executive Summary
The urgency to address climate change has never been greater. While all ASEAN Member States (AMS) have pledged their commitment to the Paris Agreement under the United Nations Framework Convention on Climate Change (UNFCCC), achieving their net-zero carbon dioxide (CO₂) and greenhouse gas (GHG) emission targets remains a meaningful challenge. To bridge this gap, regional cooperation is essential. One potential strategy involves strengthening environmental provisions in Free Trade Agreements (FTAs) to foster greater collaboration on climate change mitigation and adaptation.
- Reviewing current FTAs registered with the World Trade Organization (WTO),this analysis evaluates environmental provisions that fall outside the WTO’s existing mandate. The assessment considers both horizontal aspects (the presence of environmental laws and regulations) and vertical aspects (the quality of provisions, including enforcement mechanisms).
- examining FTAs that excel in both horizontal and vertical dimensions, such as the Comprehensive and Progressive Agreement for Trans-pacific Partnership (CPTPP) and the EU’s agreements with Singapore and Vietnam, reveals a common trend: while thes agreements include standalone Environment or Lasting Progress Chapters, they lack specific measures for climate mitigation and adaptation. Instead, they rely on broad commitments to encourage green transition cooperation.
- Recent developments, such as the conclusion of the ASEAN-China FTA (ACFTA) 3.0 upgrade negotiations, wich include a Green Economy Chapter, demonstrate progress. However, the effectiveness of this chapter will hinge on the ambition and enforceability of its terms.The full text is expected to be released in 2025.
- The Singapore-Australia Green Economy Agreement (SAGEA), signed in 2022, offers a promising blueprint. Unlike traditional FTAs with environmental chapters, SAGEA includes concrete deliverables designed to accelerate climate transition initiatives. These measures have the potential to help countries meet their climate goals through trade, investment, and regional cooperation.
* Kristina Fong is Lead Researcher (Economic Affairs) at the ASEAN Studies Center,and Sanchita Basu Das is an economist in the Regional Cooperation and Integration Division of the Economic Research and Regional Cooperation Department at the Asian Development Bank.
ISEAS Viewpoint 2024/101, 11 December 2024
Introduction
The global fight against greenhouse gas (GHG) emissions is at a pivotal moment. All ASEAN Member States (AMS) have pledged their support to the Paris Agreement under the UNFCCC, committing to achieve net-zero carbon dioxide (CO₂) emissions by 2050 and net-zero GHG emissions by 2065. These targets aim to limit global temperature increases to no more then 1.5°C. However, the gap between ambition and action remains wide, necessitating stronger regional cooperation. One potential solution is to enhance environmental provisions in Free Trade Agreements (FTAs) to drive climate change mitigation and adaptation efforts.
Trade plays a crucial role in ASEAN’s economic development,with most member countries relying on trade for over 100 percent of their GDP. By integrating more binding environmental provisions into FTAs, ASEAN can leverage trade as a tool to accelerate its green transition and achieve its climate goals.
ASEAN Trade Agreements: A Pathway to Accelerating the Green Transition
Table of Contents
- ASEAN Trade Agreements: A Pathway to Accelerating the Green Transition
- Environmental Laws in Trade Agreements: A Closer Look at Global and Regional Trends
- Balancing Trade,Investment,and Environmental Goals in ASEAN+ Agreements
- ASEAN Trade agreements: Environmental Provisions and the Path to Greener Future
- New Trade Agreement Aims to Accelerate Climate Change Transition
The Association of Southeast Asian Nations (ASEAN) has long been a cornerstone of regional trade policy, leveraging its extensive experience to foster economic cooperation across Asia and beyond. However, as the global community races to meet green transition targets, the integration of environmental provisions into ASEAN’s trade agreements has become increasingly critical. while some progress has been made, the incorporation of climate change considerations in ASEAN+1 Free Trade Agreements (FTAs) and the regional Comprehensive Economic partnership (RCEP) remains in its infancy. This gap must be addressed to ensure the region’s sustainability goals are achieved.
