Let me first congratulate the organisers of this conference for the timely focus of the event. As shown by the recent discussions on trade and climate change in various fora, we need to better understand the complex connections between trade and environment, and to improve the legal relationship between these two important areas of domestic and international governance. I believe this seminar provides a good opportunity to explore these linkages and to highlight both the risks of conflicts and the potential for convergence.

I also want to pay tribute to the many people and organisations who have pushed so hard to “mainstream” environmental and sustainability issues into the trade agenda. My job at the WTO may be to improve international trade rules, but I also realize, as do millions of ordinary citizens around the globe, that open trade and booming commerce without a sustainable environment is a losing proposition. I happen to have a passion for the great outdoors, and many of my best moments in life have been those I have spent in places where nature still reigns supreme. I believe what John Muir said: “in every walk with nature, one receives far more than he seeks”. Thanks to the dedicated efforts of many in the environmental movement, there is now a much broader political consensus in the world that we need to preserve the earth's resources, diversity and environment, both for its own sake and for mankind.

In any debate over trade and sustainability, we will always be left with the inevitable need to balance different interests. The search for food, fuel, housing, transportation, leisure and other things has always necessitated the exploitation of natural resources and other environmental impacts. The push for economic growth and higher living standards has often led societies to adopt environmentally unsustainable policies. But here is the happy paradox: as wealth has increased dramatically in the last two generations, so too has the concern for our environment and the desire of many to see governments strike a better balance, and I believe this will be a principal driving force in global affairs, including in institutions like the WTO, in all future endeavors.

Now, what about world trade and its relationship with the environment? At $13 trillion per year, trade is a substantial driver of economic development and global prosperity. In fact, trade is both a symptom of and a driver of economic expansion. Wealth creation leads to greater trade, which in turn increases economic efficiency and produces higher living standards. The past half a century has been marked by an unprecedented expansion of international trade — it is nearly thirty-two times greater in volume terms than it was in 1950. It is therefore not surprising that one key concern about trade is its potential role in increasing environmental degradation. This major expansion may be one reason why trade is increasingly being taken into consideration in environment fora.

But as long as economies grow trade growth is inevitable. I don't think it is feasible to convince the governments of the world that economic growth and trade have to be arrested or reversed in order to save the planet. Thus, our only real choice is to see that future growth in both economic activity and trade is done in an environmentally sustainable way. This requires us to understand the facts and to better analyse the realities of trade.

Take for example the impact of trade on greenhouse gas emissions. Obviously, growing international trade increases the use of transportation services to ship goods over long distances. A recent estimate by the International Energy Agency found that the transport sector was responsible for about a quarter of world energy-related greenhouse gas emissions. However, it is worth noting that almost 75 percent of the CO2 emissions from within that sector came from road transport. By comparison, maritime transport, which is responsible for the vast majority of merchandise trade volume, accounted for a very small portion — only about 9 per cent — of the transport sector's contribution to CO2 emissions. Paradoxically, then, maritime shipment of goods over long distances may be preferable in many cases to shorter shipments by road.

It is also instructive to look at the facts behind the debate over “food miles”— which is a way of calculating the CO2 emissions associated with the transport of food products over long distances to arrive at the final consumer. Many people take it on faith that local sourcing of such food will always be better for the carbon footprint of our food chain.. But while this certainly will be the case for some products and some countries, a lot depends on the transport involved and the type of production process being used — for example, the use of heated greenhouses for growing vegetables versus open-air production, or the use of energy intensive cultivation or irrigation versus more natural methods. For instance, meat produced in countries with abundant natural grazing lands and shipped by sea can sometimes have a lower carbon footprint than locally produced meat if the latter relies on a production chain requiring heavy use of fertilizers and pesticides. So we need to examine the facts and determine how we can best promote the more environmentally sustainable forms of trade while making the unsustainable less attractive.

In more general terms, I would argue that more open trade can have three beneficial impacts on the environment. First, greater trade openness can lead to more efficient allocation of natural resources. Second, it will, over time, help increase demand for better environmental quality, because evidence shows that those with higher living standards are the strongest proponents of environmental protection. And finally, it can improve access to, and development of, the new technologies and services that are needed to reduce pollution or energy use.

Let me turn now to the WTO, and how trade and environment issues intersect with our current agenda — as well as how they may impact WTO in the future. Here I will focus on three broad topics: 1) today's WTO rules and jurisprudence; 2) our current Doha Round negotiations; and 3) some thoughts on the future challenge of climate change and WTO.

