RESTRICTED
PREPARATORY COMMITTEE PC/SCTE/M/5
FOR THE 15December 1994
WORLD TRADE ORGANIZATION
(94-2799)
SUB-COMMITTEE ONTRADE AND ENVIRONMENT
REPORT OFTHE MEETING HELD ON23-24 NOVEMBER 1994
Note bytheSecretariat
1. TheSub-Committee onTrade andEnvironment helditsfifthmeeting on
23-24 November 1994 under thechairmanship ofAmbassador LuizFelipe Lampreia ofBrazil.
Theagenda forthemeeting, contained inPC/AIR/39, wasadopted.
2. TheChairman recalled agreement todevote thismeeting toaninitial exchange ofviews on
thesixth itemofthework programme, namely "theeffect ofenvironmental measures onmarket
access, especially inrelation todeveloping countries, inparticular totheleastdeveloped among
them, andenvironmental benefits ofremoving trade restrictions anddistortions". Heinformed
delegations that,asrequested atearlier meetings, theSecretariat wasintheprocess ofpreparing
background documentation ontheenvironmental benefits ofremoving trade restrictions and
distortions. Henoted thatsome initial discussion ofthese issues hadbeencarried outinthe
Committee onTrade andDevelopment (CTD) inthecontext ofitsUNCED follow-up work. An
overview ofthatwork wascontained intheReport bytheChairman ofthatCommittee onthe
UNCED follow-up work indocument COM.TD/W/509. TheSub-Committee would revert, as
necessary, tothefirstandthenthethirditems ofthework programme. Itwould thentakeupany
other points thatdelegations wished toraise.
Itemsixofthework programme
3. Therepresentative ofArgentina saidthattoaddress theeffects ofenvironmental measures
onmarket access wastoaddress virtually alltheissues dealtwithintheSub-Committee.
Labelling, recycling andpackaging requirements aswellascharges andtaxes forenvironmental
purposes were closely related tomarket access. Therelationship between theprovisions ofthe
multilateral trading system andtrade measures forenvironmental purposes, whether unilateral or
multilateral, alsohadrepercussions onmarket access. Butthisitemwastheonlyopportunity to
examine theenvironmental benefits ofremoving trade restrictions anddistortions. Thechallenge
before theSub-Committee wastogiveaprecise andconvincing answer astowhyandinwhat
conditions freetrade could benefit theenvironment.
4. Interms ofeconomic theory, heexplained thatwhen theprice ofaproduct reflected the
realcostofthefactors involved initsproduction anddistribution itmaybeassumed thatresources
hadbeenefficiently allocated. The"real cost" ofthose factors, inasituation of
perfect-competition equilibrium, wasdetermined bythemarket, i.e.,bythesupply anddemand.
Ifthe"real cost" waslower thanthereproduction costofthefactors involved intheproduction
process there would beadistortion intheprice formation system, which would leadto
overexploitation oftheresource and,possibly, itspremature depletion. Ineconomic terms, its
shadow price would behigher thanitsmarket price. Thequestion wasthenwhatdistortions in
theprice formation system could haveanegative effect ontheenvironment? Orwhatdistortions
intheprice formation system would leadanatural resource tobeexploited beyond its
reproduction cost,i.e.,overexploited? There were several andhegavetheexample ofPC/SCTE/M/5
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commodities. Since theycame atthetopoftheproduction chain, theymaybeparticularly
sensitive tothefailure tointernalize environmental costs and,atthesame time, beabletoaffect a
broad range ofgoods. Forcommodities, themost obvious distortion intheprice formation
system wassubsidies.
5. Inthisregard, hequoted from anOECD publication entitled "The Environmental Effects
ofTrade": "Generally speaking, trade isnotattherootofenvironmental problems, which are
caused bybothdefects inthemarket (such asfailure tointernalize environmental costs) andpolicy
defects (such assubsidies ortrade barriers). Market defects occur when markets donotreflect
environmental costs. Policy defects occur when public policies failtocorrect, orcreate or
exacerbate market defects". Thispublication approached theproblem asitshould beapproached:
howcould progress bemade towards theinternalization ofenvironmental costs intheprice ofthe
product? What should thefirststeps betowards ensuring thatthemarket incorporated these costs?
6. Itcould notbeassumed thatallsubsidies thataffected commodities inonewayoranother
necessarily hadnegative environmental externalities. Oneexception wasincentives tospeed
technological changes thatwould incorporate environmentally sustainable production processes.
