RTAs and The Environment:
Internalizing the Externalities at
Regional Level
by
LAKSMI DHEWANTHI
Ministry of Environment, Indonesia
Tokyo , 19-20 June 2007
1
Key points
 Background
 What are the main environmental
issues in the region?
 Can trade internalize the
externalities?
 Efforts at Regional level
 Closing Remarks
2
Background
 Trade has the potential to stimulate economic, social
and environment. Yet, to ensure that this trade is
environmentally sustainable is a major challenge;
 In this regard, it is necessary to ensure that trade
liberalization does not have a negative impact on the
environment, and that economic growth is
environmentally sustainable;
 Increase negotiation on and discussion of trade and
environmental issues  increased the challenges
confronting developing countries as they attempt to
formulate coherent trade and environment policies.
3
Indonesia
Over-exploitation of Natural
Resources and Environment in
the last 3 decades
trade contribute to better natural resources and environment? or
Weak environmental management lowering competitive advantage
in trade?
4
What are the main environmental
issues the region?
Rice, pulp and paper, and palm oil are among other key trade
commodities, not only for Indonesia, but for most of countries in
the ASEAN region
ENVIRONMENTAL IMPACTS
•
•
•
•
•
Increase in Land Conversion (land use shifting)
Decrease chemical fertilizer/pesticides use
Haze pollution
Marine pollution
Lost of biodiversity
5
Can trade internalize the
externalities?
Current environmental condition is due to negative
externalities of development activities, incl. trade.
 Isolating the impacts of trade from the impacts of
other activities is difficult.
 Environmental impact is site and time specific, yet it
also cumulative in nature
ASEAN region: regional environmental impacts
and transboundary environmental impacts (haze,
marine pollution, etc)

 by internalising environmental factors/
impacts into trade policy measurements
6
Efforts at regional level
 No specific references of environmental
measurement within RTAs. Yet it has always
been aimed at fostering regional peace and
stability (incl. environment);
 Development of testing and certification and
development of regional infrastructure;
 Regional cooperation on R&D, and exchange of
information on traditional and environmentally
preferable production methods suitable for
local condition;
7
Efforts…. (2)
 Development of regional strategies for
improving sustainable trade, including
through strengthening south-south trade
 WG-MEAs, a forum to provide extentisive
discuss implementation and development of
MEAs
Haze pollution, Biodiversity, Climate
Change, hazardous waste, POPs, etc
8
ASEAN WG- MEA
 dialogue among member countries on
implementation of MEAs, icl. Conventions:
Basel, Rotterdam, Stockholm, Climate
Change, etc.;
 Raise awareness and build the capacity of all
stakeholder, i.e. information exchange and
dissemination, transfer of knowledge/
technology, training/workshop, and
incentive/financing mechanism.
9
Benefits
 Having regional efforts allow country to
address, both, regional and transboundary
environmental impact;
 Reducing negative impacts by internalizing the
externalities into regional policy framework 
accelerating internal/ national environmental
policy processes;
 Enhancing MEAs implementation, especially
through joint efforts, capacity building,
financing mechanism, dll.
10
Closing remarks
 Trade relating to Environment Issues is only one side
of the coin, in order to achieve and to ensure a “winwin-win” situation  it is need to internalizing
environmental impacts into policy making process at
all levels;
 MEAs as a multilateral poicy framework could be
support by regional comittment and efforts.
 Regional efforts on internalizing the externalities
would able to address environmental impacts
resulting from trade. Yet the capacity building and
technical assistance must result into reasonable
costs.
11
Thank you
12