FREE TRADE 

AGREEMENTS

Office of the U.S. 

Trade Representative 

Should Continue to 

Improve Its Monitoring 

of Environmental 

Commitments

Report to Congressional Requesters

November 2014

GAO-15-161

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-161, a report to 

congressional requesters

November 2014

FREE TRADE AGREEMENTS

Office of the U.S. Trade Representative Should 

Continue to Improve Its Monitoring of 

Environmental Commitments

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 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.

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. 

View GAO-15-161. For more information, 

contact Kimberly Gianopoulos at (202) 512-

8612 or Gianopoulosk@gao.gov.
Page i GAO-15-161 Free Trade Agreements

Letter 1

Background 4

Partners Have Taken Steps to Improve Enviromental Protection, 

with U.S. Assistance, but Continue to Face Challenges 9

Partners Are Establishing Secretariats to Process Submissions 

Regarding Environmental Issues 23

U.S. Resources for Cooperation Activities Have Declined Since 

Fiscal Year 2009 28

State and USTR Improved Monitoring, but USTR’s Process Lacks 

Key Elements 30

Conclusions 39

Recommendations for Executive Action 40

Agency Comments and Our Evaluation 40

Appendix I Scope and Methodology 42

Appendix II Comments from the Department of Agriculture’s U.S. Forest 

Service 45

Appendix III GAO Contacts and Staff Acknowledgments 46

Table

Table 1: Status of Dominican Republic–Central America–United 

States Free Trade Agreement (CAFTA-DR) Secretariat 

Submissions Received from 2007 to 2014 25

Figures

Figure 1: Per Capita Gross Domestic Product (GDP) for the 

United States and Free Trade Agreement Partner 

Countries, 2012 5

Figure 2: Dairy Production Facility, San Salvador 15

Figure 3: Water Quality Reference Laboratory, San Salvador 16

Figure 4: Wildlife Rescue Center, Petén, Guatemala 19

Figure 5: Pucallpa Checkpoint, Ucayali, Peru 21

Contents
Page ii GAO-15-161 Free Trade Agreements

Figure 6: Numbers of People Attending Outreach Campaign 

Events and Numbers of Submissions Received, 2007 to 

2013 26

Figure 7: U.S. Funding for Cooperation Activities for Free Trade 

Agreement (FTA) Partner Countries for Fiscal Years 

2004 through 2013 29

Abbreviations

CAFTA-DR Dominican Republic–Central America –United States 

Free Trade Agreement

CITES Convention on International Trade in Endangered Species 

of Wild Fauna and Flora

EPA Environmental Protection Agency

FTA free trade agreement

GDP gross domestic product

NAFTA North American Free Trade Agreement

NGO nongovernmental organization

NOAA National Oceanic and Atmospheric Administration

OSINFOR Organismo de Supervision de los Recursos Forestales 

y de Fauna Silvestre

USAID United States Agency for International Development 

USFS Department of Agriculture’s United States Forest Service

USTR Office of the United States Trade Representative 

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Page 1 GAO-15-161 Free Trade Agreements

441 G St. N.W.

Washington, DC 20548

November 06, 2014

The Honorable George Miller

Ranking Member

Committee on Education and the Workforce

House of Representatives

The Honorable Sander M. Levin

Ranking Member

Committee on Ways and Means

House of Representatives

Free trade agreements (FTA) phase out barriers to trade in goods with 

particular countries or groups of countries and contain other commitments 

to open access for services and investment, and have become an 

important component of U.S. trade policy. By 2014, the United States had 

signed free trade agreements with 20 countries, including 5 Central 

American countries and the Dominical Republic as part of a regional 

arrangement known as the Dominican Republic–Central America–United 

States Free Trade Agreement (CAFTA-DR). These 20 countries are as 

diverse as Australia, Chile, Colombia, Honduras, Korea, Morocco, Oman, 

Panama, and Peru. The United States is also in negotiations on a 

proposed regional Asia-Pacific trade agreement, known as the TransPacific Partnership, and a free trade agreement with the European Union 

known as the Transatlantic Trade and Investment Partnership.

Congress expressed an interest in balancing U.S. commercial interests 

with other goals, including environmental protection, when it gave the 

President trade promotion authority in 2002.1

 1

Bipartisan Trade Promotion Authority Act of 2002, 19 U.S.C.A. §§ 3801-13,

In addition, the May 10, 

2007 Bipartisan Agreement on trade policy between congressional 

leadership and the administration committed the United States to 

negotiate for strengthened environmental provisions in FTAs, among 

other things. For example, the May 10, 2007 agreement called for FTA 

environmental obligations to be enforced with the same remedies, 

procedures, and sanctions as FTA commercial obligations. In addition, 

the agreement recognized a previous U.S. commitment to work with Peru 

on comprehensive steps to address illegal logging and to restrict imports 
Page 2 GAO-15-161 Free Trade Agreements

of products that are harvested and traded in violation of the Convention 

on International Trade in Endangered Species of Wild Fauna and Flora 

(CITES). Certain FTAs also create a process that allows members of the 

public to formally raise concerns if they believe that a party is not 

effectively enforcing its environmental laws. This is known as a “public 

submissions” process. 

In 2009, we issued a report on four of the first FTAs concluded under 

2002 trade promotion authority and made recommendations to improve 

how U.S. agencies monitor implementation of those FTAs.

2 We 

recommended that the Department of State (State) work with other 

agencies to develop a more structured approach to manage and monitor 

the implementation of environmental projects and that the Office of the 

United States Trade Representative (USTR), in cooperation with other 

agencies, prepare updated plans to implement, enforce, monitor, and 

report on compliance with and progress under the FTAs’ environmental 

provisions. In 2012, we found that State and USTR were making progress 

to address our recommendations.3

You asked us to provide an update on agency and partner actions, 

including the current status of partners’ implementation of FTA 

environmental commitments, and to review U.S. monitoring and 

enforcement efforts. This review of FTA environmental provisions 

examines (1) steps selected partners have taken, with U.S. assistance, to 

implement FTA environmental commitments; (2) selected partner 

mechanisms to process public environmental submissions; (3) U.S. 

resources to assist partners in implementing environmental commitments; 

and (4) U.S. agency monitoring of cooperation activities and partner 

compliance with their FTA environmental commitments.

Additional information on monitoring 

partner progress and compliance with FTA environmental provisions is

discussed later in this report.

 2

GAO, International Trade: Four Free Trade Agreements GAO Reviewed Have Resulted 

in Commercial Benefits, but Challenges on Labor and Environment Remain, GAO-09-439

(Washington, D.C., July 10, 2009).

3 For further information on the steps agencies had taken by that point, see GAO-09-439.
Page 3 GAO-15-161 Free Trade Agreements

To address these objectives, we reviewed text and associated annexes of 

the environmental chapters of 11 FTAs that went into effect (that is, 

entered into force) from 2003 through 2013; the May 10, 2007 Bipartisan 

Agreement; and reports and other FTA documents such as environmental 

cooperation agreements, work programs, and FTA implementing 

legislation. 

We met with officials from State and USTR who are, respectively,

responsible for implementing and monitoring partner cooperation projects 

and enforcing compliance with FTA commitments. We also met with 

officials from other U.S. agencies involved in carrying out environmental 

cooperation activities with FTA countries, including the United States 

Agency for International Development (USAID), the Department of the 

Interior (Interior), the Department of Agriculture’s U.S. Forest Service, the 

Environmental Protection Agency (EPA), the Department of Commerce’s 

National Oceanic and Atmospheric Administration (NOAA), and the 

Department of Justice (Justice). We also made site visits to El Salvador, 

Guatemala, Peru, and Chile, where we met with U.S. and host 

government officials and representatives of the private and public sectors, 

to obtain firsthand perspectives and current information on partner efforts, 

the nature and impact of cooperation activities, and ongoing challenges. 

We selected countries for site visits and associated FTAs on which to 

focus based on several factors, for example FTAs that entered into force 

before the May 10 2007 Bipartisan Agreement (CAFTA-DR, which 

includes El Salvador and Guatemala) and after (Peru), and to follow up 

on a country that had been one of the four covered in our 2009 report 

(Chile). These countries also reflect a range of income, U.S. assistance,

environmental progress, and challenges. We also met with officials at the 

CAFTA-DR Secretariat for Environmental Matters, which is responsible, 

on behalf of CAFTA-DR signatories, for receipt, evaluation, and reporting 

on environmental submissions. In Geneva, Switzerland, we met with 

officials, including the Secretary General of CITES, since protection of 

certain CITES-listed species is specifically referenced in the Peru FTA, as 

well as with officials from the United Nations Environment Program and 

the World Trade Organization. We also discussed monitoring of CAFTADR partner progress with officials from the Organization of American 

States, in Washington, D.C. To obtain information on U.S. resources to 

help FTA partners improve environmental protection and meet FTA 

commitments and to assess U.S. agency monitoring, we interviewed 

USTR, State, and USAID officials, and obtained and reviewed data and 

documents. See appendix I for further details of our scope and 

methodology.
Page 4 GAO-15-161 Free Trade Agreements

We conducted this performance audit from August 2013 to November

2014 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

FTAs—which phase out barriers to trade in goods with particular 

countries or groups of countries and contain rules designed to improve 

access to foreign markets for U.S. goods, services, and investment—

remain a major component of U.S. trade policy. Collectively, according to 

USTR, FTAs with 20 countries accounted for about 40 percent of U.S. 

trade in goods in 2013. Eleven of these 20 FTAs were negotiated under 

trade promotion authority in the Trade Act of 2002, went into effect from 

2003 through 2013, and involved 16 partner countries.4

The 20 FTAs involve partners ranging from high income countries such 

as Australia, Bahrain, Singapore, Chile, Korea, Oman, and Canada to 

lower middle income countries such as Morocco, El Salvador, Guatemala, 

Honduras, and Nicaragua. Colombia, Costa Rica, the Dominican 

Republic, Jordan, Mexico, Panama, and Peru are upper middle income 

countries. 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. See fig.1.

