leverage, at the expense of  Europe (that had immolate herself badly, and would be on the eve of her second and ultimately act of savagery and destruction). Consequently, countries engaged in economic practices aimed at weakening their counterparts, rising tariffs and devaluating their currencies; making any hopes of understanding based on non-discriminatory rules to disappear (Stern, 2007, p. 3). Although there was a lapse in which the economic situation seemed to improve by restoring the gold standard, differences regarding the ideal level between high and low tariffs made impossible any agreement, triggering a wave of protectionism and retaliatory measures from which the Fordney-McCumber and the Smoot-Hawley Tariff Acts of 1922 and 1930 respectively, were the maximum expression in USA. [2] This would be known as the ‘beggar thy neighbour’ principle. Nevertheless, the MFN principle was introduced in the Fordney-McCumber Tariff Act. The Smoot-Hawley Act is particularly controversial, due mainly to the thesis of some economic historians that had blamed it for causing a wave of retaliatory measures against US products in Europe and in Latin America which, ultimately, deepened the Great Depression (see Kindleberger, 1986 p. 291). 
[3]     This should not be understood as to include neither the USSR, nor any other country. The main architects of Bretton Woods were Britain and the United States under the Atlantic Charter, a treaty that is often interpreted as the transfer of world rule from a declining Britain to a burgeoning United States. Thus, it has to be seen under the light of an Anglo-American alliance to win the war, and to rearrange the world under the auspices of a Pax Americana.
[4]     Another powerful reason that pushed the United States to negotiate the multilateral framework of Bretton Woods was to bring to an end the imperial preference system that Britain had imposed upon its colonial territories and the commonwealth. In order to avoid a direct clash with Winston Churchill and the British negotiators, President Roosevelt relaxed his demands for a firm declaration of non-discriminatory principles, and vowed to respect the system of preferences that was already in place (Aaronson, 1991 p.175; Gardner, 1985-1986 p. 23). Therefore, the exceptions contained in paragraph 2a of article I of General Agreement on Tariffs and Trade (GATT 1947, 55 UNTS 194) and Annex A of the same text.
[5]     In December 1945 the United States decided to resume negotiations, this time under the leadership of President Harry Truman, who had been authorised by the congress to negotiate the reciprocal reduction of tariffs of trade in goods. Not as much as President Truman would have liked though. The Congress had passed a new Trade Agreements Act in 1945, in which gave powers to the president to negotiate tariffs reductions, but also created a ‘Tariffs Commission’ with the power to oversee the executive cuts; however, the commission could just ‘recommend’ adjustments if found that a lower tariff was ‘injuring’ the national producers, but since a negative of the president to accept the recommendations could have been seen by the Congress and the public opinion as permitting the injury to happen, the power of the commission was much bigger than it seemed (see Kenen, 2000). The negotiation for the creation of the International Trade Organisation (ITO) and a General Agreement on Tariffs and Trade (GATT) were undertaken simultaneously in London and Geneva. By 1948 negotiations for the ITO had concluded in Havana, Cuba, and GATT had entered into force; with the ITO charter concluded and signed, was the turn of the United States Congress to approve it. Interestingly enough, it never happened; the Senate held the Charter until it was desisted by the US government in 1950. The opponents adduced simply that ‘the ITO would [have] meddle[d] in domestic economic matters’ (Kenen, 2000, p. 216).    