Norwere subsidies necessarily theonlydistortion intheprice formation system toobstruct the
internalization ofenvironmental costs incommodities. However, todealseriously withthe
relationship between trade andtheenvironment, itcould notbeoverlooked thattheenvironmental
impact ofthehundreds ofmillions ofdollars allocated every yeartosubsidizing agriculture in
industrialized countries wasfarfrom neutral. Thisexample highlighted themagnitude ofthe
problem. Other areas, suchasfishery, which received approximately $54billion insubsidies
every year, illustrated theconcern equally well, andperhaps lessdramatically.
7. Heasked howdistortions incommodity trade affected theenvironment? How didthey
manage toaffect, eventhough there maybenophysical cross-border consequences, the
environment incountries farremote from theplace where suchpractices occurred? Henoted at
leastthefollowing three mechanisms which transferred orspread these effects immediately.
(a)Subsidies affecting commodities could, andinmany cases did,encourage inefficient
allocation ofresources and,coming before theinternalization ofenvironmental costs in
prices, they"created andexacerbated" amarket defect, tousetheOECD 'sexpression.
Toallow certain producers toproduce atamarginal costthatwashigher thantheprice
would beifthere were nosubsidy wasdoubly harmful totheenvironment. Itencouraged
overexploitation oftheenvironmental resource usedbytheproducers whopurportedly
benefitted from thesubsidy. Even iftheharm donetotheenvironment hadnophysical
cross-border implications, international trade transmitted theprices reduced bythesubsidy
andtherefore producers inother countries were forced tooverexploit theirown
environmental resources iftheywere toavoid being excluded from themarket. Inother
words, insuchcircumstances international trade acted asavector which multiplied and
spread thenegative environmental effects ofinefficient allocation ofresources inthe
subsidizing country.
(b) Theprice formation system forcommodities wasactually distorted byfailure to
internalize environmental costs. Ifitwere notdistorted itwould bedifficult toexplain
why, asarule,aproduct whose manufacture generated neutral orrelatively lessnegative
environmental externalities thanasimilar product, wasfrequently more expensive thanthe
similar product whose manufacture generated negative orrelatively more negative
environmental externalities. Inother words, theenvironmental impact generated bythe
production ofagiven product wasoften inversely proportionate toitsprice. Themore
negative theimpact, thelower theprice. Acaseinpoint was"organic" foods, whosePC/SCTE/M/5
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price wasusually higher thantheprice ofproducts produced withintensive useof
fertilizers, pesticides andinputs toimprove theirappearance. This"green rent" generated
bytheconsumers 'growing concern fortheenvironment andtheirownhealth could not
easily beincorporated intheprice. Such a"premium" wasnotsufficient tooffset the
failure tointernalize environmental costs.
(c) Therestrictions affecting market access forcommodities could havedirect or
indirect negative environmental consequences. Direct consequences were thatthelossof
earnings toproducers would force them toresort topractices thatwere harmful tothe
environment, suchasabandoning croprotation systems, incorporating marginal lands into
production andresorting increasingly tointensive cropping practices. Indirect
consequences were thatthelossofearnings toexporters andproducers meant thatthey
would beunable topursue environmentally friendly practices. Improving income levels in
developing countries was,quoting from thesame OECD publication, "amajor prerequisite
forinvesting inthenecessary environmental regulation andsecuring broader support for
improving thequality oftheenvironment".
8. Hewasnotclaiming thatraising theincome ofagricultural producers, indeveloping
countries forexample, wasenough toguarantee better environmental practices butitwasa
prerequisite forimplementing policies thatencouraged ecologically sustainable farming practices.
Inconclusion, itwasnotenough simply torepeat thatthere wasnocontradiction between
international trade andtheenvironment. Thatwasonlyahalftruth. Norcould the
Sub-Committee saythatitwasnotprepared toaccept environmental measures thatdistorted
international trade without accepting atthesame timetheelimination oftheenvironmental
distortions transmitted through international trade. Todealseriously withtherelationship between
trade andtheenvironment, thefirstlogical, obvious andindispensable stepwastoidentify and
agree onaframework toeliminate those subsidies thathadnegative environmental externalities in
thecommodity production process. Hewasnotdiscussing thedistorting effects thatsubsidies
could haveoninternational trade. Thisaspect wastreated, withlimited success, intheframework
oftheUruguay Round. Hewasdiscussing theenvironmental benefits tobederived from the
elimination ofthistypeoftrade distortion. Thiswaswhatnowconcerned theSub-Committee.
