RESTRICTED
PREPARATORY COMMITTEE PC/SCTE/M/4
FOR THE 14November 1994
WORLD TRADE ORGANIZATION
(94-2405)
SUB-COMMITTEE ONTRADE AND ENVIRONMENT
REPORT OFTHE MEETING HELD ON26-27 OCTOBER 1994
Note bytheSecretariat
1. TheSub-Committee onTrade andEnvironment helditsfourth meeting on
26-27 October 1994 under thechairmanship ofAmbassador LuizFelipe Lampreia ofBrazil. The
agenda forthemeeting, contained inPC/AIR/35, wasadopted.
2. TheChairman recalled thatthismeeting would focus onthefirstitemofthework
programme: "therelationship between theprovisions ofthemultilateral trading system andtrade
measures forenvironmental purposes, including those pursuant tomultilateral environmental
agreements". Henoted twodocuments thattheSecretariat hadprepared forthismeeting:
PC/SCTE/W/3 onrecent developments regarding trade measures forenvironmental purposes taken
pursuant tomultilateral environmental agreements; andPC/SCTE/W/4 ondispute settlement
provisions inmultilateral environmental agreements (MEAs). Healsonoted thatsignificant work
hadbeencarried outintheGroup onEnvironmental Measures andInternational Trade onthis
subject. Asummary ofthose discussions wasindocument L/7402. Other relevant documentation
thathadbeenprepared forthatwork wascontained inTRE/W/1/Rev.1, TRE/W/5, TRE/W/8,
TRE/W/16, TRE/W/17, TRE/W/18, TRE/W/19, TRE/W/21 andthefactual noteL/6896.
3. HesaidthattheSub-Committee would revert, asnecessary, tothethirditemofthework
programme andhealsoinvited delegations toaddress anyother issues thattheywished toraise.
Inthisregard, henoted athirdnewdocument thattheSecretariat hadprepared, contained in
PC/SCTE/W/2, onarrangements forrelations withnon-governmental organizations intheUnited
Nations, itsrelated bodies andselected other inter-governmental organizations.
4. Under apoint oforder, therepresentatives ofMorocco andParaguay regretted thefact
thatthedocumentation forthemeeting hadnotbeenmade available inFrench andSpanish and
requested theChairman toensure thatdocumentation inallGATT working languages beprovided
wellinadvance offuture meetings.
(a) Observer status ofinter-governmental organizations
5. TheSub-Committee agreed toextend observer status tothose inter-governmental
organizations thathadhadobserver status intheGroup onEnvironmental Measures and
International Trade. Thisincluded, apart from theUnited Nations (UN), theUnited Nations
Conference onTrade andDevelopment (UNCTAD), theWorld Bank andtheInternational
Monetary Fund (IMF) which already hadobserver status intheSub-Committee, the
United Nations Environment Program (UNEP), theFood andAgriculture Organization (FAO), the
International Trade Centre (ITC), theUnited Nations Development Program (UNDP), the
Organization forEconomic Cooperation andDevelopment (OECD), andtheEuropean FreeTrade
Agreement (EFTA). Anyother organization which requested observer status would betaken up
onacase-by-case basis.PC/SCTE/M/4
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6. Therepresentative ofIndia registered hisdelegation 'sunderstanding thatthe
Sub-Committee 'sagreement regarding inter-governmental organizations, anelement towards
facilitating transparency, wastaken inthecontext ofArticle VoftheWTO. These organizations
were admitted because theyhadadirect interest andwere active inthesubject. Hisdelegation
noted thatitwould likesimilar flexibility tobeshown tosome other inter-governmental
organizations which hisdelegation knew would beinterested inseeking observership tothisbody.
Healsonoted thattheSub-Committee 'spresent decision waswithout prejudice tothequestion of
observers intheCommittee onTrade andEnvironment, which would come intoforce afterthe
WTO.
(b) Items oneandthree ofthework programme
7. Therepresentative ofJapan noted thathisgovernment placed agreat dealofimportance
onthisitemsince ithadwide-ranging implications. Fullanalysis wasneeded which meant that
undue haste should beavoided. Hepresented some preliminary views tocontribute tothework.
Theterm"environment" covered agreat variety ofareas from protection ofendangered species,
dolphins andtheozone layer toabating airpollution, preserving scenery, traffic issues, etc.The
Sub-Committee should carefully define whatwasmeant bythisterm, especially ifdeviation from
theGATT rules were tobeallowed. Otherwise uncertainty within thecarefully balanced network
ofrights andobligations andother problems would result. Forthepurpose ofhisintervention it
wasnotnecessary todefine thisterminaprecise manner; hewould useitinabroad sense.
8. Aspointed outinearlier debates, theGATT/WTO wasneutral towards theobjective of
environmental protection which didnotmean aninsensitivity totheneedtoprotect the
environment. Ifitwasagreed thattrade measures were noteffective forthatpurpose, there
would benodebate; however, since theywere apowerful tool,trade measures could beusedfor
thatpurpose. Given this,thefundamental issues would be(i)whyatrade measure wasnecessary
toachieve certain environmental objectives andwere there notother equally effective means
available forthispurpose; (ii)whatwere thepossible side-effects ofusing trade measures, and
were theylessserious thanthose ofother measures; and(iii)whoshould passjudgement onthese
questions andinwhatmanner? Maybe itwasbeyond theGATT/WTO 'scompetence tojudge
whether atrade measure wasmost appropriate toachieve acertain environmental purpose, though
itcould point outtheside-effects from theuseofthemeasure.
9. Ithadbeenargued thatsolving anenvironmental problem through international
cooperation would beuseful andeffective, particularly when theproblem wastransboundary,
regional, arising from anareaoutside national jurisdiction, orglobal. Often international
cooperation tooktheform ofanMEA. Thefactthatonly18outof180MEAs hadtrade
provisions showed thattrade measures were notalways necessary toaccomplish theirobjectives.
There were some whohighlighted theconflict between MEA'sandtheGATT/WTO, butunder
theexisting GATT/WTO andMEA law,there were cases where nocontradiction existed. Ithad
beenpointed outintheEMIT Group thatthere were avariety oftrade measures available for
environmental protection, iftheywere usedinamanner consistent withArticles I,II,III,
XI,XIII, etc.Even iftheywere notconsistent withthese Articles, anumber ofsuchmeasures
could bejustified under Article XX,which meant, inaway, thattheywould stillbeGATT-
consistent. Incases where there wasnoalternative buttotakeGATT/WTO-inconsistent
measures, there wasstillanoption toseekawaiver forthatmeasure. From these preliminary
arguments, itcould bestated thatitwould notalways benecessary togenerally exempt trade
measures taken under MEAs from therules anddisciplines oftheGATT/WTO.PC/SCTE/M/4
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10. Ontheissue of"non-parties", hisdelegation wasconsidering whether there were cases
where discriminatory trade measures against non-parties were necessary inMEAs, andwhether
theuseofsuchmeasures waseffective toaccomplish theenvironmental objectives. Views had
beenexpressed intheEMIT Group thatdiscriminatory measures were notalways effective, and
thatthere were cases where suchmeasures were evencounter-productive toenvironmental
protection. Also, ifanMEA hadbroad enough participation, non-discriminatory measures, rather
thandiscriminatory ones, would effectively serve environmental purposes. Henoted thathis
delegation concurred withthefindings contained inthepanel report onUnited States -Restrictions
onImports ofTuna.
11. Toconclude, heprovided some points onorganizing thefurture work ofthe
Sub-Committee. TheMarrakesh Decision provided anumber ofissues tobedealtwith. Each
issue could bedivided intosub-issues, while noting thatthere were some overlaps between issues.
Given thecomplexity ofeachandthetimeavailable, itwaswisenottotackle alltheissues at
once. Substantive progress could bemade bybecoming familiar witheachissue bytackling one
performal session. After completing ageneric butsubstantive overview, theissues onwhich to
focus inorder toefficiently pushthework forward could befound.
12. Therepresentative ofEgypt considered thatthisissue should constitute amajor partofthe
Sub-Committee 'sfuture work. Heattempted tosetsome criteria tohelpdistinguish between
MEAs relevant totheSub-Committee 'swork. Thefirstcriteria wasthedomestic versus the
international impact ofenvironmental problems. Whereas theenvironmental standards could
properly besetatthenational levelforimpacts confined tonational boundaries, thesame didnot
apply when theimpact wasglobal. Incases where there were regional ornational problems and
MEAs were designed toaddress these, costs arising from trade impacts would beborne globally
whereas thebenefits would accrue locally orregionally. Thiswaswhytrade measures taken
under suchagreements should notbelegitimized under theGATT/WTO. Inthecaseofissues
suchasgreenhouse gases, ozone depleting substances ortheconservation ofthreatened species,
international agreements were essential. These mandated specific actions thatfrequently included
trade measures toaddress environmental problems, which should beexamined closly.
13. Thesecond criteria related tothescope oftheagreement. The"universality" ofMEAs
should beemphasized. MEAs under theUnited Nations should bedistinguished from regional or
evenmultilateral environmental agreements thatcould havethirdparty trade effects which could
thenposeserious difficulties. Such environmental agreements should besensitive toand
accommodate GATT principles. Itwasdifficult toargue thatitshould beGATT that
accommodated suchagreements wherever theirprovisions intersected oroverlapped, asnocountry
would permit itstrade advantages negotiated intheGATT tobeeroded bytheprovisions ofan
MEA towhich itwasnotaparty.
14. Thereasons forwhich acountry maydecide nottojoinanenvironmental agreement were
alsorelevant, i.e.because ofcontroversial scientific evidence, differences innational risk
assessment, differences inthecapability toadhere tocertain environmental standards anddifferent
absorption capacities ofitsenvironment. Therefore, merely being anon-party toanMEA should
notmake acountry more vulnerable forpunitive action. Thefactthatmembers ofanMEA may
facetrade declines andbeforced toapply measures faster thanstipulated intheMEA mayalsobe
asignificant deterrent tojoining theMEA, particularly fordeveloping countries.
15. International cooperation totackle environmental problems should include technology
transfer, financial andtechnical assistance rather thanunilateral measures andtrade sanctions.
These were necessary incentives toattract universal participation inMEAs and,hence make itPC/SCTE/M/4
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desirable tobring them intoconformity withGATT rules andprinciples. Thus, the
Sub-Committee 'staskshould beconfined tostudying thetrade provisions ofthose qualified
agreements, which were opentoallcountries andembraced thewidest possible participation of
countries atallstages ofdevelopment andwiththelargest geographical spread.
16. Thethirdcriteria waseffectiveness. Itwould beimportant toevaluate theextent towhich
anMEA necessitated resort totrade provisions toachieve itsenvironmental objectives andhow
successful ithadbeeninthisrespect, before giving itablank check regarding itscompatibility
withGATT rules andprinciples. Itshould always bekeptinmind thattrade measures for
environmental purposes constituted onlyasecond bestsolution. Theconcept ofeffectiveness,
however, would require further work andelaboration onthepartoftheSub-Committee. Inthe
EMIT Group, there hadbeengeneral agreement thatenvironmental objectives andtrade policy
objectives neednotconflict andthattheGATT system wassupportive ofbetter environmental
protection atboththenational andinternational levels, asitallowed foranextensive variety of
trade-related environmental measures, including exceptions forthose thatwere inconsistent with
basic GATT rules. Thescope ofexceptions toGATT provisions available under Article XX
would havetobeaddressed insome detail. Theconditions contained inArticle XXreflected the
checks andbalances intheGATT system thatwere intended toprevent theabuse oftrade
measures forenvironmental purposes which could prove detrimental tobothinternational trade as
wellasenvironmental protection.
17. Anumber ofproposals hadalready beenmade toclarify therelationship between the
GATT andtrade measures taken pursuant toMEAs. Suffice ittosaythathisdelegation saw
tremendous difficulties involved inanyattempt toreinterpret orclarify theapplication ofthe
provisions ofArticle XX; thebasic principles which should govern theuseofexceptions should
notbeputindoubt. Trade measures taken forenvironmental purposes evenunder theaegis of
MEAs should benon-discriminatory, notconstitute adisguised restriction ontrade, andbeleast
trade restrictive. Accordingly, itwasbeyond doubt thatArticle XXprovided forexceptions to
protect theenvironment, butitdidnotwarrant departures from established GATT principles. In
sofarashisdelegation wasconcerned, preservation ofthestatus quoshould continue tobethe
option. Thisdidnotcontradict thefactthatifthere were conflicts thewaiver procedure could
provide aprovisional wayoutforMEAs thathadthirdparty trade effects while necessarily
allowing foradequate compensation asprovided forinArticle XXVIII.
18. Therepresentative ofCanada sought tomove theanalysis forward bysynthesizing some of
thediscussions intheSub-Committee andtheEMIT Group onseveral elements inthework
programme. Hereturned tothediscussion oneco-taxes from theSeptember meeting ofthe
Sub-Committee. Asseveral delegations noted, many governments were exploring theincreased
useofeconomic instruments asatooltoaddress environmental problems. Environmental
charges, oreco-taxes broadly speaking, maybeakeycomponent ofthepackage ofeconomic
instruments. Environmental charges, asopposed toother measures likeregulations were more
flexible andtherefore potentially more cost-effective, andtheircosts were likely more visible. At
thelastmeeting anumber ofdelegations focused ontheeffectiveness andnecessity ofapplying
border taxadjustments toimports pursuant toadomestic eco-tax programme. Thisdiscussion was
notlimited toonlythetypes ofborder taxadjustments thatmaybeconsistent withthecurrent
trade rules. Italsotookaccount ofproposals fortheapplication toimported products ofeco-taxes
based onnon-product-related PPM criteria, something thatwould gobeyond theGATT rules.
19. TheSub-Committee benefitted from excellent analytical contributions from anumber of
delegations, inparticular NewZealand, Brazil, Argentina andMexico. Heconsidered thatthe
discussion wasmoving along twobasic lineswhich were captured bestintheanalysis provided byPC/SCTE/M/4
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NewZealand. First, inthecaseofnational measures aimed ataddressing thelocal environmental
impacts ofproducts attheconsumption ordisposal stage, theeffectiveness ofaneco-tax would be
enhanced ifitwere applied toallproducts being consumed anddisposed ofinthedomestic
market. Itwould therefore bereasonable toapply thetaxtoimports andnotapply ittoexports.
Itwasnoted, ofcourse, thattheGATT obligations relating totransparency andMFN andnational
treatment would havetobemet.
