The USMCA directly addresses environmental matters in Chapter 24 Environmental, unlike its predecessor the NAFTA, which handled environmental issues in a separate side agreement called the North American Agreement on Environmental Cooperation. Chapter 24 modernizes such side agreement, borrowing extensively from the environmental provisions of Chapter 20 of the Trans-Pacific Partnership Agreement. The objectives of Chapter 24 are to promote mutually supportive trade and environmental policies and practices, provide high levels of environmental protection and effective enforcement of environmental laws, as well as to enhance the Parties’ capacity to address trade-related environmental issues in a cooperative fashion to further sustainable development.
II. EXECUTIVE SUMMARY
The USMCA’s Chapter 24 provisions are intended to complement the efforts of each Party to enforce their own respective environmental laws and regulations, with a special focus on controlling the production, consumption and trade of substances harmful to the ozone layer, controlling pollution of the marine environment by ships, and preventing the trafficking of specific protected species of flora and fauna, including endangered species. The Parties agree to maintain procedures for evaluating the environmental impact of certain projects, with the intention of avoiding adverse effects on the environment. The Parties also establish mechanisms for the application of environmental legislation and incorporate the possibility of establishing new consultative mechanisms, such as national advisory committees, to monitor the implementation of the provisions contained in Chapter 24, which mechanisms include encouraging transparency and the participation of the general public. Recognizing that a healthy environment is an integral element of sustainable development, and the contribution that trade makes to such, the Parties commit to protect the marine environment, prevent and reduce marine litter, improve air quality, promote corporate social responsibility and responsible business conduct, promote sustainable forest management, avoid whaling for commercial purposes, and criminalize the intentional transnational trafficking of protected wildlife.
III. LEGAL DISCUSSION
The key provisions of Chapter 24 are summarized below:
Article 24.1: Definitions. The term environmental law means a law or regulation of a Party, including any multilateral environmental agreement, the main purpose of which is the protection of the environment, or the prevention of a danger to human life or health.
Article 24.2: Scope and Objectives. The key objectives of Chapter 24 are to promote mutually supportive trade and environmental policies and practices, and to promote high levels of environmental protection and effective enforcement of environmental laws. The Parties further acknowledge that it is inappropriate to establish or use their environmental laws or other measures in a manner that constitutes a disguised restriction on trade or investment among the Parties.
Article 24.3: Levels of Protection. The Parties recognize the sovereign right of each Party to establish its own levels of environmental protection and to establish, adopt or modify environmental laws and policies to promote and encourage high levels of environmental protection.
Article 24.4: Enforcement of Environmental Laws. The Parties are prohibited from intentionally neglecting to effectively enforce their environmental laws in a manner that affects trade or investment between the Parties after the USMCA has entered into force. Likewise, the Parties acknowledge that it is inappropriate to encourage trade or investment by weakening or reducing the protection afforded in their respective environmental laws. Finally, no Party may undertake environmental law enforcement activities in the territory of another Party.
Article 24.5: Public Information and Participation. Each Party must promote public awareness of its environmental laws and policies, including enforcement and compliance procedures and ensuring that necessary information is available to the public.
Article 24.6: Procedural Matters. Each Party is required to ensure that a procedure is available whereby an interested person may request from its competent authorities the investigation of alleged violations of its environmental laws, and further ensure that its competent authorities properly consider such requests, in accordance with the Party’s own legal framework. Each Party must further ensure that administrative, quasi-judicial or judicial procedures for the enforcement of its environmental laws are available, and that such proceedings are fair, equitable, transparent, and comply with due process of law. This includes ensuring that the parties to such proceedings have the opportunity to support or defend their positions without undue complications, unreasonable fees or timelines. Hearings in such proceedings must be conducted by impartial and independent persons, in accordance with the Party’s applicable law, and will be open to the public, except as otherwise required for the proper administration of justice. Final decisions on the merits of the case must be formulated in writing and substantiated. Each Party must also ensure that pursuant to its law the parties to these proceedings will have the right to request the review, and if appropriate, the correction or re-determination of final decisions. Each Party must provide appropriate sanctions or remedies for violations of its environmental laws, considering factors such as the gravity of the violation, damage to the environment, and any economic benefit derived by the violation.
