How globalised should one get?

Carnegie Europe in a latest report by Suyash Rai and Anirudh Barman have brought out a comprehensive overview of India's engagement with globalization in trade, climate negotiations, data sovereignty, global finance and digital taxation. 

Titled India:Testing Out New Policies on Globalization", it concludes that India's engagement with the global order has changed since 2010 - towards a more inward looking strategy. 

What should a country's strategy be with respect to global economic engagement? Should it be based purely on national interest or working towards a larger "global good"? How much must one liberalise and when? How should we decide on the pace of liberalisation? How do we account for the winners and losers of globalization? Should internal regulatory reform in sectors be driven by an outward looking reform oriented policy or an inward looking policy? Should domestic reform be driven by external pressures? How important are national champions in a country's growth trajectory? Should they grow in a protected environment or facing the globalized world? How does one set the agenda in global rule making? Will being inward looking disengage a country from crafting the rules? Is there a balance that can be brought between becoming globally competitive and liberalisation? 

Environmental protection, domestic implementation and trade - there is a link!

(https://www.bloomberg.com/news/articles/2022-02-10/u-s-requests-mexico-talks-on-marine-environmental-obligations)

An interesting trade issue with an environmental tinge has come up of late. It is reported here, here and here. The United States has sought consultations with Mexico under the provisions of the United States Mexico, Canada Agreement related to the implementation of environmental protection to an endangered species of fish (vaquita porpoise) and illegal trafficking of totoaba fish. It was based on this complaint by environmental groups.The Mexican laws prohibit it but the claim here is that it is not enforced well and the illegal activities endangering the environment exist.

I am not going into the facts of the case but more on the issue of provisions of trade agreements and what impact they can have on possible international actions. the USMCA is essentially a trade agreement but has a number of chapters covering digital trade, state-owned enterprises, competition, anti-corruption, good regulatory practices, labour and environment. Traditional FTAs do not cover as many areas or atleast do not have deep provisions in relation to most of these subjects.

A number of interesting issues arise when one sees this type of dispute coming up in the context of trade agreements. The link between the protection of the environment and trade effects comes to the fore:

1. Provisions of an international trade agreement can be used for enforcing environment standards as well as protecting the environment per se. the Environment chapter under the USMCA is quite broad in its scope and applicability.

2. Under Article 24.4.1 of the USMCA no "Party shall fail to effectively enforce its environmental laws through a sustained or recurring course of action" or inaction in a manner affecting trade or investment between the Parties, after the date of entry into force of this Agreement." It is also pertinent to note that for purposes of dispute settlement, "a panel shall presume that a failure is in a manner affecting trade or investment between the Parties, unless the responding Party demonstrates otherwise." Thus, there is a prima facie case that the responding party's failure to effectively enforce its environmental lawshas affected trade or investment. Thus, the complainant has to only establish that there is a failure to effectively enforce domestic environmental laws through a sustained or recurring course of action - a rather low threshold.

3. Is this a dispute only about protecting an endangered species or about impacting trade in terms of fishing? If it is the former, is it covered by a trade agreement? If it is the latter, what conditions re necessary to establish the link between non-implementation and its affect on trade or investment?

4. Sans this agreement, the battle to protect the vaquita would probably be a domestic one (in local courts) or in fora that are provided by multilateral environmental agreements. The USMCA has provided an additional, international forum. Is this the real strength of trade agreements - the ability to take up a wide range of issues of environment, labour, state owned enterprises in panel disputes to ensure compliance?

5. Whether this dispute would go all the way to a dispute stage is debatable. What it brings to the fore is the potential for a wide range of issues including weak enforcement of domestic laws in international fora. While ultimately the decision may be in favour of the respondent party, the capacity and preparation to engage with an additional level of compliance can be daunting and counter-productive for many countries.

Some would argue the environment is critical and endangered species must be protected irrespective of how we do it. The issue is what is the right forum for it.