20. Inthecaseofmeasures aimed atlocal environmental impacts attheproduction stage,
however, theeffectiveness ofapplying domestic non-product-related PPM standards toimports
andofexempting exports wasnotclear. Infact,thesecond main theme wasthatthere would not
appear tobeaneedtoimpose suchPPM requirements onimports inorder toachieve thedomestic
environmental objective. Henoted thatanother dimension thathademerged inthediscussion was
whatapproach might beappropriate incases where theenvironmental impacts ofproduction,
consumption ordisposal were transboundary orglobal. ThisledtotheMEA issue ontheagenda
ofthismeeting.
21. Inpursuing thediscussion ofapplying national PPM standards toimports viaborder tax
adjustments, account ofthemotivation should betaken intoaccount. Twoofthemain motivations
identified were: (1)toencourage achange inenvironmental behaviour byforeign producers; and
(2)torespond toconcerns ofdomestic producers, whohadincurred environmental costs asa
result ofgovernment measures, thattheywere notdisadvantaged vis-à-vis foreign producers.
Many viewed thefirstrationale asadirect expression ofthekindofextraterritorial imposition of
domestic standards thathadbeenclearly rejected indiscussions hereandpreviously in
Principle 11oftheRioDeclaration. Thedebate hadtherefore tended tocome down to
competitiveness concerns. Ithadbeennoted inthiscontext thatenvironmental policy-makers
were sometimes faced withadilemma indesigning ameasure toaddress anenvironmental
problem. Themost effective measure from thedomestic environmental point ofviewmaybeone
thatfocused onlyondomestic production processes. However, arguments made bydomestic
industry interests about thecompetitive disadvantage theywould faceifthemeasure were
implemented maymake itsdomestic political acceptance verydifficult.
22. Hisdelegation would notquestion thedifficulty ofgaining acceptance ofany
environmental measure thatinvolved greater costs. However, there wasalways atendency for
industry toexaggerate thelossofcompetitiveness thatmight result from newenvironmental
measures. Even insectors where thecompetitiveness argument might havesome validity, his
delegation hadnotbeenconvinced thatitwasanappropriate reason forextending domestic PPM
standards toimports. Interms ofaddressing thecompetitiveness argument where itwas
overstated, there were anumber ofrelevant points. First, inmost cases, itwasnotclear that
higher environmental standards accounted forasufficiently significant element ofthecostof
production thattheyalone would haveacritical impact oncompetitiveness. Second, inmany
areas, conforming tohigher standards could actually improve theappeal ofproducts andtherefore
enhance theircompetitiveness. Third, there were many other elements inthecostofproduction
equation thataccounted formuch greater differences incompetitiveness, including onesthatalso
reflected national values andchoices.
23. Thequestion thenarose, whyshould environmental costs beadjusted attheborder when,
forexample, more significant social programme costs onindustry were not? Insome countries,
likeCanada, there were health care, unemployment insurance, health andsafety, andother
programmes thatimposed significant costs onCanadian industry. Ifeverything inthecost
equation thatvaried from country-to-country wasadjusted, chaos would result.PC/SCTE/M/4
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24. Even ifborder taxadjustment schemes onimports didnotadjust forthefullcosts incurred
bydomestic producers, there would alsobethepractical problem ofdeveloping anobjective basis
forcalculating aborder tax.Indeed, itwasprobably notadministratively feasible inmost cases to
make border taxadjustments inawaythatfairly reflected differences inthecosts ofproduction
standards from onecountry tothenext. Forexample, whatabout asituation inwhich acountry
imposed, viaatax,itsowndomestic non-product-related PPM standards onimports from
countries thathadstandards thatwere different, butequally stringent intheirownway? Ifexports
from these countries failed toconform totheparticular standards oftheimporting country and
therefore faced aborder taxadjustment, theywould bepaying adouble price forenvironmental
production, onceathome andagain intheforeign market. Thiscould potentially havetheeffect
ofundermining support forappropriate domestic standards intheexporting country ifthecostof
environmental protection inaforeign country alsohadtobeabsorbed. Ithadtoberecognized
thatthecompetitiveness argument worked bothways and,indeed, became atwoedged sword.
25. Butwhatabout where there mayinfactbealegitimate concern about competitiveness?
Hesuggested thatincases where itcould bedemonstrated thatthecompetitive position ofa
domestic industry could infactbesignificantly affected byhigher production standards, thenother
alternatives should beconsidered. Forexample, insome cases itmaybeatransboundary or
global environmental problem thatwasatissue, inwhich caseefforts would needtobemade to
findcommon approaches onamultilateral basis. Incases where theenvironmental problem was
entirely local, thepossibility ofadjustment assistance could beconsidered. TheWTO Agreement
onSubsidies andCountervailing Measures would allow financial assistance tofirms thathadto
meetnewenvironmental requirements imposed bygovernments.
26. Itwasuseful toexamine ifsome points made about eco-taxes applied toother types of
environmental measures covered inthework programme, including eco-labelling, requirements
forpackaging, recycling andrecycled content anddisposal programmes, andifcommon themes
were emerging. Ofcourse, these measures were different from oneanother and,indeed, maybe
treated differently vis-a-vis theexisting trade rules orwithrespect toanynewdisciplines thatmay
beconsidered inthework. Forexample, ashisdelegation noted inSeptember, some ofthe
measures thathadbeenexamined would beapplied attheborder pursuant togovernment
regulation andthushaveanimmediate impact onmarket access. Others would apply, ineither a
mandatory orvoluntary fashion, afterimportation inawaythatcould altertheterms of
competition within thatmarket andthuscould alsohavearealimpact oneffective market access.
27. Notwithstanding thedifferences, many oftheunderlying issues thathadbeenidentified in
thediscussions were common toallthese types ofmeasures. Once again referring tothe
framework setoutbyNewZealand, withrespect tomeasures aimed ataddressing consumption
anddisposal externalities ,itmaybenecessary andeffective toapply requirements toboth
domestic production andimports. Keyconsiderations inthese circumstances would beensuring
programmes were developed transparently tominimize thepossibility thattheycould becaptured
byprotectionist interests, andensuring thattheyprovided effective most favoured nation and
national treatment.
28. With respect tonational measures orcriteria aimed ataddressing local production
externalities ,thequestions were more complicated although theanswers maynotbe.There was
general agreement, andCanada strongly supported theidea, thattheharmonization ofPPM
requirements wasnotenvironmentally desirable since absorptive capacities differed dramatically
from place toplace. Thiswasrecognized intheRioDeclaration, Principle 11.Therefore, in
many instances thestandards oftheimporting country maynotbeatallenvironmentallyPC/SCTE/M/4
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appropriate intheexporting country and,ashadbeenseenintheexample ofrecycled content
requirements, could evenleadtoenvironmental damage intheexporting country.
29. Hisanalysis therefore ledtoquestioning anyattempt toimpose domestic non-product
related PPM requirements toimported goods. Thiswould continue tobeacentral theme inthe
discussions andonethatwasparticularly challenging withrespect tovoluntary measures, some of
which were outside ofcurrent GATT disciplines. Finally, regarding PPMs inthecontext of
MEAs, herecalled thathisdelegation hadsuggested thatonetypeoftrade measure thatmight be
considered forinclusion inanMEA wasarestriction onimported products based on
non-product-related PPMs. Ofcourse, inmany cases trade measures would notberequired to
address environmental problems andwere nota"first best" solution. Nevertheless, thistypeof
measure might beconsidered. Hesuggested thatmany ofthepoints justreviewed were relevant
toMEAs.
30. Using NewZealand 'sframework, ananalysis ofthenecessity andeffectiveness of
applying toimports measures aimed ataddressing production externalities where the
environmental effects were transboundary orglobal might leadtoadifferent conclusion thanthat
related tomeasures aimed atlocal externalities. AsNewZealand hadpointed out,inthecaseof
transboundary orglobal environmental impacts, theeffectiveness ofmeasures would depend on
all,oralmost all,ofthecountries concerned applying thesame requirements relating tothe
production externality. There could belittledoubt about thevalidity ofthisobservation orthe
factthatitpointed clearly inthedirection ofpursuing suchmeasures multilaterally. Thiscould be
through MEAs, inwhich casehisdelegation would pursue thepossibility ofaccommodating inthe
trade rules theuseofsuchPPM-based measures todealwithtransboundary orglobal problems in
thework onMEAs.
31. Another form ofinternational cooperation wasthedevelopment ofwhattheISOhadcalled
"environmental management standards". These would beanagreed means ofmeasuring the
sustainability ofvarious production practices. Forcertain sectors thismaybeapractical and
desirable approach andcould beuseful, inparticular, where there wasacallfortheuseofmore
"environmentally friendly" PPMs. These voluntary standards, accompanied byanagreed and
verifiable certification system would provide consumers withtheinformation needed tomake
environmentally sound purchasing decisions. Aprime example ofasector inwhich thiscould be
apromising approach wastheforestry sector. Oneadvantage ofthisapproach wasthatthe
development ofinternational environmental management standards involved primarily private
sector business andenvironmental interests directly through organizations liketheISO.
32. Inclosing, hisdelegation believed thatanalysis wasbringing theSub-Committee closer to
three important conclusions thatwould helpdefine thedirection offuture work. First, the
imposition ofnon-product-related PPM requirements toimports would notappear tobeeffective
ornecessary toaccomplish adomestic environmental objective. Second, incases where the
environmental problem wastransboundary orglobal, solutions hadtobefound through
multilateral cooperation. MEAs thatcontained standards, including PPM-based measures, that
reflected broadly-based international agreement should beconsidered foraccommodation under the
trade rules inthecontext oftheSub-Committee 'swork onMEAs. Third itwasessential thatany
programme bedeveloped inafullytransparent fashion tominimize thepossibility ofcapture by
protectionist forces.
33. Therepresentative ofSweden, onbehalf oftheNordic countries, noted thatpressing
global andregional environmental problems hadresulted intheemergence ofseveral MEAs
during recent years. Even though MEAs normally related toactions within countries, somePC/SCTE/M/4
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provided fortrade measures asameans ofreaching theirobjectives. Asmultilateral cooperation
wasthemost effective wayofsolving global andregional environmental problems, thenegotiation
ofMEAs, inopenandtransparent processes, should bepromoted andfacilitated. Sometimes
trade measures were necessary ingredients forMEAs tofulfil theirpurposes. Efficient andwell
functioning MEAs were alsoasafeguard against unilateral trade measures forenvironmental
reasons. Unilateralism inthisfieldshould beavoided, asitcontained risksforarbitrary
discrimination andhidden protectionism; thelatter would notonlybenegative from atrade point
ofview, butalsofrom anenvironmental point ofview. Unjustified environmental arguments,
usedforprotectionist measures, would threaten thecredibility oftheenvironmental work. Itwas
thuslikely thatenvironmental policymakers would beequally negative towards misuse of
environmental arguments aswould trade policymakers.
34. Theissue ofMEAs andGATT rules hadalready beenthefocus ofmuch analysis, which
could beusedasbasis forfuture work. Continuing thiswork withtheaimofreaching substantial
results wasahighpriority inorder toimprove thestability andpredictability ofthetrading
system. Herdelegation perceived thegoals ofthisprocess tobetomutually reinforce thetrade
andenvironmental systems andtoavoid trade conflicts. There wasaneedfordevelopment of
GATT rules totakeintoaccount thefactthatexisting MEAs contained trade measures (which
might benecessary infuture MEAs) andthus, inasuitable way, tomake surethere wasroom for
those kinds ofmeasures within theGATT system. Thismust beformed insuchawaythatit
would provide guidance tofuture negotiators ofMEAs andatthesame timewould protect the
trading system against misuse byunfounded environmental arguments.
35. Herdelegation believed thatthiscombination waspossible toachieve. Legal
accommodation ofMEAs inthetrading rules should bemade insuchawaythatitwould provide
forpredictability andstability andwould provide thenegotiators offuture MEAs withsome
guidance astowhatcriteria GATT would useifadispute occurred. Such clear andpredictable
rules would reduce theriskforfuture trade conflicts andthereby alsoserve thepurposes ofthe
MEAs assuch. Inparticular, thelegalaccommodation would havetosolve thetreatment of
countries which were notsignatories oftheMEAs. Animportant issue wastoestablish criteria
forwhatshould count asanMEA eligible forexception fromGATT/WTO .Relevant parameters
could bethelevelofglobal orregional representation, extent ofparticipation ofcountries
concerned, whether theMEA wasopenforaccession byallconcerned countries, ifitwas
negotiated under amultilateral forum suchastheUnited Nations system, whether the
environmental goalinquestion wasbased onsound scientific evidence, etc.
36. Another issues washowtosolve atrade conflict thathadarisen duetomeasures taken in
pursuance ofanMEA.Thepoint ofdeparture wasthatsuchconflicts should beavoided. Incase
aconflict arose, however, itwould bestbesettled within anMEA ifbothparties were signatories,
anddispute settlement wasprovided forintheMEA. However, incaseonlyoneparty wasa
signatory totherelevant MEA, theissue would bedifferent. Provided thatthetrade measure was
relevant fortheenvironmental problem, thiscasewould involve thebalancing oftheinterests of
freetrade andofprotecting theglobal orregional environment. Such aconflict might havetobe
solved within theGATT system. Therefore themultilateral trading system must beabletodeal
withthiskindofconflict. Themeasures taken byonecountry against another would havetobe
judged onthebasis ofcriteria suchasleasttrade restrictiveness, non-discrimination etc.
37. Inherdelegation 'sopinion, anMEA thathadfulfilled theinternationally agreed criteria of
thetypeproposed above, should haveastrong position. Ifaglobal orregional environmental
issue wassopressing thatanMEA hadbeenjudged necessary, thiswould indicate theimportance
oftheissue inrelation tofreetrade. Insummary, herdelegation believed thattheissue ofPC/SCTE/M/4
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accommodating MEAs intheGATT system wasofhighpriority, andthatdueactions should be
taken toaccomplish thisgoal.
38. Therepresentative ofMalaysia, onbehalf oftheASEAN countries, noted thatwhile much
discussion onthissubject hadtaken place intheEMIT Group, ithadbeenconfined totrade
measures pursuant toMEAs. Examination oftheitemtoday would necessarily require discussion
ofother trade measures adopted independent ofMEAs. Hisdelegation hoped thattheSub-
Committee would givethisaspect alsodueattention.
39. Heconsidered itinteresting thatofthe180international environmental treaties and
agreements only18contained trade provisions. While itmaybetempting toconclude that
environmental objectives could beachieved without much resort totrade measures, theissue still
merited serious consideration especially inviewofcurrent MEAs being negotiated orthose tobe
negotiated inthefuture andtheirpotential forusing trade measures. Henoted thatitwas
becoming fashionable andperhaps expedient tousetrade measures toachieve non-trade objectives.
However, theabove figures indicated thatthere maybesufficient means other thantrade measures
toaddress environmental problems. Hisdelegation, therefore, considered thatthere wasaneedto
examine thenecessity ofcertain trade measures taken toachieve theenvironmental goal.
