Free Trade Agreements:

Office of the U.S. Trade Representative Should Continue to Improve Its Monitoring of Environmental Commitments

GAO-15-161: Published: Nov 6, 2014. Publicly Released: Nov 13, 2014.

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What GAO Found

The four free trade agreement (FTA) partners that GAO selected for this review all passed environmental laws and established institutions to improve environmental protection, in line with their FTA commitments to strive to improve their laws on and levels of environmental protection. For example, Chile created enforcement agencies and modernized its system for evaluating the environmental impact of projects; El Salvador launched a National Environmental Strategy; and Guatemala created a unit to verify compliance with natural resource protections. According to U.S., Peruvian, and nongovernmental organization (NGO) officials, U.S. assistance has helped Peru improve management and monitoring of its forest resources. However, each FTA partner continues to face challenges in capacity and enforcement of environmental protection.

Peruvian Officials Conduct Timber Inspection

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U.S. resources for cooperation activities have declined since 2009 because of shifting priorities. Peru and countries in the Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR) received 90 percent of the roughly $151 million of total funding for FTA cooperation activities from fiscal years 2004 through 2013. CAFTA-DR countries received over $87 million from fiscal years 2004 through 2013, and Peru received nearly $49 million from fiscal years 2009 through 2013. However, in fiscal year 2013, U.S. funding for environmental cooperation activities to CAFTA-DR countries was 18 percent of its 2009 level, and funding for Peru FTA activities was 41 percent of its 2009 level.

The Department of State has improved monitoring of environmental cooperation activities since 2009, and the Office of the U.S. Trade Representative (USTR) developed a plan for monitoring partner compliance with FTA environmental commitments. However, USTR's monitoring lacks timeframes and performance indicators to measure partner progress in meeting FTA environmental commitments. In addition, the U.S.-Peru bilateral action plan addresses specific challenges in Peru's forestry sector and identifies actions for Peru to take, but does not include timeframes and indicators. Lack of timeframes and performance indicators precludes stakeholders and the public from having a clear understanding of the extent to which Peru is meeting its commitments since agreeing to the terms of the bilateral action plan.

Why GAO Did This Study

The United States has signed free trade agreements that lower barriers to trade with 20 countries, including 5 Central American countries and the Dominican Republic. Reflecting Congress's interest in balancing commercial interests with environmental protection, the United States and FTA partners have agreed to strengthen environmental protection. In 2009, GAO recommended improved FTA monitoring. GAO was asked for an update.

This report examines, among other things: (1) steps selected partners have taken, with U.S. assistance, to implement FTA environmental commitments; (2) resources to assist partners in implementing environmental commitments; and (3) U.S. agency monitoring of cooperation activities and partner compliance with their FTA environmental commitments.

GAO reviewed FTA environmental provisions and cooperation agreements; analyzed U.S. funding data for cooperation activities from fiscal years 2003 through 2013; and evaluated documentary and testimonial evidence. GAO visited Guatemala and El Salvador, two of six CAFTA-DR countries, and Peru and Chile, and met with U.S., host government, private sector, and NGO officials. GAO selected these countries because they reflect a range of per capita income, U.S. assistance, environmental progress, and challenges.

What GAO Recommends

GAO recommends that USTR establish timeframes and indicators to assess the extent to which Peru is meeting commitments in the bilateral action plan and establish timeframes and indicators to implement its plan for enhanced monitoring across all FTA partner countries.

For more information, contact Kimberly Gianopoulos at (202) 512-8612 or Gianopoulosk@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: GAO met with USTR staff in July 2016 to discuss detailed a number of actions USTR has taken, with its partners on the interagency partners, including members on the Interagency Committee on Trade in Timber Products from Peru (timber committee), to develop appropriate benchmarks to measure Peru's progress in implementing commitments under the bilateral forestry action plan. USTR officials explained that they continue to work with the timber committee in regards to developing appropriate indicators to monitor the bilateral plan. In addition, USTR staff provided us with documentation containing actions aligned with the objectives of the bilateral plan, potential indicators for monitoring Peru?s activities in regards to the action plan, and potential sources for information collection to update the potential indicators. While we are encouraged by these actions, we will continue to periodically review USTR?s implementation of its instrument to monitor actions taken by Peru in response to the bilateral action plan.

    Recommendation: To enhance its ability to monitor partner compliance with FTA environmental commitments and provide timely and useful information to help target assistance where it is most needed, USTR should establish time frames and develop performance indicators to assess the extent to which Peru's actions are meeting the commitments of the U.S.-Peru bilateral action plan to address specific challenges in Peru's forestry sector.

    Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative

  2. Status: Open

    Comments: In July 2016, GAO met with USTR staff to discuss its efforts for ensuring that U.S. trading partners implement and comply with their international trade obligations, including obligations under the environment chapters of our free trade agreements. According to USTR staff, they continue to work with the interagency monitoring committee to systematically monitor environmental issues with its free trade partners, although staff reiterated that this is not a blanket approach to search for infractions. In addition, according to USTR staff, they have used systematic methods to monitor issues with illegal fishing with Korea and Mexico, and logging issues with Peru, for example. GAO will continue to evaluate USTR's progress in executing its procedures, which includes applying benchmarks and indicators where appropriate, in its updated monitoring.

    Recommendation: To enhance its ability to monitor partner compliance with FTA environmental commitments and provide timely and useful information to help target assistance where it is most needed, USTR should work with its interagency monitoring subcommittee to establish time frames and performance indicators to implement its plan for enhanced monitoring of implementation of FTA environmental commitments across all FTA partner countries.

    Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative

 

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