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TRADE AND ENVIRONMENT 
The Trade and Environment Committee, and Doha preparations 

Background back to top

When ministers approved the results of the Uruguay Round negotiations in Marrakesh in April 1994, they took a decision to begin a comprehensive work programme (see below) on trade and environment in the WTO. During the past six years, this work programme has provided the focus of discussions in the Committee on Trade and Environment (CTE). The CTE’s main aim is to build a constructive relationship between trade and environmental concerns. The CTE has a two-fold mandate: first “to identify the relationship between trade measures and environmental measures in order to promote sustainable development”; second, “to make appropriate recommendations on whether any modifications of the provisions of the multilateral trading system are required, compatible with the open, equitable and non-discriminatory nature of the system.”

This broad-based mandate covers goods, services, and intellectual property rights and builds on work carried out in the previous GATT Group on Environmental Measures and International Trade. Since 1997, the CTE has adopted a thematic approach to its work to broaden and deepen the discussions and to allow all items of the work programme to be addressed in a systematic manner. Discussions of the items on the work programme have been clustered into two main areas: issues relevant to market access and issues related to the linkages between the multilateral environment and trade agendas.

As directed by the Marrakesh Ministerial Decision, the CTE submitted reports on the progress on all items of its work programme to the 1996 Ministerial Conference in Singapore, the 1998 Ministerial Conference in Geneva and the Ministerial Conference in Seattle in 1999. The CTE will submit another report to the 2001 Ministerial Conference in Doha.

Several WTO symposia have been held with representatives of civil society in recent years on the trade and environment interface. The most recent one in July 2001 featured a working session on trade and environment, one of ten topics discussed in a public event entitled “Issues Facing the World Trading System”.

Work of the CTE back to top

The CTE has brought environmental and sustainable development issues into the mainstream of the WTO’s work. Several important parameters guide the CTE’s work. The first is that WTO competency for policy coordination in this area is limited to trade and those trade-related aspects of environmental policies which may result in significant trade effects for its members. In other words, it is not intended that the WTO should become an environmental agency. Nor should it get involved in reviewing national environmental priorities, setting environmental standards or developing global policies on the environment. That will continue to be the task of national governments and of other intergovernmental organizations better suited to the task. The second parameter is that increased national coordination as well as multilateral cooperation is necessary to address environmental concerns. The third is that secure market-access opportunities are essential to help developing countries work towards sustainable development.

The contribution which the multilateral trading system makes to environmental protection was recognized at the United Nations Conference on Environment and Development (the Earth Summit) in 1992, which stated that an open, equitable and non-discriminatory multilateral trading system has a key contribution to make to national and international efforts to better protect and conserve environmental resources and promote sustainable development.

In its first report in 1996, the CTE recognized that trade and environment are important areas of policy-making and that they should be mutually supportive in order to promote sustainable development. The report noted that the multilateral trading system has the capacity to further integrate environmental considerations and enhance its contribution to the promotion of sustainable development without undermining its open, equitable and non-discriminatory character.

Some of the main points of discussion of the CTE’s work programme since 1996 include the following:
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The relationship between the provisions of the multilateral trading system and trade measures for environmental purposes, including those pursuant to multilateral environmental agreements

A range of provisions in the WTO can accommodate the use of trade-related measures needed for environmental purposes, including measures taken pursuant to multilateral environmental agreements (MEAs). Those that are cited regularly as being of key importance are the provisions relating to non-discrimination (MFN and national treatment) and to transparency. Beyond that, and subject to certain import conditions, Article XX of GATT allows WTO members legitimately to place public health and safety and national environmental goals ahead of their general obligation not to raise trade restrictions or to apply discriminatory trade measures. These provisions have been a major focus of work for the CTE and will be kept under review.
 

Trade measures applied pursuant to MEAs

Throughout the discussions on this issue in the WTO, it has become clear that the preferred approach for governments to take in tackling transboundary or global environmental problems is through cooperative, multilateral action under an MEA. While some MEAs contain trade provisions, trade restrictions are not the only nor necessarily the most effective policy instrument to use in MEAs. In certain cases they can play an important role. It has also been stated that the WTO already provides broad and valuable scope for trade measures to be applied pursuant to MEAs in a WTO consistent manner.