[6]     Through this short analysis, two conclusions clearly emerge; the first is that the ‘new world order’ impulse by Britain and the United States throughout WWII and the early post-war period was not liberal in its neoclassic sense. Financially, the Great Depression had left a bitter flavour in the mouths of politicians and the general public, that led to an almost unanimous consensus regarding strong capital controls (central to Roosevelt’s New Deal) and better financial regulation (Helleiner, 1994, pp. 25-50). In trade matters, strong opposition in the congress could just be placated by Roosevelt promise that tariff cuts would not expose domestic producers to ‘injurious competition;’ even so, an escape clause had to be added to most of the trade agreements negotiated during Roosevelt’s administration (see Kenen p. 218), to placate the most furious protectionists lobbies. With Truman, contumacy in the Congress got just worse (probably fuelled by the fact that Truman was not the prototype of American hero that Roosevelt had been for US people), reflecting an increasingly protectionist animus among the political landscape in the United States. The second conclusion is that notwithstanding Congress and lobbies opposition to tariff reductions, the architects of the post-war international order, embodied in the heirs and cadres of Roosevelt’s New Deal, were strongly committed to a fairer and rule-based international trade order; much more than their counterparts in Britain and Europe. This main conviction was based on the increasing strength of the US economy, which initial advantage was the war destruction of its counterparts in Europe and Asia, the new character of USA as a lender nation and its uncontested military might. The GATT original mission was ‘to set and regulate a code of conduct for international trade’, in other words ‘to facilitate an open, liberal, and competitive international trading system.’ But by the time negotiations were under way to create the ITO most countries ‘were concerned about safeguarding their weaker national economies against US export competition.’ The complexity of the negotiations and the unavoidable reality of international relations immediately after WWII, made most of the original objectives of the ITO and GATT to become ‘nominal’; furthermore, ‘[t]he combination of an equal vote for every country and escape clauses basically left every country to do as it liked’ (Dominguez, 1993, pp. 368-369; 378). Another important consideration to understand why the United States, being so committed to free trade, did not push harder to achieve a stronger ITO or GATT regime, is to be found on American strategic goals as the Cold War unfolded. A sympathetic attitude towards its European and Japanese allies (regarding the pace in which these economies were going to be liberalised) prevailed, at the expense of an imposition of liberal measures that could bring social unrest and more economic disarray, and therefore could strengthen the communist forces within these countries (Helleiner, 1994, p. 5-6; Loriaux, 1991, pp. 124-126).  
[7]    Notwithstanding the progress in the field of trade, not everything went according to plan for the Bretton       Woods system. By 1955 most of the economies in Europe and Japan were in the middle of an economic boom, signalling a period of unprecedented economic expansion at global scale. A combination of Keynesianism, decolonization and different variants of Import Substitution Industrialization (ISI) were modernizing the developing world; therefore integrating them into the multilateral system. This economic expansion would bring a golden economic era for the United States; but would also bring increasing competition. Political developments would make the US to reassert its role as the defender of the western world against communism; getting involved first in the Korean War, and later, Vietnam. One of the most important mechanisms of Bretton Woods was the pegged-rate system, which anchored both the dollar to a fixed value of gold, and the rest of strong currencies to the dollar. By 1969 (after the expansion of the war in Vietnam into an all-out war) the pegged system was in danger. The war expenditures were bleeding the gold reserves of the United States; countries that had dollars as backup for their currencies were growing increasingly nervous, and spelled out their concerns about the ability of the US to cut its budget and trade deficits. The answer of the US government was to print out more dollars to pay its increasing debts abroad; as a response to that, governments in Europe were reluctant to accept the rate of inflation that the US was imposing upon them through its monetary policy. They started sending back their dollars to the Federal Reserve and demanded the price in gold to be paid. Germany went further, and left the pegged-system without even consultations on May, 1971. In August President Nixon announced the end of the pegged system, due to ‘external speculation,’ and by 1973 most currencies were floating against each other; bringing to an end the Bretton Woods exchange system.      
[8]     The term comes from the combination of ‘stagnation’ and ‘inflation’. It refers to the combination of high unemployment and inflation rates, traditionally thought to be mutually exclusive. For mainstream macroeconomics in the post-war, namely Keynesian economics, there was no way to fight both at the same time; for if fighting one would necessarily strengthen the other.
[9]    Marc Dlester, in his book American Trade Politics speaks about a ‘long-standing trend toward tripolarity in the global economy’ to explain in some way the declining economic power of the US, which had to share the world with Europe and Japan after the collapse of the USSR, without ‘the glue that Cold War security alliances had therefore provided.’ (Destler, 2005, p. 41)
[10]   Although Jimmy Carter was the last North American ‘Keynesian’ President, he would promote Paul Volcker as the Chairman of the Federal Reserve. Volcker was an important factor in Nixon’s decision to eliminate the pegged-rate system; and was a well-known monetarist. He was the first Chairman of the Fed to use money supply as a mechanism to fight ‘stagflation’. In 1981 Volcker would raise interest rates to 21.5%, contracting demand and occasioning a recession in USA, in what it was to be known as the Volcker Shock. After Carter lost the elections in 1981 Ronald Reagan would become the first ‘monetarist’ President of the United States. 