40. GATT wasaninstitution thatregulated trade andhisdelegation attached great importance
totheneedtoensure thatallmeasures were permissible andinconformity withGATT provisions.
There should notbeanydeviation from thisapproach thatcould stifle trade. Furthermore, the
integrity ofthemultilateral trading system hadtobepreserved andthebenefits thathadbeen
derived from thesystem must continue toflow. Therefore itwasimperative thatcompatibility
withmultilateral trading rules anddisciplines beaddressed throughout theprocess ofselecting
measures forenvironmental purposes ofwhich trade measures wasoneofseveral options, whether
within anational orinternational context.
41. IntheEMIT Group, approaches hadbeenforwarded todealwithtrade provisions taken
under MEAs suchasthewaiver approach andacollective interpretation onapplying Article XX.
There maybeother approaches proposed inthecourse ofdiscussions. Hisdelegation wasstill
examining therelationship between GATT provisions andtrade measures under MEAs anditwas
notinaposition topronounce onthisissue. With regard tofuture MEAs orthose thatwere
being negotiated, hisdelegation firmly believed thatiftrade measures were oneofmany
alternatives inaddressing environmental problems, theyshould bethelastrecourse andhavethe
leastadverse effect ontrade. Since most ofthecountries thatparticipated innegotiations of
MEAs were orwould bemembers oftheGATT/WTO, itshould beassumed thattheytakeinto
account theirGATT obligations soastoavoid future inconsistencies.
42. Therepresentative ofVenezuela considered thatthisitemrequired theSub-Committee to
examine theways inwhich therules ofthefuture WTO could beeffectively harmonized with
MEAs. Asageneral point, hisdelegation considered itimportant tostress thattherelationship
between therules oftheWTO andofMEAs should takeintoaccount thefactthat,inthecontext
ofthemultilateral trading system, despite thelegalequality ofStates andtheprovisions and
principles concerning special anddifferential treatment, developing countries were ata
disadvantage. Thisdisadvantage persisted despite theincreased interdependence ofallthe
participants inthesystem. From theenvironmental standpoint, thissituation would gradually be
corrected totheextent thatdeveloping countries were able, through specific technology and
resource transfer mechanisms, toadopt environmentally sound production methods. Until this
came about intheappropriate forums, whatever solution agreed upon multilaterally should includePC/SCTE/M/4
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specific provisions tomaintain abalance between thecapabilities ofthedeveloping andthe
developed countries.
43. Itwasnotthefunction oftheWTO toserve asamechanism forputting pressure ona
country tosignMEAs. Onthecontrary, itwasmore appropriate thattheso-called
"environmental window" bedesigned soastoprotect theinterests ofthemembers oftheWTO
from thepossibility ofenvironmental trade measures being usedinways incompatible withthe
GATT. Inthisrespect, thesolution adopted forincorporating environmental objectives should be
based onclearly defined principles andbeclearly delimited inscope. Hisdelegation considered
thattrade measures could bepermitted iftheywere provided forinMEAs, butonlybetween
signatories. AsfortheMEAs thatdidnotcontain trade provisions, itshould bepointed outthat
thissituation stemmed from alackofagreement inthose forums regarding theirappropriateness
ortheirlackofpractical usefulness. Before including these measures intherange ofmeasures
permissible under theWTO, itwould bebetter forthese agreements, through scientific working
parties, todetermine scientific parameters under which trade measures could beincorporated. It
would berisky fortheWTO topermit trade measures onwhich there wasnoscientific agreement
inthecorresponding environmental forums. Hisdelegation would intervene atalaterstage to
refertomore specific aspects ofthequestion.
44. Therepresentative ofSwitzerland considered thatMEAs covered verydifferent types of
agreements related toenvironmental questions. Abasic criterion todefine thetypes wasthescope
oftheenvironmental problem withwhich theagreement dealt, i.e.global, regional orlocal. Not
many MEAs existed thataddressed trulyglobal commons, i.e.environmental problems withthe
potential todirectly affect allStates. TheClimate Change Convention andtheMontreal Protocol
onozone-depleting substances were theclearest examples. Anumber ofother agreements were
multilateral innature, buttheirdirect benefit could beseenasmore locally confined although
there wasalarge global interest atstake; theBiodiversity Convention, theBasle Convention and
CITES maybeputinthiscategory. Athirdgroup ofmultilateral agreements addressed regional
problems ofonlylimited impact, suchastheGeneva Convention onLong-Range Transboundary
AirPollution.
45. Thequestion waswhether allthese agreements posed thesame problems withregard to
possible trade measures andextraterritoriality inaddressing thefreerider problem posed by
non-parties. Herdelegation considered thatthere were differences which needed tobeworked out
more precisely. Obvious differences were thenumber ofcontracting parties toaconvention; the
trade measures thatwere foreseen bytheagreement (ascontained indocument TRE/W/1/Rev.1)
andtheirimpacts onthetrading system; theimpacts ofthese measures onnon-parties andthe
effects suchmeasures mayhaveparticularly ondeveloping countries. Atthispoint ofthe
discussion herdelegation considered itimportant toaddress thislatter issue which hadgreat
consequences forglobal MEAs, theaimofwhich could notbeachieved without thefull
participation ofdeveloping countries.
46. Possible difficulties fordeveloping countries tocomply withprovisions ofglobal MEAs
could andshould, ifpossible, bemitigated bycompensatory measures andmechanisms. For
example, theClimate Change Convention clearly stated thatparties should protect theclimate on
thebasis ofequity andinaccordance withtheircommon butdifferentiated responsibilities and
respective capabilities. TheConvention acknowledged thatdeveloping countries would needto
increase theirenergy consumption foreconomic development while thedeveloped countries had
committed themselves totakeimmediate action. However, itmust benoted thattheClimate
Change Convention didnotspecify anytarget forstabilization orreduction ofgreen house gas
emissions. Commitments under theConvention related onlytotheneedfordeveloping andPC/SCTE/M/4
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updating national green house gasinventories andforreporting onprogrammes containing
measures tomitigate emissions. Only developed country parties were required toreport within
sixmonths oftheentry intoforce detailed information ontheirpolicies andmeasures tomitigate
emissions. Inaddition, developed country parties hadcommitted themselves toprovide newand
additional financial resources tomeettheagreed fullcostincurred bydeveloping country parties
incomplying withtheirobligations under theConvention.
47. What wasclear from thisexample wasthattheClimate Change Convention, aswellas
other MEAs suchastheMontreal Protocol andtheBiodiversity Convention, fullyacknowledged
theparticular needs anddifferentiated responsibilities ofdeveloping countries. Itwaswithin these
conventions thattransition periods fordeveloping countries andcompensatory financing
mechanisms could befurther developed. Sheunderlined thatanytrade measure infuture MEAs
orinnewProtocols toexisting MEAs would automatically havetotakeaccount oftransition
periods granted todeveloping countries forreaching certain objectives. Itwastherefore important
todefine therelation between thestage ofdevelopment ofacountry anditscapacity toimprove
itsenvironmental standards. Thispoint wasparticularly important regarding theissues raised by
PPMs. Theexample oftheMontreal Protocol mentioned inPC/SCTE/W/3 illustrated PPM-based
measures taken pursuant toanMEA. Parties totheMontreal Protocol haddecided in
November 1993 thatitwasnottechnically feasible toimpose abanorrestriction ontheimport of
products produced with, butnotcontaining, controlled substances listed inAnnex Aofthe
Protocol. TheReport oftheTechnology andEconomic Assessment Panel stated thatitwasnot
technically oreconomically feasible todetermine whether controlled substances were usedbecause
little, ifany,residue ofcontrolled substances would bepresent ordetectable intheproducts
concerned.
48. Inconclusion, sherecalled thatthemandate oftheSub-Committee wastomake
appropriate recommendations onwhether anymodifications oftheprovisions ofthemultilateral
trading system were required, compatible withanopen, equitable andnon-discriminatory trading
system, and,inparticular, theneedforrules toenhance positive interaction between trade and
environmental measures forthepromotion ofsustainable development, withspecial consideration
totheneeds ofdeveloping countries. Thiscalled forcoherent development ofboththe
international trading system andinternational environmental agreements. Thismeant that
coherence between MEA-based rules andmeasures andtherules oftheWTO needed tobe
fostered. Thisrequired intensified dialogue between trade andenvironment experts atalllevels.
49. Therepresentative ofAustria recalled thathisdelegation hadsubmitted ananalytical paper
ontherelationship between GATT andMEAs totheEMIT Group (TRE/W/19) which it
considered tobeaworking paper forthisSub-Committee. Hewished tobuild ontheissues
raised inTRE/W/19 inorder tostimulate andpossibly advance thediscussion. With regard to
existing MEAs ,tohisdelegation 'sknowledge notoneMEA which allowed fortrade measures had
beenchallenged inGATT. Consequently, theissue ofnegotiating either aspecific/individual
exception orgranting individual waivers forexisting MEAs appeared toberather theoretical. Of
course, disputes could ariseatanytimebecause ofdiffering views ontheapplication oftrade
measures based onMEAs which could besettled either according tothespecific dispute settlement
procedure outlined intheMEA or,forWTO members, according totheWTO dispute settlement
procedure iftheyconsidered theirWTO rights infringed.
50. Furthermore, anunderstanding byWTO members tousethemeasure which didnotcreate
unnecessary barriers totrade, andtoapply suchameasure intheleasttrade distortive manner,
could behelpful from thepoint ofviewofdispute prevention. Inaddition tosuchan
understanding concerning theapplication oftrade measures, atrumping clause covering existing,PC/SCTE/M/4
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unchallenged MEAs which could, forinstance, bemodelled aftertheoneusedintheNAFTA
would beworth considering forthepredictability andsecurity ofthemultilateral trading system.
Theburden ofproof could andshould beshifted sothattrade measures based ontheMEAs
enumerated inthetrumping clause were presumed nottocreate unnecessary barriers totrade, to
beleasttrade distortive, ortobeleastinconsistent withGATT/WTO rules.
51. Headded thatforfuture MEAs anapproach based onthefollowing considerations could
beuseful. Principles, suchasnon-discrimination, leasttrade restrictiveness, leasttrade
distortiveness, efficiency, proportionality, transparency, sound scientific evidence andnecessity
should betaken intoaccount indeveloping criteria. These criteria could serve asyardsticks to
determine thelegitimate useoftrade measures infuture MEAs. Such aprocedure would allow
evaluation ofMEAs, thuspreventing disputes. Ultimately thiscould leadtodevelopment of
guidelines, which should takeintoaccount work undertaken inother international fora.
52. Inorder toprevent disputes ,members oftheWTO may, through theCouncil, askfora
non-binding legalopinion ofthelegalservice oftheWTO orthenewly created Appellate Body
whether thetrade measures envisaged inanMEA could beregarded ascompatible withWTO
rules. Ifparties toanMEA decided nottoaccept thisnon-binding legalopinion, themembers of
theWTO among theparties should beencouraged: (i)todemonstrate totheCouncil whythe
envisaged trade measures hadtobeincluded inthefuture MEA inorder tofulfil itsenvironmental
goaleffectively; or(ii)toapply foraspecial environmental waiver, iftheother members didnot
follow theirreasoning. Iftrade measures were targeted specifically atnon-parties toanMEA in
order toassure therealization oftheenvironmental goal, unanimity oftheWTO members could
berequired. Given theexpected nearuniversality oftheWTO, theoutlined procedure should
protect non-parties from protectionist abuse ofsuchmeasures. Inaddition, theInternational Court
ofJustice (ICJ) could begiven aroleasanauthority above bothtrade andenvironmental interests.
53. Trade measures notbased onMEAs andproducing extraterritorial effects mayposealegal
problem. Governments were inclined toresort tosuchmeasures ifthere wasastrong demand by
theircitizens totrytoachieve anenvironmental goalforenvironmental, social ormoral reasons.
Some ofthefollowing reasons mayinduce governments totakeontheroleofacatalyst: (i)the
underlying environmental goalorpreference wasnotuniversally orwidely shared; (ii)there was
noagreement ontheevaluation ofthescientific evidence produced tosupport theargument; or
(iii)thenegotiating process toconclude anMEA wasperceived tobesloworobstructed bysome
countries. Itshould benoted thatthechances ofsucceeding inthatrolewere directly proportional
tothepolitical andeconomic power ofacountry.
54. Hisdelegation believed thatnewefforts should beundertaken intheSub-Committee to
devise ways andmeans onhowtokeeptrade measures notbased onMEAs under theWTO
umbrella wellbefore disputes were toarise. Dispute prevention should always prevail over
dispute settlement. Hethanked theSecretariat foritsdocument ondispute settlement andnoted
thatthenon-compliance procedures contained intheMontreal Protocol should notfigure under the
heading of"conciliation" butrather should beconsidered asaninstrument ofdispute prevention.
55. Therepresentative ofKorea considered thatsince thisitemtouched upon thefundamental
nature oftheexisting GATT/WTO framework andthedelicate balance between rights and
obligations under theGATT/WTO, ithadbeenfound preferable bymany intheEMIT Group not
toprejudge thenewapproaches oroptions suggested. Hisdelegation hoped thatthisapproach
would prevail infuture discussions. Hedrew attention tosome points thatwere, inhis
delegation 'sview, largely shared byother delegations atprevious discussions. Trade measures
were notthebestmeans andshould bethelastresort forachieving theenvironmental objectives ofPC/SCTE/M/4
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MEAs. Trade liberalization would contribute totheobjective ofsustainable development by
facilitating theoptimal useofworld resources. Second, outofapproximately 180MEAs onlya
handful contained trade provisions, andtheycould generally beoperated inaccordance with
existing GATT/WTO provisions. Fewconflicts between these agreements hadcaused difficulties.
Third, tocopewithtrade measures outside oftheGATT/WTO framework, theexisting
GATT/WTO provisions should betaken intoaccount, together withtheimportant concepts or
principles thatwere being established byinternational consensus and/or were emerging from
GATT practice. Among others, these included theprinciples ofleast-trade restrictive measures,
avoidance ofarbitrary measures, necessity, proportionality, avoidance ofunilateral action, and
non-discrimination. Most were provided forintheRioDeclaration andAgenda 21,andsome
were emerging intheGATT system.
56. Herecalled thatanumber ofthemerits anddemerits ofex-ante andex-post approaches
hadbeenexpressed intheearlier discussions inaneffort todetermine therelationship between
GATT/WTO provisions andMEAs. Hisdelegation considered thatacase-by-case approach,
possibly complemented bysome elements ofanex-ante approach, deserved attention, particularly
withrespect tothefollowing points:
(a) conflicts between trade provisions inMEAs andtheGATT/WTO Agreement were
notlikely tooccur frequently. Therefore, providing leeway forthetrade
provisions inMEAs onanex-ante basis wasnotnecessary orefficient. A
case-by-case solution would provide thebestmeans ofsolving potential problems,
andwould better prevent possible abuse oftrade measures forenvironmental
purposes;
(b) states most likely tobeinfluenced bymeasures inMEAs were probably non-party
states from developing countries. Thereason whytheywere outside theMEAs
wasnotdirectly related totrade, sotrade measures maynotbethebestsolution.
