Jörn Dosch Balancing Trade Growth and Environmental Protection in ASEAN TKN Synthesis Paper June 2010

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    1. The environment and tradein the Mekong region

    The Mekong River is the worlds twelfth-largest river andSoutheast Asias longest waterway. It originates in Tibetand flows through the Chinese province of Yunnan beforecontinuing southwards, touching the territories of sixcountries and ending in the South China Sea. The GreaterMekong Subregion (GMS) is composed of Thailand, LaoPDR, Cambodia, Myanmar, Vietnam, and two Chineseprovinces: the Guanxi Zhuang Autonomous Region and

    Yunnan Province.i The GMS covers some 2.3 millionsquare kilometres and contains a population of about 245million people. The subregion has been characterized bycentrally planned market systems, but is moving into aprocess of transition towards closer integration withexternal markets and increasing trade orientation as adevelopment strategy.

    In general terms, all of the GMS economies have beencarrying out structural changes from substantiallyagricultural to modern industrial economies (withCambodia, Lao PDR and Myanmar still being largely

    reliant on agriculture and raw materials, though). As aresult, trade flows both within the region andextraregional trading partners have significantly increasedsince 1992.ii This success has been attributed to severalfactors. The first is its outward oriented strategiescharacterized by unilateral reforms to liberalize trade, therehabilitation of infrastructure and institutions, andgreater market access in the region and other developedcountry markets. Secondly, intra-GMS exports have

    grown annually by an average of 19 percent in the periodof 19942006. However, as a share of total tradeintraregional trade still accounts for only 24 percent dueto limited complementarities.iii

    At the same time, illegal trade is still a matter of fact. Mostcrucially, the biodiversity within the GMS continues to bethreatened by rampant and unchecked wildlife and timbertrade. The region is home to some of the richest and mostbiologically diverse habitats in the world. Its forests rangefrom evergreen and semi-evergreen, to mixed deciduousdeciduous dipterocarp,iv panoramic grasslands, swamp

    forests and mangroves.v Four of the six deciduousdipterocarp species in the world are found in thisubregion.vi Approximately 20,000 plant species, 1,200bird species, 800 reptile and amphibian species, and 430mammal species also inhabit the region, and more arebeing discovered. For the period 19972007 alone at least1,068 new species were discovered, i.e. two new speciesper week on average every year for the ten-year period.vii

    Achieving a balance between trade and investmenliberalization and environmental protection is one of thekey challenges facing the states of the GMS. All Mekong

    states have embarked on far reaching trade liberalizationprograms, driven byor as a requirement ofWorldTrade Organization (WTO) membership, membership ofthe Association of Southeast Asian Nations (ASEAN) FreeTrade Area or other international factors, as well aunilateral liberalization, e.g. in Cambodia, where tariffs

    were reduced significantly even before WTO accessionand being mandated by ASEAN. However, traditionallyenvironmental concerns have not been a primary policy

    BalancingTrade Growth and EnvironmentalProtection in ASEAN:Case studies

    from the Mekong subregion

    Jrn DoschJune 2010

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    focus of the subregions governments. As a UNDevelopment Program study puts it:

    The common challenge facing the GMS ... is to balance

    the three dimensionseconomic, environmental andsocialof sustainable development. The GMScountries cannot afford the grow now, clean up laterapproach experienced in the more advanced economiesin the region and elsewhere in the world.viii

    2. Environmental challenges

    An important focus cooperation in the GMS has beenhydropower and the setting up of regional power grids tosupport regional power trade. The sustainable utilization of

    water and natural resources in the Mekong basin is directlyand inevitably linked to human survival in the region.Energy securityand trade in energyis mainly related tothe promising, but not uncontroversial, issue ofhydroelectric power. The development of hydropower hasresulted in the threeADB and private sector co-fundedLao PDR-based power plants: the Theun HinbounHydropower Project, which started commercial operation inMarch 1998; the Nam Leuk Hydropower Development,

    which was completed in May 2000; and the Nam Theun 2Hydroelectric Project, which began supplying energy toThailand in mid-March 2010.ix A number of other

    hydropower dams are being planned or are underconstruction in various GMS countries. In several cases,these projects these projects are carried out with intraregionalinvestment, for instance Chinese foreign direct investment(FDI) in Cambodia and Vietnamese FDI in Lao PDR.

