The two CAFTA-DR countries (El Salvador and Guatemala)  and the two countries with bilateral FTAs (Peru and Chile) that we visited  reflect a range of national per capita incomes. Partners Have Taken Steps to Improve Enviromental Protection, with U.S. Assistance, but Continue to Face Challenges

According to officials in Chile, Peru, El Salvador, and Guatemala, their  countries passed or made changes to their environmental laws and  established or strengthened environmental institutions since signing their  respective FTAs. U.S. agencies worked with these partners under  environmental cooperation agreements to help them build capacity to  meet FTA environmental commitments. Peru

U.S., Peruvian, and NGO officials credit the FTA with helping the country  take steps to improve environmental protection. 2.) 3.) 5.) U.S. Resources for Cooperation Activities Have Declined Since Fiscal Year 2009

U.S. funding resources for FTA-related cooperation activities have  declined since fiscal year 2009, because of a decline in CAFTA-DR  funding and shifting budget priorities. In fiscal year 2013, funding for  cooperation activities to countries under CAFTA-DR was 18 percent of its  fiscal year 2009 level, while funding under the Peru FTA was 41 percent  of its fiscal year 2009 level. For example, cooperation activities in Peru and  CAFTA-DR partner countries received over 90 percent of the almost $151  million of funding for cooperation activities from fiscal years 2004 through  2013. More specifically, countries under CAFTA-DR received over $87  million in funding for cooperation activities from fiscal years 2004 through  2013, and Peru received nearly $49 million from fiscal years 2009 through   Cooperation activities in Chile received over $4 million in funding  2013.since fiscal year 2009, as well. State and USTR Improved Monitoring, but USTR’s Process Lacks Key Elements

Since 2009, State has improved its management and monitoring of U.S.- funded FTA cooperation activities, by working with the Organization of  American States and a private firm that specializes in monitoring and  evaluation. In terms of  the remaining 19 FTA partners, USTR has taken initial steps to improve  monitoring FTA partner country compliance with environmental  commitments—such as developing a monitoring plan. Although the bilateral plan identifies a targeted  set of actions for Peru to undertake to address challenges in its forestry  sector, the lack of performance indicators and time frames for completing  action precludes USTR from having a clear understanding of the extent to  which Peru is meeting its commitments in the bilateral plan. Recommendations for Executive Action

To enhance its ability to monitor partner compliance with FTA  environmental commitments and provide timely and useful information to  help target assistance where it is most needed, USTR should: establish time frames and develop performance indicators to assess  the extent to which Peru’s actions are meeting the commitments of  the U.S.–Peru bilateral action plan to address specific challenges in  Peru’s forestry sector, and work with its interagency monitoring subcommittee to establish time  frames and performance indicators to implement its plan for enhanced  monitoring of implementation of FTA environmental commitments  across all FTA partner countries. Appendix I: Scope and Methodology

To examine steps selected partner countries have taken with U.S.  assistance to implement free trade agreement (FTA) environmental  commitments, we analyzed the structure and provisions of the  environmental chapters of the 11 FTAs that entered into force from 2003  through 2013 to identify the range of their provisions and the procedures,  if any, for the receipt and consideration of public environmental  submissions under those FTAs. We also examined in detail the  environmental chapters in the Chile FTA, Dominican Republic–Central  America–United States Free Trade Agreement (CAFTA-DR), and Peru  Trade Promotion Agreement to identify similarities and differences among  their key environmental provisions. We interviewed officials from the  Office of the United States Trade Representative (USTR), Department of  State (State), and United States Agency for International Development  (USAID) in Washington, D.C., and State, USAID, and host government  and nongovernmental organization (NGO) officials in two CAFTA-DR  countries, El Salvador and Guatemala, as well as in Chile and Peru. To examine U.S. resources to assist partners in implementing  environmental commitments, we collected budget data on funding of FTA  environmental activities from State and USAID.
Why GAO Did This Study

The United States has signed free trade agreements that lower barriers to trade with 20 countries, including 5 Central American countries and the Dominican Republic. Reflecting Congress's interest in balancing commercial interests with environmental protection, the United States and FTA partners have agreed to strengthen environmental protection. In 2009, GAO recommended improved FTA monitoring. GAO was asked for an update.
This report examines, among other things: (1) steps selected partners have taken, with U.S. assistance, to implement FTA environmental commitments; (2) resources to assist partners in implementing environmental commitments; and (3) U.S. agency monitoring of cooperation activities and partner compliance with their FTA environmental commitments.
GAO reviewed FTA environmental provisions and cooperation agreements; analyzed U.S. funding data for cooperation activities from fiscal years 2003 through 2013; and evaluated documentary and testimonial evidence. GAO visited Guatemala and El Salvador, two of six CAFTA-DR countries, and Peru and Chile, and met with U.S., host government, private sector, and NGO officials. GAO selected these countries because they reflect a range of per capita income, U.S. assistance, environmental progress, and challenges.

What GAO Found

The four free trade agreement (FTA) partners that GAO selected for this review all passed environmental laws and established institutions to improve environmental protection, in line with their FTA commitments to strive to improve their laws on and levels of environmental protection. For example, Chile created enforcement agencies and modernized its system for evaluating the environmental impact of projects; El Salvador launched a National Environmental Strategy; and Guatemala created a unit to verify compliance with natural resource protections. According to U.S., Peruvian, and nongovernmental organization (NGO) officials, U.S. assistance has helped Peru improve management and monitoring of its forest resources. However, each FTA partner continues to face challenges in capacity and enforcement of environmental protection.
Peruvian Officials Conduct Timber Inspection
U.S. resources for cooperation activities have declined since 2009 because of shifting priorities. Peru and countries in the Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR) received 90 percent of the roughly $151 million of total funding for FTA cooperation activities from fiscal years 2004 through 2013. CAFTA-DR countries received over $87 million from fiscal years 2004 through 2013, and Peru received nearly $49 million from fiscal years 2009 through 2013. However, in fiscal year 2013, U.S. funding for environmental cooperation activities to CAFTA-DR countries was 18 percent of its 2009 level, and funding for Peru FTA activities was 41 percent of its 2009 level.
The Department of State has improved monitoring of environmental cooperation activities since 2009, and the Office of the U.S. Trade Representative (USTR) developed a plan for monitoring partner compliance with FTA environmental commitments. However, USTR's monitoring lacks timeframes and performance indicators to measure partner progress in meeting FTA environmental commitments. In addition, the U.S.-Peru bilateral action plan addresses specific challenges in Peru's forestry sector and identifies actions for Peru to take, but does not include timeframes and indicators. Lack of timeframes and performance indicators precludes stakeholders and the public from having a clear understanding of the extent to which Peru is meeting its commitments since agreeing to the terms of the bilateral action plan.

What GAO Recommends

GAO recommends that USTR establish timeframes and indicators to assess the extent to which Peru is meeting commitments in the bilateral action plan and establish timeframes and indicators to implement its plan for enhanced monitoring across all FTA partner countries.