THE WTO TODAY

The WTO is one part of the complex architecture of multilateral cooperation. It provides a framework of disciplines to facilitate global trade and serves as a forum to negotiate further trade openness. But it is also becoming an important forum for advancing some international environmental goals. This is reflected in the WTO's existing goals and rules. So let me talk a few minutes about our stated goals and some of our key rules touching on environment.

GOALS

First, the WTO recognizes that freer trade is not and should not be an end in itself; it is tied to crucially important human values and welfare goals captured in the WTO's founding charter, the Marrakesh Agreement. One of these goals — enshrined in the Preamble of that agreement — is to allow for the optimal use of the world’s resources in accordance with the objective of sustainable development. So for our Members the goal of an open and non-discriminatory multilateral trading system and the goal of promoting sustainable development are supposed be mutually supportive.

WTO RULES

This commitment to sustainable development can also be seen in WTO rules. First, our fundamental rules of non-discrimination and transparency offer a framework for ensuring predictability and the fair implementation of measures to address environmental concerns. Secondly, many of our other rules and agreements — such as the Agreement on Technical Barriers to Trade (which deals mainly with product regulations), and the Agreement on Sanitary and Phytosanitary Measures (which concerns food safety and animal and plant health) — provide scope for environmental objectives to be followed and for necessary trade-related measures to be adopted.

However, there is always the concern that certain measures taken to achieve environmental protection goals may, by their very nature, restrict trade and thereby impact on the WTO rights of other Members. This is why exceptions such as GATT Article XX are important (GATT is the core WTO agreement relating to trade in goods). GATT Article XX on General Exceptions lays out a number of specific instances in which Members may be exempted from GATT rules that might otherwise prohibit a certain trade measure. The provision seeks, among other things, to ensure that environmental measures are not applied arbitrarily and are not used as disguised protectionism.

Our dispute settlement jurisprudence also shows how integral environmental issues have become to our system of rules. Since the entry into force of the WTO in 1995, our Dispute Settlement Body has had to deal with a number of disputes concerning environment-related trade measures. [SLIDE 5] Four disputes are particularly relevant: the US — Gasoline case, the US — Shrimp case, the EC — Asbestos case and the Brazil — Retreaded Tyres case. Trade measures in these cases have sought to achieve a variety of policy objectives — from conservation of sea turtles to the protection against air pollution. [SLIDE 6] I won't go into the details of these cases today, but they have all affirmed that WTO rules do not take precedence over environmental concerns and that WTO rules allow an appropriate balance between, on the one hand, the right of Members to take regulatory measures, including trade restrictions, to achieve legitimate policy objectives and, on the other hand, the rights of other Members under basic trade disciplines.

RELEVANT WTO INSTITUTIONS

Let me now talk about how the WTO supports sustainable development and the protection of the environment through its specialized committees and bodies. One unique institutional venue is the Committee on Trade and Environment (CTE). The work programme of the CTE covers the main issues at the intersection of trade and environment — for example, the environmental benefits of removing trade restrictions in the energy and forestry sectors, or the effect of energy efficiency labelling on market access. As a forum for dialogue on trade and the environment, the Committee is an incubator for ideas on how to improve trade policies in a way that supports sustainability. In fact, some issues first raised in the CTE have now become full-fledged negotiations, including the Doha Round negotiations on fisheries subsidies and on the relationship between the WTO and multilateral environmental agreements (MEAs).

Other WTO bodies are also important. For example, the so-called TBT Committee, which administers the Agreement on Technical Barriers to Trade is an important place for governments to share information on their proposed environmental actions and how they may affect trade. The Committee helps governments understand how best to achieve legitimate environmental objectives while avoiding unnecessary obstacles to international trade.

THE DOHA ROUND NEGOTIATIONS

I would now like to explain a few of the key environmental issues in the current Doha Round of WTO negotiations. This round represents the first significant multilateral negotiations on trade and environment issues in the GATT/WTO system's history, and the mandate was spelled out in the Doha Ministerial Declaration. Its overarching objective is to enhance the mutual supportiveness of trade and environment. Specific trade and environment issues are set out in Paragraph 31 of the Doha mandate[SLIDE 7]. I will discuss these briefly and then refer to some other issues which clearly have huge environmental implications but which come from elsewhere in the Doha mandate.

