4.1. What Kinds of Climate Action Are FTAs Specifically Promoting?
We turn now to this study’s second set of questions concerning what kinds of climate action are FTAs specifically promoting, and how effective a potential positive impact may we expect these to have. The 14 provision types provide a first-tier node classification framework for examining what kinds of climate action measures FTAs have incorporated into their texts. Table 2
shows the general patterns of occurrence for each provision type, where it is clearly apparent the most important empirical domain of activity is clean energy sector development
. Of the 245 provisions from across all 69 total FTAs in this study, 146 or 60% fell into this category (types 1, 3, 4, 5, 6 and 11). The promotion of renewable energy
and energy efficiency
accounted for over half of these (77 provisions, 31% of the total) and played an early pivotal role during the 1980s and 1990s FTAs though from quite different perspectives.
In most of the African regional FTAs of this period (see Table 2
), the promotion of renewable energy was set in an explicit energy security
rather than an environmental context. For example, both the 1983 Economic Community of Central African States (ECCAS) and the 1991 African Economic Community (AEC) agreements state in mirrored provisions that its members will “Promote the development of new and renewable energy in the framework of the policy of diversification of sources of energy” (Article 54.2c of both agreements), and moreover were in both FTAs preceded in their own parallel commitment to “Establish appropriate co-operation mechanisms with a view to ensuring a regular supply of hydrocarbons” (Article 54.2b of both agreements), thus simultaneously promoting fossil fuel sector development for apparently similar motives and thus leading to particular ‘green paradox’ outcomes [10
]. The 1993 Common Market for Eastern and Southern Africa (COMESA), 1993 Economic Community of West African States (ECOWAS) and 1999 East African Community (EAC) agreements also contained similar energy security focused measures on renewables, hence being of tangential climate relevance at best. This second-tier node
‘energy security’ classification of climate-relevant provisions does not, however, extend beyond this group of four African regional FTAs.
In the 1990s, the European Union (EU) negotiated FTAs with Central and East European countries where energy co-operation was promoted in a broad multi-sector context guided by sustainable development principles. The most common climate-relevant theme across these EU-centred agreements was the promotion of energy efficiency
. This was aimed at redressing the past neglect of East European communist governments in this sector and mitigate significant levels of transboundary pollution affecting EU member states [87
]. These provisions were, however, set within a relatively weak textual framing. For example, in both the EU’s 1991 signed FTAs with Hungary and Poland under ‘Energy Co-operation’ (Articles 77.1 and 78.1, respectively), it simply states: “Cooperation shall take place within the framework of the principles of the market economy and develop against a background of progressive integration of the energy markets in Europe”, and then details in the following sub-article a list of a dozen or so energy-related themes including “the promotion of energy saving and energy efficiency”. Similarly, under ‘Environmental Co-operation’ (Articles 79 and 80, respectively), both agreements state that: “The Parties shall develop and strengthen their co-operation in the vital task of combating the deterioration of the environment, which they have judged to be a priority. Co-operation will centre on”, followed again by a list of specific activity areas including “efficient energy production and consumption”. While there was a regional dimension to the promotion of energy efficiency in these EU-centred FTAs, it lacked a substantive basis on which to develop a second-tier node
The first climate-relevant provisions found in FTAs negotiated by the United States in the 2000s had only tenuous climate action links. For example, the 2003 US–Chile FTA’s commitment to “increased use of cleaner fuels” (Article 19.3h) and both the US–Central America–Dominican Republic FTA (2004) and US–Panama FTA (2007) mirrored provisions on the “maintenance of clean production technologies” (Articles 17.9 and 17.10, respectively), while the 2007 US–Korea FTA only measures related to vehicle fuel emission standards (Annex 9.B). Almost all other FTAs in study during this decade contained only one or two climate-relevant provisions that collectively were scattered across various provision type categories (Table 2
). By this time, climate-relevant provision sections in FTAs typically contained between only 100 and 200 words, indicative of the thin textual substance of climate action measures in FTAs that persisted for some considerable time [88
]. A possible explanation was that climate action had not sufficiently penetrated trade discourses, norms or narratives by the end of the 2000s [44