 4

These 11 FTAs include Chile, Singapore, Australia, Morocco, Bahrain, CAFTA-DR 

countries (El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic, and 

Costa Rica), Oman, Peru, Korea, Colombia, and Panama.

Background
Page 5 GAO-15-161 Free Trade Agreements

Figure 1: Per Capita Gross Domestic Product (GDP) for the United States and Free Trade Agreement Partner Countries, 2012

Chile, El Salvador, Guatemala, and Peru also face a range of 

environmental challenges.

• Chile—According to Chilean officials, the country’s environmental 

challenges (described later in this report) relate to natural resource 

and extractive industries, including mining, fishing, forestry, and 

agriculture. For example, Chile’s agriculture and mining sectors are 

water-intensive, placing strains on its water supply. Chile is a top 

producer and exporter of fish, and mitigating the fishing sector’s water 
Page 6 GAO-15-161 Free Trade Agreements

pollution and impact on ecosystems is a challenge.5

• El Salvador and Guatemala—countries under CAFTA-DR. According 

to Salvadoran and Guatemalan officials, environmental challenges 

facing one or both of these countries include preservation of 

biodiversity and threats to endangered species, water and air 

pollution, deforestation, and degradation of marine resources. To 

assist these countries in addressing their environmental challenges 

and FTA commitments, the United States and these countries have 

been working together under the framework of the FTA as well as a 

February 2005 environmental cooperation agreement and related 

work programs.

The United 

States and Chile have been working together under the framework of 

the FTA as well as a June 2003 environmental cooperation 

agreement and related work program to assist Chile in addressing its 

environmental challenges and FTA commitments.

• Peru—Peru has about 13 percent of the world’s tropical forests. 

These forestry resources include forestry concessions used for 

logging, natural protected areas, and reservations for indigenous 

communities. 6 Peru’s myriad environmental challenges include 

deforestation and water contamination from small mining operations. 

Because of concerns related to illegal logging, the FTA included an 

annex on forest sector governance. To address Peru’s environmental 

challenges and FTA commitments, the United States and Peru have 

been working together under the framework of the FTA as well as a 

July 2006 environmental cooperation agreement and related program.

 5 For further information on Chile’s and Peru’s environmental challenges see USTR, 

Interim Environmental Review, Trans-Pacific Partnership Agreement (August 2013), 

accessed August 28, 2014, http://www.ustr.gov/trade-topics/environment/environmentalreviews.

6

According to the Society of American Foresters, The Dictionary of Forestry, a forestry 

concession is “a contract, license, or permit granted to a firm or a person to extract and 

market timber (timber concession) or other produce commercially from a defined area of 

the forest within a given period—note a timber concession may specify the number, type, 

and size of tree that may be harvested.” Accessed August 28, 2014, 

http://dictionaryofforestry.org/dict/term/forest_concession.
Page 7 GAO-15-161 Free Trade Agreements

The 11 agreements negotiated under trade promotion authority include 

environmental chapters as part of the agreements. 7

The Peru FTA, which entered into force following the May 10, 2007 

Bipartisan Agreement, also includes commitments that each party shall 

adopt, maintain, and implement laws, regulations, and other measures to 

fulfill certain obligations under seven listed multilateral environmental 

agreements, and that the parties will not fail to enforce their laws, 

regulations, and other measures to fulfill those multilateral environmental 

The environmental 

chapters contain several provisions that call for strengthened 

environmental protection and allow for increased public participation in 

the implementation of environmental provisions. For example, the 11 

FTAs include provisions for formal opportunities and mechanisms for 

public participation in government environmental decision making. Four of 

the 11 FTAs additionally provide for submissions to a secretariat by 

persons or organizations of an FTA partner country asserting that the

FTA partner country is failing to effectively enforce its environmental laws; 

the secretariat is to consider these claims and may develop a report, 

known as a “factual record,” about them. CAFTA-DR, which entered into 

force in 2006, was the first to include such a mechanism, and the Peru 

FTA also includes one. The three FTAs that were the focus of our review 

(Chile FTA, CAFTA-DR, and Peru FTA) contain provisions regarding 

partner countries’ levels of protection and strengthening of their 

environmental laws. For example, these three FTAs commit each partner 

country to ensure that its laws provide for high levels of environmental 

protection and to strive to continue to improve those laws or levels of 

protection; to strive to ensure that it does not waive or otherwise derogate 

from such laws in a manner that weakens or reduces the protections 

afforded in those laws as an encouragement for trade with another party; 

and to ensure that judicial, quasi-judicial, or administrative proceedings 

are available under its laws to sanction or remedy violations of its 

environmental laws. Finally, each of the three FTAs commits the parties 

“to not fail to effectively enforce its own environmental laws, through a 

sustained or recurring course of action, in a manner affecting trade 

between the parties.” This provision is enforceable, meaning a party that 

fails to comply is subject to dispute settlement, under the respective FTA.

 7

According to USTR, the provisions in FTAs provide for an FTA’s entry into force through 

an exchange of formal diplomatic notes among the parties. In the United States, the 

President must first determine that the trading partner has come into compliance with 

obligations that will take effect when the agreement enters into force.

Recent FTAs Contain 

Environmental Provisions 

in Environmental Chapters
Page 8 GAO-15-161 Free Trade Agreements

agreement obligations. Unique among FTAs, it also contains an annex on 

forest sector governance with detailed requirements pertaining to 

improved forest management and protection of CITES-listed endangered 

species, including big-leaf mahogany and Spanish cedar.

According to USTR officials, an Environmental Affairs Council, involving 

both trade and international environment ministries of the FTA parties 

(State and USTR in the United States), is charged with overseeing the 

FTA environmental chapter. Each of the 11 FTAs includes an article on 

environmental cooperation that provides for, among other things, 

negotiation of a separate agreement on environmental cooperation 

among the parties to the FTA. State has the lead in negotiating and 

administering these agreements, which have typically been concluded 

about a year after the FTAs enter into effect; implementation is overseen

by an Environmental Cooperation Commission. 8 Environmental 

cooperation is programmed through agreed-upon work plans covering 

specified periods, and involves such activities as professional exchanges, 

workshops, and in-country projects aimed at improving laws, institutions, 

and practices that may involve U.S. funding.

State is primarily responsible for overseeing implementation of 

environmental cooperation activities, while USTR is responsible for the 

negotiation and administration of trade agreements and has lead 

responsibility for monitoring and enforcing compliance with FTA 

commitments. State supports cooperation activities that enable FTA

countries to develop capacity to meet their FTA environmental 

commitments.9

 8

The environmental cooperation agreement establishes an Environmental Cooperation 

Commission, which State chairs. Under the agreement, the commission is responsible for 

developing a work program. 

Other U.S. agencies with technical expertise in specific 

areas carry out cooperation activities. According to USTR officials, they 

rely on a network of other agencies to support their monitoring and 

enforcement functions. Accurate monitoring is necessary to track the 

extent to which partners are complying with FTA commitments and 

ensure that resources are targeted to areas where they can be most 

effective, according to U.S. officials.

9

State’s Bureau of Oceans and International Environmental and Scientific Affairs has the 

lead responsibility for FTA-related cooperation activities.

State Is Responsible for 

Overseeing Cooperation

Activities and USTR for 

Monitoring Compliance 

with FTA Commitments
Page 9 GAO-15-161 Free Trade Agreements

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. However, these countries 

continue to face challenges, including limited technical capacity and 

inadequate resources for enforcing environmental protection.

According to State, Chile has taken steps to strengthen environmental 

standards since signing the FTA and improved enforcement of its 

environmental laws. In addition, according to Chilean officials, the country 

continues to take steps to increase transparency of government 

information on the environment and has made progress in increasing 

public participation in government environmental decision making. 

According to U.S. and Chilean officials, much of the progress was the 

result of a new environmental law, approved in 2010 that they said 

reformed the country’s environmental framework by establishing new 

agencies.10

• Environment Ministry—along with the president, is responsible for 

designing and implementing environmental policies, plans, and 

programs.

For example:

 10According to State officials, Chile passed a key environmental law (Law 19.300) in 1994; 

in 2010 it passed a law (Law 20.417) that reformed the 1994 general environmental 

regulatory law and created the Environment Ministry, Environmental Evaluation Service,

and Environmental Superintendency; it also passed Law 20.600 that established the 

environmental tribunals in 2012.

Partners Have Taken 

Steps to Improve 

Enviromental 

Protection, with U.S. 

Assistance, but 

Continue to Face 

Challenges

FTA Countries Have 

Passed Environmental 

Laws and Established

or Strengthened 

Environmental Institutions

Chile
Page 10 GAO-15-161 Free Trade Agreements

• Environmental Superintendency—responsible for enforcing 

environmental laws and regulations, including assessing fines and 

sanctions for violations.

• Environmental Evaluation Service—responsible for managing and 

modernizing Chile’s environmental impact assessments for both 

public and private sector projects to ensure compliance with 

applicable environmental standards.

• Environmental tribunals—responsible for judicial review of 

Environmental Superintendency decisions and settling environmental 

challenges or resolution of environmental damage claims, and hearing 

other environmental cases.

According to Salvadoran officials, a key step in El Salvador’s meeting its 

CAFTA-DR environmental commitments was the 2012 reform of its 1998 

Environmental Law. The law established the Ministry of Environment and 

Natural Resources, with the authority to protect the environment and 

conserve, restore, and promote the use of natural resources. The ministry 

is responsible for implementing the environmental law as well as the 

Natural Protected Areas and Wildlife Conservation laws. According to 

Salvadoran officials, the 2012 reform allowed for the creation of 

environmental tribunals and establishment of the tribunals as legal 

authorities responsible for determining the civil liability for acts against the 

environment. According to State officials, another important step was 

taken in 2013, when the ministry launched its National Environment 

Policy and Strategy to address sanitation, biodiversity, climate change, 

and water resources. In addition, according to a Salvadoran official, the 

establishment of an environmental “hotline” in 2011 increased the 

opportunity for public participation in oversight.

