2.1 Theoretical and Normative Dimensions

As an interdisciplinary concept, the term ‘green regionalism’ first appeared in the theory and practice of sustainability science and urban planning. Timothy Beatley advocated regional sustainability planning to address environmental issues. He suggested that as ‘a true shift toward sustainability’, green regions represent ‘spatial units that mix urban settlements with surrounding hinterlands and ecosystems’ and result in ‘compact, sustainable cities and settlement patterns’.Footnote ¹² Reinforcing ‘the value and importance of the natural and ecological qualities of place’, green regionalism denotes ‘the practice and perspective that arise from’ green regions.Footnote ¹³ Hence, green regionalism is a holistic approach to advancing values and policies of sustainability and climate change.Footnote ¹⁴ This concept is grounded on Ian L. McHarg's idea to integrate sustainable development into regional planning. McHarg's view culminated in his revolutionary book, ‘Design with Nature’, and gained more attention following the UN's Brundtland Report.Footnote ¹⁵

Beatley's elaboration on green regionalism has influenced similar projects such as green infrastructure.Footnote ¹⁶ The term was also referred to in the literature on environmental politics, as well as research and development in environmental technology.Footnote ¹⁷ From a legal aspect, I define green regionalism as a normative process for regional economic frameworks to integrate and operationalize environmental sustainability. The ambit of legal frameworks extends beyond conventional FTAs and covers new green economy agreements and initiatives. The definition and its theoretical and normative implications are essential to the trade-sustainability nexus in international law.

A fundamental question for green regionalism is why selected countries, including hegemonic powers and middle powers, have actively pursued green regionalism though bilateral or plurilateral agreements. The power struggles between the Global North and the Global South have hindered multilateral negotiations. A realist assumption that countries are inclined to increase their material power does not provide a satisfactory answer. Unlike market access or intellectual property, environment and climate-related provisions are not perceived to directly ‘empower’ states that impose these WTO-plus and extra rules.

In the context of green regionalism, IR explanations offer a sound understanding of state behavior. Both international law and IR notions of recognition can be traced back to G.W.F. Hegel's recognition theory, which explains why and how the pursuit of recognition motivates human actions.Footnote ¹⁸ In international law, recognition involves constitutive and declaratory doctrines, which differ in their views on whether diplomatic recognition is essential to establish statehood.Footnote ¹⁹ Thus, legal recognition is a zero-sum exercise. Distinctly, recognition in IR involves varying degrees of intersubjective affinity and is often an ongoing process. Influenced by Hegel's theory, IR scholars analyzed interstate relations based on countries' identity construction and status claims, which collectively form the basis for the IR concept of recognition.Footnote ²⁰

The struggles for recognition in IR denote the practice in which states seek acknowledgment from significant counterparts to have their self-constructed identities confirmed on the world stage.Footnote ²¹ Subscribing to constructivist ontology, IR theorists look beyond the realist lens by deciphering the role of states' psychological needs for ‘prestige’ in energizing state actions.Footnote ²² Hence, the self-constructed identities of Washington and of Brussels as global hegemonic or normative powers have prompted them to pursue new rules on sustainability.Footnote ²³ The new green norms are considered value-based as they aim to uphold the core non-economic objectives of the US and EU trade pacts. For middle powers, such as Australia, Singapore, and New Zealand, their positions as green economies and as thought leaders in sustainable development have propelled their sustainability agreements.

The other pillar of recognition in IR is the status claim, which refers to the normative rather than the psychological dimension of recognition.Footnote ²⁴ Based on the ‘principle of participatory parity’, a country's motivation is not to pursue a distinct or unique self-image in global politics.Footnote ²⁵ Instead, its aims are to be treated as an equal member according to the acknowledged standard of respect.Footnote ²⁶ This status claim represents the pursuit of ‘dignity’, in order to obtain self-esteem by securing equal status in interstate relations.Footnote ²⁷ The IR view therefore supplements Richard Baldwin's ‘domino theory’ that explains the driving force for regionalism.Footnote ²⁸

The fear of exclusion has driven states to join key agreements and safeguard their trade status. The UK's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in 2023 and the pending applications of other economies, including China and Taiwan, furnish evidence for this hypothesis.Footnote ²⁹ Green regionalism follows the same rationale. Under their Indo-Pacific strategies, the US and EU trade pacts articulated key sustainable development areas, including the environment and climate change.Footnote ³⁰ Smaller states participate in these trade agreements with comprehensive environmental obligations or additional green economy initiatives because they are concerned about being ‘left out’ of new international standards. The status dimension in IR also explains small nations' worry about losing opportunities for potential market access. As a compromise, they became more willing to accept green rules advanced by large economies.

2.2 Trade and Sustainability 1.0

The IR concept of recognition that rests upon the core elements of identity and status clarifies states' quests for green regionalism, which yields paramount implications for sustainable development and international law. To contextualize green regionalism, I now turn to its evolution vis-à-vis fundamental shifts in climate change and sustainability movements during the three waves of global regionalism.Footnote ³¹ Influenced by the UN's efforts for sustainable development, including multiple MEAs, green regionalism emerged in the first two waves of regionalism from the 1950s to 1990s. In this era of ‘Trade and Sustainability 1.0’, the two issues were largely governed by separate yet parallel regimes and their nexus was fragile. Since the 2000s, green regionalism has substantially expanded during the third wave of global regionalism. The new trade agreements and green economy initiatives establish the normative basis for ‘Trade and Sustainability 2.0’.