    Another focal point is the development of logistictransportation in the region, particularly the introductionof nine GMS economic corridors, which has prioritized asthe most important program in the region in to facilitateand enhance regional trade and investment. With thefinancial support of the ADB and some Northeast Asian

    countries, particularly Japan and China, several items ofphysical infrastructure have already been put in place toestablish these economic corridors.

    However, the development of transportation infrastructureshas contributed to environmental impacts, including soilerosion, and direct impacts on wildlife through increasedpressure from illegal trade, overexploitation of forestresources through unsustainable logging, etc.x

    Among the most pressing concerns is climate changeTemperature and other climatic variables are expected tochange significantly, causing changes in rainfall patternsand daytime and night time temperatures. A study by

    Eastham et al. predicts a basin wide temperature increaseof 0.79C and an increase in flooding in all parts of thebasin by 2030, with the greatest impact in downstreamcatchments on the main stream of the Mekong River.xi

    While it is true that the quantity of environmental policiesand regulations in the GMSas almost everywhere in the

    worldhas increased due to the pressure and lobbying oboth international and domestic stakeholdersenvironmental ministries or equivalent agencies in theregion are often ill-equipped either to enforce existingregulations or to design, implement, monitor, inspect andenforce new effective environmental polices.xiFurthermore, the protection of the environment is regardedas a niche area and assigned to often powerless ministries ofthe environment that usually find themselves in the lowerranks of the government hierarchy. Few countries effectivelymobilize other line ministries to this challenging task.

    3. Policy initiatives to protectthe environment and theireffectiveness

    The political rhetoric is clear and straightforward:

    In the GMS, which holds some of the most importantnatural forests and biodiversity in the worldprotecting the subregions wealth of natural resourcesis a major challenge in the face of efforts of GMScountries to achieve faster economic growth.xiii

    It is correct to say that environmental issues have receivedsome attention from GMS leaders, who have agreed insummit meetings to improve cooperation in addressing

    environmental challenges common to the region.

    For example, at a special meeting of the GMS ministers ofthe environment in Shanghai in May 2005, the GMS CoreEnvironment Program (CEP) was launched to ensurestronger coordination in conserving natural systems andmaintaining the quality of the environment. Under theCEP, a Biodiversity Conservation Corridors Initiative (BCI)is being implemented to protect high value terrestriabiodiversity and protected areas by establishing sustainable

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    management practices and restoring habitat connectivity inthese areas. Measures for reducing poverty amongcommunities living in or near the economic corridors,defining appropriate land use and restoring connectivity of

    ecosystems will be undertaken in six BCI pilot sites.xiv

    3.1 Timber and wildlife trade

    Particular attention has been given to forest conservation.Today the most common forest conservation mechanism

    within the GMS is the establishment of protected areas.Through its Global 200 project, the World Wildlife Fundfor Nature (WWF) identified approximately 200ecoregions that are outstanding examples of biodiversity,six of which are found in the GMS.xv Within these

    ecoregions, pockets of protected areas were establishedcovering 533 percent of the total area of each ecoregion.

    However, despite the existence of these five designatedecoregions, almost all of them are being threatened invarying degrees by logging and the hunt for wildlife. Forexample, in the Cardamom Mountains rainforests, illegallogging even in protected areas is causing widespreaddegradation of the ecoregion. Excessive capture of wildanimals throughout Cambodia and Thailand to meet theregional and international demand is also threatening theregions biodiversity. The rampant and largely unchecked

    trade in timber and wildlife is fuelled in large part byaccelerating demand within the region and globally. Overthe past two to three decades, affluence in the subregion asa result of market liberalization, particularly in China,Thailand and Vietnam, grew. This growing affluence,coupled with competing demand from Japan, the UnitedStates and Europe, placed great stress on the biodiversityof the GMS as large commercial interests take advantageof the huge demand and the local populace continue torely it for their livelihood.xvi

    Yet in spite of the existing legislative efforts to stop

    deforestation, the initiatives of NGOs to document theproblem, the warnings of forestry experts, and thediscussions among senior officials in a number ofcountries, nothing is currently under way that seems likelyto halt the destruction of the remaining tropical naturalforests of Southeast Asia. International organizations havebeen set up to support sustainable forestry, particularly,the International Tropical Timber Organization, which issupposed to develop and monitor good practices in

    sustainable forestry. However, it seems that thiorganization, based in Japan, has had little impact apartfrom its monitoring function.xvii