ENVIRONMENTAL GOODS NEGOTIATIONS (PARA. 31(III))

Let me first discuss the effort to liberalize trade in goods and services that have environmental benefits — goods like solar panels and solar water heaters, hydropower turbines and equipment for biogas production; and services like environmental consulting or soil conservation services. This could have a positive impact on air quality, water, soil and natural resources conservation and help improve for instance waste water management, energy efficiency or abatement of greenhouse gas emissions. A successful outcome of these negotiations on environmental goods and services could deliver a triple-win for WTO Members: a win for the environment, a win for trade and a win for development. The environmental benefits would come from better access to safe water, sanitation or clean energy. Trade wins because these products become less costly and efficient producers of such technologies can find new markets. And development wins because poor countries can better afford the tools needed to address key environmental priorities as part of their ongoing development strategies.

RELATIONSHIP BETWEEN MEAS AND WTO (PARAS. 31(I) AND (II))

The other key negotiations from Paragraph 31 is the discussion of how to ensure a harmonious co-existence between WTO and multilateral environmental agreements (MEAs). There are over 250 MEAs currently in force, and about 20 of them include provisions that can affect trade. Questions can arise about whether trade measures under an MEA are compatible with WTO rules. For example, a multilateral agreement could authorize trade in a specific product between its parties, but ban trade in the same product with countries that have not signed the agreement.

Since environmental problems often transcend national borders, the response must involve concerted action at the international level. WTO Members have long recognized the need for coherence amongst international institutions in addressing global environmental challenges. The current negotiations on the WTO-MEA relationship provide a unique opportunity for creating positive synergies between the trade and environment agendas at the international level.

OTHER PARTS OF THE DOHA NEGOTIATIONS

I would also like to mention two other parts of the Doha negotiations which would have extensive implications for the environment. First, the negotiations to reduce trade distorting subsidies in agriculture (and in fact to eliminate export subsidies entirely) could have a profound impact, because they could lead to a more efficient allocation of global resources and production. They will also create increased trade opportunities for developing countries with competitive agricultural sectors, and this could lead to important income gains for these countries. Increased incomes may enable poorer countries to improve environmental protection and for instance reduce their vulnerability to the effects of climate change.

The second, even more ground-breaking area has to do with fisheries subsidies. The Doha Declaration mandated Members to “clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries”. This mandate reflects the increasing attention being paid in many international fora including the WTO (in particular in the CTE prior to the Doha ministerial conference), to the serious problems of overcapacity and over-fishing in today's modern fisheries fleets, and the role that subsidies could play in contributing to those problems. At the same time, the fisheries sector is of particular importance and sensitivity to developing countries, given its importance as a source of food and its frequent role as employer of last resort where other employment opportunities are scarce.

WTO Members are negotiating specific disciplines on fisheries subsidies. The basic discipline proposed in the draft text is a prohibition of certain subsidies. However, not all fisheries subsidies would be banned, and the prohibition would be modulated by certain exceptions, including for developing countries (but on this question of exceptions I should note that the negotiating group chair in his recent report expressed serious concern that Members are risking making the exceptions so broad as to actually undermine the objective of reducing over-fishing). The draft text also recognizes the need for specific, focused technical assistance to developing countries in order to allow them to implement fisheries management systems.

FUTURE CHALLENGE —THE WTO AND CLIMATE CHANGE

To conclude my remarks today, I would like to say a few words on one aspect of the recent debate on trade and climate change. Recently, the issue of border measures has been raised in different fora. Some countries are contemplating “border adjustments” of various sorts in order to offset the domestic carbon cost. No need to say that countries are very divided on this matter.

The key message I would like to convey here is that only a multilateral approach to climate change will allow us to properly address this challenging issue. A multilateral agreement, that includes all major emitters, would be the best placed international instrument to guide other instruments, such as the WTO, as well as all economic actors on how negative environmental externalities must be internalized.

Of course, multilateral processes involve a great many actors and this makes reaching consensus complicated. In the context of the Doha round of negotiations we are in fact facing similar difficulties. But in the end, it is only through a multilateral process that we can achieve results which are both legitimate and credible. And we should remember that the governments negotiating a Copenhagen accord are the same governments who belong to the WTO and who will negotiate future trade rules. If they can reach a multilateral consensus on what commitments to accept in order to prevent climate change, as well as how to enforce those commitments, they should be able to ensure that those commitments are harmonious with their WTO commitments. Coherence between trade and environment ministries within all of our governments will be needed to ensure such an outcome, but I believe that in the end this will be possible.

In conclusion, let me thank you for including me on your program today. I hope my remarks will inspire some discussion and sharing of ideas on how we can continue to build, through the WTO and other bodies, the important synergies that are needed between trade and environment.