According to a Guatemalan official, Guatemala’s legal reforms 

established a Ministry of Environment and Natural Resources in 2000. 

The ministry is responsible for formulating and implementing 

environmental policies and approves and oversees compliance with

environmental impact assessments. Guatemala joined the CITES 

convention in 1980. According to a Guatemalan Environment Ministry 

official, its 2013 climate change legislation was another important step in 

CAFTA-DR: El Salvador

and Guatemala
Page 11 GAO-15-161 Free Trade Agreements

meeting the CAFTA-DR environmental commitments.11

Although we focused on El Salvador and Guatemala for our site visits, 

CAFTA-DR officials we met with in Washington, D.C., provided examples 

of steps their countries have taken to improve environmental protection. 

For example, according to these officials, Honduras improved waste 

water treatment; the Dominican Republic created programs for issuing 

environmental permits; and Costa Rica increased its use of renewable 

energy.

Environmental 

regulations are included in other sector-specific laws and regulations, 

including the Forest, Hydrocarbons, and General Fishing and Aquaculture 

laws, according to a ministry official. According to this official, other key 

steps include the ministry’s creation in 2011 of the Environmental Auditing 

Unit and the setting up of the environmental hotline for persons to make 

environmental submissions.

U.S., Peruvian, and NGO officials credit the FTA with helping the country 

take steps to improve environmental protection. Peruvian officials cited 

actions that include establishing the Environment Ministry, with an 

investigative arm, to verify compliance with environmental legislation and 

oversee the process of obtaining environmental impact assessments; 

establishing an independent forestry oversight body to conduct audits of 

forestry concessions and take administrative enforcement actions, assess 

monetary fines, and cancel concessions for noncompliance; and enacting 

a new Forestry and Wildlife Law in 2011. According to State officials, 

Peru also undertook a public consultations process to collect input from 

all interested stakeholders, including indigenous communities, on draft 

implementing regulations for the new law. In addition, according to USTR, 

Peru did the following:

• adopted laws and administrative procedures for managing and 

supervising the issuance of export permits for big-leaf mahogany and 

Spanish cedar, two endangered CITES-listed timber species;

• strengthened the Organismo de Supervision de los Recursos 

Forestales y de Fauna Silvestre (OSINFOR), an independent forestry 

 11According to U.S. officials, recognizing the country’s vulnerability to climate change, 

Guatemala passed Law-Initiative No. 4139: Framework Law to Regulate the Reduction of 

Vulnerability, Obligatory Adaptation, Facing Climate Change and the Mitigation of Green 

House Gases Effects in Guatemala in 2013.

Peru
Page 12 GAO-15-161 Free Trade Agreements

oversight body that conducts post-harvest audits to limit illegal 

logging;12

• amended the criminal code to include substantial penalties for illegal 

activities related to the environment, such as illegal logging and 

wildlife trafficking; 

• developed and began implementing a national anti-corruption plan for 

forestry and wildlife.

According to U.S., Peruvian, and NGO officials, the FTA helped motivate 

Peru to establish its National Forest Service and increase staff and 

capacity of OSINFOR. For example, according to Peruvian officials, postharvest verifications of concessions increased from 49 in 2009 to 1,255 in 

2013. According to the Ministry of Culture, which is responsible for 

addressing issues that affect indigenous people, since entry into force of 

the FTA and enactment of the new environmental laws, Peru has taken 

steps to increase consultation with indigenous groups during the drafting 

of regulations to help them benefit from resources located on their 

traditional lands.13 Despite these steps, according to U.S. officials, full 

implementation of the new environmental law and sustainable actions for 

environment protection will require finalization and implementation of 

regulations, and setting up viable mechanisms to assure the law is 

implemented.

The overall objective of U.S. environmental cooperation with Chile was to 

establish a framework for cooperation to promote the conservation and 

protection of the environment, the prevention of pollution and degradation 

of natural resources and ecosystems, and the rational use of natural 

 12OSINFOR includes seven regional offices. It was created by law in 2008 to verify 

concessions to strengthen the regulation of the forest sector, according to Peruvian 

officials.

13According to Peruvian officials, following entry into force of the FTA, indigenous people 

blocked a highway near Bagua for 2 months, demanding the repeal of decrees passed by 

the government that opened up native territories in the Amazon forest to oil, mining, and 

logging companies. The decrees were eventually repealed, according to these officials.

U.S. Assistance Helped 

Partners Build Capacity to 

Meet FTA Commitments

Chile
Page 13 GAO-15-161 Free Trade Agreements

resources in support of sustainable development. According to U.S. and 

Chilean officials, Chile benefited from cooperation activities, including 

exchange programs with EPA, Interior, the Park Service and NOAA.14

Chilean officials stated that EPA and Interior helped them establish the 

new Risk Assessment Unit at the Ministry of Environment, focusing on 

hazardous chemicals and pesticides and their impact on biodiversity. As 

part of this effort, EPA and Interior hosted Chilean officials in the United 

States to share best environmental practices for mining, strengthen 

processes for mine closure, and improve risk assessment and evaluation 

through workshops and a study tour, according to EPA officials. EPA also 

provided assistance for managing risk assessment related to working and 

closed mines. According to Chilean Ministry of Environment officials, in 

2014, the Risk Assessment Unit plans to complete a map of 

contaminated areas and implement the National Environment Risk 

Assessment Plan that it developed in 2012, with assistance from EPA.

For 

example, in 2010, Chilean officials traveled to the United States to 

observe how EPA addresses environmental disasters. According to 

officials from the Ministry of Environment, assistance provided by Interior 

and EPA in the areas of biodiversity, oversight of protected areas, 

conservation of endangered species, and implementation of multilateral 

environmental agreements has been valuable. Chile continues to receive 

help in meeting FTA commitments. For example, a World Wildlife Fund 

official described the fund’s work with the Chilean government, under a 

grant from State, to help Chile implement its 2013 fishing and 

aquaculture law, which aims to protect vulnerable marine ecosystems and 

bring Chile’s practices in line with international standards. 

Since 2004, the government of Chile has worked in partnership with 

NOAA to develop a cooperation program on marine protected areas that 

includes training. Since 2009, NOAA’s National Ocean Service has 

worked with the National Park Service to establish an interagency 

cooperation program on marine and terrestrial protected areas with the 

 14According to Interior officials, its assistance to date has focused on mining regulation 

and oversight, biodiversity, protected area management, and improved CITES 

implementation.
Page 14 GAO-15-161 Free Trade Agreements

government of Chile.15

According to State, the CAFTA-DR parties identified the following four 

thematic areas for environmental cooperation: (1) institutional 

strengthening; (2) biodiversity and conservation; (3) market-based 

conservation; and (4) private sector performance.

Representatives of Chile’s Forest Service we met 

with in Santiago indicated their agency has had a very good relationships

with several national parks, with Interior’s National Park Service, and the 

U.S. Forest Service under “sister park-to-park memorandums of 

understanding.” For example, there is a 5-year agreement with Yosemite 

National Park and an arrangement with Redwood National Park in 

California that have enabled Chilean Forest Service officials to make 

several U.S. visits to observe how to manage wildfires. According to 

Chilean Environment Ministry officials, in 2009, NOAA, with the support 

of the National Park Service, organized a Chilean delegation visit to 

Glacier Bay National Park and Preserve, and 2 years later, the United 

States and Chile developed the first bilateral marine-related sister park 

agreement.

Government and NGO officials we met with in El Salvador and 

Guatemala confirmed cooperation activities with U.S. agencies have 

helped these countries improve their capacity to meet CAFTA-DR 

environmental commitments. In addition, according to U.S. officials, State 

and USAID have supported the operations of the CAFTA-DR Secretariat 

for Environmental Matters. USAID and other agencies, including Interior, 

EPA, Justice, and NOAA, supported capacity building activities to help 

strengthen institutions to improve environmental protection.16

 15According to NOAA officials, in January 2013, NOAA, the National Park Service, the 

Chilean Ministry of Environment, the National Forest Corporation, and the Undersecretariat for Fisheries and Aquaculture entered into an interagency memorandum of 

understanding that provides a framework for cooperation on marine and terrestrial 

protected areas. This agreement was possible due to the work that NOAA and the 

National Park Service developed with Chile with funding from State under the FTA 

environmental cooperation agreement, according to U.S. and Chilean officials.

For 

example, according to USAID officials, USAID supported the Central 

American Commission on Environment and Development by providing 

equipment and software to strengthen information and management 

16According to NOAA, with State and USAID funding, the National Marine Fisheries 

Service supported projects, including use of turtle excluder devices; development and 

implementation of fisheries observer programs; and fisheries law enforcement, including 

establishment of a Fisheries Monitoring and Control Network for countries in the region.

CAFTA-DR: El Salvador and 

Guatemala
Page 15 GAO-15-161 Free Trade Agreements

systems in El Salvador. To support biodiversity and natural resource 

conservation, Interior helped El Salvador draft and adopt new legislation 

to achieve CITES category 1 status, indicating that El Salvador’s 

legislation fully implements the CITES agreement, according to Interior 

officials. These officials stated that Interior supported the creation of the 

Central American Wildlife Enforcement Network, of which El Salvador and 

Guatemala are participants. The network brings together government 

officials across relevant agencies to combat the illegal wildlife trade at 

national and regional levels. The wide range of activities Interior worked 

on for the network included arranging technical advice by the U.S. Fish 

and Wildlife Service and supporting countries in developing studies to 

update scientific information. According to USAID officials, to improve 

private sector environmental performance and cleaner production, USAID 

and the Central American Commission on Environment and Development 

completed cleaner production assessments in the pig, poultry, and dairy 

sectors to identify areas for savings by implementation of improved 

production practices. At one dairy production facility that we visited, 

USAID and its partner, the World Environment Center, provided 

assistance that helped decrease the cost of production by reducing 

inputs. World Environment Center consultants pointed out several 

instances in which the company was wasting raw materials, energy, and 

other inputs such as water, and helped the firm streamline operations, 

according to an official at the facility. (See fig. 2.)