[11]   The current list of Newly Industrialized Countries (NICs) also comprises Malaysia, Philippines, Thailand, Turkey, Mexico and South Africa.
[12]   Destler states in his book: ‘the US “decline” came mainly in the 1950s and 1960s, and could be seen as an inevitable correction of the abnormal an unsustainable pre-eminence created by World War II. But the full impact was felt in the 1970s and the 1980s. Industrial sectors that were once world leaders came under intense trade-competitive assault: first steel and consumer electronics, then automobiles, then microelectronics […] And such concerns were reinforced by a separate phenomenon that was frequently, albeit oversimply, interpreted as reflecting an accelerating decline. This was the onset of regular merchandise trade deficits.’ (Destler, 2005, pp. 48-49)
[13]   I use the term ‘Self-Contained Regime’ to describe within the scope of this dissertation ‘…a set of rules, norms and decision-making procedures around which actors’ expectations converge in a given area of international relations’ (S. D. Krasner [ed.], International Regimes, in Runersten [2008], p. 7), and that is sufficiently organised to depend on a minimum level from general rules applicable to International Law. See on this respect Runersten (2008) and Lindroos & Mehling (2006). 
[14]   Schott, 1994, p. 5. The agreements were successfully negotiated and the US-Israel FTA came into force in 1985; the Canada-US FTA came into force in 1987 under the name of CUSFTA and would be superseded by NAFTA in 1994.
[15]   Although this can explain the creation of the WTO in 1994; the completion of the Uruguay round could not have been possible if some developing countries would have not believed that multilateral trade liberalisation could be the solution to many developmental problems.  
[16]   The group was funded in the Australian city of Cairn in 1986 by Argentina, Australia, Brazil, Canada, Chile, Colombia, Fiji, Hungary, Indonesia, Malaysia, New Zealand, the Philippines, Thailand and Uruguay.
[17]   To make matters worse, in 1988 the United States amended its Omnibus Trade and Competitiveness Act to actualise Section 301 of the Trade Act 1974, to particularly accommodate intellectual property protection. The first ‘Special 301’ list came out in May 1989 and put the ‘leaders’ of the developing countries, opposing the new ‘expansion’ within the Uruguay round beyond trade in goods matters, in its ‘Priority Watch List.’ Brazil and India were both put at the top of the list, and were targeted as the main drivers of opposition within the Uruguay round to intellectual property rights inclusion (Abbott, 1989, pp. 708-710; Drahos, 2002; Destler, 2005, pp.123-124).
[18]   ‘… movement in APEC raised alarms among Europeans, who feared the United States was turning away from its traditional Atlantic-first orientation.’ Destler (2005), p. 208.
[19]   The coalition was formed by the following countries: Argentina, Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Cuba, Ecuador, El Salvador, Guatemala, India, Mexico, Pakistan, Paraguay, Peru, Philippines, South Africa, Thailand and Venezuela (G-20). And later, the addition of Egypt and Kenya transformed it in the G-22.
[20]   With developed countries hoping to advance further at Cancun on issues of government procurement and investment (the so called Singapore Issues), the G-20 was a tremendous setback. The proactive agenda of the group also revealed how hollowed were proposals on eliminating tariff barriers and subsidies on agriculture from Europe and the United States. Is in this point that negotiations have encountered a massive wall; the United States insisted on presenting itself as championing investment and procurement measures, while giving away on agriculture as a trade-off. But this is not certainly true, in terms of subsidies per capita to agriculture the average in US is $ 20,000, whereas in the EU is $ 14,000; but this is not all, of all the payments done in the US to the farming sector, 73% goes to just 10% of the farms, and the bill is getting bigger, which makes to think that rather than decreasing, subsidies are being increased in the US (Greener, 2008). In the case of the EU, the arguments are no fewer protectionists, but they are certainly more complex. Europe fears that the US is reinforcing its subsidies policies back home while pushing hard the EU to liberalise the farming sector. Another big concern for Europe is that its CAP is a source of secure food supply, away from the uncertainties of world supply and prices; with two months of world consumption in proven reserves of cereals, this contrast with 50 years of proven oil reserves. ‘The risk of dependence is just as serious as that of energy dependence’, writes French economist Michel Godet (2007).