    The situation with regard to illegal wildlife trade is equallydaunting. Smuggling ranges from live animals and plants tosupply the pet and horticulture trades to wildlife meats forluxury foods for the wealthy and traditional Asianmedicine, to wildlife derivatives such as ivory, pelts andbones to make clothing and medicines. Rich in biodiversityboth the Mekong subregion and Southeast Asia as a wholeare a source, transit and destination region for the illegal

    wildlife trade that is devastating the regions biodiversityPopulations of many Southeast Asian wildlife speciesincluding tigers, Asian elephants, pangolins, and freshwaterturtles and tortoises, are declining sharply due to their highcommercial value in the illegal wildlife trade. The pangolinis the most heavily traded mammal, while big cats and theirbody parts are still regularly found in trade.xviii

    While coordinated intergovernmental action against illegawildlife trade is absent from the official cooperation agenda inthe Mekong subregion, it is addressed in the broader contextof ASEAN. A core initiative has been the ASEAN Regional

    Action Plan on Trade in Wild Fauna and Flora 20052010 which addresses common issues of enhanced lawenforcement networking, interagency cooperationstrengthened national legislation and increasing theavailability of scientific information to guide wildlife trademanagement by CITES (Convention on International Tradein Endangered Species of Wild Fauna and Flora) authorities

    All GMS states are signatories to CITES, which regulates theinternational trade of endangered species through the listingof such species in three Appendices, classified according to

    whether they should not be sold commercially or sold inlimited quantities, based on findings by scientific authoritythat export will not be detrimental to the survival of thespecies.Theplanalso prioritizes engagement withcivil societyto raise awareness of issues of legality and sustainability with

    industry groups, traders and local communities involved in wildlife trade.xix In December 2005 the ASEAN WildlifeEnforcement Network (ASEAN-WEN) was launched as thetask force of the Regional Action Plan.xx

    3.2 Climate change

    All GMS states have ratified the United NationFramework Convention on Climate Change and the

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    Kyoto Protocol. Because of the underlying climate-relatedrisks confronted by the GMS countries, each country hasmoved towards the integration of climate change intotheir respective national policy frameworks.

    In November 2007, based on its understanding of theregions vulnerability to climate change, ASEAN made acommitment to specifically address climate change andidentified appropriate mitigation and adaptation measuresthrough the Singapore Declaration on Climate Change.Economic approaches chosen for this goal are financialsupport and cooperation for capacity building; thedeployment of clean technology in the region throughvarious means, such as investment, technical and financialassistance, and technology transfer; and the developmentand expansion of policy and measures, includinginnovative instruments and financing mechanisms forenvironmental management, to promote sustainablepatterns of consumption and production among others.These commitments have yet to find their way intotrading arrangements in the Mekong region.

    According to the Mekong River Commission (MRC),xxi

    much needs to be done if the Mekong countries are toadapt to the challenges presented by climate change. TheMRC and ASEAN are currently in discussion on apossible cooperative agreement that will be discussedduring the First Mekong River Commission Summit2010. The MRC recognizes that the ASEAN and otherregional arrangements have facilitated increased levels ofenvironmental cooperation, and as this happens, there isan increasing demand from other stakeholders to havetheir voices heard in the management of natural resources,particularly on actions related to climate change.xxii

    4. The limits of intraregionalcooperation onenvironmental sustainability

    One of the most crucial issues of intraregional cooperationon trade and investment that potentially undermines theenvironmental sustainability of the region is the absence ofany legally binding and enforceable commitment to theenvironment.