Trade and Sustainability 1.0 encompasses the first two waves of global regionalism and signifies the initial shift from multilateral WTO and UN efforts to regional initiatives. A predominant driver is the evolution of enhanced green rules incorporated into European and North American integration frameworks. The First Regionalism, which denotes the first wave of global regionalism between the 1950s and the 1960s, shows limited focus on sustainability issues in trade agreements.Footnote ³² After the Second World War, the 1947 General Agreement on Tariffs and Trade (GATT) functions as an indispensable pillar of the Bretton Woods system. Article XX of the GATT provides general exceptions for GATT-inconsistent measures. Absent the direct reference to environmental measures, Article XX(b) and (g) justify measures that are ‘necessary to protect human, animal or plant life or health’ or ‘relating to the conservation of exhaustible natural resources’.Footnote ³³ Presumably not envisioned by the drafters, these justifications became hotly contested in WTO litigation and feature Trade and Sustainability 1.0.

In the First Regionalism, sustainability grounds were considered to accord governments public space and seen as defensive tools for environment-related trade measures in actual disputes. Trade pacts have followed provisions on Article XX-style exceptions. The 1957 Treaty of Rome that established the European Economic Community (EEC) emerged as the first economic integration agreement with environmental provisions.Footnote ³⁴ In addition to Article 36, which incorporates the exceptions under Article XX(b) of the GATT, Article 92 justifies state aid to remedy ‘the damage caused by natural disasters’.Footnote ³⁵ To a certain extent, European integration influenced the creation of the Association of Southeast Asian Nations (ASEAN) as Asia's initial regionalism endeavor in 1967.Footnote ³⁶ Nevertheless, ASEAN's founding document focuses predominantly on political solidarity and does not mention the environment.Footnote ³⁷ The economic integration mandate only addresses collaboration in agriculture, industries, and trade without providing detailed rules.Footnote ³⁸

The EEC and ASEAN cases suggest that sustainability was not envisioned as a policy priority at the initial stage of regionalism. In tandem with global movements for sustainable development, the watershed moment for green regionalism took place during the Second Regionalism from the 1970s to the 1990s. In less than two decades, sustainability and climate change ascended to be the core of the global development agenda. The 1972 Stockholm Conference on the Human Environment, the 1987 Brundtland Report entitled ‘Our Common Future’, and the 1992 Rio Conference on Environment and Development raised global awareness of sustainable development and made it the UN's primary objective.Footnote ³⁹

These developments spurred the proliferation of MEAs and resulted in the normative linkages and tensions between environmental law and trade law. In particular, the MEAs contain trade measures to enforce sustainability obligations. The first of such MEAs is the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), which encompasses provisions on ‘Regulation of Trade in Specimens of Species’ listed in Appendices I to III.Footnote ⁴⁰ Therefore, the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal further imposes obligations on parties not to export hazardous wastes to or import them from non-parties.Footnote ⁴¹

It became a norm for environmental and climate agreements to utilize trade mechanisms. This trend is well illustrated by the Montreal Protocol on Substances that Deplete the Ozone Layer, the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC), and the Paris Agreement.Footnote ⁴² On the one hand, the fact that more than 80% of the parties to these MEAs are WTO members has reinforced the trade-sustainability nexus. On the other hand, the potentially overlapping jurisdictions of MEAs, the WTO, and FTAs will inevitably complicate enforcement.

In line with the MEAs, the newly established WTO also emphasizes sustainability. The preamble of the Marrakesh Agreement considers ‘the objective of sustainable development’ and aims ‘to protect and preserve the environment’.Footnote ⁴³ An important institutional milestone is the 1994 Ministerial Declaration on Trade and Development, which takes into account the Rio Declaration and Agenda 21 and created a Committee on Trade and Environment within the WTO.Footnote ⁴⁴ In the meantime, GATT and WTO disputes on environmental issues shed new light on normative tensions between trade and sustainability.

In the 1980s and the 1990s, US quantitative restrictions on tuna and tuna products led to panel reports on US–Canadian Tuna, US–Tuna (Mexico), and US–Tuna (EEC).Footnote ⁴⁵ Panels on these cases held that US trade measures could not be justified under Article XX(b) and (g). The latter two panel reports were not adopted due to the weakness of the GATT DSM. The subsequent establishment of the Appellate Body and the adoption of the negative consensus rule transformed the WTO DSM. One of the most significant trade-environment cases is US–Shrimp, which also involves Article XX. In contrast with GATT panels that undisputedly regarded ‘fish’ as ‘exhaustible natural resources’, the Appellate Body considered the Appendix I of the CITES and found that ‘sea turtles’ also fall within the Article (g) ambit.Footnote ⁴⁶

Although the Appellate Body ruled that the United States failed to meet the Article XX chapeau requirements, it stressed the concept of sustainable development within WTO agreements, which integrate three pillars – economic development, social development, and environmental protection.Footnote ⁴⁷ WTO trade-environment disputes have continued to involve general exceptions, but issues have subsequently extended to more complex areas, such as the local content requirement of renewable energy programs.Footnote ⁴⁸