Figure 2: Dairy Production Facility, San Salvador
Page 16 GAO-15-161 Free Trade Agreements

According to the Salvadoran Minister of Environment, EPA provided 

expertise in areas where El Salvador could not have addressed issues 

alone; for example, by providing assistance for setting standards for lead 

contamination and equipment, and advice to help set up a national water 

quality reference laboratory. (See fig. 3.)

Figure 3: Water Quality Reference Laboratory, San Salvador

EPA and Justice participated in discussions with Salvadoran officials in 

2008 regarding El Salvador’s efforts to establish environmental tribunals 

and conducted a workshop on environmental adjudication for judges from 

El Salvador in 2009. The Minister of Environment credited assistance 

from EPA and Justice with helping the National Police and Attorney 

General establish environmental units to address violations of 

environmental laws and regulations. This assistance included attorneys 

from Justice and EPA giving presentations and providing training in El 

Salvador, Guatemala, and Costa Rica, according to Justice officials.

According to U.S. and Guatemalan officials, environmental cooperation 

activities in Guatemala have helped strengthen Guatemalan institutions 

and capacity to meet environmental standards and enforce its 

environmental laws. According to U.S. and Guatemalan officials, USAIDsupported activities helped the Guatemalan government draft a cleaner 
Page 17 GAO-15-161 Free Trade Agreements

production policy and encouraged market-based conservation.17 For 

example, a related State-sponsored program also supported a number of 

training activities and has helped introduce cleaner production into the 

curriculum in universities in the CAFTA-DR countries. At the Guatemalan 

Cleaner Production Center, an official told us that the project was 

instrumental in expanding their work with the Ministry of Environment and 

Natural Resources and private enterprises, and that it had a major impact 

in both strengthening institutions and helping small- and medium-sized 

enterprises participate in the cleaner production program that decreased 

electricity and water use.18

• Issuing a National Cleaner Production Policy in 2010—In 2011, 

Guatemala established a National Cleaner Production Committee to 

implement the policy.

According to this official, U.S. support helped 

the center and the Ministry of Environment and Natural Resources 

decrease the cost of production by reducing the waste of raw materials, 

energy, water, and other inputs and helped the ministry achieve the 

following key steps:

• Conducting environmental diagnostics by sector—The center is 

partnering with industry associations to help companies implement 

recommended improvements.

• Working in rural Guatemala—The center provided training to 

familiarize 10 small- and medium-sized restaurants and hotels in the 

Panajachel region with legal requirements for environmental 

protection and helped them implement cleaner technology.

According to a ministry official, EPA assistance helped Guatemala set up 

a reference laboratory for testing waste water by providing training, 

books, manuals, and equipment that enable them to analyze chemical, 

physical, and microbiological samples. According to this official, the waste 

water reference laboratory is recognized as one of the best in the region.

 17Clean production requires updating practices to reduce water and energy consumption, 

as well as waste. 

18The Guatemala Cleaner Production Center is one of 14 national centers operating 

throughout Central and Latin America. Since 2008, it has been working closely with the 

Ministry of Environment and Natural Resources and USAID on CAFTA-DR environmental 

improvement projects. The center functions as a specialist on technical issues as well as a 

mediator between industry and government in implementing cleaner production 

requirements. 
Page 18 GAO-15-161 Free Trade Agreements

According to Guatemalan officials, assistance from Justice and EPA 

helped improve the capacity of judges and adjudicators to address 

environmental issues. For example, Justice and EPA officials spoke at 

two workshops for Guatemalan judges on environmental adjudication that 

addressed subjects including principles of environmental law; regulations; 

permits; health and ambient based standards; public participation in 

environmental decision making; case management by judges. According 

to these officials, workshops also addressed civil and criminal penalties.

Under a State-funded cooperative agreement (grant), the Humane 

Society International conducted a number of outreach and public 

awareness projects centered on biodiversity and endangered species 

conservation in Guatemala and other CAFTA-DR partner countries, 

according to State officials. For example, the Humane Society 

International awarded grants to two NGOs in Guatemala for public 

outreach campaigns that have reached 195,000 people, including 

students and farmers. According to a Humane Society International 

official, getting people from the public and private sectors to recognize the 

importance of environmental protection and compliance is challenging, 

but many, including regional government officials, are beginning to value 

environmental preservation. We visited a wildlife rescue center run by a 

Humane Society International grant recipient. The grant was used to help 

maintain the center for endangered species, including construction of a 

quarantine center for birds and mammals. (See fig. 4.)
Page 19 GAO-15-161 Free Trade Agreements

Figure 4: Wildlife Rescue Center, Petén, Guatemala

We also visited a USAID-supported community forestry enterprise 

sawmill, run by a timber industry consortium representing a group of 

companies that have logging concessions in the protected area. USAID 

funding to the Rainforest Alliance helped the group improve certification 

of logging for timber production, according to an executive at the sawmill.

The objective of the U.S. environmental cooperation agreement with Peru 

was to establish a framework for enhancing bilateral and regional 

environmental cooperation between the parties to protect, improve, and 

preserve the environment, including the conservation and sustainable use 

of their natural resources. According to USTR officials, the focus of 

cooperation activities was on commitments included in the FTA forest 

Peru
Page 20 GAO-15-161 Free Trade Agreements

sector annex and improvement of forest sector governance. Key themes 

and objectives outlined in the work program include:

• institutional and policy strengthening for effective implementation and 

enforcement of environmental laws;

• transparency and public participation in environmental decision 

making and enforcement;

• community and market-based activities; and 

• improved environmental performance in the productive sector.

To support these objectives and help Peru build capacity to combat trade 

associated with illegal logging, enhance forest governance, and promote 

legal trade in timber products, U.S. agencies supported a variety of 

cooperation activities. For example, according to officials, Interior 

provided assistance to help develop the institutional framework for 

effective management of indigenous territories, as well as sustainable 

forest, fisheries, and wildlife management. A USAID project helped Peru 

develop regulations for implementing its new forestry and wildlife law and 

enhance public participation in environmental decision making. In 

addition, a representative from an organization representing indigenous 

communities said that USAID helped his group recognize the threat that 

subsistence farming by poor indigenous people poses to the forest and 

identify options that are less damaging. The U.S. Forest Service is also 

helping Peru build technical capacity for forest management and 

monitoring, and improve institutional capacity for forest administration, 

according to its officials. Forest Service officials said a key activity to help 

Peru increase effective implementation and enforcement of its 

environmental laws and multilateral commitments was a project to 

develop a prototype for an information and control system for forest and 

wildlife resources. The system tracks timber that originates from the 

Amazon forest in Peru by creating electronic records of harvested timber 

that allows officials to monitor the flow of the timber, including CITESlisted species. Forest Service officials also said the prototype is designed

to replace a paper-based system, which is subject to fraud and 

falsification of documents, and allow operators to limit opportunities for

illegally harvested timber to enter the chain of custody. The U.S. Forest 

Service has also helped Peru provide training and outreach to civil 

society—particularly indigenous communities—in order to solicit 

comments on the draft regulations and enhance public participation in 

environmental decision making. In addition, the U.S. Forest Service 

helped Peru implement an online portal to gather public comment on the 
Page 21 GAO-15-161 Free Trade Agreements

regulations, and provided training to Peru on management and analysis 

of public comment. Finally, the U.S. Forest Service supported Peru in 

developing the methodology, management, dissemination, and legal 

framework for field-based forest inventory data as well as remote sensing 

data for improved coordination and management of the Amazon forest, 

according to officials. (See fig. 5.)

Figure 5: Pucallpa Checkpoint, Ucayali, Peru

Chile continues to face environmental challenges, including water 

contamination due to mining and fish farming, according to U.S. officials. 

In addition, threats to biodiversity and marine biodiversity are ongoing 

concerns, according to U.S. and Chilean officials. Officials also identified 

the challenge of the government’s limited technical capacity and 

resources in the regions to conduct investigations and enforce 

environmental laws and standards. In January 2013, the United States 

and Chile approved a work program that established priorities for 

cooperation activities. These priorities include strengthening 

Partners Continue to 

Face Environmental 

Challenges, Including 

Limited Technical Capacity 

and Resources for 

Enforcement of 

Environmental Laws

Chile
Page 22 GAO-15-161 Free Trade Agreements

implementation and enforcement of environmental laws and encouraging 

development of sound environmental practices, according to State.

El Salvador and Guatemala continue to face environmental challenges, 

including water pollution, deforestation, threats to endangered species, 

and limited capacity and resources to enforce environmental laws, 

according to U.S. officials.

According to Salvadoran officials, water quality remains a concern in El 

Salvador, where only 5 percent of surface water meets water quality 

standards. Other challenges include toxic waste from abandoned 

industrial facilities, destruction of forests and habitat for endangered 

species, air pollution, urban sprawl, solid waste pollution, coastal 

pollution, and depletion of marine resources, according to officials. U.S. 

officials cited limited resources and technical capacity at the Ministry of 

Environment and Natural Resources to enforce environmental laws and 

regulations as an ongoing challenge. Similarly, Guatemala faces 

challenges including water pollution, deforestation, and illicit trade of 

endangered species, according to Guatemalan officials. According to an 

official from the Environment Ministry, of key concern are water 

contamination and degradation of the country’s watersheds and the 

impact of climate change. Guatemalan officials stated that limited 

capacity and resources continue to challenge Guatemala’s ability to 

enforce environmental laws. Guatemalan officials also cited the high 

turnover in ministries and agencies responsible for environmental 

protection as a challenge.

