DEPUTY DIRECTOR-GENERAL ALAN WM. WOLFF
Good afternoon, it’s a pleasure to be with you here today for the discussion of a topic both important to the health of our planet and to the future work of the WTO.
Our thanks to Finland and Costa Rica for their leadership in organizing this important event.
This event is one among several taking place on the margins of tomorrow’s meeting of the Committee on Trade and Environment. I want to commend the organizers of these events, as well as the many Members contributing to the discussions in the Committee. I am very much looking forward to what some of you have dubbed “WTO Environment Week”.
The effort, engagement and enthusiasm that make a WTO Environment Week possible are another encouraging sign of Members’ growing recognition:
- That trade is evolving as environmental risks, new technologies and social pressures reshape the way we do business.
- That the global trading system must adapt to the new circumstances.
- And that the pressure to adapt can open new windows of opportunity for our work at the WTO.
I encourage you to think “out of the box” on what those opportunities are and how to seize them to support WTO reform.
The discussions taking place this week are extremely timely. More than a slight possibility exists to turn trade into a lever for a better environment. The stakes could not be higher:
- In the balance is our readiness to live up to the spirit and letter of the Marrakesh Agreement, the WTO’s founding document. In its opening paragraph, the Marrakesh Agreement enshrines sustainable development as an overarching principle of the WTO.(1)
- In the balance is the contribution of trade to the fulfilment of the 2030 Agenda for Sustainable Development. The Agenda looks to trade and to the WTO to turn the 17 Sustainable Development Goals into reality.
- In the balance is the continued ability of trade to deliver benefits reaching far and wide, as ever more frequent and extreme weather events expose the vulnerability of the supply, transport and distribution chains that make trade possible in the first place.
Bringing trade opportunities into sharper focus
It is imperative that the WTO continue to be relevant and credible in a world where environmental risks have become one of the single biggest concerns among governments, businesses and consumers, especially among the young. The future is theirs to live in, and they are owed a positive response from us, those who are considering the rules and guidelines for world trade that will shape that future.
In a recent survey of nearly 1,000 experts from the public and private sectors, academia and civil society, extreme weather events and the failure to tackle climate change were singled out as the gravest threats over the next ten years from a long list of geopolitical, economic, and technological risks.
Proactive, forward-looking trade approaches are key elements of coordinated and effective solutions to manage these risks. For example:
- Trade can help to cushion the adverse impacts of climate change on food security. According to one study, malnutrition resulting from climate-related increases in global crop prices would be 15 percentage points higher among households in certain parts of the world if trade stopped rather than being allowed to flow freely.
- Trade can also help countries have access to the goods and services they need to tackle urgent environmental challenges. One study found that if 18 large countries eliminated the barriers they place on imports of environmental goods, they would be able to import 63% more energy-efficient lighting, 23% more wind power equipment and 14% more solar power equipment.
These are just two examples of concrete ways to utilize trade policies to advance environmental sustainability. WTO Members have identified many others.
There are many untapped opportunities to bring trade and environmental sustainability into closer alignment. If turned into action, the multilateral trading system would be seen to be responsive to the needs of peoples around the world, especially resonating with the younger generations, who would bear the brunt of the burdens imposed by a rapidly deteriorating natural environment.
Our ability to make progress on this front calls for strengthened collaboration and innovative partnerships involving not just governments, but also consumers, the private sector and other stakeholders.
Last year, WTO Director General Azevêdo and the Executive Director of UN Environment announced that their organizations were joining forces to provide a platform for interested stakeholders from all sectors of society to exchange ideas, showcase successful experiences and improve understanding of how trade can more effectively help bring about sustainable development.
To kick-start this work, WTO and UN Environment co-hosted a very successful high-level event during last year's WTO Public Forum, along with an exhibition of a series of innovative sustainability solutions and the launch of a joint publication.
This initiative has borne fruit. A number of WTO Members report that this program played a catalytic role in encouraging the formation of some of the partnerships around this week's events. The joint WTO-UN Environment dialogue has helped spark new ideas on positive linkages between trade and environment and provided impetus to capital-based discussions on this issue.
Trade and the circular economy
The topic of this meeting — the circular economy — is a case in point.
The fact that it was becoming obvious to all of us that the build-up of waste on this, our planet was not sustainable, did not lead to an immediate response. Reducing waste through reuse, sharing, repair, refurbishing, remanufacturing and recycling was long available but was not widely regarded as being imperative. The awakening is summed up in the words “circular economy”, minimizing the creation of waste and harmful by-products, by keeping products, equipment and infrastructure in use longer, and increasing productivity as a social goal, not just an economic one.
The joint WTO-UN dialogue was instrumental in promoting a focused discussion on this issue here at the WTO. Your deliberations today will further improve our understanding of the relevant trade aspects.
To foster this conversation, I will highlight some of the ways that the WTO could support the efficiency and sustainability goals which are at the core of the circular economy.
The first way is to “do no harm”. WTO rules do not constrain the ability of governments to promote sustainability, not least through circular economy strategies.