Article 24.7: Environmental Impact Assessment. Each Party commits to maintaining appropriate procedures for assessing the environmental impacts of projects that are subject to an action of that Party’s federal government that may cause significant effects on the environment in order to avoid, minimize or mitigate any adverse effects.
Article 24.8: Multilateral Environmental Agreements. The Parties recognize the important role that multilateral environmental agreements play in protecting the environment and as an effective response of the international community to global or regional environmental problems. Each Party affirms its commitment to implement the multilateral environmental agreements to which it is a party, and to undertake to consult, cooperate and exchange information with each other on environmental issues of mutual interest, particularly in trade-related matters, pertaining to multilateral environmental agreements.
Article 24.9: Protection of the Ozone Layer. The Parties recognize that atmospheric emissions of certain substances can significantly deplete and change the ozone layer and may have effects on human health and the environment. Each Party is required to take measures to control the production, consumption and trade of substances controlled by the Montreal Protocol. Consistent with their obligations to cooperate pursuant to the provisions of Article 24.25, the Parties must cooperate in matters that may include exchanging information and experiences in areas related to: (i) environmentally friendly alternatives to such substances; (ii) practices, policies and programs for refrigerant management; (iii) methodologies for the measurement of stratospheric ozone; and (iv) combating the illegal trade of such substances.
Article 24.10: Protection of the Marine Environment from Ship Pollution. The Parties recognize the importance of protecting and preserving the marine environment. To that end, each Party must take measures to prevent pollution of the marine environment by ships.
Article 24.11: Air Quality. The Parties recognize that air pollution is a serious threat to public health, ecosystem integrity, sustainable development and that it contributes to other environmental problems. Noting that the reduction of certain air pollutants can provide multiple benefits, the Parties agree to cooperate to address matters of mutual interest with respect to air quality.
Article 24.12: Marine Litter. The Parties recognize the importance of taking measures to prevent and reduce marine litter, including plastic and micro-plastic wastes, in order to preserve human health and marine and coastal ecosystems, prevent loss of biodiversity, and mitigate costs and impacts of marine litter.
Article 24.13: Corporate Social Responsibility and Responsible Business Conduct. The Parties recognize the importance of promoting corporate social responsibility and responsible business conduct. Accordingly, each Party is obligated to encourage enterprises organized under its laws, or operating in its territory, to adopt and implement voluntary best practices of corporate social responsibility related to the environment, such as those in internationally recognized standards and guidelines that have been endorsed or supported by a Party.
Article 24.14: Voluntary Mechanisms to Enhance Environmental Performance. The Parties recognize that flexible and voluntary mechanisms, such as voluntary auditing and reporting, market-based mechanisms, voluntary sharing of information and expertise, and public-private partnerships, can contribute to the achievement and maintenance of high levels of environmental protection and complement domestic regulatory measures.
Article 24.15: Trade and Biodiversity. Each Party, recognizing the importance of conservation and sustainable use of biological diversity, as well as the ecosystem services it provides, and their key role in achieving sustainable development, commits itself to promote and encourage the conservation and sustainable use of biological diversity, in accordance with its law or policy. Each Party also recognizes the importance of respecting, preserving and maintaining the knowledge and practices of indigenous peoples and local communities that involve traditional lifestyles that contribute to the conservation and sustainable management of biological diversity.
Article 24.16: Invasive Alien Species. The Parties recognize that the transboundary movement of exotic land and aquatic invasive species through trade-related pathways can adversely affect the environment, economic activities and development, and human health. Accordingly, the Environment Committee established under Article 24.26.2 must coordinate with the Committee on Sanitary and Phytosanitary Measures, established under Article 9.17 of Chapter 9, to identify cooperative opportunities to share information and management experiences on the movement, prevention, detection, control, and eradication of invasive alien species.
