RESTRICTED
WORLD TRADE WT/CTE/W/21
G/TBT/W/21
ORGANIZATION 21February 1996
(96-0681)
Original: English Committee onTrade andEnvironment
Committee onTechnical Barriers toTrade
COMMUNICATION FROM CANADA
Thefollowing Communication, dated 20February 1996, hasbeenreceived from the
delegation ofCanada withtherequest thatitbecirculated toMembers oftheCommittees.
_______________
Thispaper ispresented bytheCanadian government topromote discussions of
eco-labelling intheCommittees onTrade andEnvironment andTechnical Barriers toTrade.
Itreflects ourpreliminary views andisthussubject tofurther review andrefinement.
Elements ofaPossible Understanding totheTBTAgreement
Eco-labelling
1. Eco-labelling isincreasingly seenasanimportant toolforencouraging resource and
manufacturing industries toadopt higher standards ofenvironmental protection through influencing
consumer andpossibly government purchasing patterns. Such programmes mayconfer a
competitive advantage onproducts carrying thelabel. Given theincreased number ofeco-labelling
programmes andincreased product coverage, eco-labelling programmes arebecoming asignificant
newforce inthemarketplace.
2. With thisinmind, thispaper examines therelationship between theWTO TBTAgreement
andeco-labelling programmes. Itsaysthateco-labelling programmes, whether mandatory or
voluntary, areclearly within thescope oftheAgreement totheextent thattheyarebased on
standards thatrelate toproduct characteristics ortheirrelated processes andproduction methods
(PPMs). Itargues thatbodies thatdevelop andruneco-labelling programmes should be
considered asstandardizing bodies. Itfurther suggests thatthescope oftheTBTAgreement
should beinterpreted tocover theuseofcertain standards based onnon-product-related PPMs by
eco-labelling programmes, provided thatthese standards strictly adhere tomultilaterally-agreed
eco-labelling guidelines. Thispaper doesnotdiscuss specifically thedisciplines thatshould be
developed, northeconditions under which these disciplines would apply, toprovide coverage for
non-product-related PPMs.
3. Forthepurpose ofthispaper, wehaveusedadefinition ofeco-labelling programmes
derived from theISOTC207 draftGuiding Principles andProcedures:
Eco-labelling programmes aredesigned tocontribute toreducing theenvironmental
burdens andimpacts associated withproducts, through identifying bytheaward oflabelsWT/CTE/W/21
G/TBT/W/21
Page2
(orother identifying marks) products claiming overall environmental preference. Such
programmes arebased onlife-cycle considerations andarerunbyrecognized bodies.
Basic Principles
(a) Mandatory eco-labelling measures, voluntary eco-labelling measures, andeco-labelling
compliance procedures arewithin thescope oftheTBTAgreement anditsCode ofGood
Practice.
(b) Thecoverage applies toalleco-labelling programmes, whether voluntary ormandatory,
whether these begovernmental (central orsub-central) ornon-governmental.
(c) Eco-labelling programmes areestablished bystandardizing bodies; therefore, suchbodies
should accept theTBTCode ofGood Practice.
(d) Thescope oftheTBTAgreement should beinterpreted tocover theuseofcertain
standards based onnon-product-related PPMs ineco-labelling programmes, provided that
these standards strictly adhere tomultilaterally-agreed eco-labelling guidelines.
(a) Eco-labelling iscovered bytheTBTAgreement
4. TheTBTAgreement deals withtechnical regulations, standards, andconformity
assessment procedures. Thus, tofallwithin thescope oftheAgreement, mandatory eco-labelling
measures must meetthedefinition ofatechnical regulation, voluntary eco-labelling measures must
meetthedefinition ofastandard, andeco-labelling compliance procedures must meetthe
definition ofconformity assessment, assetoutinAnnex 1.
5. Ingeneral, thedefinition oftechnical regulations andofstandards specifically includes
symbols, marking andlabelling requirements, which arethebasic components ofanyeco-labelling
programme, assuggested bythedefinition inparagraph 3above. Furthermore, ithasalready been
established thatmandatory labelling requirements aresubject tothenotification provisions of
Article 2,regardless ofthekindofinformation provided onthelabel. Inaddition, TBT
Committee Members areoftheopinion thatvoluntary labelling standards aresubject tothe
notification provisions oftheTBTAgreement Annex 3(Code ofGood Practice), again regardless
ofthekindofinformation provided onthelabel.
6. Mandatory eco-labelling programmes areclearly within thescope oftheAgreement tothe
extent thattheyarebased onrequirements about theproduct 'sdesign, characteristics or
performance aswellasPPMs thathaveadirect impact ontheproduct 'scharacteristics. These
aspects ofmandatory eco-labelling programmes fallwithin thescope ofTBTArticle 2,Article 3,
Article 10andArticle 14.