Assessing ASEAN’s Trade Agreements: Environmental Provisions in Focus
to better understand the current landscape, we examined the environmental provisions within ASEAN’s preferential trade agreements (PTAs). These provisions,which extend beyond the current mandate of the World Trade Organisation (WTO),were analyzed from both horizontal and vertical perspectives. The goal was to identify opportunities for strengthening environmental commitments and accelerating the region’s green transition.
ASEAN’s Plurilateral Trade Agreements
ASEAN’s plurilateral trade agreements represent a significant portion of its economic framework. These agreements, which include the ASEAN Free Trade area (AFTA) and the Regional Comprehensive Economic Partnership (RCEP), have laid the groundwork for regional trade. However, the integration of environmental provisions in these agreements has been limited, despite their potential to drive sustainable practices.
| Plurilateral | |
| ASEAN / ASEAN + | Other |
| ASEAN Free Trade Area (AFTA)*[4] | Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) |
| ASEAN – Australia – New Zealand | EFTA – Indonesia |
| ASEAN – China | EFTA – Philippines |
| ASEAN – Hong Kong, China | EFTA – Singapore |
| ASEAN – India | Gulf cooperation Council (GCC) – Singapore |
| ASEAN – Japan | EU – Singapore |
| ASEAN – Korea, Republic of | EU – Vietnam |
| Regional Comprehensive Economic Partnership (RCEP) | Eurasian Economic Union (EAEU) – Vietnam |
ASEAN’s Bilateral Trade Agreements
In addition to plurilateral agreements, ASEAN has also established numerous bilateral trade agreements. These agreements, while diverse, often lack robust environmental provisions.The table below highlights some of the key bilateral agreements involving ASEAN member states.
| Brunei | Singapore cont… |
| Brunei Darussalam – Japan | japan – Singapore |
| Indonesia | Jordan – Singapore |
| Chile – Indonesia | Korea, Republic of – Singapore |
| Japan – Indonesia | new Zealand – Singapore |
| Indonesia – Australia | Panama – Singapore |
| Indonesia – Pakistan | Peru – Singapore |
| Lao PDR | Singapore – Australia |
| Lao People’s Democratic Republic – Thailand | singapore – Chinese Taipei |
| Malaysia | Türkiye – Singapore |
| Chile – Malaysia | United Kingdom – Singapore |
| India – Malaysia | United States – Singapore |
| Japan – Malaysia | Thailand |
| Malaysia – australia | Chile – Thailand |
| new Zealand – Malaysia | India – Thailand |
| pakistan – Malaysia | Japan – Thailand |
| Türkiye – Malaysia | Thailand – Australia |
| Philippines | Thailand – New zealand |
| Japan – Philippines |
While these agreements have facilitated trade and economic growth, their environmental provisions are often underdeveloped. This presents an prospect for ASEAN to lead the way in integrating sustainability into its trade policies, setting an example for other regions to follow.
The Road Ahead: Strengthening Environmental Commitments
As the world grapples with the challenges of climate change,ASEAN’s trade agreements must evolve to reflect the urgency of the green transition.By incorporating stronger environmental provisions, the region can not onyl meet its sustainability goals but also position itself as a global leader in sustainable trade practices.
The time to act is now. ASEAN’s long-standing expertise in regional trade policy makes it uniquely positioned to drive this change.By prioritizing environmental considerations in its trade agreements, the region can pave the way for a more sustainable and resilient future.
Environmental Laws in Trade Agreements: A Closer Look at Global and Regional Trends
Trade agreements around the world are increasingly incorporating environmental provisions,but the extent and effectiveness of these measures vary considerably.A recent analysis of plurilateral and bilateral trade agreements reveals key insights into how environmental laws are being integrated and enforced across diffrent regions, particularly in Asia and the Pacific.