[21]   Barry, T. (Jan. 14, 2005) Zoellick Plies a New Trade. Asia Times Online. Retrieve: August 28th, 2010. Online at:
[22]   Further to the Independence of the remnant regions of the Americas, following the instability caused in Europe by the Napoleonic wars, the United States established the Monroe doctrine to assert its area of influence and with the excuse that after peace, the Europeans would pursue the re-conquest of their ‘lost’ territories. Britain had desired it so, in so far as the independence would not curtail international trade and British access to these new markets. Although it is difficult to determine until what extent President Monroe was sincere regarding the rest of the Americas, there is no doubt that it would become a beacon of the US foreign policy. 
[23]   Although there were periods and administrations that seemed to have ‘upgraded’ Latin America in the policy agenda of the US, they were succeeded by periods of oblivion and hostile administrations; particularly when surges of left wing governments appeared to sweep the continent. But the emergence of new competitors in the context of globalisation, and the impressive rise of Asia as the juggernaut of the global economy, in detriment of US hegemony, has made the situation change. Latin America looks now, more than ever, as El Dorado that impressed so much the Spanish Conquistadors that colonised the continent. Vast amounts of natural resources, tangible and intangible, lie untapped across the continent; its peasants and urban poor are a vast source of cheap labour, ready to create enormous surpluses and break the comparative advantage of Southeast Asia. All these benefits with: neither having to flight to the other side of the world, nor having to wait two months for a container to arrive.
[24]   The list of invasions in Latin America is endless; I will just mention the most famous of the 20th century: The Platt Amendment (Cuba, 1901); the independence of Panama (Colombia, 1903); the occupation of Dominican Republic between 1916 and 1941; the occupation of Nicaragua between 1912 and 1933; the involvement of US troops in the Mexican Revolution in 1916; the occupation of Haiti between 1915 and 1934; the toppling of Jacobo Arbenz  in 1954 in Guatemala; Bay of Pigs invasion in 1961 (Cuba); the toppling of Salvador Allende in Chile in 1973; the invasion of Grenada in 1983; the Iran-contras scandal in 1986, the invasion of Panama in 1989 and a long so on. 
[25]   Nevertheless, I have argued before that these initiatives (APEC, FTAA, NAFTA), were taken as part of a broader strategy to break the stubbornness of some countries at GATT level, and also opening new channels that could off-set the boredom and slowness (when not completely halted) of round negotiations in the WTO.
[26]   See Destler, 2005, pp. 47-52.
[27]   I have followed, in order to give this work a third world perspective, the thesis of Vizentini (2004) and Arrighi (1994; 2005a and 2005b) in this respect.
[28]   Another new initiative, not directed linked with the FTAA but with a similar degree of coordination (this time among the IMF, the World Bank and the Treasury), was the so called ‘Washington Consensus’, which was a set of principles aimed at work as a set of remedies for long standing Latin American problems such as debt, stagflation, lack of capital, poverty, etc. 
[29]   A similar argument regarding CAFTA-DR negotiations can be found in McElhinny (2004). For a positive image regarding the negotiations of FTA and PTAs based in these regional agreements see CEPAL (2003).
[30]   Although in the Bolivian case there was more than trade involved in President’s Bush decision; Evo Morales was elected President of Bolivia in 2005, increasing the Anti-American rhetoric to strident levels. President Morales ordered the exit of the Department of Anti-Narcotics (DEA) from Bolivia in 2008 after accusing them of espionage, and later would declare the US ambassador persona non grata amid accusations of fuelling the secessionist movement in Santa Cruz Province.     