Article 24.17: Marine Wild Capture Fisheries. The Parties acknowledge their roles as major consumers, producers, and marketers of fishery products and the importance of marine fisheries sectors for their development and for the livelihood of fishing communities, including those dedicated to artisanal, small-scale and native fisheries. The Parties also recognize the importance of promoting and facilitating trade in fish and fishery products obtained and managed in a sustainable and legal manner, while ensuring that the trade of these products is not subject to unnecessary or unjustified barriers to trade, given the negative effect that such barriers can have on the well-being of their communities that depend on the fishing industry for their livelihood.
Article 24.18: Sustainable Fisheries Management. With a view to achieving the objectives of conservation and sustainable management, each Party is required to operate a fishery management system that regulates wild marine capture fishing.
Article 24.19: Conservation of Marine Species. Each Party agrees to promote the long-term conservation of marine species through the implementation of appropriate measures, including studies, evaluations and data collection in relation to the adverse impact of operations on non-target species.
Article 24.20: Fisheries Subsidies. The Parties recognize that for the prevention of overfishing and overcapacity, as well as to promote the recovery of overfishing populations, subsidies that contribute to such activities must be controlled, reduced and eventually eliminated. Each Party is prohibited from granting or maintaining prohibited subsidies under the SCM Agreement. With respect to subsidies that are not prohibited, each Party must make its best efforts not to introduce new subsidies, or to extend or improve existing subsidies. The Parties must review subsidies at regular meetings of the Environment Committee and work with the WTO to strengthen international rules on the granting of subsidies to the fisheries sector and to improve the transparency of fisheries subsidies generally.
Article 24.21: Illegal, Unreported, and Unregulated (IUU) Fishing. The Parties agree to endeavor to improve international action and cooperation against IUU fishing, with and through competent international organizations, through the implementation of port state control measures, schemes for monitoring, controlling, surveilling, and enforcing trans-shipment in the sea of fish caught by IUU fishing or fishery products derived from IUU fishing. Each Party must maintain a vessel documentation scheme and promote the use of International Maritime Organization or other comparable unique ship identification numbers for vessels that operate outside its national jurisdiction.
Article 24.22: Conservation and Trade. The Parties agreed to promote conservation and to combat the illegal taking of and illegal trade in wild fauna and flora. Each Party must take measures to protect and conserve the natural resources identified at risk within its territory, maintain or strengthen governmental capacity and institutional frameworks, and must seek to improve public participation. The Parties must take measures to enhance the effectiveness of inspections of shipments containing wild flora and fauna, including parts and products thereof, must treat international trafficking of wildlife protected under its laws as a serious crime as defined in the United Nations Convention on Transnational Organized Crime, and must endeavor to identify opportunities to enhance law enforcement cooperation and information sharing.
Article 24.23: Sustainable Forest Management and Trade. The Parties acknowledge their role as major consumers, producers and traders of forest products, and acknowledge the importance of a healthy forest sector, as well as the importance of the conservation and sustainable management of forests in providing environmental economic and social benefits for present and future generations. Additionally, the Parties recognize that forest products, when sourced from sustainably managed forests, contribute to fulfilling global environmental objectives, including sustainable development, conservation and sustainable use of resources, and green growth. Accordingly, each Party agrees to maintain or strengthen government capacity and institutional frameworks to promote sustainable forest management, trade in legally harvested forest products, and to exchange information and cooperate for such purposes, and for purposes of combatting illegal logging and associated trade.
Article 24.24: Environmental Goods and Services. The Parties recognize the importance of trade and investment in environmental goods and services, including clean technologies, as a means to improve environmental and economic performance, contributing to green growth and jobs, and encouraging sustainable development, while addressing global environmental challenges. The Parties will strive to facilitate and promote trade and investment in environmental goods and services. For compliance with the foregoing, the Environmental Committee will deal with issues related to trade in environmental goods and services. The Parties agree to work to address any potential barriers to trade in environmental goods and services, including through work in the Environmental Committee and in conjunction with other committees.