9. Bydefining theproblem inthese terms, hewasnotoverlooking thedifficulties of
eliminating policies onsubsidies andthelimitation ofmarket access forcountries thatapplied
them. Norwasheoverlooking whatwasalready being doneinterms of"setaside" andthe
correction ofmany agricultural protection measures. Hewassimply pointing outthatsuch
policies haddistorted andwould continue todistort world trade inagriculture, andatthesame
timewere destroying theenvironment inthecountries thatapplied them, withnegative
consequences fortheenvironment ofother countries. Inother words, hewasadding sound
environmental reasons tosound trade reasons forstepping upefforts toeliminate suchpolicies.
10. Therepresentative ofAustralia considered thatthisitemdemanded reflection onthe
positive contribution which themultilateral trading system maymake tofurthering theobjective of
sustainable development. Thiswasclearly stated inthesecond partofthisitem, calling foran
examination ofthe"environmental benefits ofremoving trade restrictions anddistortions". The
positive contribution tosustainable development wasjustasimportant inrelation tothefirstpart
on"theeffect ofenvironmental measures onmarket access, especially inrelation todeveloping
countries, inparticular totheleastdeveloped among them". Thisagenda itemrecalled thatthe
examination oftherelationship between trade measures andenvironmental measures must start
from anappreciation ofthecontribution which bothtrade andenvironmental policies could make
topromoting sustainable development. Itwasthisappreciation which underpinned theaimof
making trade andenvironmental policies mutually supportive thatwashighlighted inthePC/SCTE/M/5
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Committee 'smandate. Thechallenge wastoidentify thecontribution which themultilateral
trading system could make toputting thisgoalintopractice.
11. Thecomplexities ofachieving thisshould notbeunderestimated. Environmental measures
which restricted market access andreduced thetrading opportunities ofthirdcountries,
particularly ofdeveloping countries, may, onbalance, make littlecontribution topromoting
sustainable development oreventoimproved environmental outcomes attheglobal level. This
mayoccur iftherestriction imposed ontrade wasdisproportionate totheenvironmental objective
being pursued, andifthetrade restriction adversely impacted development opportunities in
thirdcountries. International cooperation tominimise thescope forenvironmental measures to
haveunintended, unnecessary, orunwarranted effects onmarket access should bevalued as
positive contributions tofurthering sustainable development. BoththeAgreement onTechnical
Barriers toTrade andtheAgreement ontheApplication ofSanitary andPhytosanitary Measures
hadimportant roles toplayinthisarea.
12. Inregard tothesecond aspect ofthisagenda item, itwaswellrecognized thatarange of
trade distortions andaccess barriers haddirect adverse environmental consequences. Thiswas
clearly thecaseinrelation toagriculture andnatural resource based products. Distorted price
signals forfarmers inthemajor industrialized countries hadnotonlyledtohighlevels of
uneconomic production, which hadadversely affected farmers inother parts oftheworld through
export subsidization andrestrictive access barriers. They hadalsoencouraged environmentally
damaging agricultural practices. Forexample, there wasastrong correlation between highlevels
ofagricultural subsidization andhighlevels ofuseofagricultural inputs raising environmental
concerns, suchaschemical fertilizers andpesticides. Thehighlevels offarmsupport and
associated increase inagricultural output hadalsoincreased production ofwaste material and
expanded farmproduction intoecologically sensitive areas. High levels ofagricultural support in
themajor industrialized countries hadreinforced thefactthattheprices ofinputs andoutputs in
agricultural markets toooften didnotfullyreflect theenvironmental costs ofagricultural
production. Consumers andtaxpayers hadeffectively beenpenalized twice byhaving tobearthe
costofagricultural support andtheresulting environmental costs.
13. Itwasalsoimportant toreflect ontherelationship between distorted world agricultural
markets, involving depressed prices andrestricted access opportunities, andreduced economic
opportunities inefficient agricultural producing countries. Thesignificant linkages between
depressed world prices, reduced agricultural earnings andrural poverty inmany countries, andthe
close association between rural poverty andenvironmental degradation should alsobenoted.
Depressed rural returns meant thatfarmers faced withlanddegradation andother environmental
problems hadlittlemoney topayforremedial works ortofinance changes tomore sustainable
agricultural practices. TheUruguay Round Agreement onAgriculture wasanimportant firststep
towards amore rational andfairer world agricultural political economy, from bothatrade and
development perspective andanenvironmental perspective. Butmajor trade distortions would
remain andthere wasconsiderable scope tobuild ontheUruguay Round Agreement torealize the
contribution which agricultural trade liberalization could make tofurthering sustainable
development.