The CTE has held several Information Sessions with the Secretariats of various MEAs to discuss the trade-related developments in these agreements. At a session in June 2001, the following MEA secretariats gave presentations: Convention on International Trade in Species of Wild Fauna and Flora (CITES); Basel Convention on Transboundary Movements of Hazardous Wastes and their Disposal; Montreal Protocol on Substances that Deplete the Ozone Layer; UN Convention on Biological Diversity (CBD); UN Framework Convention on Climate Change; the Rotterdam (PIC) Convention; the Stockholm (POPs) Convention and the UN Fish Stocks Agreement.

Several MEAs noted that the focus of most environmental agreements is on developing mechanisms to assist parties to comply with their obligations in a flexible and non-confrontational manner, thereby preventing disputes from arising. While CITES and the Montreal Protocol had long-standing mechanisms in place to facilitate compliance, other MEAs, such as the Basel Convention and the recent Rotterdam (PIC) and Stockholm (POPs) Conventions, were in the process of developing non-compliance regimes. The UNFCCC gave a thorough presentation of the non-compliance regime envisaged for the Kyoto Protocol, in which compliance rests on market-based instruments.

It was noted that compliance and enforcement in MEAs, as in the WTO, is a dynamic process. MEAs are designed to facilitate compliance through creating incentives and providing financial and technology transfer; however, there is no one size fits all for compliance in MEAs.

Other MEA secretariats which have participated in the CTE’s discussions include: the Montreal Protocol on Substances that Deplete the Ozone Layer; the Intergovernmental Forum on Forests; and the International Tropical Timber Organization.
 

Dispute settlement

A related item concerns the appropriate forum for the settlement of potential disputes that may arise over the use of trade measures pursuant to MEAs. Should such disputes be addressed in the WTO or to the dispute settlement procedures that exist in the MEAs themselves? There is general agreement that in the event a dispute arises between WTO members who are also signatories to an MEA, they should try first to resolve it through the dispute settlement mechanisms available under that MEA. Were a dispute to arise with a non-party to an MEA, but with another WTO member, the WTO would provide the only possible forum for resolving the dispute.

The CTE agrees that better policy coordination between trade and environmental policy officials at the national level can help prevent situations from arising in which the use of trade measures applied pursuant to the MEAs could become subject to disputes. Furthermore, it is unlikely that problems would arise in the WTO over trade measures agreed and applied among parties to an MEA. In the event of a dispute, however, WTO members are confident that the WTO dispute settlement provisions would be able to tackle any problems which arise in this area, including those cases requiring input from environmental experts. Some governments, however, have said they are interested in clarifying WTO rules to avoid future conflicts.

 
Eco-labelling

Eco-labelling programmes are important environmental policy instruments. Eco-labelling was discussed extensively in the GATT and the CTE and TBT Committee have had exhaustive discussions on labelling schemes and other related issues. A key WTO requirement is that environmental measures that incorporate trade provisions or that affect trade significantly should not discriminate between home-produced goods and imports, nor between imports from or exports to different trading partners. Non-discrimination is the cornerstone of secure and predictable market access and undistorted competition: consumers are guaranteed a wider choice and producers better access to the full range of market opportunities. Subject to that requirement being met, WTO rules place essentially no constraints on the policy choices available to a country to protect its own environment against damage either from domestic production or from the consumption of domestically produced or imported products.

The CTE has acknowledged that well-designed, eco-labelling programmes can be effective instruments of environmental policy. It notes that in certain cases such programmes have raised significant concerns about possible trade effects. An important starting point for addressing some of these trade effects is to ensure adequate transparency in the preparation, adoption and application of eco-labelling programmes. Interested parties from other countries should also be allowed to voice their concerns. Discussion is continuing on how the use in eco-labelling programmes of criteria based on non-product-related processes and production methods should be treated under the rules of the WTO Agreement on Technical Barriers to Trade.
 

WTO transparency provisions

The WTO transparency provisions fulfil an important role in ensuring the proper functioning of the multilateral trading system. They help to prevent unnecessary trade restrictions and distortions and ensure that WTO members provide information about changes in their regulations. They can also provide a valuable first step in ensuring that trade and environment policies are developed and implemented in a mutually supportive way. Trade-related environmental measures should not be required to meet more onerous transparency requirements than other measures that affect trade. The CTE has stated that no modifications to WTO rules are needed to ensure adequate transparency for trade-related environmental measures. In 1998 the CTE also established a WTO Environmental Database which can be accessed electronically by WTO members. The WTO Secretariat up-dates this database annually by reviewing all the environment-related notifications.
  