Themost effective waytoinduce those countries tojoinwastoprovide positive
incentives suchasfinancial assistance andthetransfer oftechnology, rather than
toutilize trade restrictions;
(c) insome cases, itwasrarethatdeveloped countries were non-parties toMEAs, in
other cases, certain developed countries hadchosen toremain outside MEAs.
They were notlikely tobeseriously affected bytrade measures inMEAs.
Developing country parties maybemore vulnerable totrade restrictions thannon-
parties indeveloped countries.
57. Hisdelegation believed thatthevarious problems withex-ante approaches could be
mitigated byintroducing some oftheimportant elements found inthese approaches inacombined
approach which would enhance thepredictability oftrade measures inMEAs andhelptoavoid the
useofunilateral measures. Itwould alsoresult intheprovision ofguidelines forex-post
approaches. However, ex-ante approaches should bedesigned inaveryflexible andgeneric
manner andshould include principles thatwere emerging inGATT practice andconcepts that
were established inother forabyinternational consensus.
58. Therepresentative ofAustralia noted thatthisitemencompassed arange ofissues thathad
received significant public attention anddeliberations onitcould beexpected toattract great
interest. First, theitemincluded consideration oftherelationship between theprovisions ofthe
multilateral trading system andtheuseoftrade provisions inMEAs, anissue thathadbeen
subject todetailed discussions intheEMIT Group. Thisfirstaspect might concern thePC/SCTE/M/4
Page14
relationship between international cooperation inthefields oftrade andenvironment andtherole
oftheprovisions ofthemultilateral trading system inthiscooperation. Second, theitemincluded
consideration oftherelationship between theprovisions ofthemultilateral trading system and
actions taken pursuant toMEAs byindividual countries. Itmaybeuseful todistinguish thisissue
from thequestion oftheuseoftrade provisions inMEAs given thatthese provisions maybe
discretionary rather thanmandatory andmayprovide significant scope forinterpretation by
individual countries regarding theirimplementation. Thissecond aspect might besaidtoconcern
theissue ofhowacountry managed implementation ofinternational obligations inthefields of
trade andenvironment andhowthisrelated totheprovisions ofthemultilateral trading system.
59. Third, thisitemconcerned theuseoftrade measures forenvironmental purposes by
individual countries inpursuit ofobjectives theydetermined individually rather thaninthecontext
ofprovisions contained inanMEA. Thisthirdaspect maybesaidtoconcern therelationship
between environmental andtrade policy inindividual countries, andthedisciplines setbythe
multilateral trade rules ontheimplementation oftrade ortrade-related measures usedtofurther
environmental objectives. Onthisthirdaspect, inparticular, much ofthework mayprimarily
haveaneducative value, inhelping toimprove understanding ofthemultilateral trade rules and
responding toconcerns about whatthese rules meant forcountries 'regulation oftheirinternal
affairs. Considerable freedom would appear tobeprovided bythemultilateral trade rules for
pursuing environmental concerns within acountry 'sownjurisdiction, including through theuseof
trade andtrade-related measures. Atthesame timetheSub-Committee 'sterms ofreference
required ittocarefully examine therules inthelightoftheneedforthem toenhance positive
interaction between trade andenvironmental measures while supporting theopen, equitable and
non-discriminatory nature ofthemultilateral trading system.
60. Ontheuseoftrade provisions inMEAs, thework oftheEMIT Group provided agood
basis fordeliberations. However, there wasnowanewcontext tothediscussion, bothinregard
totheSub-Committee 'sterms ofreference andtheenhanced multilateral trading framework
provided bytheUruguay Round Agreements. Forexample, these Agreements could mean thata
wider range ofMEAs wasnowrelevant totheprovisions ofthemultilateral trading system, or
thattherelationship wasnowbroader andmore extensive. Asaforum forinternational
cooperation ontrade issues, itseemed natural thattheWTO should endorse theneedfor
cooperative, multilateral approaches todealing withenvironmental problems, particularly those of
atransborder orglobal nature. However, theinternational community, atUNCED, pointed tothe
importance ofinternational cooperation forthetwofields tobe"mutually supportive". This
objective reflected anawareness oftheneedtoaddress issues ofpoverty anddevelopment atthe
same timeasresponding toenvironmental problems ifthebroad objectives ofsustainable
development were tobeadvanced.
61. Thechallenge fortheinternational community washowtoensure thatthe"mutually
supportive" idealwasputintopractice, inother words thatthere wasagenuine partnership
between international cooperation inthetrade andenvironment areas. Thespecific challenge for
theSub-Committee wasthecontribution which theprovisions ofthemultilateral trading system
could appropriately playinthisprocess. Thepotential forconflicts oflawbetween acountry 's
obligations under theGATT andtrade measures itmaytakepursuant toanMEA wasasubject
which hadgenerated considerable interest. Inresponding tothisconcern theSub-Committee
could takeamore narrow viewofitswork. Attention could focus onresponding toperceptions
thatuncertainty about thescope forsuchconflicts oflawmayhinder international cooperation to
dealwithenvironmental problems. TheSub-Committee could focus onfinding anefficient and
effective means ofclarifying therelationship between theprovisions ofthemultilateral trading
system andtheuseoftrade measures inMEAs withaviewtolimiting thescope forconflicts ofPC/SCTE/M/4
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lawwhile maintaining theintegrity ofthefundamental principles ofthemultilateral trading
system.
62. Hecautioned thattheimportance andcomplexity oftheissues involved should notbe
underestimated. There were certain usesoftrade measures which could posefundamental
questions forthebasic principles ofthemultilateral trading system, whether these trade measures
were adopted unilaterally orinthecontext ofanMEA. Forexample, using trade measures to
address competitiveness concerns could raisemajor issues, suchasinrelation tothecontribution
oftheprovisions ofthemultilateral trading system infurthering development objectives and
encouraging greater equity intheconduct ofinternational economic relations. TheMarrakesh
Decision provided thebasis forawider viewoftheSub-Committee 'swork andforexamination of
whether there wasaneedfortheprovisions ofthemultilateral trading system toplayamore
active roleinensuring thatinternational cooperation intheareas oftrade andenvironment were
mutually supportive infavour ofsustainable development.
63. Itmaybeappropriate toexplore whether there wasarolefortheprovisions ofthe
multilateral trading system toexpress policy views withregard totheuseoftrade measures in
MEAs. Provisions expressing suchpolicy views could provide guidance togovernments inthe
negotiation ofMEAs andassist them inensuring thatanytrade provisions included insuch
agreements were tested against the"mutually supportive" concept agreed atUNCED. Inaddition,
suchprovisions could provide guidance toindividual governments intheirchoice ofpolicy
instruments fornational implementation ofobligations under MEAs, especially when these
agreements provided member countries withsignificant discretion inthemeans usedtomeettheir
obligations. Anysuchprovisions would needtobecarefully circumscribed sothattheyfocused
onthose specific issues where acontribution tofurthering themutually supportive objective could
bemade within thecompetence ofthemultilateral trading system. Hisdelegation didnotintend
toexpress anypreference foranarrower orbroader perspective regarding theobjectives under
thisitem. However, itwasimportant thattheSub-Committee appreciate thatthisitemwasmore
thanjustacontinuation ofthework oftheEMIT Group andthatitcarefully analyze andreflect
onthefullrange ofissues itraised.
64. Therepresentative ofArgentina noted thatdiscussion ofthisitemcould include bothtrade
measures adopted unilaterally andthose adopted within theframework ofMEAs. However,
within theextensive andsomewhat confused work programme, thiswastheonlyitemunder which
theSub-Committee would beabletoanalyze therelationship between theWTO andthe
restrictions onfreetrade which itmight beindispensable toadopt within thecontext ofMEAs.
Moreover, itwasperhaps theonlyopportunity todealwiththethorny problem ofPPMs not
related totheproduct, butwhich nevertheless hadcross-border effects. National provisions
concerning "product-related" PPMs were comparable either tothetechnical regulations ortothe
standards defined intheTBT. Provisions concerning PPMs "notrelated" totheproduct and
without cross-border effects were reserved fortheenvironmental policy ofeachcountry and
therefore, insofarastheydidnothaveadistorting effect ontrade, GATT didnotneedto
concern itself withthem.
65. There remained, however, athirdcategory ofPPMs deartolegitimate environmental
interests: those which, although notproduct-related, produced cross-border effects. Forthis
reason andtodispel acertain image ofenvironmental insensitivity which theGATT hadunjustly
acquired insome sectors ofpublic opinion, hisdelegation considered itnecessary tofocus the
debate ontherelationship between thetrade measures which could beincluded inMEAs andthe
multilateral trading system, expressed bytheWTO.PC/SCTE/M/4
Page16
66. Before entering intodetails, heputforward some thoughts. Therelationship between
environmental protection andinternational trade wascomplex andhadcome before thisforum for
clarification. Itwould beneither prudent norintelligent tobelieve thattheenvironmental
challenge would fadeaway withtime. Hisdelegation wasconvinced thatitwasnecessary to
recognize thisreality inorder tobeabletopropose amultilateral pathcompatible withtheGATT.
Itwasalsoconvinced thatitwasnecessary toaccompany thismessage witharefusal toaccept
unilateral measures contrary totheGATT which hadanadverse effect onfreetrade orclaimed to
linkcompetitiveness withenvironmental protection. Inother words, itwasnotrealistic tosuppose
thatthemultilateral trading system could beprotected from unilateral actions linked tothe
environment without atthesame timeoffering ameans ofreceiving andprocessing intheGATT
theenvironmental objectives shared andadopted inmultilateral fora, when these necessarily
required theadoption oftrade measures.
67. MEAs attimes included trade restrictions which theparticipants considered necessary to
ensure thecomplete achievement oftheirobjectives. These trade measures were usually included
toensure theachievement oftheobjective oftheagreement orforother complementary purposes
suchas:(i)topromote universal participation intheagreement; (ii)toprevent environmentally
harmful practices being transferred tocountries which were notparties orsignatories; or(iii)to
discourage countries notparties totheMEA which might trytoderive economic advantages from
thesituation (freeriders). Some ofthese provisions could prove tobeincompatible withthe
existing rules oftheGATT, especially where countries thatwere parties totheMEA applied trade
measures which adversely affected contracting parties which were notparty totheMEA.
However, itshould bepointed outthat,sofar,theGATT dispute settlement mechanism hadnot
hadtodealwithanycontroversy originating inmeasures adopted under theMEAs inforce.
68. Aninitial analysis ofdocument PC/SCTE/W/3 revealed thatthelatest MEAs negotiated
(Climate Change, Biological Diversity andDesertification Conventions, International Tropical
Timber Agreement 1994) didnotinclude trade provisions oriftheydid,theywere ofafeeble and
general type. Thisconfirmed theimpression ofmany delegations that,although clarifying the
relationship between GATT andMEAs maybeimportant, there should notbeanyundue haste to
reach conclusions. From thediscussions heldintheEMIT Group itappeared thatthere were two
main approaches toensuring thatthetrade provisions oftheMEAs were consistent withthe
GATT. Afirstapproach, which might becalled theex-ante approach, basically involved
modifying orinterpreting thegeneral exceptions provided forinArticle XXinorder toestablish,
inabstract form, thecriteria which thetrade measures contained intheMEAs must satisfy tobe
considered compatible withtheGATT. Thisapproach hadtheadvantage ofproviding acertain a
priori assurance ofthelegality, vis-à-vis theGATT, ofthese trade measures, butdidnot
guarantee theapplication ofthespecific measures adopted inthiscontext, ifany. Thesecond
approach, which might becalled theex-post approach, appeared tofavour acasuistical solution,
suchasgranting waivers under Article XXV:5. Thisapproach wasbased, ontheonehand, on
fearofgiving theenvironmental negotiators a"blank check" and,ontheother hand, onthe
reduced number ofMEAs withtrade provisions andtheabsence ofdisputes arising from the
application oftheirprovisions. Alsothediversity ofthefuture MEAs suggested thatitwould be
extremely difficult toanticipate thecriteria thatwould ensure consistency withtheGATT.
69. Hisdelegation considered thatthisapproach hadonedefect: itpresupposed that,inthose
cases inwhich theMEAs provided fortrade measures, thepossibility oftheiractually being
applied waslefttothediscretion oftheGATT andwould leave noframe ofreference for
determining thelegality ofsuchmeasures. Accordingly, hisdelegation wasinclined tofollow an
intermediate pathwhich combined theadvantages ofthetwoapproaches mentioned above. He
summarized theessential features ofthisapproach. First, theSub-Committee could identify andPC/SCTE/M/4
Page17
define thecriteria which would, prima facie,make thetrade measures adopted within thecontext
ofanMEA compatible withtheGATT. Thisprocess could bebased ontheanalysis made inthe
EMIT Group. These criteria would havetoinclude definitions concerning theconceptual scope
andthecharacteristics which theMEAs would havetohaveandconcerning thejustification and
characteristics ofthetrade measures theycontained. Inthisconnection, heclarified his
delegation 'sposition onfourbasic criteria. Thefirsttworelated tothecharacteristics and
conceptual scope oftheMEAs andthesecond twotothejustification andcharacteristics ofthe
trade measures therein.
(i) Theterm"multilateral" should beconsidered from twostandpoints: quantitative
andqualitative. Thefirstwasrelated tothenumber ofcountries which, inthe
geographical region covered bytheMEA, would havetobe,asaminimum,
parties toit.Thesecond, qualitative aspect wasconnected withtheneedforthese
MEAs toform partofamultilateral effort opentotheparticipation andaccession
ofanycontracting party irrespective ofitslevelofdevelopment, market
characteristics orgeographical location.
(ii) Theterm"environmental" should embrace anyagreement having anenvironmental
protection objective, evenifthiswasnotitsonlyobjective. Thiswasa
recognition ofthecomplexity oftheconcept of"environment", which inreality
wasinterwoven withvarious disciplines.
(iii) Theconcept ofthe"necessity" ofthetrade measure, inGATT lexicon, should be
translated as"indispensable", when working withenvironmental agreements. This
would enable dispute avoidance andleave trade measures asalastresort. This
concept should beexamined intheSub-Committee from anabstract point ofview;
itshould notbetiedtoaspecific case. Ofcourse, theapplication ofthisconcept
tospecific cases wasoutside theSub-Committee 'scompetence andshould bedealt
withinthecorresponding MEA.