[31]   Another feature of US bilateralism in the region was the disregard for Andean Community (Established in 1969 through the Acuerdo de Cartagena between Colombia, Ecuador, Peru, Chile and Bolivia; later joined by Venezuela in 19730) as a group. The CAN (by its acronym in Spanish) was a solid group and the first regional integration initiative emerged in South America. With unilateral negotiations with most of the Andean pact countries, the US showed little respect for the Latin American integration process, also sought to break the possibility of negotiations in block (e.g. US-CAN) that could strengthen the position of Latin American countries vis á vis with the US. Venezuela left the Andean Community in 2006 amid accusations against Colombia, Peru and Ecuador to have killed the union by negotiating bilaterally with the US. Another important result of the ‘surge’ of bilateralism in the region was the reaction of Brazil against the FTAA and the launching of the Mercado Comum do Sul or MERCOSUR in 1991, along with the initiative for the South American Free Trade Area (SAFTA), both aimed at breaking the encirclement of the FTAA and the push for liberalisation that the ‘Washington consensus’ was entrenching in the region. Although Brazil had undergone a deep process of economic realignment during the 80s, which meant a big degree of liberalisation and appeasement of the international investors, the country did not resign to its ‘national project’, nor to its long term ambition of becoming the ‘leader and the voice’ of Latin America (Vizentini, 2004, pp. 16-20).
[32]   Nestor Kirchner’s wife Cristina Kirchner, was elected President in October 2007, and mainly represents her husband’s line of thought, having good relations with most left wing governments in the continent.
[33]   Sebastian Piñera was elected President of Chile in December 2010, and represents the first right wing President elected in Chile since the dictatorship of Pinochet ceased in 1989.
[34]   UNASUR also represents the beginning of a complicated process of integration between CAN and MERCOSUR, whereas the United States’ FTAs with Peru, Chile and Colombia (not ratified), can press effectively to postpone the integration ambitions of Brazil and most South American countries. If the United States is serious about adjusting its economy to the new geopolitical realities of the planet (and in this sense MERCOSUR, UNASUR and the nightmarish scenario of the DDA in the WTO are outstanding setbacks to this project), we are going to see necessarily an increase of unilateral and bilateral activity from the US towards Latin America; this will depend on political changes in each country and how sincere are some politicians regarding UNASUR. Colombia and Peru, for example, are playing hard at the Organisation of Americas States (OAS) along with the United States to try to re-legitimate this forum, while downplaying UNASUR in the continent. But in South America, Peru and Colombia belong to a minority (at least momentarily), whereas the majority is seriously committed with a scheme of political, economic and social integration.         
[35]  Magraw (1994, p. 14) used this argument in the same way to speak about ‘the most significant concern raised by the prospect of negotiating and implementing NAFTA…’
[36]   GATT DS21/R – 39S/155. Online at:
[37]   See ‘Valuing Biodiversity in Costa Rica’. ELaw.
[38]   All the acronyms are in Spanish, otherwise stated.
[39]   Pasta processing is one of several stages in the production of Cocaine from the coca leaves. ‘[T]he leaves are mixed in a pozo (pit lined with heavy plastic) and filled with a large quantity of water to which sulphuric acid has been added. The leaves are mixed in the pit by pisacocas (coca traders) hired to stomp the coca for several hours. The liquid which rises to the top of the pit is decanted into a smaller pozo where it is mixed with kerosene, diesel fuel, and calcium oxide (cement) to neutralize the solution… The kerosene is drawn off and sodium carbonate is added to the resulting liquid, producing a sulphate precipitate, cocaine pasta.’ (Léons & Sanabria, 1997).
[40] In the article President Garcia compared the indigenous people and organisations that support them with the old Spanish comedy written by Felix Lope de Vega, The gardener’s dog, or the Dog in the Manger, as this fable is known in the Anglo world.