The study examines two primary perspectives: the horizontal perspective, which evaluates the environmental laws governing trade between member countries, and the vertical perspective, which assesses the quality and depth of these environmental provisions. Both approaches highlight opportunities and challenges in ensuring that trade agreements contribute to sustainable development and environmental protection.
horizontal perspective: Enforcement and Ambition
From a horizontal standpoint, the focus is on how environmental laws are implemented within trade agreements.This includes commitments to environmental standards, enforcement mechanisms, and sanctions for violations. Though, the analysis shows that the language used in many agreements frequently enough dilutes the level of ambition. As a notable example,phrases like “encouraging” countries to adopt environmental standards fall short of legally binding commitments,limiting the potential impact of these provisions.
“Despite their presence in the agreements,the level of ambition often gets diluted by the language used in the texts,resulting in a missed opportunity for tangible impact.”
This trend is particularly evident in plurilateral agreements involving ASEAN countries, where environmental provisions are often limited to general statements about sustainable development. However, agreements with more developed partners, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Singapore Free trade Agreement, demonstrate a stronger commitment to environmental protection.
Vertical Perspective: Quality of Environmental provisions
The vertical perspective delves into the quality of environmental provisions within trade agreements, using a set of criteria established by the World Bank.These criteria evaluate seven key areas:
- environmental Goals/Objectives: Focus on environmental protection and sustainable development.
- Balance Between Environmental and Trade/Investment Goals: Measures to prevent economic incentives from overriding environmental objectives.
- enforcement Mechanism: Dispute resolution mechanisms for environmental violations.
- External Assistance: Provisions for technical, financial, and capacity-building support.
- General Environmental Protection Areas: Coverage of issues like ozone-depleting substances and illegal wildlife trade.
- Multilateral Environmental Agreements (MEA) Compliance: Requirements to align with international environmental treaties.
- Participation in Promoting Environmental Objectives: Institutional frameworks to advance environmental initiatives.
The analysis reveals that while some agreements, such as those involving Japan and South Korea, include robust environmental provisions, others fall short.For example, the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN-China Free Trade Agreement mention environmental goals but lack binding commitments.
Environmental Goals: A Mixed Picture
Most ASEAN+ plurilateral agreements fail to explicitly outline environmental goals,relying rather on vague statements about sustainable development. In contrast, agreements like the EU-Singapore FTA go further by promoting regulatory cooperation and harmonization of environmental standards. Bilateral agreements, particularly those involving Japan and chile, show a stronger commitment to environmental protection, with many acknowledging the importance of high environmental standards.
For instance, the Japan-Indonesia Free Trade Agreement and the Malaysia-New Zealand Free trade Agreement include formal cooperation mechanisms for environmental regulation, signaling a deeper level of commitment to achieving environmental objectives.
Implications for the United States
The findings have important implications for the United States,particularly as it engages in trade negotiations with countries in the Asia-Pacific region. the success of environmental provisions in agreements with more developed partners suggests that the U.S.could play a leading role in promoting stronger environmental standards in future trade deals. By leveraging its economic and diplomatic influence, the U.S. can help ensure that trade agreements contribute to global environmental goals while fostering sustainable economic growth.
As the world grapples with pressing environmental challenges, the integration of robust environmental provisions in trade agreements will be crucial.The analysis underscores the need for clear, binding commitments and effective enforcement mechanisms to maximize the impact of these measures.
For U.S. policymakers, the challenge lies in striking a balance between economic interests and environmental protection. By learning from the successes and shortcomings of existing agreements, the U.S. can set a global standard for integrating environmental sustainability into trade policy.
Balancing Trade,Investment,and Environmental Goals in ASEAN+ Agreements
The delicate balance between trade,investment,and environmental protection remains a critical issue in ASEAN+ trade agreements. While these agreements frequently enough acknowledge the importance of environmental considerations, the extent to which they integrate explicit safeguards varies significantly. This article delves into the nuances of how ASEAN+ and other trade pacts address environmental concerns, enforcement mechanisms, and external assistance, offering insights into their effectiveness and potential gaps.
Environmental Safeguards in Trade Agreements
Most ASEAN+ trade agreements include a general exception clause allowing for environmental considerations, but only two—the ASEAN-China Free Trade Agreement (FTA) and the ASEAN-Republic of Korea (RoK) FTA—explicitly incorporate environmental exceptions in their investment chapters. This lack of specificity means that trade and investment objectives frequently enough take precedence over environmental protection initiatives, as most agreements lack controls to prevent this.