Export of domestically prohibited goods

During the mid-1980’s, concerns were raised by a number of developing country GATT contracting parties that they were importing certain hazardous or toxic products without knowing the full environmental or public health dangers such products could pose. In the late 1980’s, a GATT Working Party examined ways of treating trade in goods which are severely restricted or banned for sale on the domestic market of an exporting country. A key consideration was that the importing country should be fully informed about the products it was receiving and have the right to reject them if it felt such products caused environmental or public health problems.

Several MEAs have been negotiated in the last few years to deal with problems of trade in environmentally hazardous products (e.g. the Basel Convention and London Guidelines). The WTO does not intend to duplicate work that has already been accomplished elsewhere in the area of domestically prohibited goods. WTO members, in the context of the CTE, have agreed to support the efforts of the specialized inter-governmental environmental organizations that are helping to resolve such problems. However, they have noted that there may be a complementary role for the WTO to play in this area.
 

Trade liberalization and sustainable development

The CTE continues to tackle this item of its work programme in the context of the built-in agenda of further trade liberalization initiatives contained in the results of the Uruguay Round negotiations. WTO members participating in the CTE have noted that the removal of trade restrictions and distortions, in particular high tariffs, tariff escalation, export restrictions, subsidies and non-tariff barriers, has the potential to yield benefits for both the multilateral trading system and the environment. Several have said this should be a key objective of future trade liberalization negotiations and could apply to agriculture and fisheries, energy, forestry, non-ferrous metals, textiles and clothing, leather and environmental services. Discussions to date have highlighted areas where the removal of trade restrictions and distortions can be beneficial for the environment, trade and development, providing “win-win-win” opportunities.
 

Trade in services and TRIPS

The CTE also examines the links between environmental measures and the WTO’s services and intellectual property agreements. With respect to the General Agreement on Trade in Services (GATS) and the environment, the CTE has noted that its discussions have so far not led to the identification of any measures that members feel may be applied for environmental purposes to services trade which are not already adequately covered by GATS provisions.

In the case of intellectual property rights, WTO members have acknowledged that the Agreement on Trade-Related Intellectual Property Rights (TRIPS) plays an essential role in facilitating access to and the transfer of environmentally-sound technology and products. However, further work is required in this area, including clarifying the relationship between the TRIPS Agreement and the Convention on Biological Diversity.

While many governments believe the two agreements to be mutually supportive, some also seek assurances that the agreements are implemented in a complementary manner. Others call on the need to develop an international framework to protect genetic resources and traditional knowledge.

Several intergovernmental organizations have also briefed members of the CTE on related work, including the CBD, the Food and Agriculture Organization (FAO) and the World Intellectual Property Organization (WIPO).

Preparations for Doha back to top

Over the last two years some WTO member governments have sought further discussion in CTE on the precautionary principle. Some believe it is necessary to help to build a common understanding of how to manage risks in situations where there is scientific uncertainty about the effects on human health and the environment. The EU, in particular, has called for the clarification of the use of this principle in the WTO in order to ensure that it is not used in an arbitrary way or as a form of protectionism. Whilst some governments support the emphasis on science-based decision making, several note the lack of an internationally agreed definition of this concept and cautioned against invoking precaution to justify protectionism.

WTO government delegations still have clearly divergent views on whether any negotiations are appropriate in the area of trade and environment, and more specifically on the nature of any further work on the relationship between the WTO and MEAs, on eco-labelling and on precaution. Some have mentioned possible exploration of a future mandate for the CTE on the relationship between the WTO and MEAs, and also regarding further work on eco-labelling in the TBT Committee, provided there are clear commitments not to weaken existing disciplines. However, for other governments this is going either too far or not far enough, at least at the present stage. Precaution remains a rather divisive issue.

The “win-win” or even “win-win-win” situations (for trade, environment and development), specifically with regard to environmentally damaging subsidies, especially in the fisheries area, may require a clarification of the role of the CTE in a negotiating context.