[41]   That was the situation when in 2008 Peru decided to implement the US-Peru FTA through Law Nº 29316 and other related Legislative Decrees; strikingly, all these legal instruments had a common enemy: the indigenous people (or the Dogs in the Manger as President Garcia had called them). Law 29316 abolished decision 486 of CAN that regulated the scope of patentability life forms, it also abolished the obligatoriness of the Certificate of Origin (CO) in order to grant patents (Law 27811), and the article in the same law that made the patent null if no CO was produced. Law Decree 1090 excluded the natural resources of the country as ‘patrimony of the nation’ and expanded the agricultural border in a way that threatened indigenous land and favoured biofuels crops. In practice, the law stripped 45 million ha of its protection as forest heritage, to be added to the agricultural area and thus, sold off. Decree Law 994, reclaims the property of all land that is not in use, but has agricultural conditions. Law Decrees 1020 and 1081 imposed a set of new institutions that are not adapted and are incompatible with indigenous customs and own institutions. Law Decree 1083 gives category of contract-law to those investments in the water sector; moreover, it categorize as priority just water for human consumption, leaving outside water for agricultural, energy and livestock purposes, which would have to be paid if any concession was granted in a particular area. In August 2008, two months after the enactment of the package of laws to implement the FTA (called by the indigenous people as the Laws of the Jungle), protesters started blocking access in roads and rivers along what they believed was their territory, in order to prevent any enforcement and block major cities. In December the Congress had to act and derogate two of the most infamous Law Decrees, 1015 and 1073, and granted a three month moratorium for the coming into force of the Law Decrees. The government refused to derogate the rest of Law Decrees that were affecting directly indigenous communities, and after some months of negotiations, on 9th April they went on strike again. On 5th June, the government decided to intervene; 23 policemen and 9 civilians were killed, and an undetermined number of people are still missing; the colloquial name of such a day: El Baguazo. Although it cannot be said that the Peru-US FTA caused the massacre, it can be said that this happened because of the government insistence on enacting laws to implement the FTA without consulting the directly affected; this sounds more as a government failure on dealing with its citizenry, but it remains the question of whether should have happened would it not be a FTA.
[42]   In reality it was already a major scandal that neither Clinton nor Bush could avoid during the campaign.
[43]   See Destler (2007), p. 260-262.
[44]   Destler (2005, p. 261).
[45]   See Jenkins (2000); Jenkins (2003) and Gristwold (2001, pp. 3-5).
[46]   ILO fundamental conventions: #87, #98, #29, #105 (ratified by the US), #100, #111, #138 and #182 (ratified by the US). In contrast, all these conventions have been ratified by Chile, Colombia, Peru, Panama, Costa Rica, Guatemala, Honduras, Dominican Republic and Nicaragua; all members or future members of US FTAs in the region.
[47]   Process Production Methods, or PPMs, are very complicated but useful distinctions in the WTO technical language. The distinction between PPMs and non-PPMs is how the process affects the final product; if two products that have been made in completely different ways are used, handled and disposed in the same way, so we are in front a non-PPM product. For further information see Environment & Trade: A handbook.
[48]   GATT DS21/R… op. cit., p. 12
[49]   Ibid., p. 36. Emphasis added.
[50]   Ibid.
[51]   Obama, B. (2008). Obama’s Speech in Janesville, Wisconsin. Council on Foreign Relations. Essential Documents. Online at:
[52]    See also NAFTA at Ten: Lessons from Recent Studies. CRS report for the U.S. Congress. Online at:
[53]   Individually, as I have argued before, these FTAs do not mean what a FTAA would for USA.
[54]   North American Free Trade Agreement, U.S.-Can.-Mex., Dec. 17, 1992, 32 I.L.M. 289 (1993), available at
[55]   The United States-Central America-Dominican Republic Free Trade Agreement, U.S.-CAFTA-DR, Aug. 5, 2004, [hereinafter DR-CAFTA].
[56]   United States-Chile Free Trade Agreement, U.S.-Chile, June 6, 2003, 42 I.L.M. 1026 (2003) [hereinafter Chile FTA], available at:
[57]   United States-Peru Trade Promotion Agreement, U.S.-Peru, Apr. 12, 2006, available at  [hereinafter Peru TPA].
[58]   Article 19.3, Chapter 19, Chile-US FTA.