Article 24.25: Environmental Cooperation. The Parties agree to expand their cooperative relationship on environmental matters, recognizing that such will help them achieve their shared environmental goals and objectives, including the development and improvement of environmental protection practices, and technologies. The Parties agree to undertake cooperative environmental activities pursuant to the Environmental Cooperation Agreement between the governments of Canada, the United Mexican States and the United States of America (ECA), which will be coordinated and reviewed by the Commission for Environmental Cooperation as provided for in the ECA.
Article 24.26: Environmental Committee and Contact Points. Each Party is obligated to designate a point of contact within its government and must establish an Environmental Committee comprised of senior government representatives or their designees. The Environmental Committee will meet within one year after the entry into force of the USMCA and, thereafter, every two years. During the fifth year following the entry into force of the USMCA, the Environment Committee will review the implementation and functioning of Chapter 24 and will report its conclusions and recommendations to the Council for the Commission for Environmental Cooperation and the Commission.
Article 24.27: Submissions on Enforcement Matters. Any person of a Party may file before the Secretariat of the Commission for Environmental Cooperation (“CEC Secretariat”) a submission asserting that a Party is failing to effectively enforce its environmental laws. The CEC Secretariat will examine it and determine if such requires a response from the Party, in which case it will notify the Party. Such Party will notify the CEC Secretariat if that specific matter is subject to a judicial or administrative proceeding that is pending resolution, in which case the CEC Secretariat will not proceed with the matter.
Article 24.28: Factual Records and Related Cooperation. If the CEC Secretariat considers that the submission merits the preparation of a factual record, it will inform the Council and the Environmental Committee. The CEC Secretariat will prepare a factual record if at least two members of the Council instruct it to do so. Any Party may provide comments to the draft factual record, which comments will be incorporated to the final factual record that the CEC Secretariat will submit to the Council. The Environmental Committee must consider the factual record and may provide recommendations to the Council.
Article 24.29: Environmental Consultations. A Party may request consultations with any other Party with respect to any matter arising from Chapter 24. A third party that considers itself to have a substantial interest in the matter may also participate in the consultations. The Parties will enter into the consultations, with the understanding that such Parties will use their best efforts to reach a mutually acceptable resolution of the matter.
Article 24.30: Senior Representative Consultations. If the Parties fail to resolve the dispute, a Party may request that the Parties’ Environmental Committee representatives meet in order to discuss the matter. Such representatives will meet promptly following notice and will seek to resolve the matter. The Environmental Committee representatives of any other Party that considers it has a substantial interest in the matter may also participate in the consultations.
Article 24.31: Ministerial Consultations. If the Parties fail to resolve the dispute, one Party may refer the matter to the relevant Ministers of the consulting Parties, who will then seek to resolve the matter.
Article 24.32: Dispute Resolution. If the Parties fail to resolve the dispute through consultations within the allotted time period, the requesting Party may ask for the establishment of a panel. Such panel may seek advice or technical assistance to address the specific matter, will allow the Parties the opportunity to provide their respective comments and will consider any interpretative guidance in making its findings and recommendations.
Chapter 24 provides for protection of the environment, while allowing trade among the Parties to prosper and environmental policies to be implemented, all taking into account the proper enforcement of their respective environmental laws.
Additionally, Chapter 24 provides opportunities for the implementation and enforcement by the Parties of obligations and commitments made in prior multilateral agreements.
While avoiding unnecessary trade barriers, Chapter 24 provides for cooperation among the Parties in order to achieve their main objectives, which include, among others: (i) encouraging better regulation and international cooperation, (ii) promoting sustainable development by incorporating tools such as public consultations, (iii) establishing dispute resolution mechanisms, which may incorporate the results of public consultations on issues of interest to the Parties, and (iv) establishing a framework for active public participation through the inclusion of written submissions to the Parties regarding any matter that is subject to environmental regulation.
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