(iv) Regarding theprinciple of"least trade restrictiveness", itwasprecisely inthe
GATT/WTO thateachspecific caseshould beanalyzed though using theinputs
provided bythecorresponding MEA. Hewould referbelow tothe
appropriateness ofadjusting thisconcept toaparticular case.
70. Second, inaccordance withthesecond halfoftheproposal, itwould benecessary to
reflect these criteria intheWTO through acollective interpretation ofArticle XX,although this
interpretation would alsohavetoinclude anexplicit recognition thatbefore atrade restricting
measure wasapplied, itsappropriateness, i.e.itscompatibility withtheabove-mentioned criteria,
would havetobeanalyzed onacase-by-case basis. Forthispurpose, itmight bepossible to
follow aprocedure similar tothatprovided forinArticle XXV:5 oftheGATT.
71. Insummary, hisdelegation believed thatthepathproposed would make itpossible to
resolve twooftheprincipal concerns involved: theneedtoadmit legally, inthecontext ofthe
GATT, thepossibility ofapplying trade-restricting measures iftheyarebased onMEAs with
specific characteristics andscope which, intheirturn, maybeconsidered "indispensable" and
compatible withtheprinciple of"least trade restrictiveness"; andontheother hand, theneedto
avoid disregarding freetrade andthelawofanycontracting party inthecourse oftheextremely
important andspecific taskofdealing withenvironmental problems.PC/SCTE/M/4
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72. Before concluding, hereferred toaconcern which could inhibit theconsideration ofthis
question. Herecalled thatinitially theSub-Committee spent agreat dealoftimeestablishing the
order inwhich toexamine theitems inthework programme. Nodelegation wanted toleave
questions out,butthere wasaconcern toidentify those which should begiven priority. However,
iftheSub-Committee hadtopresent itsreport tothefirstMinisterial Meeting intwoyears time,
heasked whytheSub-Committee wassoconcerned withtheorder ofpriority ofthese questions?
Heresponded because there wasacertain uneasiness andconcern intheairthatsome questions of
particular interest tosome contracting parties might receive special treatment andbesettled
prematurely, withother questions, ofparticular interest toother contracting parties, leftforlater.
Asthisitemwasoneofthetopics thataroused thisapprehension, hisdelegation believed thatit
would behighly desirable toleave these suspicions aside andproceed withthework freeofthis
burden. Hisdelegation noted thatthework programme wasabalanced package ofinterests;
partial progress ononeitemshould notbeconsidered definitive untilthesame isdoneforallthe
items. Nevertheless, thisdidnotprevent starting straight away toseekthebasis foraconsensus.
73. Therepresentative ofNewZealand considered thatthisitemofthework programme was
animportant areaofwork because itaffected thepublic perception oftheinterrelationship
between environmental protection andthemultilateral trading system, itinvolved cooperative
multilateral approaches, anditencompassed themessage which emanated from UNCED regarding
themutual supportiveness oftrade andenvironmental policies. Henoted thatthisitemwas
broader thanthesimilar itemoftheEMIT Group 'sagenda. Although theEMIT Group haddone
considerable work inthisarea, further work wasneeded before prescriptive approaches could be
considered. Heagreed withCanada, Australia, andtheASEAN countries thattheother
dimensions ofthisitemneeded tobethoroughly considered. Inthiscontext, hisdelegation would
beinterested instudying analytical contributions ontheeffectiveness oftrade measures taken
outside MEAs toaddress global ortransboundary environmental issues. Inthisregard, henoted
thecomment byAustralia about apossible educative roleinrelation topublic perception ofsome
ofthecircumstances outlined bytheAustrian delegation. Hisdelegation would consider making
ananalytical contribution onthisissue atalaterstage.
74. Therepresentative ofHong Kong noted thathisdelegation 'sposition onthisissue had
beenclearly spelled outintheEMIT Group. Heconsidered thattheSub-Committee hadcome to
thestage where some interaction among delegations might helpimprove understanding ofthe
issues andgradually move towards concrete ideas and,later, options. Inthiscontext, henoted
thattheCanadian intervention hadraised anumber ofissues which were notonlyrelevant to
border taxadjustment buttomeasures suchaslabelling, packaging, andtechnical regulations. In
particular, hewasinterested inthecomparisons made onefforts towards changing production,
consumption ordisposal patterns. Thiswashelpful inunderstanding theeffectiveness and
necessity ofthemeasure aswellastheeffect ofthose measures oninternational trade.
75. Onapoint raised byNewZealand andArgentina, hewasnotsurethatthedistinction
between product related andnon-product related PPMs wasveryclear. Another wayofanalysing
implications wasbytheeffect ofthePPM ontheproduct 's"likeness"; whether thePPM
consideration actually changed thecharacter oftheproduct interms ofitbeing "like" toanother
comparable product. Another point tobeconsidered waswhatwere theeffects oflocal, global,
andforeign externalities andwhyandhowtheyshould bedealtwith. Ifeventually the
Sub-Committee came tothepoint ofconsidering solutions, Canada 'spoint, thatthecosts andthe
benefits hadtobetaken intoaccount, wasrelevant. Heconsidered thattheinsome cases, the
analysis showed thatthebenefits might bemarginal ontheenvironment side,orthesame effects
could beachieved byother means, whereas thecosts tothetrading system might behigh. He
would revert tothisatalaterstage.PC/SCTE/M/4
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76. Henoted thatJapan, Korea, andtheASEAN countries spoke totheneedtopreserve the
stability andpredictability oftheGATT system. Alsoreference wasmade totheexceptional
nature oftrade measures inMEAs; document PC/SCTE/W/3 stated thattenpercentofMEAs
contained trade provisions. Even inthistenpercent, asmaller percentage would contain
provisions forGATT-inconsistent trade measures. Therefore, talking about aconflict between
MEAs andtheGATT system, addressed averysmall cluster ofissues. TheAustrian submission,
TRE/W/19, andtheintervention byArgentina atthismeeting, moved theprocess forward andhis
delegation could seepossible approaches tomanage anyconflict within theGATT. First, there
wasthewaiver approach which would maintain thestatus quowiththeexisting GATT. Next,
there wasaclarification approach. Thesubmission bytheEuropean Community inthe
EMIT Group, TRE/W/5, talked about acollective interpretation ofArticle XX; Argentina had
given points tothink about inthiscontext. Finally, there wasthenewrules approach. He
considered thattheSub-Committee should startwiththestatus quo,i.e.thewaiver approach, and
examine ifitwasinadequate andthen, ifnecessary, move towards clarification. However, his
delegation would beveryhesitant toelaborate newrules inthisarea.
77. Henoted thatanumber ofinterventions appeared toshow apreference foracombined
approach andperhaps thisshould beconsidered. Thebasic ideawasalready inArticle XX(h) of
GATT. Overall, hesounded anoteofcaution; theSub-Committee hadtomaintain asense of
proportion. Although some MEAs contained trade provisions which might beinconsistent with
GATT, there hadnever beenachallenge, thusthiswasnotarealproblem. Ifthesolution to
transboundary, global environmental problems wasinternational consensus, thentheGATT system
hadtoaccommodate thiswhen itwasgenuine andtrulyinternational. TheSub-Committee was
notdesigned torewrite GATT, todismantle whatwasaccomplished intheUruguay Round, norto
findmeasures which would encourage policymakers tointroduce trade measures inMEAs which
were inconsistent withGATT. Theoverriding viewhadtobethatthegreatest contribution that
GATT could make tosustainable development wasthrough trade liberalization. Heasked that
more timebegiven tothisitembecause itmight bethefirstareawhere theSub-Committee could
sendsignals totheenvironmental community.
78. Therepresentative oftheEuropean Communities noted thatdocument PC/SCTE/W/4 on
dispute settlement inMEAs would bemore suitable forfuture discussion under thefifthitem. He
considered thatsuchissues would constitute a"second generation" ofissues which maycome up
again under thefirstitemoncetheapproach tothatissue wasestablished. Hisdelegation
considered thatthisitemwasoneofthemost important issues. Hisintervention would mainly
focus ontherelationship between theGATT andfuture WTO provisions andtrade measures for
environmental purposes when taken pursuant toMEAs. However, before turning tothisissue, he
stressed thatmany measures taken forenvironmental purposes which affected trade were allowed
under GATT rules insofar astheycomplied withspecific conditions. Heagreed withEgypt that
suchmeasures neednotconflict withtrade rules.
79. Forinstance, product standards were accepted iftheyconformed tothebasic principles of
Articles IandIIIoftheGATT andtotheprovisions oftheexisting andrevised TBTAgreement.
Many sanitary andphyto-sanitary measures were accepted under Article XX(b) oftheGATT and
therules applicable tothem hadnowbeenclarified intheUruguay Round SPSAgreement. It
should alsobenoted thatthePreamble oftherevised TBTAgreement stated asabasic principle
thatnocountry should beprevented from taking measures necessary fortheprotection ofhuman,
animal orplant lifeorhealth, aswellastheenvironment, atthelevels itconsidered appropriate.
Ofcourse, themeasures must beinaccordance withthefundamental GATT principle of
non-discrimination, theymaynotconstitute arbitrary discrimination oradisguised restriction on
international trade, andtheymust otherwise beinaccordance withtheprovisions ofthePC/SCTE/M/4
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TBTAgreement. Finally, henoted theimportant references inthePreamble ofthe
WTO Agreement totheaimsofsustainable development andenvironmental protection.
80. However, thisitemexisted because negotiators ofMEAs sometimes deemed itnecessary
totakecertain trade measures, which might -intheabsence ofanMEA -beatunease with
GATT obligations, andthattheysometimes evenconsidered that,inorder toavoid thatthe
environmental objective ofanMEA beundermined bytheenvironmental behaviour ofnon-
parties, itwas"environmentally" necessary totakesuchtrade measures alsoagainst non-parties to
theMEA. Particularly inthisrespect hisdelegation washappy withtheArgentinean statement
thatitwasneither prudent norintelligent tobelieve thatthisenvironmental challenge would fade
away withtime; andneither GATT northeWTO could ignore thischallenge.
81. Itwasgenerally recognized thatthemultilateral trading system should positively consider
MEAs, including trade measures contained therein. Asstated inPrinciples 7and12ofthe
RioDeclaration, international cooperation should befavoured toprotect global commons and
solve transboundary environmental problems. Furthermore, itwasagreed atRio,inpoint 2.21(a)
ofAgenda 21,thatgovernments should strive tomake international trade andenvironment policies
mutually supportive infavour ofsustainable development, andthattheyshould dosothrough
relevant multilateral fora, including GATT. Inviewofensuring thismutual supportiveness, his
delegation hadmade almost twoyears agoasubmission totheEMIT Group which focused mainly
ontheissues raised bytrade measures taken inaccordance withMEAs under theexisting
multilateral trading system (TRE/W/5). Thatpaper suggested thatthework within theEMIT
Group becarried outinviewofacollective interpretation ofArticle XXwhich would ensure a
positive approach byGATT towards trade measures taken pursuant toMEAs. After submission
ofthatpaper there wasconsiderable discussion onthisitemintheEMIT Group, including the
approach suggested inthispaper. Hisdelegation wanted topickupthatdiscussion again.
82. Heconsidered thatthediscussion intheSub-Committee should focus onlyoncertain trade
measures against non-parties. With regard toMEAs, themain issue ofconcern tothemultilateral
trading system wasthetaking oftrade measures byoneormore parties toanMEA withregard to
oneormore GATT contracting parties orWTO members, which were notparty tothatMEA.
Measures agreed upon andapplied between parties toMEAs seemed tobe"resinteralios acta",
which didnotneedtobeofconcern. Those were issues where itwasassumed thatthegeneral
rules ofpublic international lawwould provide thenecessary guidance toGATT contracting
parties orWTO members which were alsoparties totheMEA concerned, although hedidnot
exclude thattheymayhavetobetouched upon when discussing thefifthitem, therelationship
between dispute settlement inMEAs andinmultilateral trade agreements.
83. Furthermore, trade measures taken pursuant toMEAs against non-parties tothose MEAs
were mainly ofconcern, asfarastheyarguably would becontrary totherules ofthemultilateral
trading system iftheywere nottaken pursuant toanMEA. Forinstance, if,inorder to
implement itsobligations under anMEA, aGATT contracting party orWTO member imposed a
certain technical regulation onaproduct inorder toavoid environmental harm which would
otherwise becaused bythatproduct, andthatproduct standard wasarguably inconformity with
itsGATT obligations -inparticular Article IIIoftheGATT andtheTBTAgreement -his
delegation would consider thatsuchameasure neednotbeofgreat importance tothediscussions
intheSub-Committee, eventhough itwastaken toimplement obligations under anMEA.
84. Anessential element ofthediscussions intheEMIT Group andinhisdelegation 's
submission tothatGroup wasthequestion ofwhatconstituted a"genuine" MEA forGATT 's
purposes. Intheviewofhisdelegation, theconcept ofanMEA should bedefined soastoensurePC/SCTE/M/4
Page21
notonlythatinternational environmental cooperation wasnothindered, butalsothatrestrictive
trade measures were theresult ofagenuine multilateral process among thecountries concerned.
Inthisrespect, hisdelegation made thefollowing suggestion initsubmission: thatMEAs should
benegotiated under theaegis oftheUnited Nations oraspecialized agency (e.g.UNEP) orthe
agreement should beopenforparticipation toallGATT members; andthattheMEAs should also
beopenforaccession toallGATT contracting parties onequitable terms incomparison with
original members.
85. With regard tothispoint, hisdelegation considered thatasource ofinspiration mayalso
befound intherules applying tointer-governmental commodity agreements. Inspired by
documents TRE/W/17 onArt.XX(h), hisdelegation noted theformula usedbythedrafters ofthe
GATT inArticle 60,paragraphs (a)and(e),oftheHavana Charter Chapter onIntergovernmental
Commodity Agreements. Thisreadthatfullpublicity should begiven toanyproposed
intergovernmental commodity agreement, andthatsuchagreements should beopento
participation, initially byanymember (i.e., ITOmember) onterms nolessfavourable thanthose
accorded toanyother country. Another issue regarding themultilateral nature ofMEAs wasthat
theyshould reflect agenuine multilateral consensus. Inthatrespect, onequestion waswhether it
would beappropriate toprovide thattrade measures against non-parties taken pursuant toMEAs
mayonlyqualify forapossible special approach bythemultilateral trading system, iftheMEA
concerned hadbeenratified byaqualified number ofStates. With regard tothisquestion, he
underlined thathisdelegation wasnotconvinced thatitwould bedesirable fortheWTO toset
fixed minimum numbers ofparticipants inorder todetermine which MEAs were sufficiently
representative ofacommon interest toprotect theenvironment.