Even at this stage of relatively weak climate action measures, however, a template analysis of FTA texts reveals an important general second-tier node
, namely co-operation
as the main operational framework of climate action measures in FTAs. This is significant in that only one provision type (type 8) has an explicit co-operation theme, yet operationally co-operation is relevant to most other provision types also. It is furthermore clearly the dominant such framework over the other evident second-tier node
. ‘Co-operation’ in the FTA context refers broadly to mutual commitments by all signatory governments and other relevant parties to engage in new joint collaborative ongoing ventures, projects or other actions in ongoing processes with the aim of realising specific benefits and transformative outcomes. It is a dynamic and relational process that depends on dialogue frameworks to sustain and develop the co-operative activities concerned. Liberalisation is an intrinsic essence of an FTA, primarily focused on the one-off or phased removal of identified technical policy measures impeding trade, foreign investment, finance and other forms of international economic exchange. Thus, whereas in operational terms at least co-operation is primarily about the creation of something new, liberalisation is essentially about the elimination of existing barriers. There are circumstances, however, where liberalisation entails some form of ongoing trade partner co-operation as discussed later. Table 3
shows that co-operation was the focus of 84.6% of all climate-relevant provision wording in the 62 out of the total 69 agreements with pertinent content.
The emphasis on co-operation over liberalisation was investigated deeper in this study’s template analysis of FTA texts, from which third-tier nodes were developed to identify both: (i) progressive levels, and (ii) key common functional features of this co-operation. This helped determine further degrees of specificity regarding what kind of climate action measures have been incorporated into FTAs. Key word searches were again deployed in this process when differentiating between climate-relevant provisions here. The first set of third-tier nodes centres on four conceptual progressive levels of co-operation:
Optional—parties do not expressly commit to co-operation on climate action but rather leave it optional, often using conditional language. Examples of key coded words relevant here are ‘may’, ‘possible’, and ‘potential’.
Intentional—explicit statements of intent to co-operate, often with climate-relevant issues identified, but lacking detail on actions, methods and objectives. Key coded words here included ‘shall’, ‘will’, and ‘in order to’.
Action-Structured—specific co-operative actions are outlined in detail within an actional framework or loose governance structure but with no set targets or schedules. Here, key coded words covered various types of action (e.g., workshops, training, information exchange, technology transfer, joint projects, technology development, infrastructure development) and at times involved agencies with reference to some sort of co-operation or governance process, e.g., ‘regular dialogue’.
Programmatic—the agreement contains a programmatic plan of specified actions, targets and schedules for co-operation in a well-defined governance structure with key coded words (e.g., plan and strategy, with reference to numeric targets, timeframes, and agencies) reflecting this. The governance structure aspect has links with ‘institutionalised co-operation discussed later.
shows the distribution of these levels achieved across relevant FTAs. More impactful forms of climate action will naturally arise from the latter two co-operation levels. By ‘governance structure’ we are referring mainly in this context to some kind of decision-making entity or arrangement with general responsibility to overseeing the co-operation outlined in the agreement. This is invariably non-existent in the first two co-operation levels, often quite weak at the action-structured
level and strongest at the programmatic
level. As Table 3
co-operation has been constantly dominant, arising in 29 FTAs, yet the highest-level programmatic
co-operation only appears relatively late from 2014 onwards with seven agreements out of the last 20 signed, indicating there remains much scope to deepen levels of climate action co-operation generally within FTAs. Regarding trade partner patterns, the EU is especially significant, being involved in approximately one-third of the agreements and oriented towards higher-level co-operation. Moreover, it has recently signed agreements containing programmatic co-operation text of approximately 1000 words or more, over four-times the trade partner average as a secondary proxy measure of substantive co-operation. Most other active trade partners (Korea, Japan, Chile, Peru, Canada, China, Singapore, Australia, Malaysia, EFTA, Mexico and New Zealand) lie in the mid-level range.