In contrast, plurilateral agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are more robust. The CPTPP, for instance, includes clauses in its investment chapter that allow for environmental exceptions, alongside safeguards to ensure environmental protection remains a priority. Similarly, recent EU-led agreements with Singapore and Vietnam also feature special environmental dispute settlement mechanisms, reflecting a stronger commitment to environmental sustainability.
Bilateral agreements, though, lag behind. While they generally provide for general state-to-state dispute settlements, only two—the New Zealand-Malaysia FTA and the U.S.-Singapore FTA—specifically address environmental provisions. These agreements are notable for their comprehensive enforcement mechanisms, but the majority of bilateral FTAs lack similar safeguards, leaving environmental protection initiatives vulnerable.
Enforcement and Dispute Resolution
One of the most significant shortcomings of ASEAN+ trade agreements is the absence of concrete enforcement and dispute resolution mechanisms. Unlike the CPTPP, which mandates judicial proceedings for environmental regulation enforcement and provides avenues for international remedies, ASEAN+ agreements fall short.this lack of robust mechanisms undermines the effectiveness of environmental provisions, leaving member states without clear pathways to address violations.
The CPTPP stands out as a model for enforcement, offering a comprehensive framework that includes special environmental state-to-state dispute settlement and international remedies. Similarly, EU-led agreements with Singapore and Vietnam also incorporate these features, demonstrating a commitment to upholding environmental standards. In contrast, bilateral agreements are less consistent, with only a handful providing similar protections.
External Assistance and Capacity Building
technical and financial assistance, along with capacity-building cooperation, are critical components of trade agreements, particularly given the varying levels of development among member states. The ASEAN+ agreements, along with the ASEAN-China FTA and select plurilateral agreements like the CPTPP, include provisions for such assistance. However, only a third of bilateral agreements in the region embed these elements, with most of these involving Japan and Chile.
These provisions are essential for bridging the gap between developed and developing nations, enabling them to implement environmental protections effectively. Without such support, many member states may struggle to meet the standards set by these agreements, limiting their overall impact.
Broad-based Environmental Protection initiatives
When it comes to the breadth of environmental protection areas covered, the ASEAN-Japan FTA stands out with explicit terms addressing fisheries management and forest conservation. Among plurilateral agreements,the CPTPP is the most comprehensive,covering areas such as illegal trade of protected flora and fauna,and the dumping of toxic substances. Recent EU-led agreements with Singapore and Vietnam also reflect a broader approach to environmental protection.
Bilateral agreements, on the other hand, tend to focus on more specific areas like fisheries management, deforestation prevention, and biodiversity promotion. These terms are more commonly found in agreements involving Japan, highlighting the country’s strategic role in advancing environmental initiatives within the region.
Conclusion: A Call for Greater Integration
While ASEAN+ trade agreements have made strides in acknowledging environmental considerations, significant gaps remain. The lack of explicit safeguards, enforcement mechanisms, and comprehensive coverage of environmental protection areas underscores the need for greater integration of these elements. As global environmental challenges intensify, the success of these agreements will depend on their ability to balance trade and investment goals with the urgent need for sustainable practices.
For U.S. stakeholders, understanding these dynamics is crucial, particularly as the nation engages with ASEAN+ economies. By advocating for stronger environmental provisions in trade agreements, the U.S. can play a pivotal role in promoting sustainable development and ensuring that economic growth does not come at the expense of the planet.
ASEAN Trade agreements: Environmental Provisions and the Path to Greener Future
The Association of Southeast Asian Nations (ASEAN) and its associated trade agreements have been under scrutiny for their environmental provisions. While some progress has been made, the overall assessment reveals a need for more ambitious and binding measures to achieve meaningful environmental and climate change objectives.