7. Voluntary eco-labelling programmes areclearly within thescope oftheAgreement tothe
extent thattheyarebased onrequirements about theproduct 'sdesign, characteristics or
performance aswellasPPMs thathaveadirect impact ontheproduct 'scharacteristics. However,
therelationship between theAgreement, voluntary measures andnon-product-related PPMs isless
clear. Thefirstsentence ofthedefinition ofastandard isambiguous: itcanbeinterpreted to
exclude non-product-related PPMs, butitcanalsobeargued thataplain reading ofthedefinition
cannot support suchaninterpretation (i.e.non-product-related PPMs areincluded in,orarenot
excluded from, thedefinition). Moreover, thesecond sentence ofthedefinition could beWT/CTE/W/21
G/TBT/W/21
Page3
interpreted toinclude non-product-related PPMs. Itthuscanbeargued, andthisappears tobethe
general understanding among Members, thatvoluntary eco-labelling programmes fallwithin the
scope oftheTBTAgreement Annex 3,Code ofGood Practice.
8. Eco-labelling compliance procedures aretheequivalent ofconformity assessment
procedures which determine thatrelevant requirements intechnical regulations andstandards are
fulfilled. Eco-labelling compliance fallswithin thescope ofTBTArticle 5,Article 6,Article 7,
andArticle 10.
9. Therefore, most elements ofeco-labelling programmes, asdescribed above, arecovered
bytheTBTAgreement andaresubject tothefundamental TBTprovisions requiring thatmeasures
benon-discriminatory, nomore trade-restrictive thannecessary, based oninternational and
performance-based standards, andtransparent.
(b) Coverage applies toalleco-labelling programmes
10. TheTBTnegotiating history makes clear thenegotiators 'intent tocover bothmandatory
andvoluntary programmes, andtorequire thatMembers takereasonable measures asmaybe
available tothem toensure thatlocalgovernments andnon-governmental standardizing bodies
within theirterritories accept andcomply withtheprovisions oftheTBTCode ofGood Practice
(Article 4).Thiswording isclear andestablishes astrong obligation.
11. Asaresult, mandatory eco-labelling programmes should comply fullywithallobligations
oftheTBTAgreement; attheveryleast, voluntary programmes fallwithin thescope oftheCode
ofGood Practice andshould comply withitsprovisions. Thedifference hereisoneofthe"level
ofobligation" astheTBTAgreement anditsCode ofGood Practice areguided bythesame
principles.
(c) Eco-labelling programmes areestablished bystandardizing bodies
12. Aneco-labelling programme isbasically thegranting byathirdparty ofalabelthat
certifies thataproduct conforms toasetofcriteria orstandards thathavebeendeveloped bythat
thirdparty. These criteria canrelate tothemethod ofproduction, thecharacteristics or
performance ofaproduct, aswellastoitsdisposal. Consequently, theactivities linked tothe
development ofcriteria foreco-labelling programme aresimilar tothose ofregulatory bodies or
standardizing organizations.
13. Furthermore, inAnnex 1oftheTBTAgreement, astandard isdefined asa"document
approved byarecognized body...". Although theterm"recognized body" isnotexpressly
defined, itisarguable from thedefinitions oftheISO/IEC Guide 2:1991 thatlegalor
administrative entities (including organizations, authorities, companies andfoundations) which are
recognized onanational, regional orinternational levelconstitute "recognized" bodies. Theterm
"recognized body" isbroader initsscope than"standards body" or"national body", which are
more specific; thus, onecanconclude thatvoluntary standards established bynon-traditional
standards-setting bodies fallwithin thescope ofthestandards definition. Members should
therefore acknowledge thataseco-labelling programmes areestablished bystandardizing bodies,
theyshould takereasonable measures toensure thatsuchstandardizing bodies, whether
governmental ornon-governmental, accept theCode ofGood Practice.WT/CTE/W/21
G/TBT/W/21
Page4
(d) Scope oftheTBTAgreement should beinterpreted tocover theuseofcertain standards
based onnon-product-related PPMs byeco-labelling programmes, provided thatthese standards
strictly adhere tomultilaterally-agreed eco-labelling guidelines
14. Eco-labelling programmes arebased, toasignificant extent, onlife-cycle approaches,
i.e.consideration oftheenvironmental impact from theextraction/production stage, through to
consumption andfinaldisposal. Life-cycle approaches arenowconsidered anintegral partof
eco-labelling programmes, andonebasis oftheirenvironmental credibility. Life-cycle approaches
consider theenvironmental impact ateachstage oftheproduct 'slifeandtheeco-labelling
programme criteria aredeveloped accordingly. Incases where thegreatest impact isatthe
consumption (e.g.energy orwater consumption ofhome appliances) orfinaldisposal
(e.g.batteries, lubricating oil)stage, theresulting eco-labelling criteria willbelargely
product-related andcharacteristic orperformance-based. Such eco-labelling criteria arethusno
different from other voluntary standards andshould besubject toexisting TBTdisciplines. Where,
however, thelife-cycle approach indicates thatsignificant environmental impact isatthe
production stage (e.g.photofinishing), theresulting eco-labelling criteria mayhaveastrong
component ofnon-product-related PPMs.