In the Second Regionalism, MEAs and WTO developments propelled green regionalism. Different from the First Regionalism, where the ‘environment’ was considered solely as a carve-out exception, the trade agreements in the new era started to incorporate affirmative environmental obligations. As a constitutional basis for the EU, the 1992 Maastricht Treaty highlights environmental protection as a policy goal of the bloc.Footnote ⁴⁹ Signed in the same year, the North American Free Trade Agreement (NAFTA) and its side agreement, the North American Agreement on Environmental Cooperation (NAAEC), constitute ‘landmark precedents’ in green regionalism.Footnote ⁵⁰ They represent the first attempt of trade pacts to cover detailed provisions on environmental law enforcement and cooperation, as well as institutional designs such as a commission.Footnote ⁵¹ The United States–Mexico–Canada Agreement (USMCA), negotiated during the Trump era, incorporates the NAFTA and the side agreement into the main text.Footnote ⁵²

Green regionalism has spillover effects on the Global South. Unexpectedly, the first climate change provision appeared in an African agreement, as the 1993 Common Market for Eastern and Southern Africa (COMESA) stipulates the requirement for members to accede to the UNFCCC.Footnote ⁵³ The COMESA also includes provisions for cooperation in the areas of environmental and natural resources protection, wildlife management, and the prevention of hazardous wastes.Footnote ⁵⁴ Although these provisions are not as detailed as the NAFTA and the NAAEC, they demonstrate that green regionalism is not exclusive to the Global North and can be crucial for South–South integration.

2.3 Trade and Sustainability 2.0

Constructing the normative basis for Trade and Sustainability 2.0, green regionalism has rapidly evolved since the inception of the Doha Round. In this latest wave of global regionalism, known as the Third Regionalism, the trade-sustainability nexus has faced significant geopolitical upheaval. From the 2000s to the present, multifaceted disruptions have inhibited multilateral talks and global supply chains, thus making the reorientation of the trade regime inevitable.

Thomas L. Friedman's idea on the path of globalization, outlined in his book The World is Flat, has become much less convincing.Footnote ⁵⁵ As Shannon K. O'Neil asserted, regionalism premised on the multipolar reality has surpassed globalization and influenced decisive issues such as climate change governance.Footnote ⁵⁶ A key factor that distinguishes the Third Regionalism from previous waves of regionalism is the decline of America's ‘unipolar moment’ due to its economic and military preeminence.Footnote ⁵⁷ The White House's perceived unwillingness and incapability to lead its allies made it difficult to replicate the success of the Washington Consensus in global environmental issues.

I identify three decisive developments of green regionalism in world trade law. First, geopolitical conflicts have disrupted the critical judicial and legislative functions of the WTO. The WTO appeals mechanism ceased to function in 2019 due to Washington's refusal to appoint and reappoint Appellate Body Members on grounds such as juridical outreach.Footnote ⁵⁸ This crisis is also interpreted as enhancing US leverage to push for broader WTO reforms aimed at addressing China's ‘unfair’ trade practices that are arguably WTO-consistent.

So far, 24 cases demonstrate the strategy of selected WTO members, including the United States, Russia, and Korea, to appeal unfavorable panel decisions ‘into the void’.Footnote ⁵⁹ Although these cases predominantly concern anti-dumping and subsidies and do not directly relate to environmental issues, the lack of the Appellate Body will have long-term implications for green regionalism. Evolving technology has advanced and transformed environmental goods and services. New forms of disputes will not be confined to carve-out exceptions under WTO law. Without a functioning Appellate Body to interpret WTO agreements, existing jurisprudence cannot effectively address the new trade-sustainability nexus. Presumably, another development will be the increasing use of regional dispute settlement mechanisms to solve these cases. Nevertheless, a structural weakness will be to worsen the fragmentation of the judicial interpretations of green norms.

As for WTO negotiations, a rare notable achievement is the 2022 Agreement on Fisheries Subsidies (AFS), which marks the first-ever WTO pact addressing environmental concerns.Footnote ⁶⁰ This AFS incorporates the disciplines of fisheries subsidies that have previously been adopted in the CPTPP, the USMCA, and UK FTAs with Australia and New Zealand.Footnote ⁶¹ Despite the AFS, the promise of the Doha Ministerial Declaration, which reaffirms ‘the objective of sustainable development’ under the Marrakesh Agreement, has failed.Footnote ⁶² The most effective trade mechanism to meet the goal of the Paris Agreement is ‘the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services’.Footnote ⁶³ Environmental goods include components of hydraulic and wind turbines, rechargeable batteries, and renewable fuels. The close complementarity between the exports of environmental goods and services cannot be underestimated.Footnote ⁶⁴ To exemplify, solar panels require pertinent installation, cleaning, and repair services.

The definitions and scopes of environmental goods and services are major challenges. Regional institutions, including APEC, the EU, and the Organisation for Economic Co-operation and Development, as well as the WTO and the UN, have proffered proposals with different classifications.Footnote ⁶⁵ The lack of universal consensus has obstructed negotiations. For instance, Brazil and the EU hold opposing views on whether biofuels should be included as environmental goods.Footnote ⁶⁶ The ‘dual use’ problem also applies to products such as mufflers, which can reduce noise but can be used in both wind turbines and diesel trucks.Footnote ⁶⁷ The fact that the negotiations for the plurilateral WTO Environmental Goods Agreement (EGA) began in 2014, but broke down in 2016, highlights these challenges.Footnote ⁶⁸

The legitimacy of the EGA is also questionable, as only 46 out of 164 WTO members participated in the negotiations.Footnote ⁶⁹ Although the global average tariff on environmental goods is low, it still exceeds 10% in developing countries such as China, Chile, India, and Korea.Footnote ⁷⁰ Ironically, only three developing economies (China, Costa Rica, and Turkey) joined the talks, as many developing countries were frustrated with the Global North's reluctance to provide financial commitments under the Kyoto Protocol.Footnote ⁷¹

