Integrating Sustainable Development into Bilateral Trade Agreements

Abstract

It is now well established that trade and environmental policy are complementary in achieving sustainable development. Chapter 2 of Agenda 21 emphasises the need to promote sustainable economic ‘development through trade’. It states that this must be done through ‘a commitment to sound economic policies and management, an effective and predictable public administration, the integration of environmental concerns into decision-making and progress towards democratic government’ (UNESD, 1992, ch. 2, para 2.6). The Johannesburg Plan of Implementation 2002 of the World Summit on Sustainable Development has subsequently reinforced this call. The Preamble to the WTO Agreement commits to multilateral trade liberalisation in the pursuit of sustainable development and purports to protect and preserve the environment. Despite the recognition of this linkage, the current multilateral trading system is littered with the arbitrary and discriminatory use of environmental requirements for trade restrictive purposes as well as environmentally unsustainable free trade. Furthermore, the trade-environment nexus needs to be upheld in all free trade arrangements – whether those arrangements are bilateral, regional, or multilateral. While, this nexus has been enshrined in some multilateral treaties, currently, incorporation of the trade-environment nexus has not been considered at the bilateral level. This paper will examine the prospects and challenges of bilateral economic integration and sustainable development pursuant to GATT Article 24. The paper will argue that integration of sustainable development into bilateral trade arrangements will create new avenues for regional and global trade liberalization and maximise trade-induced sustainable development. The focus of this Paper is on how sustainable development principles can be enshrined in bilateral trade agreements between Australia and India with special reference to the primary sector, specifically agricultural products and natural resources. Both Australia and India are committed to economic development as well as environmental protection yet both countries treat the environment as a non-trade issue. Against this context, the paper will examine (i) the extent to which Australian bilateral trade treaties with India can integrate sustainable development;(ii) explore economic and other implications of focusing on sustainable development in trade treaties; and (iii)illustrate how bilateral preferential trade agreements can serve as stepping-stones for global trade liberalization