Peru continues to face environmental challenges, including illegal 

activities on protected lands, illegal logging and mining, and limited 

resources and enforcement capacity, according to U.S. officials. 

Deforestation for agricultural production, including production of palm oil 

and illegal cultivation of coca, was also cited by an industry group and 

NGOs as a growing threat. They said that while the focus of the 

implementation of the FTA forest sector annex is on illegal logging of 

CITES-listed species, deforestation and transformation of the forest into 

agriculture production, including for illegal production of coca and 

expanded production of palm oil and coffee cultivation, is a significant 

threat to conservation of forest resources. Timber officials said that smallscale gold mining in the forest is also contributing to deforestation in the 

Peruvian Amazon forest. In addition, according to NGO officials, lack of 

resources and low wages for government officials limit environmental 

enforcement. An NGO official also noted that cuts in funding for 

OSINFOR, the agency responsible for auditing forest concessions, has 

CAFTA-DR: El Salvador

and Guatemala

Peru
Page 23 GAO-15-161 Free Trade Agreements

led to a drop in inspections and limits training opportunities for regional 

staff and restricts its ability to enforce sanctions. According to this official, 

decentralization of authority to regional governments presents strains on 

resources for environmental protection, because funds have not been 

allocated to support delegation of functions from the central government 

to the regions. In addition, NGO officials noted the lack of coordination 

between the Ministries of Environment and Agriculture. For example, 

according to an NGO official, the Ministry of Agriculture is allowing the 

expansion of deforestation for agricultural production, while the Ministry of 

Environment’s mission is to protect the forest from clear-cutting, which 

removes all trees from a given tract of forest, threatening the area’s 

ecological integrity.

Representatives from the United States and other CAFTA-DR countries 

have established a Secretariat for Environmental Matters. The United 

States is also working with Peru, Panama, and Colombia to establish 

similar institutions. The secretariat provides a means for members of the 

public to submit allegations that the country is failing to enforce its 

environmental laws and, by investigating and publishing the findings, can 

bring pressure on the FTA countries to increase enforcement.

According to CAFTA-DR Secretariat officials, the Secretariat for 

Environmental Matters began operating in 2007, and is staffed by three 

attorneys and other experts.19 The secretariat provided data showing that 

it received submissions, conducted investigations regarding those 

submissions, and published the results in the form of factual records.20

CAFTA-DR partners agreed on official procedures for the secretariat’s 

work that, among other things, provide that the secretariat may consider 

the submission if it meets certain criteria, including:

 19The CAFTA-DR environmental chapter established the environmental submissions 

mechanism, which allows persons of CAFTA-DR countries to file submissions claiming 

that a party to the agreement is failing to effectively enforce its environmental laws. 

20A factual record is a report based on the facts of the investigation, which is publically 

available after publication. 

Partners Are 

Establishing 

Secretariats to 

Process Submissions 

Regarding 

Environmental Issues

CAFTA-DR Secretariat for 

Environmental Matters Is 

Functioning
Page 24 GAO-15-161 Free Trade Agreements

• be written in English or Spanish,

• clearly identify the person making the submission,

• appear to be aimed at promoting enforcement rather than at 

“harassing” industry,

• be filed by a person of a CAFTA-DR partner country.

Once the secretariat determines that the submission meets certain 

specified criteria, it determines whether the submission merits requesting 

a response from the government in question. If so, the government has 

45 days to respond, unless there are exceptional circumstances. In its 

response, the government in question must inform the secretariat 

whether, among other things, the issue is the subject of a pending judicial 

or administrative proceeding. In general, secretariat officials compare the 

response from the government with the assertions in the submission, and 

decide whether to look further into the matter, according to secretariat 

officials. The secretariat can determine that the submission warrants a 

factual record and inform the Environmental Affairs Council of its 

determination.21

The secretariat has received 29 submissions since its inception. Of these, 

24 were either suspended or withdrawn. This includes submissions that 

were suspended because (1) the parties voted not to proceed with the 

secretariat’s recommendation to draft a factual record or (2) there were 

pending judicial or administrative procedures to address the concerns of 

the submission, according to secretariat officials. To date, the secretariat 

has recommended that 5 submissions proceed to factual records. 

Ultimately, the secretariat prepared and published three factual records. 

(See table 1.)

The secretariat then prepares the factual record if the 

council, by a vote, instructs it to do so. Only one party’s vote is required, 

and so far all votes to proceed with a factual record have come from the 

United States, according to secretariat and State officials. To date, 

according to USTR officials, all final factual records have been made 

public.

22

 21The Environmental Affairs Council consists of representatives from each FTA country 

and is charged with overseeing the operation of the CAFTA-DR environmental chapter.

22One active submission is pending a party response, according to secretariat officials.
Page 25 GAO-15-161 Free Trade Agreements

Table 1: Status of Dominican Republic–Central America–United States Free Trade 

Agreement (CAFTA-DR) Secretariat Submissions Received from 2007 to 2014 

Suspended and/or withdrawn submissions 24

Active submissions 2

Published factual records 3

Total submissions 29

Source: CAFTA-DR Secretariat for Environmental Matters. | GAO-15-161

Note: The secretariat recommended 5 of 29 submissions for the preparation of draft factual records; 

however, the council has voted for the publication of 3 of 29 submissions.

According to USTR officials, the Environmental Affairs Council considers 

the final factual record in light of the environmental chapter and the 

associated Environmental Cooperation Agreement and, as appropriate, 

may make recommendations to the Environmental Cooperation 

Commission related to matters addressed in the factual record (such as 

recommending that environmental cooperation projects be designed and 

funded) to enhance the party’s mechanisms for monitoring its 

environmental enforcement. During the April 2014 CAFTA-DR 

Environmental Affairs Council meeting, for example, the council 

discussed a factual record about environmental licensing in Honduras, 

noted areas for expanded environmental cooperation, and heard from 

Honduras about actions it is taking to improve enforcement.

Some CAFTA-DR governments have addressed some environmental 

concerns as a result of submissions and factual records publication, 

according to U.S., host government, secretariat, and NGO officials. For 

example, the Dominican Republic responded to a factual record regarding 

sea turtles and addressed the issue by instituting seizures and fines that, 

according to the secretariat, NGO, and government representatives, 

resulted in a significant reduction in the sale of products made from sea 

turtles as well as the number of places that trade them. 

The number of submissions to the CAFTA-DR Secretariat increased 

following an outreach campaign to increase public awareness, according 

to secretariat officials. The secretariat translated into multiple indigenous 

languages literature and other information about the FTA, functions of the 

secretariat, and criteria for drafting and turning in submissions, according 

to secretariat documents. The secretariat has conducted 39 of 77 planned 

outreach efforts in El Salvador and Guatemala thus far, but officials stated 

that they will be focusing their efforts in additional CAFTA-DR countries. 

The Number of Submissions

to the CAFTA-DR Secretariat 

Increased Following Its Public 

Participation Outreach 

Campaign
Page 26 GAO-15-161 Free Trade Agreements

According to secretariat data, the number of submissions the secretariat

received in 1 year peaked at 10 in 2010, when it conducted its most 

extensive outreach efforts. Prior to 2010, the secretariat received a total 

of 4 submissions and, from 2010 on, received an average of 6 per year. 

Similarly, the number of people that the secretariat reported to have 

attended outreach events totaled roughly 2,500 from 2007 through 2013, 

and peaked at almost 700 in 2010. (See fig.6.)

Figure 6: Numbers of People Attending Outreach Campaign Events and Numbers of 

Submissions Received, 2007 to 2013

The CAFTA-DR Secretariat created a strategy that was specific to the 

country for the citizen outreach campaigns, according to officials. For 

example, the secretariat engaged human rights organizations and NGOs 

in El Salvador and Guatemala to assist with outreach campaigns, 

according to officials. According to secretariat officials, while the 

secretariat has raised awareness through its outreach, it cannot provide 

direct assistance to persons drafting submissions, in order to preserve 

independence and avoid giving the appearance of supporting a particular 

submission. 
Page 27 GAO-15-161 Free Trade Agreements

The United States, Peru, and the Organization of American States 

continued to negotiate the establishment of the Peru Secretariat for 

Submissions on Environmental Matters as of July 2014, more than 5 

years after the FTA entered into force. The FTA commits the United 

States and Peru to establish a secretariat to receive submissions about a 

party’s effective enforcement of environmental laws. In 2010, the 

Environmental Cooperation Commission agreed to an Environment 

Cooperation Work Program for 2011-2014, which listed establishing a 

secretariat to receive submissions on environmental matters as an 

objective.23

According to USTR and State officials, the negotiations have included a 

number of complex issues, such as the structure of the secretariat’s 

substantive functions and financial issues arising from the secretariat’s 

operations. As of June 2014, USTR and State officials informed us that 

the United States and Peru had concluded negotiations on a bilateral 

Secretariat Agreement and on three Environmental Affairs Council 

decisions pertaining to issues such as staffing. USTR also indicated that 

the United States, Peru, and the Organization of American States agreed 

to the final terms of an agreement. According to USTR and State officials, 

final documents are all expected to be signed by the parties and 

approved by the council before the end of 2014.

In the absence of an operational Secretariat for Submissions on 

Environmental Enforcement Matters, the United States and Peru 

established an interim procedure to receive environmental submissions 

from the public, consistent with the FTA. According to these procedures, 

both governments shall provide written responses to submissions 

addressed to them, and shall make such submissions and responses 

publicly available in a “timely and accessible manner.” In June and July 

2013, USTR received submissions—in the form of two letters—from an 

environmental organization based in Lima expressing concerns over palm 

oil cultivation in Peru to the detriment of Peru’s forests and wildlife. 

