Slow Going in the WTO Committee on Trade and Environment

For years now (since 1995) the WTO Committee on Trade and Environment (CTE) has been trying to reconcile the potentially harmful impact of trade disciplines on obligations contained in multilateral environmental agreements. Some of the more common environmental arguments run that absent environmental restraint on free trade the following environmentally harmful situations will arise: (1) polluting industries will relocate to states with lax pollution standards; (2) poor states will be unable to resist the import of toxic wastes from wealthy states; (3) the exploitation of resources (especially deforestation) will accelerate in an unsustainable fashion to accommodate greater demand induced by lower prices; (4) environmental treaties (e.g. CITES, Montreal Protocol & Amendments) that rely on trade sanctions for enforcement will lose their efficacy; (5) free trade will impinge on permanent sovereignty over natural resources through the principle of non-discrimination; (6) states will lose economic instruments used to promote environmental protection (reforestation subsidies).

Bridges Digest today reports on recent developments:

Progress on the Doha Round mandate on trade and the environment remains sluggish, as negotiators at a 5-6 May session of the WTO Committee on Trade and Environment discussed how to liberalise trade in environmental goods and services, and clarify the relationship between global trade rules and trade provisions in international environmental accords.

The informal meeting continued the ongoing efforts to end persistent discord over how to fulfil the Doha mandate to “enhance the mutual supportiveness of trade and environment.”

Members remain fundamentally divided over the scope and need for negotiations on the relationship between WTO rules and the specific trade obligations (STOs) set out in multilateral environmental agreements (MEAs), with many preferring to focus on MEA implementation at the domestic level. Outside the WTO, some campaigners for sustainable development, concerned that any constraints on the trade and environment mandate might lead to more harm than good, have called for the WTO-MEA discussions to be abandoned altogether.

Norway presents draft decision

During the CTE discussions, Members provided their initial reactions to a Norwegian proposal (JOB (08)/33) for an eventual Doha Round agreement to include a ministerial decision on potential conflicts between WTO rules and the trade provisions in multilateral environmental accords.

Among other things, the proposal noted that, up until now, specific trade measures that apply to countries that have signed MEAs have not been contested in the WTO. The proposal recognised, nevertheless, that a WTO Member might bring such cases before the WTO, and that, should such a situation arise, WTO rules would apply. Despite this provision, however, it is widely believed that multilaterally negotiated STOs that are specific in nature are unlikely to be challenged in the WTO. The proposal further acknowledged that MEAs and WTO rules have equal standing in international law, and stressed that all such obligations should be implemented harmoniously and in good faith.

According to a source, Members had varied initial reactions to the Norwegian proposal. While Canada and Korea expressed their support, the US, Australia and the EU were more critical. The US and Australia argued that the proposal was not ambitious enough and that it excluded elements from an earlier submission (see TN/TE/W/72/Rev.1) that they considered important, such as references to the key features in the design of STOs that contribute to mutual supportiveness. The two countries also stressed the need to highlight the importance of national-level coordination among domestic agencies and stakeholders that are involved in international agreements (see BRIDGES Weekly, 7 November 2007, http://www.ictsd.org/weekly/07-11-07/wtoinbrief.htm#1). For its part, the EU was critical of the lack of reference in the Norwegian proposal to the role of the WTO Dispute Settlement Understanding (DSU) in resolving disputes between STOs and WTO rules. According to delegates, Norway emphasised the need to avoid hierarchy or any bias in favour of WTO agreements in this regard.

African countries call for new expert group

The Africa Group presented an informal proposal (JOB 08/38) outlining its view that the aim of the negotiations on the trade and environment mandate should be to strengthen the relationship between the multilateral trading system and MEAs, rather than to try to develop mechanisms to deal with hypothetical problems that might arise in the future. The group felt that parallel discussions on information exchange between MEAs and the WTO could further contribute to a successful outcome of the talks.