86. Hisdelegation 'searlier submission hadsuggested thatreflection could begiven totheidea
thatcertain types oftrade measures applied vis-à-vis non-participants should onlybenefit from the
provisions ofaWTO exception fortrade measures inMEAs iftheagreement fulfilled certain
criteria astoalevelofparticipation which wassufficiently representative oftheproducers ofthe
specific product subject torestriction. Hisdelegation stillconsidered thisavalid approach. With
regard tothedecision toprovide fortheobligation orpossibility tousetrade measures against
non-parties inanMEA, themultilateral trading system should show aconsiderable degree of
respect forthejudgement ofenvironmental experts which hadnegotiated anMEA, thatsuch
measures were necessary toachieve theaimofthatMEA. Inthissense, hisdelegation 's
submission hadstressed thatiftechnical regulations, aswellassanitary andphytosanitary
measures, when theyconformed tointernational standards, were deemed tobe"necessary" and
consistent withtheTBTandSPSAgreements, thisshould afortiori bethecasefortrade measures
taken pursuant toMEAs. Nevertheless, itwould seem thatthere were some points withregard to
thisissue which were worth noting.
87. There would seem tobenoreason fortheuseoftrade measures against non-parties
simply because theywere non-parties, iftheynevertheless applied thenecessary levelof
environmental protection asindicated bytheMEA. What wasrelevant from aGATT perspective
waswhether there wasanactual difference between theenvironmental protection commitments
applied byparties andbythenon-party concerned. Thiselement wasrelated totherequirement in
theheadnote toArticle XX,thatinorder tobecovered bythisArticle aminimum requirement
wasthatthemeasures concerned were notapplied inamanner which would constitute ameans of
arbitrary ofunjustifiable discrimination between countries where thesame conditions prevailed.
Another question toaskwaswhatkindoftrade measures exactly were foreseen intheMEA
concerned. Assaidintheearlier submission, there wasalegitimate concern toavoid asituation -
however hypothetical -inwhich anMEA would provide fortheapplication oftrade measuresPC/SCTE/M/4
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vis-à-vis non-parties onproducts which hadnoconnection whatsoever withtheenvironmental
damage addressed bytheagreement.
88. Itwasclear thatthemultilateral trading system should acknowledge thattrade provisions
inMEAs against non-parties tothatMEA could provide forrestrictions onproducts which were
environmentally damaging themselves ,orthrough thesubstances which were physically
incorporated inthem. However, suchmeasures mayverywell, under certain conditions, alsobe
taken byGATT contracting parties orWTO members individually, evenintheabsence ofan
MEA, bytheimposition ofproduct standards which would beintended toredress thenegative
environmental effects ofproduct characteristics .Thisalsomeant thatMEAs mayneedtoinclude
measures, based onnegative environmental effects ofPPMs, incases where thepossibility to
impose product standards hadproven insufficient totackle theenvironmental problem. Asnoted
inPC/SCTE/W/3, theMontreal Protocol provided anexample ofanMEA where itwas
considered necessary toatleastinclude thepossibility forparties tojointly decide toimpose
restrictions onimports ofproducts produced withozone-depleting substances, eventhough this
possibility hadsofarnotbeenused.
89. Thisledtotheconclusion that,while themultilateral trading system maybewelladvised
totakeamore cautious approach withregard toPPM-based restrictions rather than restrictions on
products which were inthemselves environmentally harmful, itshould notexclude thatitmaybe
necessary, from anenvironmental perspective, toalsoinclude measures related toPPMs in
MEAs, andeventoapply suchmeasures tonon-parties toanMEA, ifotherwise the
environmental objective oftheMEA would beundermined. However, amore cautious approach
could beuseful. Forinstance, arequirement thatthere beacausal linkbetween theproduction
method oftheproduct subject torestriction andtheenvironmental damage which theMEA aimed
toredress could beconsidered. Also, arequirement thattheMEA parties must haveexplicitly
determined thatother forms oftrade control were notsufficient toachieve theMEA's
environmental goals andthattherefore PPM-based trade measures were necessary toachieve the
environmental objective pursued bytheMEA could alsobeconsidered.
90. Arelated issue waswhether trade measures taken pursuant toMEAs could besubject to
different treatment when theywere notspecifically provided forbytheMEAs. Thisquestion
could poseitself intwoforms: (i)anMEA obliged parties totakethenecessary action inorder to
achieve acertain result, butdidspecify exactly which action; and(ii)anMEA obliged parties to
takeacertain minimum number ofactions, butalsoallowed them totakefurther measures. With
regard especially tothefirstcategory, initssubmission, hisdelegation hadconsidered that,where
anMEA leftaparty asignificant margin ofassessment, itshould bepossible toexamine whether
themeasure maynothavebeentaken forprotectionist purposes. Tests likethose inArticle III,
paragraph 1orintheintroductory language ofArticle XXcould beimagined. Itcould be
discussed whether thesame approach would besuitable forthesecond category, where, although
notrequired under MEAs, stricter trade measures thanwere provided bytheMEAs themselves
were possible. Apositive approach tosuchfurther measures maybejustified incases where the
parties toanMEA collectively invited parties andnon-parties tothatMEA totakefurther action.
91. Regarding future MEAs, themain question waswhether aruleshould bedeveloped inthe
WTO which "ex-ante "exempted trade measures against non-parties taken pursuant toanMEA, as
longasthese fulfilled therequirements discussed before, orthattheuseofsuchtrade measures in
MEAs could orshould besubject to"ex-post "WTO "approval" onacase-by-case basis. Some
delegations intheEMIT Group hadsuggested an"after thefact"waiver approach, based on
Article XXV oftheGATT. Hisdelegation hadalways beenextremely hesitant towards this
"ex-post "approach andhadsupported the"ex-ante "approach, based onthedevelopment ofaPC/SCTE/M/4
Page23
general framework under which trade measures taken pursuant toMEAs which fulfilled the
conditions discussed before would notbechallenged, evenwhen theyaffected theinterests of
non-parties.
92. The"ex-post "waiver approach stillseemed unsatisfactory tohisdelegation foranumber
ofreasons. Itwould seem toimply thattheWTO tookprecedence overMEAs because theWTO
Council could decide either togrant ordenyawaiver toanMEA. Thisperception would be
worsened bythefactthat,inaccordance withArticle IX,paragraph 4oftheWTO Agreement,
waivers could notbegranted foranunlimited time, butshould statethedateonwhich theywould
terminate. Waivers could beextended, butthiswasnotaviable solution forthelong-term andfor
global problems addressed byMEAs. Furthermore, evenifawaiver wasgranted foralong
period, Article IX,paragraph 4oftheWTO Agreement alsoprovided thatitshould bereviewed
annually, andtheMinisterial Conference could decide toterminate thewaiver onthebasis ofthis
annual review. ThisdidnotgiveMEAs thelegalcertainty which theyneeded tooperate
constructively. Also, using awaiver approach meant thatuntilthewaiver wasgranted, itwasnot
certain thatthemeasures which were deemed necessary bytheMEA negotiators toachieve the
aimoftheMEA would notbechallenged under GATT. Aformal denial ofawaiver could even
create, oratleastappear tocreate, anuntenable conflict ofinternational obligations forthose
WTO members which were alsoparty totheMEA. Finally, evenifawaiver would begranted
foralongperiod oftimeandcontinuously extended under theUruguay Round, anyMember
could invoke Article XXIII ofGATT 1994 ifitfeltthatbenefits accruing toitwere being nullified
orimpaired, evenifthatwassimply theresult ofmeasures applied fullyconsistently withtheterms
andconditions ofthewaiver .Would thisthenmean that,evenwhen theinternational community
hadexpressed through anMEA thatcertain trade measures were necessary toredress an
international environmental problem, andtheWTO Council hadgranted awaiver forthese
measures, inasfarastheywere applied tonon-parties toanMEA could suchnon-parties still
claim GATT compensation fortheeffects ofsuchmeasures?
93. Forthese reasons, hisdelegation stressed thatitstillconsidered theoptimal solution tobe
an"ex-ante "approach, based, withregard tothesubstance ofthisapproach, onthemodel ithad
proposed anddiscussed before. However, withregard totheprocedural means toachieve this,
there maybemore options opentotheSub-Committee thanwasthecasebefore. Although his
delegation hadpreviously supported a"collective interpretation" ofArticle XXtoensure mutual
supportiveness between MEAs andthemultilateral trading system, without inanywaywanting to
runahead oftheresult ofthediscussions, hisdelegation noted that,inaccordance withits
mandate, theSub-Committee maymake appropriate recommendations onwhether any
modifications oftheprovisions ofthemultilateral trading system were required, compatible with
theopen, equitable andnon-discriminatory nature ofthesystem. Thismeant that,ifthere would
beconsensus totakeacertain course inorder toensure mutual supportiveness between MEAs and
themultilateral trading system, hisdelegation might alsouselegalmeans other thanacollective
interpretation toimplement thatcourse. TheArgentinean delegation acknowledged thiswhen it
saidthatan"ex-ante "approach could involve modifying orinterpreting thegeneral exceptions of
theGATT (Article XX). Thework hadsofarconcentrated on"interpreting", buttheSub-
Committee could nowalsoconsider "modifying". Hisdelegation wasnotsuggesting anychange
initscurrent proposal, butremained opentoexploring alternative "procedural" approaches.
However, regarding substance, hisdelegation strongly preferred an"ex-ante "approach.
94. Finally, withregard totrade measures forenvironmental purposes which were notbased
onMEAs, hisdelegation believed thatPrinciple 12oftheRioDeclaration should remain the
guiding principle. Inthiscontext, asstated inhisdelegation 'sprevious submission, thatprinciple
meant thatcountries should avoid unilaterally, andinamanner contrary totheirGATTPC/SCTE/M/4
Page24
obligations, restricting imports onthebasis ofenvironmental damage thatdidnotimpact ontheir
territory. Furthermore, itwasextremely important thatevery possible effort wasmade toensure
thatenvironmental measures addressing transboundary orglobal environmental problems were
based onaninternational consensus. Finally, hisdelegation would carefully examine the
suggestions from thismeeting andwould liketheopportunity torevert tothem atthenext
meeting. Inparticular, theArgentinean approach seemed constructive, although hisdelegation
objected totheneedtogrant awaiver ex-post .
95. Therepresentative ofBolivia considered itindispensable tocreate, atthemultilateral level,
compatibility between theprovisions ofthemultilateral trading system andtrade measures for
environmental purposes andtheapplication ofMEAs, sothatnotincluding sustainability criteria
insome cases, andtheexistence ofstandards andregulations expressing different environmental
assimilation capabilities andresources inothers, didnotleadto"ecological dumping" orunilateral
protectionist policies contrary tothebasic principles oftheGATT. Herdelegation supported
those initiatives which maintained themultilateral "transparency" ofnational environmental
regulations. Herdelegation shared theviewthatenvironmental problems which generated
negative externalities or"spillover" effects should bedealtwithwithin theframework of
international cooperation andnotthrough unilateral action. Itwastherefore necessary toextend
theSub-Committee 'streatment ofitems concerning trade measures andtheenvironment tothe
interrelationship between trade, development andtheenvironment.
96. Therepresentative oftheUnited States considered thattrade measures were notanend,
butwere sometimes alegitimate means toanend. Thiswasgenerally recognized tobethecase
forMEAs. There wasatbestlimited recognition ofthispoint inGATT forenvironmental
agreements, although GATT didrecognize other non-trade objectives anddidconfer onthose, in
some cases, agreater degree oflegitimacy andclarity interms ofhowtheywere treated inGATT
rules. Indeed, rules hadbeenelaborated forhealth andsafety measures butthestature and
legitimacy ofenvironmental andconservation objectives hadalsogrown overtheyears. Thisfact
hadtobetaken intoaccount bytheSub-Committee toensure thattheGATT would grow
commensurately withinternational recognition ofthelegitimacy ofenvironmental andconservation
objectives andactions.
97. Headded thatastheSub-Committee setouttoprovide greater clarity inGATT, itmust be
vigilante inavoiding abuses. Clear rules were needed toensure anopentrading system that
coexisted constructively withenvironmental andconservation objectives. Theconcept of"trade
measures" wasvague andbroad. Many oftheissues discussed attheSub-Committee 'sSeptember
meeting were probably considered as"trade measures", butthose addressed under thefirstitem
were separate from those discussed under thethirditemofthework programme. Thefirstitem
related toanother aspect oftheissue: there were andwould besituations inwhich trade measures
were ameans ofachieving anenvironmental objective, orameans ofenforcement or
implementation ofagreements, including trade measures assanctions.
98. Headded thatthisitemconsisted oftwobroad areas ofwork: therelationship ofthe
multilateral trading system totheuseoftrade measures forenvironmental purposes, which wasa
broad topic inclusive ofcontexts other thanMEAs; andMEAs. Bothofthese areas must be
taken-up asthedeliberations progressed. Heconsidered thatthecurrent situation inGATT was
ambiguous andevolving andwasperceived negatively bytheenvironmental community. He
recognized thatthere were some hopeful signs inrecent GATT panel decisions, butthe
ambiguities were stillthere andtheneedtofocus onthose wascompelling. Atthesame timeas
taking intoaccount environmental concerns, commercial interests would havetobeconsidered.
Forthelatter, clear rules were needed.PC/SCTE/M/4
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99. Hesuggested twoinitial tasks fortheSub-Committee. First, itwould needtoanalyze
howtrade measures hadbeen, were ormight beused, maybe including some casestudies with
input from therelevant international organizations andother experts aswell, andsome sense of
howthose hadworked. Second, theSub-Committee would needtoturntoananalysis ofhowthe
rules ofthemultilateral trading system hadbeeninterpreted todate. Atalaterstage, itwould
havetoturntothequestion oftheadequacy ofthecurrent situation. Hisdelegation was
encouraged bythenumber ofstatements thatsuggested anopenmind onthislatter point.
100. Hereiterated some points thathisdelegation hadmade attheNovember 1993 meeting of
theEMIT Group regarding MEAs. First, hisdelegation hadcome outclearly infavour ofan
ex-ante solution which created apresumption ofGATT-conformity under certain conditions tobe
defined bytheSub-Committee, including appropriate disciplines. Thisdidnotimply ageneral
"blank check" approach, butthere wasaneedtoprovide clear rules. Atthismeeting, his
delegation alsohaddrawn attention tosome oftheweaknesses ofanex-post orwaiver approach:
theuncertainty totheenvironment community astotheoutcome ofthewaiver; thetime
consuming andcumbersome nature oftheprocess; thepossible legally untenable situation of
having twolegalinstruments inessentially aconflicting state; thepossibility ofrelegating MEAs
to"exceptional circumstance" status interms oftheGATT; thetimelimited nature ofwaivers;
andthecontinued exposure tonon-violation claims evenafterthewaiver hadbeengranted.