The EGA coverage similarly complicated the negotiations. It is generally agreed that bicycles help decrease carbon footprint and should be classified as environmental goods. However, the EU and the United States opposed China's request to include bicycles in the EGA list. This opposition stemmed from concerns about the potential influx of Chinese bicycles, which have been subjected to EU and US antidumping duties.Footnote ⁷² As the world's No. 1 producer of bicycles, China manufactures 40% of all exported bicycles, thus making these environmental products politically controversial.Footnote ⁷³ In addition, China's demand for the revised list of tariff reductions, which substantially differed from the originally discussed list, arguably made it impossible for other parties to reach a conclusion on the EGA.Footnote ⁷⁴

Outside the scope of the EGA, the liberalization of environmental services has been under the auspices of another plurilateral Trade in Services Agreement (TiSA), currently being negotiated among 23 WTO members.Footnote ⁷⁵ Nevertheless, the TiSA negotiations have not produced any concrete results since 2013. Presently, 75 WTO members are engaged in discussions on trade in environmental goods and services in the Trade and Environmental Sustainability Structured Discussions.Footnote ⁷⁶ Other WTO initiatives focus on discussions about plastic pollution and fossil fuel subsidies.Footnote ⁷⁷ Although the Doha Ministerial Declaration does not mandate the reduction of fossil fuel subsidies, these subsidies have jeopardized the development of renewable energy. The amount of fossil fuel subsidies has already exceeded $1 trillion, which is eight times the level of subsidies allocated to renewable power generation technologies.Footnote ⁷⁸ The lack of WTO agreements on these urgent sustainability issues has prompted states to expedite green regionalism.

Second, the emergence and expansion of mega-trade agreements have augmented the normative impact of green regionalism in the new dynamic of Trade and Sustainability 2.0. These agreements go beyond conventional bilateral or trilateral FTAs. The economic scale and collective political power of parties to these agreements energized paradigm shifts in world trade law. In terms of the share of global gross domestic product (GDP), the world's largest trade blocs are the Regional Comprehensive Economic Partnership (RCEP), the USMCA, the EU, and the CPTPP.Footnote ⁷⁹ Accounting for 30% of the world's GDP, the RCEP is built upon the ‘ASEAN Plus Six’ structure comprising ASEAN's FTAs with China, Japan, India, Korea, Australia, and New Zealand.Footnote ⁸⁰ As India withdrew from RCEP negotiations, there are currently 15 parties to the agreement. The absence of an environment chapter, which the CPTPP includes, inevitably weakens the RCEP's ability to shape norms of green regionalism.

The CPTPP is based on the Trans-Pacific Partnership (TPP), which was initiated by President Barack Obama to advance Washington's ‘pivot to Asia’ strategy. President Donald Trump's populist stance led to his decision to withdraw the country from the TPP. The leadership of Japanese Prime Minister Shinzo Abe enabled the remaining 11 parties to conclude a legally separate pact, the CPTPP, which suspended 22 provisions of the TPP.Footnote ⁸¹ Chapter 20 of the CPTPP encompasses 23 articles that address issues ranging from ozone layer protection to environmental goods and services.Footnote ⁸² The UK's accession to the CPTPP and the potential accession of other applicants, such as China, Taiwan, and Ukraine, will expedite green regionalism.Footnote ⁸³

The USMCA took a step further than the CPTPP. Its environmental chapter covers new issues such as air quality, marine litter, and obligations under seven MEAs.Footnote ⁸⁴ Remarkably, the USMCA includes ‘environmental measures’ as justifications under Article XX(b) of the GATT and XIV(b) of the General Agreement on Trade in Services (GATS).Footnote ⁸⁵ As Washington's current practice, the 2023 agreement under the US–Taiwan Initiative on 21st Century Trade follows the same design.Footnote ⁸⁶ Recent UK FTAs' inclusion of mitigation measures for ‘climate change’ for GATT and GATS exceptions illustrate governments' endeavors to secure policy space, particularly given WTO jurisprudence on Article XX of the GATT.Footnote ⁸⁷

Technically distinct from trade pacts, the EU is an economic and monetary union and a supranational organization with a legal personality. The most ambitious agenda of the EU is the ‘European Green Deal’ launched in 2019.Footnote ⁸⁸ To meet the SDGs, the European Green Deal aims to transform Europe into the first carbon-neutral bloc by 2050.Footnote ⁸⁹ Comprising various regulations and directives, the European Green Deal includes notable schemes such as European Climate Law and the Carbon Border Adjustment Mechanism (CBAM).Footnote ⁹⁰ Notwithstanding its transitional period from 2023 to 2026, the CBAM's prospective imposition of a carbon price on imports will increase traders' costs and cause concerns about its compatibility with WTO rules.Footnote ⁹¹ Like FTAs, these European experiments will contribute to legal and policy discussions on Trade and Sustainability 2.0.