 23 The United States and Peru established an Environmental Cooperation Commission, 

pursuant to the Environmental Cooperation Agreement signed on July 26, 2006. The 

commission is responsible for defining a work program that establishes specific goals and 

objectives and areas for cooperation that reflect national priorities for each party, among 

other responsibilities, which included establishing a secretariat as far back as 2010.

Negotiations to Establish 

the Peru Secretariat

Have Taken Longer

than Anticipated
Page 28 GAO-15-161 Free Trade Agreements

On July 31, 2013, in its response to the organization, USTR indicated that 

United States officials had been in touch with their governmental 

counterparts in Peru and would consider raising the matter with Peru at 

the Environmental Affairs Council. USTR also referred the representative 

from the environmental organization to a June 2013 joint communiqué 

that highlighted the interim procedure for submissions, and recommended 

that the environmental organization engage with the Peru Ministry of 

Trade. The organization sent updates to the June and July letters, and 

USTR officials told us that they met with representatives from the 

environmental organization on two occasions after providing the July 

response, in November 2013 and March 2014.

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. In general, funding levels for cooperation 

activities have varied for partner countries under FTAs for fiscal years 

2004 through 2013. 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 

2013.24

 24According to USAID, total FTA funding for Peru was about $59 million through fiscal 

year 2013, of which, according to our analysis, about $49 million was provided for FTA 

environmental activities.

Cooperation activities in Chile received over $4 million in funding 

since fiscal year 2009, as well. Funding for environmental cooperation to 

other FTA countries—including Morocco, Oman, Panama, and Jordan—

totaled almost $10 million from fiscal years 2004 through 2013. (See fig.

7.)

U.S. Resources for 

Cooperation Activities 

Have Declined Since 

Fiscal Year 2009
Page 29 GAO-15-161 Free Trade Agreements

Figure 7: U.S. Funding for Cooperation Activities for Free Trade Agreement (FTA) 

Partner Countries for Fiscal Years 2004 through 2013

Note: “Other FTA countries” are Morocco, Oman, Panama, and Jordan. 

State and USAID provide funds for cooperation activities, spelled out in 

the environmental cooperation agreement work plans between the United 

States and an FTA country in order to achieve specific long-term goals. 

For example, the CAFTA-DR environmental cooperation program has 

structured cooperation activities under the following five objectives: (1) 

institutional strengthening for effective implementation and enforcement 

of environmental laws; (2) multilateral environmental agreements, 

biodiversity, and conservation; (3) market-based conservation; (4) 

improved private sector environmental performance; and (5) 

implementation of specific CAFTA-DR commitments. For CAFTA-DR, 

State and USAID provided the largest share of funding (45 percent) for 

strengthening environment-related legal institutions. For the Peru FTA, 

USAID provided nearly all of the $49 million funding to support forest 
Page 30 GAO-15-161 Free Trade Agreements

conservation activities, of which 51 percent was used to implement 

activities through a contractor and 49 percent through the U.S. Forest 

Service.25 For the Chile FTA, State provided the largest portion of funding 

(35 percent) for development of environmental practices and 

technologies.

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. According to USTR officials, a focus of its efforts to monitor 

compliance and implementation of environmental commitments has been 

on the Peru FTA and its Annex for Forest Sector Governance. 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. However, its 

monitoring plan lacks key elements, such as indicators and time frames, 

to effectively track progress and partner countries’ compliance with their 

FTA commitments. Internal control standards require establishing and 

reviewing performance measures and indicators and conducting ongoing 

monitoring to assess the quality of performance over time.

Since our 2009 report, State has improved its monitoring and reporting of 

the results from environmental cooperation activities. In 2009, we found 

that State lacked mechanisms that would allow it to assess the 

effectiveness or efficiency of cooperation activities, among other things. 

Since then, State has funded contracts with the Organization of American 

States and a private firm to improve monitoring and evaluation, and 

reporting of cooperation activities in CAFTA-DR countries, and bilateral 

FTA partner countries such as Chile, Morocco, and Oman, according to 

State officials. USAID manages and funds cooperative efforts related to 

improving Peru’s forest sector governance and therefore is responsible 

for monitoring activities in the Peru Forest Sector Initiative, according to 

 25State provided $600,000 for environmental cooperation through Development 

Assistance funds.

State and USTR 

Improved Monitoring, 

but USTR’s Process 

Lacks Key Elements

State Improved Monitoring 

of United States-Funded 

FTA Cooperation Activities
Page 31 GAO-15-161 Free Trade Agreements

State and USAID officials. State officials told us that USAID program 

managers in Peru provide them with quarterly reports.26

Since 2009, the Organization of American States has published four 

reports on monitoring and evaluation of cooperation activities in CAFTADR countries. Implementing agencies that provide assistance to the FTA 

countries, such as Interior, provide data and information on the results of 

the cooperation activities, according to Organization of American States 

officials. These officials then analyze the information and publish a public 

report, on behalf of State, on the extent to which the cooperation activities 

are achieving the broader objectives of the environmental cooperation 

agreement. Organization of American States officials added that, initially, 

implementing agencies did not align their performance indicators with the 

objectives of the environmental cooperation agreement. As a result, 

sometimes the activities did not reflect the needs of the partner country, 

and it was difficult to measure progress that resulted from the activities. 

According to Organization of American States officials, they conducted 

workshops for officials in the implementing agencies on developing 

indicators that focused on results of the cooperation activities. In addition, 

these officials assisted implementing agencies by providing them with the 

performance management framework that the Organization of American 

States created to guide the efforts of the implementing agencies, which 

reduced the amount of duplicative activities implementing agencies 

conducted with partner countries in the region, according to Organization 

of American State officials. In addition, Organization of American State 

officials developed a reporting template and distributed the template to 

implementing agencies to streamline data collection from the 

implementing agencies. This addressed a problem identified in the 

Organization of American States’ first evaluation report of cooperation 

activities—that aggregating information to assess the extent to which 

cooperation activities achieved results was difficult because of the lack of 

a standardized reporting format. In addition, Organization of American 

States officials worked with officials from the partner countries to get them 

to agree on broad environmental principles and priorities and have them 

develop a vision of what environmental improvements they wanted to 

achieve. Next, the Organization of American States officials linked 

 26According to State officials, USAID issues quarterly reports for the USAID/U.S. Forest 

Service Peru Forest Sector Initiative. In addition to the quarterly reports, officials at State 

conduct regular conference calls with USAID and U.S. embassy officials on the status of 

cooperation activities in Peru, according to State and U.S. embassy officials in Lima. 
Page 32 GAO-15-161 Free Trade Agreements

specific projects to those broad goals of the partner countries and the 

environmental cooperation agreement, according to Organization of 

American States officials.

Similarly, since 2010, State has contracted with a private sector firm to 

monitor and evaluate cooperation activities in Chile, Morocco, and Oman. 

According to a representative of the firm, these efforts included:

• Developing indicators that measured the results of the cooperation 

activities, rather than measuring the amount and types of activities 

conducted.

• Conducting workshops with officials from implementing agencies to 

assist them with developing indicators suited to measuring the impact 

of their activities. In these workshops, representatives from the private 

sector firm also provided training to officials from implementing 

agencies on ways to harmonize indicators to streamline the reporting. 

This included developing harmonized indicators based on State’s 

standard foreign assistance indicators, known as F-indicators.27

• Assisting implementing agencies with developing a reporting 

template, using the harmonized indicators, to streamline the data 

collection process. According to implementing agencies, the reporting 

template has simplified processes, giving them a more defined scope 

when developing cooperation activities, and has enabled them to 

report with targeted, specific indicators and outcomes.

For 

State and some implementing agencies, using the F-indicators as a 

basis to develop additional indicators for measuring outcomes of the 

cooperation activities was important, because State and other 

agencies are required to report on them separately.

In addition, State has created formal and informal mechanisms to share 

information with stakeholders involved with conducting cooperation

activities and officials in the partner countries. For example, State 

established a website to provide information to stakeholders involved in 

implementing cooperation activities in CAFTA-DR countries. In addition, 

State has instituted quarterly conference calls between agencies 

 27State and USAID, drawing on technical expertise within both agencies and from within 

the development and security communities, have jointly developed standard indicators to 

measure what is being accomplished with foreign assistance. 
Page 33 GAO-15-161 Free Trade Agreements

managing projects in the region to support coordination and avoid 

duplication of efforts. 

USTR has pledged to vigorously monitor and enforce trade agreements, 

and included specific goals related to implementation of FTAs and FTA 

environmental provisions in its recent strategic and performance plans. 

USTR’s 2014-17 Strategic Plan states that USTR will establish and lead a 

robust interagency program for monitoring implementation of FTA labor 

and environment obligations across all FTA partners. It also states that 

USTR will promptly analyze issues identified through monitoring and 

develop appropriate strategies to resolve them. In addition, its 2015 

Performance Budget sets a performance goal to monitor implementation 

of each of the FTAs to ensure full compliance with all FTA and related 

commitments.

The Government Performance and Results Act Modernization Act of 2010 

sets several requirements for performance plans, including that they 

provide a basis for comparing results.28 For example, performance plans 

should include a basis for comparing actual program results with the 

established performance goals and a description of how the goals are to 

be achieved, including defined milestones.

29

USTR uses bilateral meetings of the Environmental Affairs Councils as 

one mechanism for monitoring implementation of FTA commitments with 

FTA partner countries, according to USTR officials.30

 28For the GPRA Modernization Act, see P.L. 11-352. For performance plan requirements, 

see 31 U.S.C. § 1115(b). For further information see: 

They further stated 

that most FTAs in our review require the United States and FTA partner 

countries to establish a council composed of senior officials of the United 

States and partner countries, and convene them annually unless the 

United States or the FTA partner country agree on an alternative date.

The councils have generally convened every 10 to 14 months for all 

http://www.gao.gov/key_issues/managing_for_results_in_government/issue_summary.