A second set of third-tier nodes were identified and developed from this study’s text analysis around three key common functional features of climate action co-operation in FTAs, these being:
Institutionalised—co-operation is overseen or managed by a newly established institutional body created by the FTA on its implementation. This is a higher-form of aforementioned ‘governance structure’ in this context (e.g., a Co-operation Committee or similar agency) either specifically charged with responsibility for climate-relevant co-operation between signatory parties or with all trade-related co-operation outlined in the agreement.
Assistive—commitment of parties to co-operate on climate action capacity-building issues (e.g., technology transfer, training) principally aimed at assisting the less developed trade partner.
Multilateral-Supportive—pledges to co-operate in supporting wider international and multilateral efforts on climate action.
As we would expect, there is a strong correlation between institutionalised
co-operation and the higher progressive forms of co-operation. However, not all instances of action-structured
co-operation fell into this category: likewise, climate action co-operation in FTAs may have high-level institutionalisation but not be necessarily that ambitious. Nevertheless, FTAs with institutionalised co-operation are more likely to operationalise stated co-operative measures due to the organisational structures created to implement, manage and develop climate action co-operation between trade partners. Table 3
shows that this has become a steadily more important functional feature of co-operation. Meanwhile, assistive
climate co-operation was particularly strong in the 1990s and 2000s, remaining a regular feature in the more recent time period. This may be explained by the developed-developing economy partnerships still being a key trend of climate-relevant FTAs. There has also been a growing trend of multilateral-supportive
co-operation commitments in FTAs, especially from 2014 onwards. This mainly relates to support of UNFCCC global climate action efforts and aligning trade diplomacy more closely to this end generally. From a trade partner perspective, half the EU’s 20 relevant FTAs contain both explicitly institutionalised co-operation and assistive co-operation features, and from 2008 all 12 of its climate-relevant FTAs have included multilateral-supportive co-operation provisions. Japan and Korea have both also been relatively active in this last area, and Korea’s FTAs have a comparatively strong profile across all three features in relation to other trade partners.
Regarding the minor second-tier node of climate-relevant trade liberalisation, interestingly, no FTA makes reference in their main agreement text to any specific import duty reductions for climate-relevant products it may contain. This seems somewhat surprising but may be partly due to long-standing product classification disagreements amongst trade partners on deciding which goods and services qualify as having a climate action purpose. Examples often include component parts such generic ball bearings used in wind turbines and other engineering equipment, or drilling bits used in both geothermal energy and hydrocarbon exploration activity. The plurilateral Environmental Goods Agreement (EGA) trade liberalisation talks that lasted from 2011 to 2016 broke down due to such disagreements (Dent 2018). Many agreements will have nevertheless included measures—such as in their tariff and rules of origin schedules—to remove or reduce trade and investment barriers on products indisputably considered climate goods and services (e.g., fully assembled solar panels) as part of a generalised trade liberalisation process. Yet only 20 FTAs had contained in their main treaty text any reference to climate-relevant liberalisation process by 2020. Within this set of agreements, a third-tier node text analysis was conducted, and the following six kinds or types of trade and investment liberalisation were identified:
Address or remove non-tariff barriers (NTBs) in environmental goods and services (EGS) trade/FDI generally—assumed to also cover climate-relevant products.
Address or remove NTBs in climate-relevant trade/FDI specifically—where climate-relevant products are explicitly referred to.
Remove any obstacles or barriers generally to climate-relevant or EGS products trade/FDI—broader in scope than the above.
Eliminate tariffs on EGS trade between the FTAs parties generally—on this particular measure and again assumed to cover climate-relevant products.
Work in international fora to liberalise EGS trade globally—thus extending beyond the trade of the FTA signatory parties.
Free movement of business-persons facilitating EGS trade and FDI—particularly pertinent to climate-relevant services trade.