Lastly, soft-law initiatives and sectoral agreements dedicated to promoting a green economy and climate change are revolutionizing the normative frameworks of the Third Regionalism. The parochial view that hard-law instruments and comprehensive FTAs underpin green regionalism no longer holds. Geopolitical and ideological clashes have propelled some states to resort to ‘unconventional’ approaches to buttress the trade-sustainability nexus. These innovative arrangements involving Asia reflect the region's anxiety for ‘green trade’, as the region accounts for about 50% of global carbon emissions and has experienced record-high temperatures.Footnote ⁹²

Established in 1989, APEC includes 21 Asia-Pacific economies and is a transnational economic forum based on non-binding rules and decisions. It is not a venue for negotiating trade agreements but serves as an ‘incubator’ for such agreements. With different legal structures, APEC and ASEAN have been the twin engines of Asian integration. As a soft-law institution, APEC has surprisingly buttressed green regionalism. During the Second Regionalism, APEC's developed members endeavored to push for more ambitious Early Voluntary Sectoral Liberalization for designated sectors, including tariffs and non-tariff measures for environmental goods and services.Footnote ⁹³ Nevertheless, Asian economies opposed the transition from voluntary participation to WTO-style negotiations.Footnote ⁹⁴

APEC economies changed their positions in the Third Regionalism by making a breakthrough at the 2011 Honolulu summit in which they pledged to cut down applied tariffs on environmental goods to 5% or less by 2015.Footnote ⁹⁵ In the following year, APEC members reached a consensus on the tariff reduction list of 54 environmental goods, including solar water heaters and renewable bamboo-based products.Footnote ⁹⁶ This milestone was a catalyst for WTO EGA negotiations. Empirical evidence shows that APEC members regarded the 5% tariff commitments as if they are binding and that trade in 54 selected products increased by 7%, which is higher than the global rate.Footnote ⁹⁷ However, changing technological developments and consumer demands may contribute to the more than 50% decline in exports of certain environmental products such as parts of solar heliostats and steam turbines.Footnote ⁹⁸ Consequently, the update and expansion of the tariff reduction list are decisive for green regionalism to sustain.

Hosted by Thailand, the 2022 APEC meetings resulted in the Bangkok Goals on Bio-Circular-Green Economy, which pledged to review tariff and non-tariff measures for environmental goods.Footnote ⁹⁹ The 2023 US-hosted APEC meetings are expected to elevate the sustainability themes from the working and expert levels to the ministerial level.Footnote ¹⁰⁰ Moreover, the agenda for the prospective Free Trade Area of the Asia-Pacific under APEC Putrajaya Vision 2040 may also enable APEC's experiment of environmental goods to transform to hard-law obligations.Footnote ¹⁰¹

APEC's soft-law approach to tariff liberalization for environmental products is unique. Along with APEC, recent sectoral agreements on the green economy outside the WTO framework also enhance the normative content of green regionalism. Departing from comprehensive FTAs, regional sectoral agreements have emerged, starting with digital trade pacts. These include the trilateral Digital Economy Partnership Agreement, the US–Japan Digital Trade Agreement, and Singapore's bilateral deals with the EU, Korea, and the UK.Footnote ¹⁰² This sectoral approach allows parties to address emerging issues in depth, such as artificial intelligence and 5G technologies, which could not be incorporated into conventional FTAs.

The world's first green economy agreement is the 2022 Australia–Singapore Green Economy Agreement.Footnote ¹⁰³ In 2023, Singapore also concluded similar, yet with a much narrower scale, framework agreements with Malaysia and the UK.Footnote ¹⁰⁴ Ongoing negotiations of the six-party ACCTS also represent this sectoral approach.Footnote ¹⁰⁵ The scope of these green economy agreements exceeds the APEC's focus on environmental goods. They extend to key areas of environmental services, fossil fuel subsidies, sustainable finance, and eco-labeling, thus effectively employing trade measures to meet the objectives of SDGs and the Paris Agreement.

3.1 United States: From the USMCA to the IPEF

The IR concept of recognition offers a unique perspective to explain Washington's motivation and strategy for pursuing green regionalism. From a macro aspect, the largest disruption in the US approach to trade is to deal with the rapid rise of China in economic and political arenas. The once undisputed recognition of America's self-constructed identity as the world's sole superpower is now confronting new threats. China and, to some extent, its allies, openly proclaimed the ‘perils’ of multifaceted US hegemony.Footnote ¹⁰⁸ Moreover, the geopolitical vacuum caused by the Trump Administration includes the withdrawal of US leadership and membership from the TPP and the Paris Agreement. While America rejoined the Paris Agreement, domestic politics compelled the Biden Administration to restore US status by resorting to trade initiatives that are not ‘traditional FTAs’.Footnote ¹⁰⁹ As IR scholars posit, Washington's struggles for identity and status claims have galvanized its trade-sustainability policy. Its Indo-Pacific strategy's focus on ‘climate and environment’ cooperation with like-minded partners exemplifies this dimension.Footnote ¹¹⁰ Hence, a ‘new Washington Consensus’ should be forged to enable ‘embedded liberalism’ to be based on an innovative approach to Trade and Sustainability 2.0.Footnote ¹¹¹

The NAFTA and the TPP built the normative foundation for the USMCA. The latter two agreements encompass broader environmental issues such as provisions on environmental goods and services that address non-tariff barriers and cooperation matters.Footnote ¹¹² Strikingly, the legal and political discourse in America has been predominantly centered on enforcing environmental and labor provisions or imposing sanctions on FTA partners who fail to comply.Footnote ¹¹³ Implementing environmental rules essentially involves determining whether they can be enforced under FTA DSMs. A critical development is the bipartisan accord on FTA policy that the Bush Administration and the Democrats-controlled Congress reached in 2007.Footnote ¹¹⁴ In particular, the accord conditions the rapid FTA ratification on various issues, including FTA commitments under MEAs and domestic environmental laws, as well as subjecting environment obligations to general FTA DSMs.Footnote ¹¹⁵