    In the tradition of the ASEAN Way of consensus-basedand non-binding decision making, all existing regional

    agreements in the GMS and within ASEAN areembedded in soft law and hardly enforceablepartly dueto the lack of a sanctions mechanism. The majority of

    ASEAN states struggle in the field of effectiv

    administration, which affects the enforcement of nationallaws and the fulfilment of international obligations alike

    Whereas Singapore is the only state in the region that haenforcement capacity comparable to (or even better than)the average Western developed country, Cambodia, forexample at the other end of the spectrum, suffers fromdeeply rooted dysfunctions in the countrys administrativeand judicial structures. Although the current process ostrengthening ASEAN (based on the ASEAN Charter andthe implementation of the Southeast Asian Community)might be helpful in respect to a more effectiveenvironmental policy in the region, success in the fightagainst illegal logging, forest fires, overfishing, etcdepends to a great extent on an overall improvement inthe administrative, legal structures and capacities of thecountries in the region.xxiii

    While the Roadmap for an ASEAN Community 20092015xxiv is very detailed in outlining the significance ofenvironmental issues (in part D) and lists dozens of actionpoints, the document lacks explicit strategies onreconciling trade and environment. The Roadmapsmission statement on the environment at least hints at

    this link: ASEAN shall work towards achieving sustainabldevelopment as well as promoting clean and greenenvironment by protecting the natural resource basefor economic and social development including thesustainable management and conservation of soil

    water, mineral, energy, biodiversity, forest, coastal andmarine resources as well as the improvement in waterand air quality for the ASEAN region. ASEAN willactively participate in global efforts towards addressingglobal environmental challenges, including climate

    change and the ozone layer protection, as well adeveloping and adapting environmentally soundtechnology for development needs and environmentasustainability.

    However, the organization seeks to pursue this purposewithout impinging on competitiveness, or social andeconomic development based on the principle of equity,flexibility, effectiveness and common but differentiatedresponsibility.xxv

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    While strongly promoting the idea of a Green ASEAN,the Fourth ASEAN state of the environment report 2009confirms that a truly balanced approach to the threedimensions of sustainable developmenteconomic,

    social and environmentalis not yet in reach withinASEAN:

    The greening of the ASEAN economy requires ASEAN to increasingly pursue market basedapproaches. The potential for trade in environmentalgoods and services are huge, and is certainlysustainable in the longer term, compared to theconventional exploitative use of ecosystem resources.However, as developing nations, with about 185million people in ASEAN still earning less than US$2a day, economic growth and social development shallremain a priority.xxvi

    Nonetheless, the report is the most detailed andcomprehensive ASEAN document to date that addressesenvironmental challenges. The growing emphasis on theenvironment is not least the result of increasing lobbyingon the part of civil society groups, who have recentlyproposed to establishment of a fourth pillar of cooperationand foundation of the Southeast Asian Community, the

    ASEAN Environmental Pillar.xxvii At the core of thisinitiative is the proposed framework for an ASEANCivilSociety Dialogue on the Environment, which asksgovernment officials to prepare a blueprint that commitsthe member states to place international best practices onenvironmental sustainability at the center of decision-making.xxviii Transnational civil society lobbying hasemerged as new pro-environment push factor, but, at themoment, ASEAN policymakers view this with scepticism,if not outright concern.

    Despite the commitments made by ASEAN, anexamination of its interventions reveals that suchcommitments have yet to be transformed into actions that

    enable capacities for resilience.

    5. Recommendations

    5.1 Wildlife and timber trade

    One of the challenges remains the fact that thedetermination of whether wildlife and timber trade is legalor illegal depends on existing national legislation,

    regulations, and policies that control and regulate suchtrade. As international concern for the conservation of thebiodiversity in the GMS grew, the various GMS statesinstituted measures through legislation or policy setting

    aimed at conserving such biodiversity, of which thecontrol or regulation of wildlife and timber trade is anecessary component. Further improvements tolegislation and enforcement could be made as follows:

    GMS countries should negotiate a new protocoto the Cross-Border Transport Agreemenrecognizing the need to incorporate the controland regulation of wildlife and timber trade intothe system. The parties could agree in the protocoor a separate agreement to coordinateconservation laws and policies across thesubregion. This means that existing systemshould be reexamined in the context of how theseshall be applied across the subregion. Bespractices should be identified and evaluated ontheir usefulness if applied across the GMS.

    For this purpose, GMS countries should aim to:

    coordinate conservation activities acrosecoregions and increase research and capacitybuilding to gather data on the status oparticular ecoregions;

    coordinate subregional enforcement throughASEAN-WEN and ensure close cooperationamong customs authorities;

    create a single database of all laws related toforest and biodiversity conservation, penalaws on illegal trade of wildlife and timberand descriptions of prohibited species; and

    establish harmonized marking rules andstandards for legally traded timber and

    wildlife and establish a system whereb

    customs authorities have immediate access tothe records of conservation authorities.