[59]   It will be enough to mention the Metalclad v Mexico case (ICSID Case No. ARB[AB]/97/1). Interestingly enough, a very similar case brought by Canadian firm Methanex against the United States resulted in the rejection of all the company’s claims in UNCITRAL (Methanex Corp. v United States of America, Final Award)
[60]   Ibid., Art. 19.2
[61]   NAFTA Chapter One. Online at:
[62]   In this case it was obvious that the U.S. was involved in a discriminatory practice against Thailand; nevertheless, the question was whether the discrimination was justifiable under Article XX (g). The traditional interpretation of paragraph g was that ‘exhaustible natural resources’ were those ‘incapable of biological reproduction’ and therefore turtles were not covered; according to the appellate body, in the light of the WTO preamble, inasmuch as the turtles were in serious danger of extinction, they were exhaustible natural resources. See Howse (2002).
[63]   Case 302/86 Commission v. Denmark, 1988 E.C.R. 4607.
[64]   This is a classical example of an environment-investment dispute. Pac Rim has not been able to continue with its operations in El Dorado mine due to environmental concerns and public pressure. Pac Rim Cayman LLC v. Republic of El Salvador (ICSID Case No. ARB/09/12). All related documents in:
[65]   Venezuela has been recently sued in the ICSID by Mobil Corporation, a company based in the U.S., through a subsidiary in Netherlands, to be covered by a BIT between this country and the Bolivarian Republic of Venezuela, which in turn, does not have a BIT with USA (Mobil Corporation and others v. Bolivarian Republic of Venezuela; ICSID Case No. ARB/07/27).
[66]   Abbott F. M., (1989, p. 573)
[67]   See on this respect Murphy (2009, p. 23) and Grove (1995, pp. 153-167).
[68]   See ut supra note 41.
[70]   U.S. Navy (April 24th, 2008). Navy Re-establishes U.S. Fleet. Retrieve September 2010. Online: See also: BBC Mundo (2008). El Regreso de la Cuarta Flota. Retrieve September 2010. Online:
[71]   See BBC News (July 16th, 2009) Colombia-US air base deal ‘close’. BBC News. Retrieve September 2010. Online at: The agreement has been recently cancelled by the Colombian Supreme Court under the grounds of unconstitutionality, since the executive did not send to Congress the agreement to be authorised. Nevertheless, the decision affects at minimum the cooperation between the Colombian military forces and the U.S. army, according to President Santos. The only worry for both governments is that the decision delays the implementation and refurbishment of the airbase of Palanquero, the only piece of hardware that only matters for the U.S., due to the length of its runway that can receive C-17s. See on this respect: BBC News (August 18th, 2010) Colombia declares US base share deal unconstitutional. BBC News Latin America & Caribbean. Retrieve September 2010. Online:; Santos, M. (2009). El Peligro de las Bases y las Mentiras de Uribe. Retrieve September 2010. Online:
[72]   The Santiago Times (September 3rd 2010). Protest against Castilla thermoelectric project ends in arrests. Retrieve September 2010. Online:
[74]   In both transcript articles the emphasis has been added. 
[75]   U.S. Department of State, Methanex Corp. V. USA. Online:
[76]   Baughen (2006, p. 7).
[77]   U.S. Department of State, Pope & Talbot v Canada. Online:
[78]   U.S. Department of State, S.D. Myers v Canada. Online:
[79]   A term often used to explain ‘a deliberate strategy on the part of the state, which may imply a negative moral judgement’. Dolzer, R. (1986) Indirect Expropriation of Alien Property. ICSID Review, Foreign Investment Law Journal. Pp. 41-59.
[80]   Baughen, ibid.
[81]   ICSID, World Bank, Metalclad Corporation v The United Mexican States. Online:
[82]   Baughen ibid., p. 9
[84]   According to David I. Stern the environmental Kuznets curve is a hypothesized relationship between various indicators of environmental degradation and income per capita. In the early stages of economic growth degradation and pollution increase, but beyond some level of income per capita (which will vary for different indicators) the trend reverses, so that at high-income levels economic growth leads to environmental improvement.


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