While the proposal suggested experience-sharing among Members as one form of support, it further called for the establishment of a specific and permanent technical assistance and capacity building instrument to help developing country members meet their MEA obligations without violating WTO rules. This new instrument would complement existing technical assistance provided by the WTO, as well as the UN Environment Programme (UNEP) and the UN Conference on Trade and Development (UNCTAD).

Specifically, the proposal called for the establishment of a roster of experts on trade and environment, including customs and trade officials, particularly from developing countries, as well as individuals from international organisations that provide technical assistance to Members. The group’s objective would be to help developing countries ensure the effective implementation of MEAs in a manner that is compliant with WTO rules.

EGS: Brazil responds to questions on ‘request-offer’ approach

Members have persistently disagreed over how to identify the environmental goods and services that should be subject to liberalisation following the Doha mandate to negotiate “the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services.”

A group of primarily industrialised countries has proposed that Members create a list of environmental goods to be liberalised. India and Argentina disagree, arguing that products on such a list might still be used for non-environmental purposes. Instead, the two countries support tariff cuts for goods used in specific environmental activities, such as air pollution control, soil conservation, waste management, and renewable energy (see BRIDGES Trade BioRes, 22 June 2007, http://www.ictsd.org/biores/07-06-22/story5.htm).

In last week’s meeting, Brazil responded to Members’ questions regarding the ‘request-offer’ approach that it introduced to the committee last autumn (see BRIDGES Weekly, 7 November 2007, http://www.ictsd.org/weekly/07-11-07/wtoinbrief.htm#1 and BRIDGES Weekly, 10 October 2007, http://www.ictsd.org/weekly/07-10-10/story5.htm). Under this approach, each country would ask its trading partners to slash tariffs on those agricultural and non-agricultural goods it felt would bring environmental benefits. Countries would then determine whether such liberalisation requests might compromise their own economic development, and indicate the environmental goods on which they were prepared to remove trade barriers. The plan would allow for several iterative rounds of this ‘request-offer’ process.

One of the concerns discussed related to the perception that the ‘request-offer’ approach was introduced late in the game, and was new and untested in the WTO context. Brazil pointed out that similar approaches were used to negotiate tariff cuts on different products during the GATT/WTO system’s earlier Uruguay and Dillon Rounds of negotiations. According to Brazil, the ‘request-offer’ approach would allow Members to preserve their ‘policy space’ with built-in special and differentiated treatment that allows developing countries to identify their own trade, environmental and developmental priorities.

On timing issues, Brazil clarified that the ‘request-offer’ process would allow for a parallel process that could be synchronised with developments in the agriculture and industrial goods mandates. Brazil presented the ‘request-offer’ approach as a middle ground in the negotiations and as a compromise between existing approaches centred on liberalising goods included in a list or within time-bound projects.

On transparency, Brazil emphasised that the process was ‘not a secret’ and that nothing would stop a Member from making public any details of the requests and offers. According to a trade delegate, Brazil said the ‘request-offer’ methodology provided an opportunity to avoid the complexity of determining environmental criteria for goods inherent in the list approach. Brazil added that Members would have the flexibility to choose criteria for their goods, and that it would be possible to determine if the concessions granted were accurately reflected in the relevant market access schedules based on verification.

The chair, Ambassador Manuel Teehankee of the Philippines, reportedly called on Members to engage simultaneously on two tracks, modalities and product coverage.

Speaking to Bridges, one trade delegate agreed that preparatory work on product coverage should be undertaken irrespective of the final approach. According to another delegate, developed countries supporting the list approach still were most active in the discussions, while most developing countries underlined the need for a resolution on which approach to take: the list approach, the project approach or the ‘request-offer’.

Some delegates told Bridges that they saw greater possibilities for a breakthrough if and when a deal on tariff and subsidy cuts was reached in the industrial goods and agriculture negotiations. Such an agreement would also give delegates a sense of what products to include in the liberalisation agreement, and would provide a more solid idea of the potential extent of any tariff cuts.

The date for the next formal session of the CTE has not yet been set, although it is likely to take place in June. The chair will continue to schedule informal consultations as appropriate.

ICTSD reporting.

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