29For milestones, see31 U.S.C. § 1115(b)(5(B) and 1115(b) (7). For further information 

see: 

http://www.gao.gov/key_issues/managing_for_results_in_government/issue_summary.

30Some FTAs provide for establishment of a body under a different name; such bodies 

function in the same manner as an Environmental Affairs Council. 

USTR Has Pledged More 

Robust Enforcement and 

Uses Bilateral Meetings 

with FTA Partner Countries 

as a Mechanism for 

Monitoring Implementation
Page 34 GAO-15-161 Free Trade Agreements

agreements. In some instances, officials from USTR meet with officials 

from FTA partner countries several times within a year, according to 

USTR officials. For example, USTR officials told us that they have met—

either through the council, or informally—with cabinet-level officials from 

CAFTA-DR countries to discuss implementation and environmental 

challenges, and to coordinate activities by country, or regionally. Most 

FTAs in our review also require that the councils host a public session, 

unless the United States and the FTA partner agree otherwise. USTR 

officials stated that the public sessions provide an opportunity for citizens 

and groups to introduce environmental issues to USTR and the FTA 

partner country, and raise implementation issues; these issues can 

become part of ongoing discussions or future council meetings.

USTR officials told us that they have focused much of their efforts to 

improve FTA monitoring and enforcement since our 2009 report on Peru 

because of the extensive environmental commitments contained in the 

Peru FTA and the forest sector annex, and associated work underway to 

enable Peru’s compliance. The officials stated that their efforts were in 

response to inputs from U.S. environmental stakeholders about what is 

important, as well as resource limitations.31

USTR formally reviews the progress that Peru and the United States have 

made in ensuring effective implementation of, and compliance with, 

USTR developed several 

mechanisms for monitoring compliance with, and implementation of, 

commitments in the environmental chapter and Annex for Forest Sector 

Governance of the Peru FTA. For example, the Subcommittee on Forest 

Sector Governance was established under the annex to facilitate 

cooperation for activities specified in the annex and provide a forum for 

the United States and Peru to share views and information on any matter 

arising under the annex. For example, the forest sector annex includes 

specific commitments, such as the development of a system that will track 

and verify the chain of custody for wood harvested in Peru ́s forests, and 

the supervision and issuance of permits for timber species covered by 

CITES. The subcommittee has met on several occasions.

 31According to USTR officials, USTR’s Environment and Natural Resources Office had six 

full-time staff as of 2013, consisting of five professional staff and one administrative 

assistant. USTR does not precisely track hours dedicated to monitoring and implementing 

FTA environmental commitments; however agency officials provided estimates of staffing 

resources dedicated to FTA environmental activities.

Much of USTR’s 

Monitoring Efforts Have 

Focused on the Peru FTA 

and Its Annex for Forest 

Sector Governance
Page 35 GAO-15-161 Free Trade Agreements

commitments in the environmental chapter of the Peru FTA in the 

Environmental Affairs Council, according to USTR.32

Officials in Peru created a matrix that tracks the status of implementation

of commitments from the environmental chapter and the annex, and 

shares this information with the public and with USTR. According to 

USTR officials, they use information from this matrix to help them oversee 

how Peru is addressing issues outlined in the forest sector annex of the 

FTA. In addition, according to these officials, USTR coordinates with 

State, USAID, and U.S. Forest Service staff in Peru to corroborate the 

information contained in the matrix. Stakeholders in the environmental 

and forestry sectors can access the matrix to verify the validity of the 

information published by the Peruvian government. Stakeholders, 

including environmental groups, with which GAO met in Peru said that 

they had taken such opportunities to seek clarification, request more 

robust steps, and encourage progress. Nevertheless, an NGO official told 

us that the timetable for action is not precisely defined and that progress 

is not meeting officials’ expectations. Additional information on the lack of 

time frames is further discussed later in this report.

The environmental 

chapter established the Environmental Affairs Council, and states that it 

should convene at least yearly, unless otherwise determined by the 

United States and Peru.

Following the entry into force of the FTA, the President established the 

Interagency Committee on Trade in Timber Products from Peru (Timber 

Committee). The Timber Committee has authority to oversee operation of 

the agreement’s forest sector annex, including requests to the 

government of Peru to conduct audits of particular exports and producers 

in Peru and verifications of particular export shipments to determine 

compliance with Peruvian law, according to U.S. agencies. The Timber 

Committee is chaired by USTR and composed of senior officials from the 

Departments of State, Justice, Interior, and Agriculture. Representatives 

from the Department of Homeland Security and USAID serve as 

observers.

 32It is important to note that where an FTA establishes an environmental affairs council, 

the council meets annually to review implementation of the chapter. These meetings are 

co-chaired by USTR and State on the U.S. side and relevant officials of the FTA partner 

government.

Environmental Group 

Petitioned the Timber 

Committee to Request Peru

to Audit Timber Exporters
Page 36 GAO-15-161 Free Trade Agreements

In April 2012, an environmental group petitioned USTR to exercise its 

authority under the Peru FTA Annex on Forest Sector Governance to 

request Peru to conduct an audit or verification of certain timber 

shipments, producers, and exporters of big-leaf mahogany and Spanish 

cedar that it considered to have been illegally harvested and exported to 

the United States. The environmental group also released an 

investigative report alleging the systematic export of timber from Peru to 

the United States it claimed was illegally harvested, transported, and 

traded.33

According to USTR, the Timber Committee investigated the allegations, 

but declined to exercise its authority under provisions in the forest sector 

annex to request the government of Peru to conduct audits and 

verifications of certain exporters, citing a significant decline in reported 

exports of these species and actions taken by the government of Peru in 

response to the investigation, among other things. However, in order to 

address challenges highlighted by the review and contribute to ongoing 

reform efforts undertaken by Peru, the committee decided to take the 

following actions:

• seek agreement with Peru on specific actions it will undertake to 

address challenges Peru faces regarding management of big-leaf 

mahogany and Spanish cedar;

• target U.S. capacity-building resources to assist Peru to carry out 

such actions; and

• regularly monitor Peru’s progress.

In January 2013, less than 1 month after the Timber Committee issued its 

decision, USTR staff traveled to Peru and reached agreement on a 

bilateral plan to address specific challenges in Peru’s forestry sector. The 

bilateral plan covers areas addressed in the forest sector annex, but with 

greater specificity, reflecting challenges identified by the Timber 

Committee in its review of the petition. For example, the bilateral plan 

includes details not included in the forest sector annex, such as 

expanding Internet connectivity of transportation check points to improve 

systems to track and verify the chain of custody of timber products. 

According to the plan, the targeted set of actions includes:

 33For more information on the specifics of this case, see Environmental Investigation 

Agency, The Laundering Machine (Washington, D.C.: 2012).

Bilateral Plan Developed

to Address Concerns of

the Petition, but It Lacks 

Performance Indicators

and Time Frames for

Achieving Objectives
Page 37 GAO-15-161 Free Trade Agreements

• strengthening physical inspections of big-leaf mahogany and Spanish 

cedar contained in harvesting plans prior to their approval, in 

accordance with Peru’s forest and wildlife laws and regulations;

• strengthening accurate harvest plan development and implementation 

by improving capacity of forest sector stakeholders, such as forest 

engineers, and native communities, among other stakeholders;

• ensuring timely criminal and administrative proceedings to sanction 

any party who violates Peru’s forestry and wildlife laws;

• improving systems to track and verify the chain of custody of timber 

exports of big-leaf mahogany and Spanish cedar; and

• strengthening the implementation of Peru’s National Anti-Corruption 

Forest and Wildlife Sector Plan.

Federal internal controls standards call for ongoing monitoring. This 

includes establishing performance indicators and time frames to track 

performance over time.34 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. For example, 

USTR was unable to provide us data on the extent to which Peru has 

improved the verification of the chain of custody of timber exports. 

Moreover, an NGO official stated that the stakeholders and the public do 

not know the extent to which Peru is meeting its commitments because 

there are no time frames or performance indicators included in the plan.

 34See GAO, Internal Control: Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: Nov. 1, 1999).
Page 38 GAO-15-161 Free Trade Agreements

USTR has taken some important steps to strengthen monitoring. In 2012, 

USTR established a subcommittee for monitoring partner countries’

compliance with, and implementation of, their FTA commitments. 35

USTR began implementing the first element of its monitoring plan—

gathering facts from relevant and reliable sources—in 2013, after it 

requested that U.S. embassies in partner countries provide information, in 

reporting cables, on the major environmental developments that have 

occurred in those countries in the past 5 years. USTR officials stated that 

the subcommittee meetings, held in December 2013 and April 2014, 

featured an initial assessment of information collected from all FTA 

partners in the reporting cables prepared in response to USTR’s request 

(step 2). USTR indicated that it has begun to identify issues (step 3) and 

in some cases begun to take steps to address concerns (step 4), such as 

by gathering additional information, engaging in discussions with FTA 

partners, raising issues in meetings of institutional bodies, or working on 

targeted capacity building.

In our 

2009 report, we said that USTR lacked plans to enforce, monitor, and 

report on progress under the FTAs, and recommended that USTR take 

steps to improve its plans. In April 2013, the subcommittee developed a 

plan for monitoring partner countries’ compliance with commitments 

across all agreements, according to USTR. More specifically, the goal of 

the plan is to assist the monitoring subcommittee in identifying any 

positive or negative developments, and to develop strategies to address 

any concerns, according to USTR. The monitoring plan consists of four 

elements: (1) gathering facts from relevant and reliable sources, (2) 

assessing and evaluating the information obtained, (3) identifying and 

prioritizing issues, and (4) developing a strategy for addressing priority 

issues.

According to USTR officials, they are executing their monitoring plan on a 

partner-by-partner basis. For example, USTR indicated that based on 

information learned through fact gathering, it has raised several issues in 

recent Environmental Affairs Council meetings with Colombia, Panama, 

and the CAFTA-DR partner countries, as well as technical discussions 

with Peru. Further, it is working to develop an updated environmental 

cooperation work plan with Oman.

