The meeting is at the Washington State Convention and Trade Center


Work of the Trade and Environment Committee

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 five 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:

  • “to identify the relationship between trade measures and environmental measures in order to promote sustainable development”;
  • “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 a report on the progress on all items of its work programme to the 1996 Ministerial Conference in Singapore and the 1998 Ministerial Conference in Geneva. The CTE adopted its report for work undertaken in 1999, which will be submitted to the Ministerial Conference in Seattle.

Several WTO symposia have been held with representatives of civil society in recent years on the trade and environment interface. The most recent was the High-Level Symposium on Trade and Environment held in March 1999 at which more than 130 non-governmental and inter-governmental organizations participated. Participation also included senior-level representatives from trade, environment, and development ministries as well as other government agencies of WTO Members which deal with matters related to sustainable development. This meeting provided a forum for a useful exchange of views and information between the trade and environment communities.

A recent WTO Secretariat report (see box) argues that international economic integration and growth reinforce the need for sound environmental policies at the national and international levels. International cooperation is particularly important in addressing transboundary and global environmental challenges beyond the control of any individual nations. This would be true even if nations did not trade with one another.

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Important parameters  

The Committee on Trade and Environment (CTE) has brought environmental and sustainable development issues into the mainstream of the WTO’s work. There are several important parameters which have guided the CTE’s work.

  • The first parameter 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 parameter is that secure market access opportunities are essential to help developing countries work towards sustainable development.

The contribution which the WTO could make to environmental protection was recognized at the United Nations Conference on Environment and Development (UNCED — 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. Among the most important recommendations of the UNCED to the GATT at the time was to implement the results of the Uruguay Round.

In its first report in 1996, the CTE recognized that trade and environment are both 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.

To raise awareness of the linkages between trade, environment and sustainable development and to enhance the dialogue between policy makers from Ministries of both trade and environment in WTO Member Governments, the WTO Secretariat has organized a series of regional seminars on trade and environment for government officials from developing and least-developed countries and countries with economies in transition.

At its most recent meeting in October 1999, the CTE agreed to hold three meetings in 2000 and to continue to deepen the analysis of all items on the work programme based on the thematic clusters of market access and the linkages between the multilateral environment and trade agendas with the objective of fulfilling the mandate of the CTE.

Some of the main points of discussion of the CTE’s work programme include the following:

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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.

As in the past few years, in June 1999 the CTE held an Information Session with Secretariats of MEAs relevant to the work of the CTE to discuss the trade-related developments in these agreements. At the June Session, presentations and papers were provided by the Convention on the International Trade in Endangered Species of Wild Fauna and Flora; the Montreal Protocol on Substances that Deplete the Ozone Layer; the United Nations Framework Convention on Climate Change; the Intergovernmental Forum on Forests; and the International Tropical Timber Organization. This meeting illustrated how trade-related measures function in MEAs and helped to deepen the understanding of the relationship between MEAs and the multilateral trading system.

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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.

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Eco-labelling programmes are important environmental policy instruments. Eco-labelling was discussed extensively in the GATT, and provided the basis in the CTE for a detailed examination of related issues. The key requirement from the WTO’s point of view 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.

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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 will up-date this database annually by reviewing all the environment-related notifications. The Environmental Database is seen as an important step towards increasing the transparency of trade-related environmental measures notified by WTO Members.

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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.

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Trade liberalization and sustainable development 

Further liberalization of international trade, both in goods and services, has a key role to play in advancing economic policy objectives in Member countries. In that respect, WTO Members have already made an important contribution to sustainable development and better environmental protection world-wide by concluding the Uruguay Round negotiations. This contribution will steadily increase as the results of the Round move towards full implementation. The UN Conference on Environment and Development (the “Earth Summit”) also recognized an open, non-discriminatory trading system to be a prerequisite for effective action to protect the environment and to generate sustainable development. This is based on the perspective that countries, particularly developing countries, are dependent on trade as the main source of continued growth and prosperity.

The CTE is continuing to tackle this item of its work programme in the context of the built-in agenda for further trade liberalization initiatives contained in the results of the Uruguay Round negotiations. The CTE has 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. Discussions in 1999 included the sectors of agriculture and fisheries, energy, forestry, non-ferrous metals, textiles and clothing, leather and environmental services. The discussions highlighted areas where the removal of trade restrictions and distortions can be beneficial for the environment, trade and development, providing “win-win-win” opportunities.

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Trade in services and TRIPS 

The CTE also is to examine the role of the WTO in relation to the links between environmental measures and the new trade agreements reached in the Uruguay Round negotiations on services and intellectual property. Discussion on these two items of the work programme have broken new ground since there was very little understanding of how the rules of the trading system might affect or be affected by environmental policies in these areas.

With respect to the General Agreement on Trade in Services (GATS) and the environment, the CTE has noted that its discussions so far have 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.

The report, published in the WTO’s Special Studies series, is authored by Hakan Nordstrom of the Economic Research and Analysis Division of the WTO and Scott Vaughan, formerly with the United Nations Environmental Program (UNEP), and currently with the NAFTA Commission for Environmental Cooperation. See WTO Press Release No. 140, 8 October 1999  with full report which is downloadable.