These types of liberalisation measures mostly embed climate-relevant products in the broader EGS trade and investment context. Environmental goods and services include a wide range of products, many of which are not directly linked to or explicitly associated with climate action. Thus, such EGS references make the links here to climate action related liberalisation provisions in FTAs often inferred or implicit. Table 4
shows that type A
is the dominant liberalisation measure, appearing in 16 (80%) of the relevant agreements. Measure type C
was a distant second occurring six times, type B
just four times while type E
and type F
have only been found in one agreement each. Liberalisation was also invariably situated in the context of ‘promoting’ trade and investment in EGS/climate-relevant products, with links to trade facilitation measures. Type E
liberalisation has an overlap with what might also be construed as co-operative action but, as noted above, the emphasis of climate-relevant provisions here is clearly on conventional forms of trade liberalisation.
By way of bringing key elements of this discussion together, recent EU free trade agreements have set new benchmarks of climate action through FTAs and provide good examples of both progressive, multi-functional co-operation as well as liberalisation in this regard, including how these may be combined. For instance, its FTAs with Singapore (2018) and Vietnam (2019) have identical chapters on ‘Non-Tariff Barriers to Trade and Investment in Renewable Energy Generation’ that coalesce co-operation and liberalisation measures together. Article 7.1 of the chapter starts by stating: “In line with global efforts to reduce greenhouse gas emissions, the Parties share the objective of promoting, developing and increasing the generation of energy from renewable and sustainable non-fossil sources, particularly through facilitating trade and investment. To this effect, the Parties shall co-operate towards removing or reducing tariffs as well as non-tariff barriers, and shall cooperate on fostering regulatory convergence with or towards regional and international standards”. The aim is thus to co-operate to achieve multiple inter-linked objectives, to use trade and foreign investment as drivers of clean energy development, to liberalise trade and investment in clean energy products, and work together on regulatory matters, and the technical details on all the above are outlined in subsequent articles in the chapters. Article 7.7 refers to each FTA’s new formed Trade Committee that has institutional responsibility for implementing climate-relevant provisions, mainly focused on clean energy. Similar but not identical chapters on Trade and Sustainable Development in each agreement further augment and broaden trade partner climate action co-operation in wider multilateral (i.e., UNFCCC) contexts, and working together in the international community generally for “the promotion of energy efficiency, low-emission technology and renewable energy” (Chapter 12 in the EU–Singapore FTA, Chapter 13 in the EU–Vietnam FTA).
Meanwhile, Chapter 4 of the EU–Armenia FTA (2018) on ‘Climate Action’ comprises a wide set of measures principally designed to assist the development of Armenia’s climate action capacity at both national and international levels. Article 54 of this chapter outlines ten objectives of co-operation in this regard, including the development of a low-carbon development plan, various energy policy measures and a climate action strategy. Article 52 beforehand details the promotion of measures to facilitate this assistive co-operation, for instance technology transfers, sector-specific (e.g., clean energy) policies, education and training. This work is overseen by the FTA’s Partnership Committee, working in a similar institutional way to the EU’s agreements with Singapore and Vietnam to manage trade partner co-operation across other aspects of the agreement. In another example, the earlier signed EU–East Africa Community FTA (2016) also contained measures with a strong assistive co-operation dimension, including in its Annex III a programmatic set of renewable energy development targets and plans linked to the agreement. In all these cases, FTAs have leveraged a broad range of climate actions in trade partner countries. We later discuss the prospects of these latest EU climate-relevant FTAs affecting other trade partner behaviour through norm leadership and influence. In sum, this study’s template analysis of FTA texts clearly reveals particular levels and functional features of co-operation are the dominant observable kinds of climate action arising in FTAs, with clean energy being an underlying focus.
4.2. How Effective a Potential Positive Impact on Climate Action?
What potential positive impacts, then, can we expect climate action measures in FTAs to have? Low-level, non-institutionalised co-operation is likely to result in limited, non-evaluated outcomes, or ensuing actions simply subsumed into wider co-operation efforts between trade partners where the FTA’s additional contribution to them may be minimal or not easily ascertained. Higher-level action-structured and programmatic co-operation is where we may expect more positive impacts to arise, this too depending on the effectiveness of institutionalised or other governance structure arrangements charged with the responsibility of managing co-operation.