Congressional approval has energized the application of general DSMs to environmental rules under US FTAs. Nonetheless, a closer look at dispute settlement procedures reveals the obstacles to the sanction model. Under the TPP, a regular panel for environmental claims can only be established after exhausting the three-step consultation process.Footnote ¹¹⁶ The USMCA follows a similar structure. While the USMCA environment chapter falls under the jurisdiction of its general DSM, the establishment of a panel requires three levels of consultations.Footnote ¹¹⁷ Unlike normal trade-related claims that require only consultations under the dispute settlement chapter, the environment chapter stipulates two additional levels of consultations. These are conducted by the Environment Committee's representatives and ministers.Footnote ¹¹⁸

Enforcing MEAs under US FTAs is also complex. The TPP and the USMCA enable parties to enforce selected MEAs, but the claim is confined to violations ‘in a manner affecting trade or investment between the Parties’.Footnote ¹¹⁹ This restricted scope is arguably designed to prevent jurisdictional conflicts between FTAs and MEAs. Nonetheless, excluding violations of environmental obligations from the enforcement mechanisms undermines the effectiveness of FTAs in strengthening MEA commitments.Footnote ¹²⁰ A relevant case, Guatemala–Labor Commitments, arose from the Dominican Republic–Central America FTA. The Panel observed that Guatemala did fail to enforce its labor laws, but it ruled against the United States due to the lack of evidence that shows the measures affected ‘trade’ under the FTA.Footnote ¹²¹ When replacing the NAFTA, the USMCA's labor and environment chapters also include measures that can affect investment and shift the burden of proof to the responding party by presuming FTA violations.Footnote ¹²² Despite these revisions, the trade or investment linkage issue is expected to be subject to judicial challenges in cases seeking to enforce MEAs. Also notably, the CPTPP even further narrows the application of obligations to enforce the CITES.Footnote ¹²³

To circumvent the domestic politics complexity and the lack of the Trade Promotion Authority, President Joe Biden initiated the 14-party IPEF as the core pillar of the US Indo-Pacific strategy.Footnote ¹²⁴ Tantamount pacts include the Americas Partnership for Economic Prosperity and the US–Taiwan Initiative on 21st Century Trade.Footnote ¹²⁵ With different geographical coverages, these deals commonly lack tariff commitments and hence may not be regarded as typical FTAs that require congressional approval. For US allies, the absence of tariff concessions makes these instruments ‘better-than-nothing’ deals. The IPEF is based on four pillars and Pillar II focuses on clean economy matters mostly relevant to the trade-sustainability nexus.Footnote ¹²⁶ US officials claimed that the IPEF is ‘enforceable’, but there is neither the withdrawal of tariff benefits as penalties nor a DSM to enforce it.Footnote ¹²⁷ Although the enforceability of the IPEF is questionable, the IPEF will serve to buttress institutional frameworks for promoting a new Washington Consensus for green regionalism.

3.2 EU: Beyond the TSD Chapters of FTAs

The EU is a key stakeholder amid disruptions of the trade regime owing to geopolitical conflicts. Akin to the theoretical analysis of US-led green regionalism, the IR concept of recognition based on identity and status claims also reveals the EU's trade approach to environment and climate governance. Unlike the United States, the EU does not claim to be a great power or hegemony. Nevertheless, the contentions for the EU's ‘normative power’ or ‘Brussels effect’ in IR and international law aim to depict the EU's normative influence beyond its borders.Footnote ¹²⁸ The EU's self-constructed role as a global power prompted the priority of value-based sustainable development, including environmental standards under the trade agenda.Footnote ¹²⁹

The pursuit of achieving a status on the world stage on par with that of America has motivated the EU's ‘strategic autonomy’ of foreign policy, including the implementation of SDGs.Footnote ¹³⁰ This aspect also helps to understand Brussels' concerns about China as ‘a systemic rival promoting alternative models of governance’.Footnote ¹³¹ FTA partners' acceptance of sustainability provisions within and beyond the TSD chapters of EU FTAs can be interpreted as their recognition of the EU's normative impact.

According to the 2006 ‘Global Europe’ communication, the EU commenced new-generation FTAs that focus on sustainable development by including TSD chapters with detailed environmental and labor provisions.Footnote ¹³² The 2007 Treaty of Lisbon clarified and granted more robust power to the EU for enforcing trade pacts.Footnote ¹³³ The Court of Justice of the EU further specified that as ‘an integral part of the common commercial policy’, sustainable development falls within the Union's exclusive competence.Footnote ¹³⁴ As the EU's first-ever ‘most ambitious trade deal’, the 2010 EU–Korea FTA was the first new-generation FTA to incorporate a TSD chapter.Footnote ¹³⁵ The EU views ASEAN as its vital partner for an interregional framework. Following the same FTA model, EU FTAs with Singapore and Vietnam serve as ‘building blocks for a region-to-region trade and investment agreement’.Footnote ¹³⁶

Compared with US FTAs, EU FTAs are often perceived to be weaker or more collaborative because they generally do not include citizen submissions and the suspension of tariff concessions due to the exclusion of TSD chapters from general DSMs.Footnote ¹³⁷ The fundamental change is the mandate of the 2018 15-Point Action Plan, which energizes the EU's ‘enhanced implementation and enforcement’ of TSD chapters in tandem with the European Green Deal.Footnote ¹³⁸ This change is envisioned as an indispensable step for Brussels' ‘value-based approach to TSD’.Footnote ¹³⁹ The 2022 EU–New Zealand FTA reflects the change by applying the general DSM to Chapter 19 on TSD.Footnote ¹⁴⁰ The FTA also incorporates additional procedural rules regarding consultations, panelists, and compliance measures for TSD-related disputes.Footnote ¹⁴¹

As of 2023, there have been limited cases of TSD, which exposed challenges to the enforcement approach of Brussels. Akin to the previous US–Guatemala dispute, Korea–Labor Commitments that arose from the EU–Korea FTA concerns the trade-related requirement for labor-based claims. Distinct from the former case, the panel upheld the trade–labor linkage based on Korea's commitments to International Labor Organization Conventions and the TSD chapter's reference to provisions on sustainable development.Footnote ¹⁴² In essence, the panel waived the burden of proving the trade-related requirement, which can be equally critical for environmental claims.