MEA Compliance in ASEAN+ Trade Agreements
Among the ASEAN+ trade agreements, including the Regional Comprehensive economic Partnership (RCEP), there is no explicit requirement for member states to comply with Multilateral Environmental Agreements (MEAs). This contrasts with plurilateral agreements like the Comprehensive and Progressive Agreement for trans-Pacific Partnership (CPTPP) and EU-led agreements, which do include such terms. Only a handful of bilateral trade agreements out of over 37 have embedded these terms. While this may not be a necessity, it does highlight a missed opportunity to reinforce commitments to environmental compliance.
Promoting Environmental Objectives
ASEAN+ agreements fall short in enhancing environmental objectives, lacking initiatives such as inter-governmental committees on the environment and civil society involvement in trade-environment discussions. In contrast, plurilateral agreements like the CPTPP and the EU-Vietnam Free Trade Agreement (FTA) have established committees and provisions for transparency and feedback on environmental terms. Though, none of these agreements currently allow for civil society participation in trade-environment dialogues.
Overall Assessment of ASEAN’s FTAs
ASEAN+ agreements have the fewest environmental provisions,particularly in enforcement mechanisms,capacity building,and technical support. The RCEP, as an example, lags behind other plurilateral agreements that came into force around the same time. In comparison, the CPTPP and EU+ agreements are more robust and comprehensive in their environmental coverage. Bilateral agreements vary,with Japan- and Chile-led FTAs showing more promise in achieving environmental objectives.
A deeper analysis of the CPTPP and EU+ agreements reveals that while they include stand-alone Environment or Sustainable Development Chapters, the text often lacks concrete measures for mitigation and adaptation.Terms like “encourage the development of,” “endeavour to facilitate,” and “encourage the promotion of” dominate, indicating a gap between ambition and commitment. Without binding terms and clear milestones, the effectiveness of these agreements in driving meaningful green transitions remains limited.
The Way Forward
The majority of Preferential Trade Agreements (PTAs) lack legally binding or ambitious terms for climate change initiatives. Though, there are signs of progress. The recent conclusion of the ASEAN-China FTA (ACFTA) 3.0 upgrade negotiations, held during the 44th and 45th ASEAN Summits, marks a positive step forward. The proposed Green Economy Chapter in the upgraded text could enhance environmental provisions, but its effectiveness will depend on the ambition and binding nature of its terms. A clearer picture will emerge when the full text is released next year.
Another promising development is the Singapore-Australia Green Economy Agreement (SAGEA), signed in 2022. Although not an FTA,SAGEA serves as a bilateral cooperation framework focused on environmental objectives. Structured around 17 key initiatives across seven areas of cooperation—including trade and investment, standards, and green finance—SAGEA aims to promote trade in environmental goods and services, decarbonize the logistics industry, and foster sustainable finance and green investment. this framework could serve as a blueprint for future FTAs with stronger climate provisions.
Conclusion
While ASEAN+ trade agreements have made strides in integrating environmental considerations, significant gaps remain. The lack of binding terms and concrete measures limits their effectiveness in driving meaningful green transitions. Moving forward, leveraging frameworks like the SAGEA and ensuring ambitious terms in future FTAs could pave the way for a more sustainable and environmentally conscious trade landscape in the region.
Image: A visual representation of ASEAN trade agreements and their environmental provisions.
New Trade Agreement Aims to Accelerate Climate Change Transition
A groundbreaking trade agreement, known as the SAGEA (Sustainable and Green Economic agreement), is set to revolutionize global trade by integrating concrete measures to combat climate change. Unlike previous free trade agreements (ftas) that frequently enough included broad environmental terms, the SAGEA focuses on tangible deliverables designed to accelerate climate transition initiatives.These measures are seen as critical tools for countries to move toward a more sustainable and environmentally amiable future.
The SAGEA emphasizes the importance of balancing economic growth with environmental sustainability. By incorporating specific commitments into FTAs, participating countries can better address climate mitigation and adaptation efforts.This approach not only enhances the effectiveness of trade agreements but also aligns them with broader environmental goals.
“The SAGEA represents a significant step forward in integrating climate action into trade policy. It provides concrete tools for countries to transition toward a greener economy while maintaining economic growth.”