In their own earlier assessment of climate action measures in trade agreements generally, Morin et al. [82
] and Morin and Jinnah [56
] assessed their potential impact across four themes. They assigned the most contributory significance and attention to legalisation
, concerning enforceable laws and regulations embodied in trade treaties. Given that virtually all nations have become signatories to at least one FTA, the legislative structures and processes involved in legally implementing an agreement will vary enormously. The same applies to the effectiveness of its implementation, this in turn depending largely on various development-related capacities of signatory nations concerned. Generally speaking, it could certainly be argued that legally binding commitments within an FTA to undertake specified actions within certain timeframes are likely to have more defined and quantifiable impacts on trade-related behaviours. Indeed, we can expect that a legalised commitment by FTA partners to undertake climate-relevant co-operation would lead to more substantive results. However, it will depend on how and where the legalisation approach is applied. For instance, new rules on liberalising tariffs on climate-relevant goods may not result in much change if companies opt not to utilise them, this often occurring due to restrictive rules of origin regulations [89
]. In a less passive and more proactive approach, legal measures in FTAs that lead to significant enhancements in the signatory governments’ own general climate action laws and policies (e.g., more ambitious carbon emission targets) would have a more assured positive impact. Yet it may be more logical to use other types of agreement for such broad-focused legal commitments, especially where the links to trade are tenuous. In another example, an FTA could carry a legal commitment to zero carbon shipping in traded goods between signatory countries but here a multilateralised agreement (e.g., at International Maritime Organisation level) would be more practical.
Climate change itself is a global-level issue, and thus multilateral approaches to tackling it are critically important. As we have seen, a number of bilateral and regional FTAs contain measures (provision types 12, 13 and 14) aimed at supporting UNFCCC-based global efforts here, often re-affirming their existing legal commitments to reduce carbon emissions and thus negating the need for any regulatory duplication in FTAs. While then there is scope to apply the legalisation approach across all six trade-climate empirical domains—and this would result in more significant positive impacts—there are also many circumstances where countries negotiating FTAs with active climate policies will view other forms of international treaty and diplomacy more logical and effective to include legally-binding measures., Legalisation nevertheless represents an important frontier ahead of climate action measures in FTAs if they are to become more impactful. The previously studied recent EU agreements with Singapore, Vietnam, Armenia and the East Africa Community interestingly all contain co-operative provisions aimed at facilitating climate action legislation and regulation, presenting a possible evolutionary way forward for future FTAs.
The other three themes noted by Morin et al. [82
] and Morin and Jinnah [56
] were innovation, replication and distribution. Innovation
as previously discussed relates mainly to the introduction of new forms of climate-relevant provisions. Replication
considers the pervasiveness or presence of a climate-relevant provision in trade agreement landscape. Distribution
focuses on the profile of countries adopting them. All three themes connect closely the next section’s discussion on emerging climate action norms
in FTAs. The potential positive impact on climate action measures in FTAs will be also determined by trade partner factors. Approximately 90% of in force FTAs worldwide are bilateral
, that is involving two signatory sides [2
]. In certain FTAs, at least one ‘signatory side’ may be a regional group, such as the EU or EFTA, and in some cases both may be (e.g., EU–Central America), thus in these instances involving multiple trade partners. Nevertheless, the large majority of FTAs are purely bilateral with just two signatory countries, this also being the case for the 69 agreements found to have climate action measures (Table 2
). This raises important questions about possible limited impact of their impacts, especially when we also take into consideration earlier discussed trade gravity factors where the bilateral trade partners are relatively small and geographically distant e.g., Malaysia–Turkey, Chile–Thailand. Even if purely bilateral FTAs are aggregated together, their collective climate action impact may be insignificant due to limited geographic and trade volume coverage, regardless of their measures’ substance and ambition. This is less of an issue for regionally multilateralised FTAs, involving a large set of countries and may include influential trade powers such as the EU.