A Sustainability Toolkit for Trade Negotiators:

Trade and investment as vehicles for achieving the 2030 Sustainable Development Agenda

2.3 Budgeting

Budgets for implementation are a cross-cutting issue. Budgets for cooperative activities are typically not specified, since the scope of the activities is unknown, but the arrangements under which they are decided should be specified. Budgets for institutions established by trade agreements or environmental cooperation agreements (ECAs) should ideally be spelled out on a predictable basis. Of course, it is difficult to budget for activities that are as yet not certain. But without a predictable budget allocation or process, it is difficult to fulfil cooperative and capacity-building mandates, which typically require multi-year commitments. Similarly, it is difficult to maintain institutional continuity without at least the reasonable expectation of continued funding.

Option 1:Specified budget as part of the trade agreement, side agreement or implementing legislation

This is the ideal where it is possible—where the details of the work to be carried out are clear enough to allow it. Regular stable funding allows the institution to safely undertake long-term strategic activities.

Examples

North America Agreement on Environmental Cooperation

How Commonly Used

Option 2:Budget allocation process specified in the agreement

Allows for some predictability of funding, if not absolute certainty.

Examples

The EU’s cooperative activities under FTAs are explicitly funded through the EU’s national development agencies on a regular funding cycle. For example:

“The European Community financing pertaining to development cooperation between CARIFORUM and the European Community supporting the implementation of this Agreement shall be carried out within the framework of the rules and relevant procedures provided for by the Cotonou Agreement, in particular the programming procedures of the European Development Fund (EDF), and within the framework of the relevant instruments financed by the General Budget of the European Union. In this context, supporting the implementation of this Agreement shall be one of the priorities.” (EU-CARIFORUM ECA, Article 7.3)

How Commonly Used

Option 3:Budget is left on an ad hoc basis

This may work, but the risk is that it can too easily be sidelined, and that the lack of predictability will negatively affect outcomes.

Examples

Any cooperative work under the ECA will be “decided by the Parties on a case-by-case basis and shall depend on the budgets available.” (China-New Zealand Environmental Cooperation Agreement, Article 3.2)

How Commonly Used

Examples

“Each Party shall contribute an equal share of the annual budget of the Commission, subject to the availability of appropriated funds in accordance with the Party’s legal procedures. Neither Party shall be obligated to pay more than the other Party in respect of an annual budget.” (Canada – Chile Environmental Cooperation Agreement, Article 43)

How Commonly Used

Examples

“With the aim of contributing to the fulfilment of the objective of this Section [on cooperation in agriculture, fisheries and forestry], and recognising that cooperative activities as envisaged in the Section will be able to be implemented effectively only when financed with adequate resources, the Parties shall provide, within the limits of their own capacities and through their own channels, adequate resources to support such cooperative activities.

Additional details regarding the provision of resources for the specific cooperative activities that the [Committee established to oversee this section] identifies and develops as part of its annual work program shall be arranged by the [Committee].

Recognising the importance of maintaining access to stable available resources, the [Committee] shall consider options for securing joint regular funding that could be utilised in implementing its cooperative activities.” (Korea – Australia FTA, Article 16.12)

How Commonly Used

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