The subsequent case, Ukraine–Wood Export Ban, involves the consistency of Ukraine's export ban on wood products with the EU–Ukraine Association Agreement.Footnote ¹⁴³ The panel rejected Ukraine's justification based on forest protection by finding that the trade chapter rather than the TSD chapter governs the trade measures.Footnote ¹⁴⁴ Although TSD provisions are contextually relevant for interpreting trade measures, they do not constitute ‘self-standing or unqualified exceptions’.Footnote ¹⁴⁵ Hence, the panel held in favor of Brussels because Kyiv failed to meet the Article 36 requirement incorporating Article XX of the GATT.Footnote ¹⁴⁶ These decisions, along with the non-application of stare decisis to FTA panels, demonstrates the unpredictable nature of legal disputes related to the trade-sustainability nexus.

Other than focusing on enforcement, EU FTAs employ more market-oriented approaches to green regionalism, including the liberalization of environmental goods and services and the reduction of fossil fuel subsidies.Footnote ¹⁴⁷ For example, the EU–New Zealand FTA encompasses an annex of environmental goods and services and includes commitments on reform programs for fossil fuel subsidies.Footnote ¹⁴⁸ Moreover, separate from TSD chapters, recent EU trade pacts also promote the green industry by including non-tariff barriers chapters on renewable energy generation.Footnote ¹⁴⁹ There are FTA provisions that prohibit parties from imposing local content requirements, partnerships with local companies, and discriminatory certification and licensing procedures.Footnote ¹⁵⁰

Since 2021, the EU has also launched green alliances and partnerships with Japan, Korea, Tunisia, Morocco and Norway.Footnote ¹⁵¹ Different from traditional FTAs, these soft-law pacts based on the European Green Deal lay the frameworks for dialogues and cooperation on climate change and energy transition. In 2023, the EU concluded a different type of green economy accords with the Philippines under which the EU committed to provide a grant worth €64 million to facilitate the green economy transition of the Philippines.Footnote ¹⁵² These initiatives of different legal natures collectively enhanced the EU's normative power in constructing green regionalism.

3.3 ASEAN: Green Economy Initiatives

What will fundamentally change global politics and trade is the GDP of Asia exceeding that of the rest of the world by 2050, enabling the region to regain the dominant economic status that it once enjoyed before the Industrial Revolution.Footnote ¹⁵³ While China and Japan have played certain roles in Asian integration, the developments of ASEAN and the ASEAN Plus Six framework have been the foundation of new Asian regionalism. This ASEAN-centered regime also led to the RCEP, the world's largest FTA by economic scale.

ASEAN is not immune from disruptions and the reorientation of the trade regime. Instead, the geopolitical conflicts have highlighted the role of ASEAN in Trade and Sustainability 2.0. Unlike the United States and the EU, ASEAN is not considered a ‘power’ in the traditional sense. However, the ten-country bloc is expected to shape green regionalism in Asia. Beyond the realist lens, recent IR literature has resorted to constructivism to unpack the impact of regionalism on ASEAN's quest for regional identity.Footnote ¹⁵⁴ The unique status of ASEAN has channeled competing powers into a norm-based regional architecture.Footnote ¹⁵⁵ ASEAN's pursuit of its identity and status at the regional and global levels has driven its internal and external integration. The recognition of ‘ASEAN centrality’ by major powers including China, the EU, and the United States under trade agreements and Indo-Pacific strategies, in turn, reinforced ASEAN's prestige and dignity in IR.Footnote ¹⁵⁶ Absent the EU law concept of direct effect, the incremental ‘ASEAN way’ premised on consultations and consensus has transformed ASEAN law into hard-law obligations with structured flexibility.Footnote ¹⁵⁷

ASEAN's first environment treaty was concluded in the Second Regionalism. The 1985 ASEAN Agreement on the Conservation of Nature and Natural Resources has never become effective due to the lack of sufficient ratifications.Footnote ¹⁵⁸ Furthermore, the agreement is not linked to the ASEAN Free Trade Area, the predecessor to the ASEAN Economic Community (AEC). A vital pact in the Third Regionalism is the 2002 ASEAN Agreement on Transboundary Haze Pollution (Haze Agreement), which seeks to eradicate air pollution resulting from the extensive use of fire for agricultural land clearance purposes. However, Indonesia, which has been a major source of haze, only ratified the Haze Agreement in 2014.Footnote ¹⁵⁹ These earlier attempts reveal the systematic problem of the traditional ASEAN way.