14. Further reform inother areas ofthemultilateral trading system would alsohavepositive
environmental benefits. While thereduction intrade distortions inrespect ofagriculture should
havedirect environmental benefits, inmany other areas theeffects maybemore indirect butstill
important. More liberalized trading conditions fornatural resource based products could support
countries intheirefforts topromote sustainable management ofthese resources andtointernalize
theenvironmental costs oftheiruse. Inaddition, reduced tariff escalation forprocessed products
andimproved trading opportunities forawiderange ofindustrial products could assist countriesPC/SCTE/M/5
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seeking todiversify theireconomies andlessen theirdependence onenvironmentally-sensitive
commodity production. Theextent towhich themember countries ofthemultilateral trading
system worked together tominimize unwarranted effects ofenvironmental measures onmarket
access andseriously responded totheneedtoremove trade restrictions anddistortions would be
animportant testofthecommitment tofinding equitable andcooperative solutions toadvancing
environmental goals andtheobjective ofsustainable development.
15. Therepresentative oftheUnited States, commenting preliminarily, considered thatmarket
access wasacentral theme permeating most ofthework oftheSub-Committee, including both
items ofthework programme dealtwithtodate. Heconsidered thatthere were twospecific
aspects ofmarket access called forunder thisitem: theeffects ofenvironmental measures on
market access, especially inrelation todeveloping countries, inparticular theleastdeveloped
among them; andtheenvironmental benefits ofremoving trade restrictions anddistortions.
16. Economic theory heldthattrade liberalization produced greater efficiencies andhigher
standards ofliving. Thisinturncould beexpected toproduce environmental benefits: first, in
theform ofmore efficient utilization ofscarce resources andsecond, evidence suggested thatas
percapital income increased countries would bemore ableandwilling todevote resources to
controlling pollution. Ontheother hand, trade persedidnotalways carry positive environmental
consequences. Much depended onthecontext inwhich trade liberalization occurred. Without
adequate attention totheutilization ofscarce resources, increased trade could result inamplifying
problems thatmayexistwithrespect tooverexploitation andunsustainable development. The
effectiveness oftrade increating environmental benefits, oritscontribution toharm, depended on
factors suchaswhether thepossible impacts were anticipated andresponded to,ormitigated. It
depended onhowliberalization waspromoted andwhether itwasbeing promoted effectively.
17. TheUruguay Round made animportant andwidely recognized contribution totrade
liberalization andmarket access. Itshould result inimportant economic advantages fordeveloped
anddeveloping countries, which would contribute positively from theenvironmental perspective.
Hisdelegation 'sanalyses, economic andenvironmental, oftheRound, andthecommitment to
address environmental issues inthisSub-Committee, suggested there wascause tobeoptimistic.
Despite theprogress, concerns remained. Forexample, tariff structures evidencing tariff
escalation maypromote inefficient production, orfalseefficiencies. Thisphenomenon wasof
particular concern tonatural resource sectors, which inturnwere ofparticular butnotexclusive
concern todeveloping countries. Onespecific example ofcontinuing concern waswood products.
Although theUruguay Round came close toreaching agreement ontariff elimination inthesector,
efforts were thwarted intheend. Theresult wasthateffective ratesoftariff protection still
reached close to30percent. Thiswasaserious disappointment, nottheleastbecause it
decreased thevalue offorest resources andimpeded efforts toinvest insustainable forest
management.
18. Therefore, trade liberalization wasnecessary butnotnecessarily sufficient tocreate the
conditions forsustainable development. How effective itwasdepended onwhether, asthe
multilateral trading system evolved, itwasensured thatenvironmental considerations inpromoting
growth anddevelopment were adequately taken intoaccount. Headded thattheeffects of
environmental compliance costs were relatively small incomparison tothose ofother factors of
production. Furthermore, although costs ofcompliance didexist, andtheymayinsome
circumstances imply significant investment outlays, inthelongtermsome ofthese mayproduce
notonlyenvironmental butalsoeconomic benefits, especially where standards encouraged more
efficient processes. Important analytical work inthisareacontinued tobecarried outinother
fora, which should betaken intoaccount aswork progressed.PC/SCTE/M/5
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19. Furthermore, potential adverse consequences ofenvironmental measures could be
mitigated bypositive measures. Boththemultilateral trading system andthegrowing network of
MEAs recognized thisimportant needthrough specific provisions addressed totheparticular
situation ofdeveloping countries. Onecrucial ingredient highlighted byallanalytical work was
effective transparency. Thismeant not-just-after-the-fact dissemination ofinformation, but
meaningful participation ofallaffected players throughout theprocess ofdeveloping
environmental measures.
20. Inconclusion, hesummarized fourmain points: market access permeated most ofthe
Sub-Committee 'swork; onthewhole, itseemed thattodateenvironmental measures hadnothad
asignificant adverse impact onmarket access, including inrelation todeveloping countries, but
areas ofconcern needed careful andbalanced examination; trade liberalization wasanecessary
ingredient fordevelopment, which inturncould contribute effectively tosustainable development
iftherightconditions were created, anditwasthetaskofthisSub-Committee tocontribute
towards ensuring thattheywere; andprogress hadbeenmade, especially through theUruguay
Round, butithadbeenuneven.