However, experts caution that trade policy alone is insufficient to address the complexities of climate change. Additional domestic initiatives, such as carbon pricing, subsidy reforms, and stricter environmental regulations, are essential to complement trade agreements. The challenge lies in ensuring that these policies work in tandem to create a cohesive strategy for climate transition.
The Role of Domestic Policies in Climate Transition
Domestic policies play a crucial role in reducing the negative externalities of climate change. As an example, carbon pricing mechanisms can incentivize businesses to reduce emissions, while subsidy reforms can redirect funds toward green technologies. Environmental regulations, when implemented effectively, can ensure that industries adhere to sustainable practices.
The success of these initiatives depends on their complementarity and momentum. Only by aligning trade policies with domestic strategies can countries achieve meaningful progress in their climate transition efforts.This holistic approach is essential for reaching broader environmental objectives and ensuring a sustainable future.
Endnotes and Further Reading
For more detailed data on the SAGEA and its implications, please refer to the original ISEAS Perspective document. The document provides comprehensive insights into the agreement and its potential impact on global trade and climate initiatives.
About ISEAS – Yusof Ishak Institute: ISEAS is a leading research institution dedicated to the study of socio-political, security, and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment. For more information, visit their website at www.iseas.edu.sg.
The SAGEA initiative is a bold step toward integrating climate action into global trade. As countries continue to grapple with the challenges of climate change,the agreement offers a roadmap for sustainable economic growth and environmental stewardship.
Ectiveness of trade agreements in promoting sustainable development but also ensures that economic growth is aligned with environmental protection goals. The SAGEA’s focus on tangible deliverables, such as decarbonization of industries, promotion of green technologies, and fostering sustainable finance, sets a new standard for future trade agreements.
### Key features of the SAGEA
1. **Decarbonization Initiatives**: The agreement includes specific targets for reducing carbon emissions in key sectors, such as manufacturing, transportation, and energy. Thes targets are designed to accelerate the transition to low-carbon economies.
2. **Green Technologies**: The SAGEA promotes the development and adoption of green technologies, including renewable energy solutions, energy-efficient systems, and carbon capture technologies. This is achieved through incentives for research and development, as well as provisions for technology transfer between countries.
3. **Sustainable Finance**: The agreement encourages the growth of green financial instruments, such as green bonds and sustainable investment funds. This helps channel capital towards environmentally sustainable projects and initiatives.
4. **Trade in Environmental goods and Services**: The SAGEA includes provisions to facilitate trade in environmental goods and services,such as renewable energy equipment,waste management technologies,and eco-kind products. This promotes a circular economy and reduces the environmental impact of trade.
5. **Standards and Certification**: The agreement establishes common standards and certification processes for environmental goods and services. This ensures that products and services meet high environmental standards, fostering trust and transparency in trade.
6.**Civil Society Engagement**: Unlike many previous trade agreements, the SAGEA includes provisions for civil society participation in trade-environment dialogues. This ensures that diverse perspectives are considered in the development and implementation of environmental policies.
### Implications for ASEAN+ Economies
The SAGEA serves as a model for future trade agreements in the ASEAN+ region. By incorporating ambitious and binding environmental provisions, the agreement addresses many of the shortcomings identified in existing ASEAN+ trade agreements. The focus on concrete measures and tangible deliverables ensures that the agreement is not just aspirational but actionable.
For the U.S., the SAGEA provides a valuable blueprint for integrating environmental considerations into its trade agreements with ASEAN+ economies. By advocating for stronger environmental provisions,the U.S. can play a leading role in promoting sustainable development and ensuring that economic growth does not come at the expense of the environment.
### Conclusion
The SAGEA represents a significant step forward in the integration of environmental considerations into global trade. By focusing on tangible deliverables and concrete measures, the agreement sets a new standard for sustainable trade. For ASEAN+ economies and the U.S., the SAGEA offers a roadmap for future trade agreements that balance economic growth with environmental sustainability. As global environmental challenges intensify, the success of these agreements will depend on their ability to drive meaningful green transitions and promote a sustainable future.