101. Interms ofspecific solutions toMEAs, hisdelegation waswilling tolookatcreative ideas
toensure thatthemultilateral trading system allowed fortheuseoftrade measures subject to
appropriate disciplines pursuant toanMEA orwhere theyenforced orimplemented aprevailing
scientifically-based international environmental orconservation norm. There were various ways
thiscould bedone, andhisdelegation wasstillconsidering therelevant options thathadbeen
cited, including acollective interpretation approach, anamendment approach, etc.These would
havetobediscussed further. Itwasalsoimportant tobemindful ofthefactthatinfurther
discussions, thelimitations ofMEAs should berecalled. They tooktime; sometimes short-term
interests prevailed overlong-term imperatives; andMEAs mayforavariety ofreasons bevague
ontheuseoftrade measures.
102. Hecitedtwoexamples ofMEAs where there hadbeenrecent activities ontrade measures.
Lastyear, theCITES Standing Committee, inthefaceofanalarming threat totheexistence ofthe
world 'spopulation oftigers andrhinos, encouraged parties toconsider theuseoftrade measures.
Inanother caseinvolving theInternational Commission fortheConservation ofAtlantic Tuna
(ICCAT), theinternational community wasfaced withaproblem. Theobjective ofthisagreement
wasbeing undermined bynon-parties whohadbeenunwilling tojoinICCAT andthereby
undermined itsimportant conservation objectives. Thesituation wasindicative oftheproblems
faced bymany fishery conservation agreements, i.e.thatachieving compliance withconservation
andmanagement measures wasoften difficult. Trade measures were increasingly seenasan
effective mechanism topreserve theobjectives ofsuchagreements incertain circumstances.
Although hisdelegation would argue thatinbothoftheabove cases, trade measures would be
GATT consistent, clarity would beuseful. Questions relating totheconditions under which trade
measures were orshould bepermissible inthecontext ofenvironmental orconservation problems
were deserving offurther specific attention bytheSub-Committee.
103. Headded thatinternationally agreed environmental concerns maynotalways be
accompanied byMEAs. Nevertheless, countries mayandhadonoccasion found itnecessary to
takeactions, including trade measures, without thecover ofanMEA. These actions mayhelp
leadtoneeded MEAs, toaddress boththeenvironmental andtrade concerns thatwere atissue.
These situations were alsoimportant elements ofafulldeliberation ofthefirstitemoftheworkPC/SCTE/M/4
Page26
programme. Heconsidered thatallgovernments strongly preferred multilateral approaches and
ways would havetobefound inwhich GATT could facilitate them rather thanhinder them. His
delegation considered itpremature todraw conclusions about theadequacy ofthepresent rules
andtheex-post approach. Theanalysis hehadsuggested earlier would beuseful ininforming
delegations ofthebackground tothose situations where itwasconsidered appropriate to
incorporate trade measures inMEAs anduseoftrade measures inother contexts.
104. Ithadbeenargued thatthecurrent, relatively vague situation regarding theGATT rules
andtheirapplication toMEAs hadhadachilling effect onaddressing, inaforthright manner,
trade measures inthecontext ofMEAs. Henoted thatthegovernment agency which he
represented hadbeenaccused attimes ofstanding inthewayoflegitimate conservation solutions
because ofitsgeneral uneasiness about howGATT might beinterpreted inthecontext those
MEAs. Hedisagreed, therefore, withthose whowere inclined tosaythatitwasalimited
problem anddidnotneedaprospective forward-looking solution intheGATT because only
10percentofMEAs hadtrade provisions. Further, itwasuseful torecall thatnotallMEAs
were thesame andthatoneGATT solution maynotbeappropriate forallofthem.
105. Therepresentative ofIndia requested thatthisitembeontheagenda ofthenextmeeting
oftheSub-Committee. Theinterventions atthismeeting andthepapers presented needed further
analysis andshowed thecomplexity ofthesubject. Thesixth itemofthework programme,
scheduled fordiscussion atthenextmeeting, cutacross other issues suchasMEAs andproduct
regulations. Flexibility wasneeded inorder fordelegations tointervene ontwoorthree items
together ifneeded. Thiswould helpthework toprogress onnumerous fronts. Heshared the
opinion ofHong Kong thatatthenextmeeting, itmight beuseful todepart from written textsand
address items onapoint-by-point basis inadialogue. Thismight alsorequire amore informal
setting, although hewasprepared todosointheformal meetings. Heconsidered thatthere wasa
problem among delegations inunderstanding theirrespective interventions andpoints ofviews and
suchdialogue would goalongwaytoclarifying concepts andideas.
106. Hebelieved thatthenextphase ofwork onthisissue wastoconcentrate onwhathe
termed inductive reasoning. Thismeant examining specific measures andspecific agreements to
determine iftheyreally were inconsistent withGATT andiftheywere really challenged under
GATT. While theanalytical work wasuseful, thisitemofthework programme spoke ofthe
relationship between theprovisions ofthemultilateral trading system andtrade measures usedfor
environmental purposes. Therefore, atsome point theSub-Committee would havetodefine what
theprovisions ofthemultilateral trading system were; rules ofthemultilateral trading system
existed, suchasthose relating tonon-discrimination, national treatment, necessity, effectiveness,
least-trade restrictiveness, proportionality, andscientific evidence. Ontheother hand, trade
measures were being taken forenvironmental purposes andthestarting point ofthe
Sub-Committee 'swork should beanexamination ofthose specific trade measures against these
rules withanopenmind andwithnopreconceived ideas astowhether these rules should be
maintained orbechanged. There wasnoneedforonesideortheother toprove itspoint, but
collectively aconclusion should emerge astowhyandiftherules were inadequate andshould be
changed.
107. Henoted thatSwitzerland hadpointed totheideaoffreeriders. Heasked whoandwhat
were freeriders? Which countries were relevant andcould examples begiven? Heconsidered
thatthisargument wasafalseonebuthelooked tobeconvinced otherwise through an
identification oftheproblem inaspecific case. Henoted thattheNordic countries hadpointed
outifthere were twocontracting parties totheGATT which were signatories toanMEA, there
would benoproblems; theproblems emerged when there wasanon-party toanMEA. TheyPC/SCTE/M/4
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alsosaidthatthetrade measure should berelevant toanMEA andthere should beabalance
between freetrade andenvironmental protection. These were general statements. Heconsidered
thattheSub-Committee waspastthestage ofprinciples, objectives andbroad parameters ofthe
debate. They were already known andwere unexceptionable. Hewould prefer going intomore
specific details andsituations tounderstand thebalance thatwasbeing discussed. Wasthis
balance thesame forallcountries ordifferent fordeveloping versus developed countries? Were
theses choices thateachcountry made onitsownordidtheyhavetobeimposed anddecided ina
multilateral forum?
108. Headded thatitwould beuseful toexamine whycountries joined MEAs suchasthe
Montreal Protocol. Didtheyjoinbecause trade restrictions were partoftheProtocol? Didthey
joinbecause there wasfunding ortechnology transfer provisions? These questions hadtobe
examined inorder todetermine whether atrade measure wastheonlywayandthemost effective
waytoachieve anenvironmental objective. Particularly inthecontext ofMEAs itwasimportant
toclarify whatthemotivations were ofdifferent parties totheMEA.
109. Therepresentative ofMexico commented onsome oftheproposals made byother
participants about howtoproceed withtheanalysis ofthisfirstitem. Herdelegation wasaware
thatthisitemwasbroader thanthesimilar itemoftheEMIT Group because itconcerned the
relationship between theprovisions ofthemultilateral trading system andtrade measures for
environmental purposes, including butnotlimited tothose pursuant tomultilateral environmental
agreements. Theanalysis ofthisitemaccordingly required thatitsextended scope betaken into
account.
110. Shenoted thatatsome point theSub-Committee would havetodecide onmaking aserious
study ofthepossible approaches. However, other questions andfactors hadbeenmentioned,
which herdelegation considered ofutmost importance forfocusing thediscussion intheimmediate
future since theirexamination would provide thematerial necessary todetermine whether the
Sub-Committee would needtodiscuss options oralternatives suchasthose referred toabove.
Oneofthese questions, mentioned bymany delegations, related totheexamination ofconcepts
suchastheeffectiveness andnecessity ofusing trade measures forenvironmental purposes .The
suggestion byNewZealand thatinthecourse ofdiscussions theSub-Committee examine any
experience relating totheeffectiveness ofusing trade measures forenvironmental purposes, inthe
context ofenvironmental agreements orinsome other context, seemed aconstructive wayof
beginning theanalysis ofthese concepts. Thisproposal complemented thatmade bythe
United States concerning theanalysis ofhowtrade measures forenvironmental purposes hadbeen
usedandhowtheyhadworked.
111. Herdelegation believed thattheexamination oftheeffectiveness ofsuchmeasures
constituted animportant element, which, together withtheanalysis oftheprinciple of"least trade
restrictiveness", would determine thenecessity ofusing these measures forenvironmental
purposes, especially inthecontext ofMEAs, andhence, thepossible usefulness ofthe
Sub-Committee examining options withrespect totherules. Herdelegation envisaged the
possibility ofcontributing along these linestothecontinuing discussion ofthissubject.
112. Arelated question which alsorequired attention andwasraised byJapan andothers
concerned thesecondary effects deriving from theuseoftrade measures forenvironmental
purposes, inparticular measures ofadiscriminatory nature. Itwould benecessary totakeinto
account thefactthat,insome cases, theuseoftrade measures maybecounterproductive. The
above related totheextended scope ofthefirstitem. With respect toMEAs, thequestion of
terminology ,mentioned byJapan, required careful examination. Itwasnecessary todefine whatPC/SCTE/M/4
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wasmeant byglobal problems inthiscontext. Herdelegation agreed withSwitzerland thatnot
many environmental agreements referred totheso-called "global commons". Only
twoagreements fellintothiscategory: theConvention onClimate Change andtheMontreal
Protocol. Other agreements mayrefertoproblems which could beof"global" orinternational
interest butwhose effects hadalocaleffective impact. Itwould benecessary toexamine the
relevant consequences ofthevarious types ofagreement andtheproblems withwhich theydealt.
113. Finally, andwithin theframework ofMEAs, there should beamore detailed analysis of
thequestion ofthespecificity ofthetrade measures inMEAs. Asherdelegation hadpointed out
onother occasions, thiswasacrucial point requiring clarification, since onlyalimited number of
thefewMEAs withprovisions relating totrade measures contained asufficient degree of
specificity tobeconsidered inwhatever typeofderogation from theGATT rules mayeventually
bediscussed intheSub-Committee. Inshort, herdelegation supported those delegations which
hadproposed focusing thework oftheSub-Committee onthose aspects which shehadmentioned,
namely examination oftheconcepts ofnecessity andeffectiveness, thedefinition ofthe
terminology andtheanalysis ofthequestion ofspecificity. Thisseemed tobealogical nextstep
intheexamination ofthistopic initsnewdimension andconsistent withthediscussion ofthe
remainder oftheitems ontheSub-Committee 'swork programme.
114. Therepresentative ofBrazil supported theinterventions ofCanada, Hong Kong, and
Argentina. Hewasconcerned thattheWTO should notactasasupranational entity withthe
power tointerfere withmultilateral work outside thetrade field. Hewasnotadvocating apassive
rolefortheWTO butaroleofattentiveness andvigilance tofighttrade distortions stemming from
MEAs. Theuniversality ofthemultilateral trading system, astheWTO replaced theGATT,
would tendtofacilitate coherence andcompatibility between MEAs andtherules andregulations
thatbindGATT contracting parties. TheWTO should begeared toacting within themargin of
conflict between thetwopolicy objectives andwhen negative trade effects occurred. What was
most needed, inpractical terms, wasanagile, effective andtransparent dispute settlement
mechanism. Hewasnotdisregarding theconceptual basis onwhich theSub-Committee hadto
work, however work must proceed withcaution interms ofthenature oftheactivity oftheWTO
inthisfield. Heagreed withHong Kong thattheSub-Committee wasnottasked withrewriting
theGATT ortheUruguay Round Agreements, norMEAs. Heagreed withIndia thatthisitembe
keptontheagenda.
115. Therepresentative ofAustria clarified thatwhen hespoke ofaspecial environmental
waiver inhisearlier intervention, hehadusedtheterminthecontext ofanex-ante approach as
opposed toanex-post approach where thetraditional waiver approach would beused. Heagreed
withtheECandtheUnited States thattheex-post waiver approach wasproblematic andhis
delegation favoured theex-ante ,dispute settlement prevention approach. Further, hisdelegation
alsodidnotconsider thattheWTO could takeonanysupranational powers.
116. Therepresentative ofSweden, onbehalf oftheNordic countries, recalled thatthetask
given totheSub-Committee bytheMinisterial Decision wastoexplore therelationship between
thetrading system andtrade measures forenvironmental purposes, including MEAs, withtheaim
ofmaking them mutually supportive. Theintention wasnottoendanger thebenefits ofthe
multilateral trading system buttoestablish andclarify towhatextent present trading rules
accommodated theneeds fortaking environmental measures. Herdelegation considered thatit
must firstbedecided whether tofollow anex-ante orex-post approach. Herdelegation thought
thatinorder tomake thetrading system supportive ofenvironmental measures, accommodation
fortrade measures would havetobemade inadvance. Only bysupplying predictability could
multilateral solutions toenvironmental problems, asopposed tounilateral measures, bepromoted.PC/SCTE/M/4
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Thepromotion ofmultilateral agreements forthegoalofsustainable development hadbeenagreed
upon inRioandsubsequently endorsed inMarrakesh.
117. Anex-post solution, aswasstated byseveral delegations, would notenhance multilateral
agreements, but,onthecontrary, would riskmaking them more difficult toachieve. Toaccept
MEAs wasnotthesame astosupport them. Therefore, herdelegation proposed thatthe
Sub-Committee chose toexplore ways togoforward onanex-ante approach based onGATT
Article XX.
118. Therepresentative ofBrazil saidthatthequestion ofwhysuchaplethora ofenvironmental
agreements hadbeennegotiated since around 1960, when thefirstrules ofinternational
environmental lawhadbeendrawn up,hadtobeasked. Henoted thatalmost 250international,
multilateral treaties related tointernational environment were registered withtheUnited Nations;
thisdidnotinclude bilateral ortrilateral treaties. Such aquantity oftreaties made animpressive
statement about theinternational regulation ofthespecial subject oftheinternational environment.
Henoted thatinnoother areaatnoother timewasthere suchurgency orvelocity inrule-making.