    5.2 Climate change

    National actions of countries in the Mekong region, suchas Vietnam, Thailand and Cambodia, have provided fortrade-related mechanisms aimed at addressing climatechange challenges, e.g. accessing support through theClean Development Mechanism provided by the Kyoto

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    Protocol, establishing market mechanisms to promote theuse of alternative energy sources, and energy managementfor the export of electricity. But data is unclear as to

    whether such national actions can be attributed to any

    ASEAN intervention.

    Overall, the stakeholders of the Mekong River haveasserted their rights and have made known their aspirationof having their voices heard specifically on matters relatedto natural resource management and climate change. Thishas been taken into account by the MRC and has beenfactored into the plans for the first Mekong River Summitin 2010. To facilitate synergy and coherence, a cooperativeagreement on climate change interventions may need tobe forged among the MRC, ASEAN and the GMS. Amultilateral cooperative agreement on climate changeamong these institutions might pave the way for bettercohesion, synergy and integration of climate changeconcerns in trading and environmental interventions.

    Given these findings, the following recommendations canbe made:

    Existing and proposed trading mechanisms andresulting projects and programs should besubjected to climate risk assessment. Tradingarrangements, be they in the form of marketaccess, emissions trading, sectoral approaches orthe setting of standards, should consider thevulnerability and exposure of people in theMekong region to climate hazards and to hazardsthat may result from mitigation and adaptationprojects. This recommendation presents anactionable option if ASEAN is truly commitmedto being a people centered organization. However,it appears that environmental and climate changeconcerns are only token commitments, since theyare not embodied in the organizations formal andbinding free trade agreements. Many of the

    commitments appear as statements in ministerialmeeting speeches and minutes of meetings, buthave few or no concrete manifestations.

    However, given that many of the comprehensiveagreements on economic cooperation/partnershipentered into by ASEAN provide room fordiscussions on specific areas of economic cooperationin the subcommittees created under comprehensiveagreements, there is room for intervention.

    It cannot be denied that ASEAN is cognizant oits critical role in addressing climate changechallenges. A way forward for the ASEANSecretariat is the mainstreaming of climate change

    in the ASEAN Institutional Framework foEconomic Cooperation. This will require arethinking of the interface between the Economicand Socio-Cultural Communities way of workingunder the Roadmap for an ASEAN Community20092015.

    The integration on climate strategies in traderelated measures under specific agreements canserve as an instrument for mitigation andadaptation. Trade approaches for mitigation caninclude, for example, the establishment of an

    ASEAN unified greenhouse gas inventory systemthat can be included in the product-specific rulesof trade agreements. This will, it is hoped, put acurb on environmental dumping.

    Trade driven technologies must ensure thaadaptive capacities are enhanced through theprocess of technology transfer and avoid anytendency to foster dependency.

    The principles of and actions on adaptation andmitigation should be embodied in formal andbinding trading arrangements.

    As climate change is a complex issue, anyinnovation may require thinking outside the boxChallenging regional integration as a means toaddress climate change concerns, alternativemodels of integration and economic polygonsmay be needed by areas like the Mekong RegionHence, apart from regional integration modellike ASEAN, it is recommended that subregionalarrangements (i.e. Brunei DarussalamIndonesia

    MalaysiaPhilppines ASEAN East Growth AreaGMS, Sijori Growth Triangle), transregional/interregional cooperation (i.e. ASEANEU FreeTrade Agreement, ASEAN+3, ASEANAustraliaNew Zealand Free Trade Agreement), andsolidarity-based arrangements can be explored tostrengthen cooperation on climate change.

    The menu for trade-related measures inadaptation is limited. Given the challenges faced

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    by vulnerable people such as those in the Mekongregion, the innovation, flexibility and dynamismsuggested byThe Stern reviewxxixwill be needed inpolicy trade reform to address adaptation needs.