 35The Subcommittee on Monitoring of Implementation of and Compliance with FTA 

Environment Chapter Obligations is a subcommittee to the Trade Policy Staff Committee.

USTR Has Taken Steps

to Improve Monitoring

FTA Partner Country 

Compliance with 

Environmental 

Commitments, but

Its Process Lacks

Key Elements
Page 39 GAO-15-161 Free Trade Agreements

Although USTR’s plan for monitoring FTA environmental chapter 

implementation calls for processes, such as developing strategies and 

solutions on a partner-by-partner basis, as previously discussed, federal 

internal control standards call for monitoring that includes establishing 

indicators and time frames to track performance over time and ensure 

that the priorities identified as a result of its monitoring processes are 

promptly resolved.36 USTR’s monitoring process is missing these key 

elements. USTR officials told us that FTA-related environmental issues 

do not lend themselves to monitoring in the form of identifying 

performance indicators or designating a specific completion date for 

measuring progress. However, as noted above, the Government 

Performance and Results Act Modernization Act of 2010 requires 

agencies to provide a means for assessing performance. Although the 

matrix Peru has developed is useful for tracking the status of steps Peru 

is supposed to take under its FTA environmental chapter and forest 

sector annex, use of the matrix does not preclude the internal control 

criteria requiring performance indicators and time frames. Establishing 

performance indicators and time frames would improve USTR’s ability to 

monitor progress and ensure that each partner country is meeting its FTA 

environmental commitments.

Chile, El Salvador, Guatemala and Peru continue to face environmental 

challenges, including limited technical capacity and enforcement 

resources. Chile has taken significant steps to meet its FTA obligations 

since 2009, while concerns remain about Peru’s capacity to enforce 

protection of endangered timber species and address emerging 

deforestation threats to the Amazon. Given the decline in funding for 

environmental cooperation activities in recent years, it is particularly 

important that State and other U.S. agencies target resources in ways 

that will most effectively assist partner countries in addressing continued 

and emerging environmental challenges. USTR has taken several steps 

to improve monitoring since we issued our 2009 report, but its plan for 

monitoring all 20 FTA partner countries’ compliance, and the U.S.–Peru

bilateral plan to address specific challenges in Peru’s forestry sector, lack 

time frames and performance indicators to assess progress. Notably, 

USTR is unable to determine the impact of the verification system in Peru 

and assure stakeholders and the public that Peru is meeting its 

 36See GAO/AIMD-00-21.3.1.

Conclusions
Page 40 GAO-15-161 Free Trade Agreements

commitments in the bilateral action plan. The lack of time frames and 

indicators also limits USTR’s ability to provide accurate information on the 

extent to which all FTA partners are meeting their environmental 

commitments. In addition, information on the status of each FTA partner’s 

progress in meeting its environmental commitments will enable USTR to 

provide guidance on where State and other implementing agencies 

should best target resources. Improved monitoring would help ensure that 

expanded trade does not come at the expense of environmental 

protection.

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.

We provided a draft of this report to State and USTR, as well as USAID, 

Interior, the Department of Agriculture’s U.S. Forest Service, EPA, the 

Department of Commerce’s NOAA, and Justice for review and comment. 

We received technical comments from State, USTR, Interior, Justice, and 

NOAA, which we incorporated, as appropriate. The Department of 

Agriculture’s U.S. Forest Service provided written comments which we 

have reprinted in appendix II.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to the 

appropriate congressional committees, the Secretary of State, the U.S. 

Trade Representative, and other interested parties. In addition, the report 

will be available at no charge on the GAO website at http://www.gao.gov.

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation 
Page 41 GAO-15-161 Free Trade Agreements

If you or your staff has any questions about this report, please contact 

Kimberly M. Gianopoulos at (202) 512-8612 or GianopoulosK@gao.gov. 

Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. GAO staff who made 

major contributions to this report are listed in appendix III.

Kimberly M. Gianopoulos

Acting Director, International Affairs and Trade
Appendix I: Scope and Methodology

Page 42 GAO-15-161 Free Trade Agreements

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.1

In addition, in the four countries we visited a number of project sites. For 

example, in El Salvador we visited the wastewater reference laboratory 

that EPA helped set up, as well as several private firms that participated 

in cleaner production activities, including a boutique hotel, a producer of 

dairy products; and a dairy and pig farm. Among the project sites we 

visited in Guatemala were the Cleaner Production Center, the ARCAS 

Wildlife Rescue Center, and a sawmill in the Petén region. In Chile, we 

met with World Wildlife Fund officials and a group of olive oil producers 

participating in a clean production program. Finally, we visited a number 

of project sites in the Ucayali province in Peru. For example, we visited a 

site where logs are transported from the Amazon region down the river to 

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 

discuss illustrative examples of assistance provided by U.S. agencies to 

help partners meet FTA environmental commitments, we interviewed 

officials from State, USTR, the Interior Department (Interior), the 

Environmental Protection agency (EPA), the Department of Justice 

(Justice), the National Oceanic and Atmospheric Administration (NOAA), 

and the U.S. Forest Service prior to making field visits to El Salvador, 

Guatemala, Chile, and Peru, where we interviewed State, USAID, and 

U.S. Forest Service staff and host government, NGO, and private sector 

officials. 

 1

Our analysis was not intended to be interpretive of the environmental provisions’ legal 

texts or to demonstrate or provide evidence regarding the effectiveness of those 

provisions.

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 43 GAO-15-161 Free Trade Agreements

sawmills for processing. We witnessed a demonstration of USAID’s and 

U.S. Forest Service’s prototype of an electronic tracking system. In 

addition, we met with regional government officials and officials 

implementing the USAID/ Peru-Bosque project to enhance public 

participation by helping local groups and indigenous people comment on 

draft regulations for the new Forestry and Wildlife Law.

To examine selected partner mechanisms to process public 

environmental submissions, we reviewed the environmental chapters of 

FTAs, which entered into force from 2003 through 2013, to determine 

which agreements required the establishment of an independent body, 

such as a secretariat, to receive and respond to citizen submissions. We 

interviewed officials at State, USTR, and USAID. In addition, we 

interviewed officials at the CAFTA-DR Secretariat for Environmental 

Matters in Guatemala City, Guatemala; and analyzed data obtained from 

the CAFTA-DR Secretariat to determine the number of citizen 

submissions it had received, and the number of factual records published 

since the establishment of the CAFTA-DR Secretariat. To determine the 

status of negotiations for establishing the Peru Secretariat for 

Environmental Matters, we interviewed officials from USTR, State, and 

the Organization of American States; and submitted questions to officials 

in the government of 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. To show trends in total 

funding for environmental activities by FTA, we aggregated funding for 

each FTA across agencies and plotted total funding over the years in 

which the FTA was in effect. We depicted total resources for each FTA by 

adding available funding data across both agencies and years in which 

the FTA was active. We also used FTA-level budget data to show the 

allocation of funding across programs. We asked USTR officials for 

estimates of staff resources dedicated to FTA implementation and 

monitoring. We assessed the reliability of the data by (1) performing 

electronic testing for errors in accuracy and completeness and (2) 

interviewing agency officials knowledgeable about the data sources. We 

determined that the data were sufficiently reliable for illustrating trends in 

FTA-related environmental assistance across agencies.

To examine how State monitors FTA environmental cooperation activities 

and USTR monitors partner compliance with FTA environmental 

commitments, we interviewed officials at State and USTR and 

implementing agencies, including EPA, Justice, Interior, USAID, the U.S. 
Appendix I: Scope and Methodology

Page 44 GAO-15-161 Free Trade Agreements

Forest Service and NOAA. In addition, we interviewed officials from the 

Organization of American States and Le Groupe-conseil Baastel

(Baastel), a private firm, which have assisted State with collecting, 

analyzing, and reporting the results of nine partner countries under four 

agreements. Furthermore, we reviewed documentation, such as data 

collection templates, monitoring reports, and performance management 

plans from State, the Organization of American States, Baastel, and 

supporting U.S. agencies, such as EPA and USAID. We interviewed 

officials at USTR, and reviewed documentation, such as its plan to 

monitor compliance and implementation. Furthermore, we reviewed 

cables detailing the status of the environment in partner countries over 

the past 5 years. USTR requested this information—through State—from 

U.S. embassies in partner countries, to collect information as part of its 

plan to monitor progress under the provisions. We interviewed officials at 

USTR to identify mechanisms that it uses—such as the Interagency 

Timber Committee—to monitor compliance and implementation of 

provisions in the environmental chapter of the Peru Trade Promotion 

Agreement, and its Annex on Forest Sector Governance. Also, we 

reviewed documentation, such as the environmental chapter of the Peru 

Trade Promotion Agreement, and its Annex on Forest Sector 

Governance, the matrix detailing the status of implementing provisions 

provided to USTR and the public by the government of Peru, and the 

Joint Communiqué of the Meetings of the Governments of the United 

States and Peru Regarding Forest Sector Governance.

We conducted this performance audit from May 2013 to November 2014 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Comments from the

Department of Agriculture’s

U.S. Forest Service

Page 45 GAO-15-161 Free Trade Agreements

Appendix II: Comments from the

Department of Agriculture’s

U.S. Forest Service
Appendix III: GAO Contacts and Staff 

Acknowledgments

Page 46 GAO-15-161 Free Trade Agreements

Kimberly M. Gianopoulos (202) 512-8612 or GianopoulosK@gao.gov

In addition to the contact named above, Kim Frankena, (Assistant 

Director), Tom Zingale (Analyst-in-Charge), Kyerion Printup and John 

O’trakoun made key contributions to this report. Sada Aksartova, Juan P. 

Avila, Karen Deans, David Dornisch, Ernie Jackson, and Oziel Trevino 

provided additional assistance.

Appendix III: GAO Contacts and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgements

(320993)
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