Regarding thequestion posed byIndia ofwhatwasmeant bytheterm"environment", he
considered thatitmeant theworld inwhich wealllive. Soifthenewaspects ofinternational law
related toprotection oftheworld were considered, certain characteristics existed thatwere not
found inother fields ofinternational law. Thefirstwasasetofmandatory rules intended to
protect public interest thatprovided forstrong stateintervention inthestateoflifeofacountry.
Ifalawrequired strong implementation, there wasnopossibility ofsolutions other than
regulation. Therefore, these were rules thatforbade anymanifestation ofwillofprivate persons
andpublic authority because these were mandatory rules.
119. Ontheother hand, thenature oftherules related tointernational trade were precisely the
contrary. They were rules thatrelated toaparticular area, trade, which must, initself, beasfree
aspossible. Thiswasthefirstobjective ofGATT. International trade wasdifficult toregulate by
international law. Thesecond objective ofGATT wastransparency andthehighest degree of
non-intervention oftheState intheeconomy. Thiswasexactly thecontrary ofinternational
environmental lawwhich washighly interventionist. Heconsidered thatthecompatibility ofa
newsetofrules ininternational environmental lawwiththerules ofGATT andofinternational
lawingeneral hadtobestudied. TheSub-Committee hadtobeprudent soasnottodenywhat
hadbeenaccomplished throughout thehistory andexperience ofGATT inthefaceofthisvery
urgent andrapid evolution inenvironmental law.
120. Inconsidering thequestion ofcompatibility, thegeneral rules ofinternational lawhadto
apply. Thismeant thataspecific lawtookprecedence overageneral law. Ifenvironmental law
considered theentire world, itwasgeneral law. Trade lawwasspecific because itregulated a
specific areaoftheworld. Therefore, ifthislogic wasfollowed, heconcluded thattrade law
would prevail overenvironmental lawinterms ofinternational law. Thenextquestion washow
toconciliate thephilosophy ofenvironmental law,i.e.intervention andprotection, with
international trade lawinterms ofGATT. Heposed these thoughts toinitiate discussion onthis
itemofthework programme.
121. Therepresentative ofMorocco noted hisdelegation 'sagreement withpoints made by
several delegations. Henoted thatCanada hadraised interesting points regarding market access.
Hisdelegation shared theviewofAustria thatWTO members could asktheWTO orthe
International Court ofJustice whether theprovisions ofanMEA were contrary toGATT rules.
Hisdelegation agreed withEgypt thatcriteria should belaiddown, keeping inmind theconcerns
ofdeveloping countries, particularly theirneeds fortransfer oftechnology andfinancial assistance.PC/SCTE/M/4
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Headded thatMEAs meant thattheinternational community tookoncommitments andparties to
theagreements tookonspecific commitments. Forexample, theConvention onClimate Change,
which provided forthereduction ofgreenhouse gases from 1990 onwards, provided forfinancial
helpfordeveloping countries. Atthesecond Conference oftheParties oftheBasel Convention,
inMarch 1994, provisions were drawn uptobanexports ofdangerous wastes from theOECD
countries tonon-OECD countries. Before taking trade measures, itmust bedetermined whether
theparties hadactually fulfilled theircommitments asprovided under theMEAs sothatthere
were nodisguised discriminatory measures involved. Heshared theopinion ofIndia andHong
Kong forapoint-by-point, in-depth, approach soastocover allmeasures provided forinMEAs
toseewhether theywere GATT consistent, howtheycould bechanged, andhowcases of
non-parties could becovered.
122. Therepresentative ofUruguay observed thatthisdiscussion wasnotjustarepetition ofthe
discussions intheEMIT Group butcontained newelements. Inthiscontext, shenoted thatthis
itemofthework programme wasbroader thanthesimilar itemintheEMIT Group because it
included bothtrade measures which were andwere nottaken inpursuance ofanMEA. Forthis
reason, theSub-Committee needed topursue ananalytical stage ofwork andnothasten towards
anydefinitive conclusion. Sheadded thatthediscussion showed thatalthough theex-ante and
ex-post approaches were thetwooptions thatexisted, there were avastrange ofpossibilities for
variances andcombinations. Oneexample wasproposed byArgentina andanother inthis
direction byKorea. Herdelegation found these approaches attractive. Shenoted thatmany
delegations hadnotexpressed afinalposition onthisissue andherdelegation wasexamining the
various arguments withanopenmind. While itwastruethatsome ofthearguments against the
ex-post approach were convincing, thecriticisms against theex-ante approach wasalsovalid. It
wasprecisely theopennature ofthediscussion sofarwhich hadmade itpossible toenvision
alternative approaches. Shelinked thisconcept withapoint made byArgentina thatthework
programme wasabalanced result andthattheSub-Committee should notadvance insome areas
while notmoving forward inothers. Harmonious progress should bemade because otherwise a
situation ofinsecurity would emerge inwhich conciliatory solutions would bedifficult tofind.
123. Therepresentative ofVenezuela noted thathisdelegation alsohadnotexpressed afinal
position onthisissue. Itconsidered thatitwastooearly todoso;noneoftheoptions should be
discarded because allneeded careful consideration. Heagreed withthesuggestion tobegin
discussing theapplication andexperience withtrade measures inthecontext ofthisitem, which
India hadsaidwere notsonumerous andcould betaken uppoint-by-point.
124. Therepresentative oftheUnited States believed thatforthework oftheSub-Committee to
progress, aflexible attitude wasneeded withnoprejudice asregards anypreferred approach. He
noted thattheex-post option, i.e.thewaiver approach, existed andinorder toevaluate some of
thealternatives, anumber ofsteps hadtobetaken. Thisincluded answering some ofthe
questions raised byIndia, Morocco andothers about anex-ante approach. Thiswould require
considerable analysis. Inthiscontext, thesuggestion bySweden totakeonthiswork wasuseful
because itwasonlythrough thiswork thatsome conclusion could befound induecourse.
Finally, heagreed thattheSub-Committee needed totakeonthefullwork programme andhe
considered thattheChairman 'sorganization ofthemeetings permitted precisely thisapproach.
125. Another representative oftheUnited States presented apaper oneco-labelling which was
contained indocument PC/SCTE/W/5. Thispaper didnotpresent anational position on
eco-labelling, butrather attempted tobring together, inacomprehensive manner, asetof
perspectives oneco-labelling andtoidentify issues forfurther discussion. Theanalytical
framework setoutinthepaper attempted tolookateco-labelling bothfrom atrade andfrom anPC/SCTE/M/4
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environmental perspective. However, hisdelegation didnotnecessarily viewalloftheissues
presented inthepaper asinvolving questions which would needtobeworked outinthe
Committee onTrade andEnvironment. Some were included hereforthesakeofanalytical
presentation. Further, thepaper didnotcover mandatory hazard warning programmes. These
were inmany respects different from theeco-labelling programmes discussed.
126. Hisdelegation considered thattheuseofenvironmental eco-labelling intheconsumer
marketplace wasbecoming increasingly wide-spread driven byanumber ofmotivations:
environmental, economic, business-oriented, andgovernmental. Nevertheless itappeared tohis
delegation thatthiswasanareawhere there could beastrong convergence ofinterest inthevalue
andutility ofthistooltoprovide market information andtofacilitate environmental
improvements. However, there were alsoconcerns raised byallthateco-labelling schemes
needed tobeproperly structured toavoid problems andthese were outlined inthepaper.
Generally, theyrelated tothequestion ofwhether theinformation provided bytheeco-labelling
scheme wascomplete, adequately informed theconsumer ofthevarious environmental impacts,
andallowed theconsumer andproducer toskew theirdecisions inawaythatcould leadto
improvements intheenvironmental aspects ofthecovered products. There were alsoissues raised
withregard tothemultiplicity ofdifferent eco-labelling schemes. Didthisaffect theircredibility
andeffectiveness? Could aconsumer make sense outofmultiple eco-labelling schemes anddecide
which oneprovided information thatwasworth acting upon? There were alsoproblems with
market segmentation andpotential conflicts between regulatory requirements ononehand, andthe
criteria ofeco-labels ontheother hand.
127. Hisdelegation considered thatmain issues withregard toeco-labelling schemes depended
inpartonthetypeofprogramme being discussed andthepaper setoutvarious types ofexisting
programmes. Thedifferences between various categories ofprogrammes didnotalways haveto
beasstarkly drawn assuggested inthepaper. Forexample, some information disclosure schemes
could relyonlifecycle assessment toprovide information forreporting keyenvironmental
impacts. Some oftheschemes mayinvolve lifecycle assessment eveniftheywere not
seal-of-approval typeschemes. There were alsohybrid types ofschemes, forexample, some
information-disclosure orreport-card typeschemes didinvolve some sortofoverall environmental
assessment aswell. There were alsoschemes which hadaseries ofassessments ormarks for
different impact areas, suchastheimpact onwater, air,orsolid waste disposal, anddidnot
attempt tomake anoverall conclusion butrather ranked theimpacts ineachcategory. Each ofthe
different setsofprogrammes might raisedifferent issues orconcerns. However, onethread that
wascommon toalltypes ofprogrammes wasthequestion ofwhatinformation wasbeing
provided. Wasitquantifiable, verifiable about theproduct orwasitanattempt todraw
judgements ontheoverall environmental merits ofoneproduct versus another? Theanswer to
thisquestion could leadtodifferent directions interms ofassessing theimpact oftheprogramme
bothinenvironmental andineconomic terms.
128. Headded thatthepaper alsodiscussed thequality oftheinformation provided. Inthis
regard anumber ofdifferent perspectives andconcerns withregard tolifecycle assessment andits
roleintheeco-labelling process were laidout.Thepaper alsotouched onthequestion ofwhat
environmental impact wastheeco-label addressing. Inthisregard, ittouched onsome ofthe
issues thathadbeenraised byother delegations withregard toeco-taxes andother sub-issues in
thethirditemofthework programme, i.e.,whatstages intheproduct 'slifecycle were important
interms ofeco-labelling; were thecriteria usedbased onlocal, regional, ornational
environmental priorities orendowments orwasthere anattempt tocreate some broadly based
international criteria andwhatwere theimplications foreither choice; were thecriteria applied toPC/SCTE/M/4
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domestic products andimported products; andwhatwere theimplications ofthischoice andwhat
were thepossibilities formutual recognition among labelling schemes.
129. Thepaper thenturned tothemain issues regarding eco-labelling particularly from the
perspective ofthemultilateral trading system. Here, hisdelegation wasassisted bythework in
theEMIT Group. Thepaper touched ontheissue ofcoverage ofthetrade rules, i.e.towhat
extent didtheexisting trade rules cover eco-labelling schemes andwhether thiswasaffected by
thedegree ofgovernment involvement intheprogrammes. Italsoaddressed theissue of
discrimination, theadverse trade affects andtransparency issues, i.e.access tolabels, andcostand
competitiveness issues. Next, thepaper moved toanexamination oftheissues ofthe
eco-labelling schemes from anenvironmental perspective. Thisbegan withthequestion of
whether further flexibility wasneeded inthemultilateral trading system toallow forthisrelatively
newpolicy tooltobedeveloped andtobeaneffective element ofenvironmental policy. The
question ofhowtostructure eco-labelling soastoaccentuate thepotential forimproved
environmental protection andtechnological development wasalsoaddressed aswasthevarious
considerations ofhoweco-labelling could beatoolforenvironmental costinternalization andfor
addressing concerns oftheeffects oftrade andtrade liberalization ontheenvironment and
sustainable development. Finally, thepaper addressed questions ofhow, from theenvironmental
andtrade perspective, theeffectiveness andacceptability ofeco-labelling asaninstrument could be
enhanced.
130. TheChairman reported onhisinformal consultations ontheissue ofappropriate
arrangements fornon-governmental organizations. These consultations hadresulted inaclearer
picture oftheinitiatives andmethods thattheSub-Committee might follow inorder toimprove the
relationship withNGOs asfarasproviding transparency forthegeneral public ontheanalytical
work being carried outandtoenable theSub-Committee 'swork tobenefit from theexpertise of
suchorganizations intheareaoftrade andenvironment. Headded thathewould work withthe
Secretariat toproduce apaper inadvance ofthenextmeeting oftheSub-Committee which would
collect thethoughts which hadbeenpresented intheform ofatentative listofmeasures and
initiatives topromote thisinteraction. Hewould revert tothisissue sothatdecisions could be
taken soon.
131. Hefurther reported onhisinformal consultations ontheseventh itemofthework
programme: theissue ofdomestically prohibited goods. Herecalled thathehadbeenrequested
toconsult onthisissue atthelastmeeting oftheSub-Committee. Hehadconsulted informally
withsome delegations andnoted some points which hademerged. First, allthedelegations
consulted were infavour ofcarrying outthiswork under itemseven ofthework programme.
Most considered thatthework should begin early nextyear, although afewconsidered thatit
could begin immediately. Many ofthedelegations consulted believed thattheissue should be
revisited inlightofthedevelopments thathadoccurred bothwithin thecontext ofGATT 'swork
ontrade andenvironment andoutside ofGATT intherelevant environmental conventions and
agreements. Inthisregard, allofthose consulted agreed ontheneedforaSecretariat background
paper which could beproduced between nowandtheendoftheyearandwhich would address the
history ofthesubject, therelevant discussions intheEMIT Group, theTBTandSPSAgreements
(asappropriate) andthedevelopments outside ofGATT inrelevant institutions.
132. Itwasagreed thatthisissue deserved fullconsideration intheSub-Committee, butnot
isolated from theother issues onthework programme. Itwould beincluded ontheagenda ofthe
Committee 'sfirstmeeting in1995 (probably during themonth ofJanuary) inorder togiveita
broad airing. Inthemeantime, theSecretariat would prepare therequested background paper in
order tobring alldelegations up-to-date ontherelevant developments related tothisissue.PC/SCTE/M/4
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133. Itwasagreed thatthenextmeeting oftheSub-Committee would beon23-24 November.
These dates would benefit from thepresence inGeneva ofMinisters andhighofficials thatwould
attend theUNEP/UNCTAD Meeting onTrade andEnvironment on21-22 November. Given that
thisdatewould notallow theSecretariat sufficient timetoprepare acomprehensive setof
documents onmarket access, heproposed thattheNovember meeting provide afirstairing forthe
sixth itemtowhich theSub-Committee would revert atthesubsequent meeting. Themeeting
would thenrevert toboththefirstandthirditems ofthework programme. TheSecretariat would
prepare twobackground notes toassist discussion under thefirstitem: (i)anissues paper which
would present thestateofthediscussion byhighlighting thedifferent approaches presented and
attempting toidentify specific issues thatwould merit further analysis intheSub-Committee; and
(ii)ananalysis oftheuse,necessity, andeffectiveness oftrade measures inthecontext ofMEAs
which would present astock-taking ofhowtrade measures inMEAs hadbeenfunctioning.