In 2007, the ASEAN Declaration on Environmental Sustainability emphasized the specific focus of regional efforts on ‘greenhouse gas emissions and carbon sinks’ as well as the promotion of renewable energy.Footnote ¹⁶⁰ Signed in the same month, the ASEAN Charter legally reconstructed the bloc from an ‘association’ to an ‘organization’ with a legal personality.Footnote ¹⁶¹ In particular, it proclaims the goal to ‘promote sustainable development’, including the protection of the environment and natural resources.Footnote ¹⁶² The next crucial milestone is the 2015 establishment of the ASEAN Community that will create ‘sustainable and highly integrated economies’.Footnote ¹⁶³ The AEC, the ASEAN Socio-Cultural Community (ASCC), and the ASEAN Political-Security Community collectively formed the new Community.Footnote ¹⁶⁴ Most mandates related to climate change and natural resources fall within the scope of the ASCC, whereas the AEC is responsible for implementing trade-related issues such as renewable energy.Footnote ¹⁶⁵

Notwithstanding the much lesser focus on ‘enforcement’ in comparison to US and EU trade deals, the ASEAN framework has led to bilateral and sector-based green economy initiatives that cater to market needs. The Framework for the Circular Economy for the AEC aims to enhance cooperation with the ASCC and streamline the harmonization of standards and mutual recognition arrangements for environmental goods and services.Footnote ¹⁶⁶ Established in 2022, the ASEAN Taxonomy Board was created to promote the bloc's ‘sustainable finance ecosystem’.Footnote ¹⁶⁷

As the ASEAN Chair, Cambodia proposed the concept of the ‘ASEAN Green Deal’.Footnote ¹⁶⁸ The green agenda goes beyond internal regionalism. The AEC's ‘global ASEAN’ objective amplifies ASEAN's normative influence over green regionalism.Footnote ¹⁶⁹ The ASEAN Plus Six framework and the RCEP will form the basis for Asia's Trade and Sustainability 2.0. The existing literature often overlooks the progression of ASEAN Plus One FTAs from merely including environmental cooperation to encompassing detailed green economy initiatives.Footnote ¹⁷⁰ The trend is evidenced by the upgraded ASEAN–Australia FTA, which signifies ASEAN's first attempt ‘to include a standalone TSD Chapter’.Footnote ¹⁷¹ Moreover, green economy issues will be integrated into the upgraded ASEAN–China FTA.Footnote ¹⁷²

Comparable to these ASEAN pacts, the RCEP should also be seen as an evolving process and its influence on green regionalism should not be underestimated. Environmental issues were initially included in the RCEP negotiations, but the parties made the decision to leave these issues to bilateral deals in order to expedite the conclusion of this mega-FTA.Footnote ¹⁷³ Without a separate TSD chapter, the RCEP's only reference to environmental matters is to affirm the obligations under the Convention on Biological Diversity, to which all ASEAN states are parties.Footnote ¹⁷⁴ Nonetheless, the RCEP's consolidation of rules of origin and the reduction of tariffs and non-tariff barriers are critical to the development of renewable and clean energy goods in Asia.Footnote ¹⁷⁵

These regional initiatives complement national green plans. Except for the Myanmar and the Philippines, ASEAN countries have respectively set their net-zero targets in 2050, 2060, and 2065.Footnote ¹⁷⁶ In particular, Singapore is recognized as the bloc's ‘climate leader’.Footnote ¹⁷⁷ From an IR angle, the recognition of Singapore's leadership in sustainability reinforces the island state's identity and status as ASEAN's intellectual hub. Despite its small size, Singapore's membership in ASEAN, the CPTPP, the RCEP, and the IPEF also enables the country to substantially enhance its normative power for shaping green regionalism.

The 2003 FTA with the United States marked Singapore's initial encounter with environmental rules in a trade agreement. This FTA arguably prompted the amendment to the Endangered Species (Import and Export) Act, which imposes criminal penalties for the transportation of certain species.Footnote ¹⁷⁸ To address the weakness of the ASEAN Haze Agreement, Singapore also passed the Transboundary Haze Pollution Act. With extraterritorial jurisdiction, the Act makes it an offense for any entity that ‘causes or contributes to any haze pollution in’ the country.Footnote ¹⁷⁹

A noteworthy normative development for Trade and Sustainability 2.0 is Singapore's green economy agreements. Sectoral agreements such as the WTO Information Technology Agreement are not exceptional, but such bilateral agreements devoted to the green economy are unprecedented. Comparable to the EU's green alliances and partnerships, Singapore's green economy deals with Malaysia and the UK focus on cooperation in identified areas such as electric vehicle charging points, renewable energy, and carbon markets.Footnote ¹⁸⁰ The Australia–Singapore Green Economy Agreement, which is similar to the prospective ACCTS, is fundamentally different.

The Green Economy Agreement ‘does not create binding obligations’ or ‘alter or affect any existing agreements’, including the CPTPP and the RCEP.Footnote ¹⁸¹ Yet, the comprehensiveness of the pact provides a catalyst for prospective ASEAN agreements, the EGA and the TiSA. It covers 17 areas of cooperation including the development of lists of environmental goods and services, sustainable agriculture, eco-labeling, green shipping, and aviation.Footnote ¹⁸² The Agreement helps fill the gap in world trade law, as it addresses brand new issues that are not covered under FTAs, such as subsea electricity cables and transboundary carbon sequestration.Footnote ¹⁸³

The list of 372 environmental goods that focuses on various renewable energy is much broader than the coverage of the APEC list.Footnote ¹⁸⁴ It also encompasses bicycle-related products that the EGA could not include. Although the Agreement is not an FTA that could ‘liberalize’ covered goods and services, the Agreement helps forge consensus for green regionalism. For these reasons, ASEAN and Singapore initiatives demonstrate a market-based rather than enforcement-focused approach to the trade-sustainability nexus.