Robert Schiffer on Environmental Compliance under Trans-Pacific Partnership

This is how time passes. I think Donovan's presentation really sets out something. Before I get into how trade agreements have been a future effect on trade between countries, if you take any 10-year slot period and look at what decision-makers and corporations had to contend with, unpredictability would be the word that has happened over and over again. For example, when I look at Vietnam in the 90s to 2000, the major catastrophe was a typhoon from the central Vietnam, and then in the United States between 2001 and 2010, Hurricane Katrina was thought to be the most catastrophic event, and then five years later Hurricane Sandy eroded the East Coast. Insurance companies keep eroding how much they will cover, and flood control is the way U.S. insurance is developed. Going into the future, we were sitting last night at dinner and thought about the movie World War Z; the next 10 years might bring chemical or biological catastrophe. The scary part is that our decision-makers have difficulty preparing us for the worst and always try to tell us to look at rosy scenarios. Vietnam as a developing country has succeeded over the last number of years because of trade and opening up its markets, producing jobs and technology in agriculture, textiles, fishery, mining, coffee, and other natural resources. The leading aspect that opened up Vietnam was its own enterprise law, which gave people the power to start their own businesses, but the bilateral treatment seriously helped Vietnam because that template elected Vietnam to the WTO. Trade agreements focused on environmental issues were on the side, but we're now facing a period where in the U.S., you could not get a trade deal passed without dealing with environmental issues. The issue is that overall, in the next 15 years, it won't be because of the Trans-Pacific Partnership that I'm going to talk about, but there was a WTO case involving Thailand over years ago about rates coming into the U.S. that were cheaper than the price of goods made in the U.S. It was pointed out that because of how the fish were being exported, environmental concerns were not addressed, and therefore additional tariffs had to be put on. I'm going to rush now because I was just told one minute, but I need three minutes. The TPP is going to be the largest free trade agreement, with approximately 40% of the world's GDP and one third of total world trade. Vietnam is going to bring up 13.6% increase in Vietnam's GDP. The agreement is important because it involves Vietnam, Malaysia, Indonesia, Australia, New Zealand, Brunei, Singapore, Canada, Peru, Mexico, Japan. For Vietnam, the U.S., Japan, and Malaysia are the four most important countries because all the others have already had free trade agreements. Garment and footwear will be a very important area for Vietnam in terms of reduction in tariffs. The rules of origin will reduce tariffs on cotton and other materials from China. The U.S. and Vietnam are the two major partners in the agreement, and the U.S. is the largest importer of textiles from Vietnam. Agricultural exports are expected to double by the TPP. Right now, U.S. agricultural products are about $20 million and Japan's $40 million, but it is expected to increase significantly when tariffs come off. There were five factors that displayed Vietnam as a beneficiary: exports in terms of trade on the TPP, strong trade with the U.S., high production of apparel and footwear, strong competitive positions in other manufacturing industries where China's comparative advantage is trading, and high initial domestic protection and powerful scale effects. The TPP's environmental chapter will include enforceable obligations for parties to make domestic environmental laws that abide by global environmental agreements, addressing biodiversity conservation, illegal logging, wildlife trade, agricultural trade, mining, land use, and overfishing. The U.S. tabled a proposal at the Chicago negotiating session in September 2011 containing three components: specific new provisions on illegal logging, marine fisheries, and endangered species; requirements to uphold commitments to multinational environmental agreements; and stakeholder participation to challenge member states' provisions, including binding dispute settlement. This has proven controversial among many countries, so it will probably be narrowed significantly in the final agreement. The environmental chapter has agreed to some environmental standards in the wood product sector, seafood sector, and garbage sector. I want to close by saying that the public will have a lot of say as this agreement goes forward. We're reaching a point now where the leaders will be at APEC in early October, where the presidents and prime ministers will try to come to a general agreement, pushing for a top-down deal, with the effort to close by the end of this year. The industry will particularly oppose that because they try to control what goes into trade agreements, and consumer environmental groups will feel the same way. There will be pushback, but what we would want to get out of the TPP from the perspective of adaptation in the future is the beginning of addressing these issues, significantly allowing people to have dispute settlements on issues between countries. That will be very difficult because it's the first agreement of this sort that is multilateral. Given the history of climate change agreements, even though this is a much smaller group of countries, with China and Korea now trying to get into the TPP, I would give it about 30 to 50 percent that it will have significant environmental standards, but at least it will be addressed for the first time.