WTO rules give Members ample policy space to pursue environmental and other legitimate policy goals, while keeping protectionism in check.
During the last two decades, several environment-related measures have been tested against those rules through the WTO dispute settlement system. The measures in question sought to achieve a variety of policy goals — from reducing the health risks linked to re-treaded tyres to controlling air pollution. These disputes have confirmed that Members may apply environmental measures, even trade-restrictive ones. But those measures must fulfil certain conditions to ensure that they are fit for purpose rather than being adopted for protectionist reasons. Under Article XX of the GATT, known as the general exceptions, it has long been recognized that when a measure is necessary for the environment or the health of a country's citizens it can be maintained as long as it is applied fairly, that it is non-discriminatory, and that it is not arbitrary.
Having the space under the WTO’s rules to invoke general exceptions does not mean that trade restrictions are necessarily an effective way to promote circularity and sustainability. Instead, we must ask what kind of trade approaches would best allow circular and sustainable businesses and practices to expand and flourish.
The second way that the WTO can support the circular economy is to promote transparency and sponsor policy dialogues.
The WTO’s Environmental Database shows that a broad range of trade measures affect the key activities that underpin a circular economy, from reuse and repair, to remanufacturing, recycling and eco-design. Of the 470 or so trade measures related to these activities contained in the database, 44% consist of government support measures, 28% of technical regulations and conformity assessment procedures, and 22% of bans and licensing requirements, with other measures making up the rest.
Many of these measures actively support the circular economy — for example by establishing eco-design or recycling standards, or by requiring governments to purchase goods that meet environmental standards.
But others may inadvertently work against circular trade, reflecting the fact that trade policies have traditionally been conceived with a linear, rather than a circular, economy in mind. This can result in a mismatch between trade policies on the one hand, and circular economy strategies on the other. The WTO’s tools on transparency and policy dialogue can help us to improve our understanding of the overlap between trade policies and circular economy strategies and avoid such a mismatch. The process can yield mutually supportive solutions.
Just as important, we must take tangible steps to help countries overcome the obstacles that limit their participation in circular trade, and the benefits they can derive from it. For example:
- Capacity constraints in some developing countries to treat imported post-consumer products in an environmentally sound manner or to combat illegal trade in waste.
- The lack of a well-functioning national or regional quality infrastructure to ensure that circular trade meets safety and quality requirements.
- And the limited participation of developing countries in the development of international standards related to circular economy activities.
Overcoming these and other barriers to circular trade is not a task for trade policy alone. It involves:
- Policymakers working together across trade and other policy domains to adopt mutually supportive policies for trade and circularity.
- Public-private partnerships being enlisted to foster the development of markets for secondary materials.
- And targeted capacity building for the poorest countries, not least to help strengthen their regulatory and quality infrastructure.
The third way that the WTO can support the goals of a circular economy relates to standards.
Although the WTO itself does not develop any standards, its rules and day-to-day work strongly encourage regulators to adopt international standards, to follow best practices and to cooperate across borders. In this way, the WTO helps governments improve coherence between trade and other legitimate regulatory policy goals. The WTO TBT Agreement requires technical regulations to be based on international standards. When a technical regulation is based on a relevant international standard, it is presumed to be WTO-consistent and not more trade-restrictive than necessary.
This pragmatic work builds trust and confidence — among regulators, and between regulators and producers and consumers. Trust and confidence are key ingredients to allow trade to play its full role in strengthening circular economy value chains and ensure that all countries can participate.
Possible next steps
In working to turn trade into a more forceful driver of circularity and sustainability, you are not starting from scratch. Far from it.
In fact, the debate on trade and environment has evolved considerably since the WTO was created in 1995. We now understand much more clearly that no country can choose between open trade and environmental sustainability. Both are critically important to ensure the well-being of people everywhere.
This improved understanding provides a solid foundation for ongoing work on trade and the environment. We owe it in no small measure to the foresight demonstrated by trade ministers meeting in 1994 who decided to add a highly innovative feature to the soon-to-be created WTO: a forum dedicated to enhancing our dialogue and improving mutual understanding on trade and the environment — the Committee on Trade and Environment.
Over the years, this forum has helped Members to put into practice the principle of “mutual supportiveness” by providing an open channel of communication with each other, and with the environmental policy community — including with many of the multilateral environmental agreements.
As you consider next steps, I would strongly encourage you to make full use of the Committee. It is particularly well-suited for practical, example-based discussions that can help usher in a more outcome-oriented phase in your work and build further momentum behind it.
Discussions like today's ensure that the WTO's approach to the environment can evolve and adapt to changing realities. As we work to respond urgently to the broader systemic issues that we face in the trading system, we must also pay urgent attention to areas that speak directly to the values and sensibilities of a large and growing part of the world’s population.
The Ministerial Conference being convened in Nur-Sultan in June 2020 is an obvious landmark for all conversations that are now happening within the WTO. You should reflect on how you want to use MC12.
Thank you for the opportunity to join you today. I wish you a productive afternoon.