    Development projects entered into under tradeagreements must ensure that interventions do notfurther increase the exposure and vulnerability ofpeople and livelihoods to climate hazards.Technology inputs must ensure that adaptivecapacities are enhanced rather than developingdependency on those with whom they trade.Trade liberalization as an approach to economicgrowth must ensure that the opening of marketsdoes not sacrifice the livelihoods of the mostvulnerable sectors. And as alternative options forindustries are introduced as natural resources arechallenged by climate change, e.g. mining as analternative to agricultural production, theseinterventions should be critically examined in thecontext of a more sustainable framework and withdue consideration for the loss of natural capital.

    References

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    conference proposal, Cha-am, Phetchaburi Province,Thailand, 1820 October.

    ADB (Asian Development Bank). 2007. GreaterMekong Subregion. Draft development effectivenessbrief. Manila. 18 July.

    . n.d. GMS: History and background..

    ASEAN (Association of Southeast Asian Nations).2009a. Roadmap for an ASEAN Community 2009

    2015. Jakarta: ASEAN Secretariat. April..

    . 2009b. Fourth ASEAN state of the environmentreport 2009. Jakarta: ASEAN Secretariat..

    Chandra, Alexander. 2009. The pursuit of sustainabledevelopment through regional economic integration:

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    Eastham, J. et al. 2008. Mekong River basin waterresources assessment: Impacts of climate change. CSIRO

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    Lang, Graeme & Cathy Hiu Wan Chan. 2006. Chinasimpact on forests in Southeast Asia. Journal ofContemporary Asia 36(2): 16795.

    Menzel, Jrg. 2007. Internationales umweltrecht in

    Sdostasien: Vom ASEAN-Way zur aktiven gestaltungregionalen und globalen umweltvlkerrechts? Archiv desVlkerrechts45(4), December: 56696.

    MRC (Mekong River Commission). 2009. Adaptationto climate change in the countries of the Lower MekongRiver basin. MRC technical paper, no. 24. Vientianne.

    . 2010. First Mekong River Commission summit45 April 2010..

    Nam Theun 2. n.d. Nam Theun 2 in Laos begins fullsupply to Thailand. Press release..

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    Stern, Nicholas. 2007. The economics of climate change:The Stern review. Cambridge: Cambridge UniversityPress.

    Thompson, Christian. n.d. First contact in the GreaterMekong: New species discoveries. Hanoi: WWF GreaterMekong. 15 December..

    UNDP (United Nations Development Program). 2007.Sustainable development strategy of the Greater MekongSub-region. New York.

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    Endnotes

    i In terms of geographical coverage, this paper focuses on mainlandSoutheast Asia and treats the Mekong region as a subset of theASEAN region. This means that while Chinas role as a member ofthe GMS is not neglected, it is not a main focus. The terms GMSand Mekong subregion are used interchangeably.

    ii ADB, 2007.

    iii See, for instance, Chandra, 2009.

    iv The Dipterocarpaceaeare a large family of tropical hardwood treethat are long lived and can grow to exceptional sizes. Of thestimated 680 species, only six are deciduous (trees that lose theileaves seasonally).

    v Thompson, n.d.: 3.

    vi These are Shorea siamensi, S. Obtuse, Dipterocarpus obtusifoliuand D. Tuberculatus (Encyclopedia of Earth, n.d.).

    vii Thompson, n.d.: 2.

    viii UNDP, 2007.

    ix Nam Theun 2, n.d.

    x See Syviengxay Orabounes report in TKNs ASEAN Series on Tradand the Environment for a more detailed analysis.

    xi Eastham et al., 2008.

    xii Zhang, 2008: 11.

    xiii ADB, 2007.

    xiv Ibid.

    xv WWF divided the entire planet into 867 terrestrial ecoregions.xvi World Bank, 2005.

    xvii Lang & Chan, 2006: 28; Forest Trends & DFID, 2010.

    xviii Wildlife Alliance, Washington, DC, .

    xix .

    xx .

    xxi MRC, 2009.

    xxii MRC, 2010.

    xxiii Menzel, 2007.

    xxiv ASEAN, 2009a.

    xxv ASEAN, 2009a: 80.

    xxvi ASEAN, 2009b: 2, emphasis added; see also p. 152.xxvii .

    xxviii 2nd ASEAN Peoples Forum & 5th ASEAN Civil SocietyConference, 2009: 1.

    xxix Stern, 2007.

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