15. Ithasbeenargued thatnon-product-related PPM-based measures arenotconsistent with
WTO rules when these measures discriminate between "like products", solely because themethods
usedtomanufacture orprocess them aredifferent. Such measures would beinconsistent with
non-discrimination obligations oftheGATT 1994 andtheTBTAgreement. However, itwould
seem excessive tosuggest thateco-labelling programmes should notbeviewed ascompatible with
theWTO simply because oneoftheiressential tools, thelife-cycle approach, usessome
components thatmayormaynotfallwithin thescope oftheTBTAgreement.
16. Thechallenge ishowtoaccommodate thecomprehensive life-cycle approaches of
eco-labelling programmes intheTBTAgreement without compromising basic WTO principles.
Onepossible solution would betointerpret theTBTAgreement toprovide foreco-labelling
programmes thatinclude theuseofcertain standards based onnon-product-related PPMs provided
thatthese programmes aredeveloped according tomultilaterally-agreed guidelines inorder thatthe
possibility ofdiscrimination andtrade-distortion beminimized. ISO14000 isthemost advanced
example ofamultilaterally developed setofguidelines foreco-labelling.
17. Acceptance oftheuseofmultilaterally-agreed guidelines toregulate theuseof
non-product-related PPMs ineco-labelling programmes would stillraiseanumber of
implementation questions. International guidelines andstandards areunder development ina
variety offoraandthusthere isneedtoconsider which oneswould qualify aswellaswhatcanbe
doneintheinterim. Forexample, toberecognized bytheWTO TBTAgreement, eco-labelling
guidelines should bedeveloped byrecognized bodies thathaveawide, open, international
membership including abalanced representation ofinterests. Theguidelines should bedeveloped
inawayconsistent withtheobligations oftheGATT 1994 andtheTBTAgreement.
18. Other important considerations would be(assuggested inthedraftISOGuiding
Principles andProcedures onEnvironmental Labelling) thatenvironmental criteria "shall be
capable ofdemonstrating thatproducts meeting thecriteria fulfil thelabelling objective of
reducing environmental impact; thedevelopment andselection ofcriteria forenvironmental labels
shallbebased onscientific methodology; andtheestablishment ofcriteria, aswellastheirreview
andrevisions, should betheresult ofimpartial decisions." Itmayalsobeuseful toconsider how
theprinciple of"equivalency" canbeapplied toPPM-based standards. Mutual recognition, ona
product-by-product basis, among eco-labelling programmes could alsoprovide aninterim solutionWT/CTE/W/21
G/TBT/W/21
Page5
andminimize costs toexporters. These issues should beaddressed further, perhaps withthe
assistance ofeco-labelling practitioners.
19. Insummary, mandatory andvoluntary eco-labelling programmes areclearly within the
scope oftheTBTAgreement totheextent thattheyrelate toproduct characteristics ortheir
related PPMs. Therelationship between theAgreement andeco-labelling criteria based on
standards thatrelate tonon-product-related PPMs islessclear. Inviewofthegrowing importance
ofeco-labelling programmes inthemarket place, andoftheincreasing useofcomprehensive
life-cycle approaches inthedevelopment ofcriteria forthese programmes, werecommend thatthe
jointCTE/CTBT consider thebenefits ofinterpreting thescope oftheTBTAgreement tocover
theuseofcertain standards based onnon-product-related PPMs. Thestandards would haveto
adhere strictly tomultilaterally-agreed eco-labelling guidelines. These guidelines would be
developed insuchawaysoastobeconsistent withtheobligations oftheGATT 1994 andthe
TBTAgreement suchasnon-discrimination; national treatment; transparency andconsultation;
useofrelevant international standards when theyexist; andconsideration given toavailable
scientific andtechnical information. Consideration should alsobegiven toequivalency of
standards andmutual recognition based onacase-by-case approach. Itisunderstood thatthis
proposal should notbeinterpreted asproviding anyscope orsafehaven fortheuseofstandards
based onunilaterally-determined non-product-related PPMs thatdonotstrictly adhere to
multilaterally-agreed eco-labelling guidelines.