21. Therepresentative ofVenezuela saidthatthisitemwasverybroad andgavethe
opportunity ofalluding toarange ofmeasures which could beapplied inorder toachieve
environmental objectives aswellastotheireffects onmarket access. Generally, thissubject
covered regulations suchasrequirements onlabelling andpackaging, aswellastechnical
regulations applicable toproducts orprocesses andproduction methods (PPMs). Itcould also
include economic-type incentives aimed atincorporating environmental costs. First, itshould be
emphasized that,inprinciple, environmental measures should beapplied inconformity withthe
non-discrimination principles contained inthemultilateral trading system, although ofcourse this
depended onthetransboundary ordomestic nature oftheenvironmental damage toberemedied or
prevented. Consideration should alsofocus ontheincentives necessary forexports of
environmentally friendly products from developing countries andonmutual recognition or
harmonization ofenvironmental standards. These subjects were analyzed indetail inthe
Sub-Committee 'swork programme andhadanimpact onmarket access forexports from
developing countries.
22. Heconcentrated onthesecond partofthisitem, namely, theenvironmental benefits of
removing trade restrictions anddistortions. Hisdelegation considered thattheelimination oftrade
distortions andrestrictions could havepositive effects onenvironmental conservation, thebasic
reason being therational andefficient allocation ofproduction resources. Thisdidnotmean that
thedegree ofopenness ofaneconomy oritsextension towards international trade determined
more healthy environmental policies; these must beimplemented inparallel. Theenvironmental
benefits ofremoving international trade distortions could beseenatthenational levelwhen, inthe
absence ofprice support mechanisms orproduction subsidies, there wasareduction in
environmental damage caused byintensive useofproduction resources andpromotion ofthe
production ofsubstitute goods together withtheutilization oftechnologies thatwere
environmentally more efficient. Inagriculture forexample, thiscould taketheform ofdecreased
useoffertilizers andpesticides. These effects were exacerbated incountries which were
competing oninternational markets forhighly subsidized agricultural products.
23. Thistypeofgovernment intervention inmarkets hadaneffect onglobal production
patterns andprejudiced sustainable development ofsocieties because itplaced ahigher value on
production thanontheconservation oftheenvironment. Itshould alsobenoted thatthesubsidies
wartaking place oninternational markets forcertain agricultural products notonlyhadanegative
effect oncountries which didnothavethesame capacity tosubsidize exports butalsodiverted a
large amount ofresources which could beallocated toalternative activities thatenhanced thePC/SCTE/M/5
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absorption capacity oftheprocesses ofinternalizing environmental costs. Countries which
imported subsidized agricultural products were alsoindirectly affected bythissituation from the
environmental point ofview. Ironically, incountries which benefitted from thelowprices of
subsidized imports, consumption wasdiverted from domestic substitute products totheimported
product. Thishadnegative effects ontheeconomy andgeneration ofwealth. Empirical evidence
showed thatpercapita contamination levels decreased atthesame rateasincome increased. The
negative economic andsocial effects inimporting countries decreased theircapacity toimplement
environmental conservation policies.
24. Government action should focus oneconomic instruments which promoted thereduction
ofcontamination bymarket agents. There hadbeenanumber ofexplicit statements onthis
subject during theSub-Committee 'sdiscussions. Inenvironmental policy, government action
should strengthen thedevelopment oflesscontaminating technologies and,attheinternational
level, promote mechanisms forthetransfer ofresources andtechnology todeveloping countries.
Ifnot,thegoals ofUNCED could notbeachieved. Fortheabove reasons, thesubject oftrade
distortions andrestrictions should beconsidered carefully bythisSub-Committee andother
intergovernmental forums inorder toestablish alinkbetween trade andtheenvironment which
would bring theobjective ofsustainable development nearer.
25. Therepresentative ofEgypt believed thatintegrating theobjectives oftrade liberalization
withtheideaofsustainable development wasoneofthebiggest andmost complex challenges to
face. Acrucial partofthiseffort wastheconstruction ofdemocratic solutions onaninternational
level, todealwiththecomplex political decisions thatconcerned trade andtheenvironment.
Nevertheless, theexperience ofthepastfewyears seemed toindicate thattheenvironmental
question wasbeing increasingly usedasanartificial barrier toimpede developing countries 'access
todeveloped countries 'markets. Many country studies prepared bydifferent international and
regional organizations indicated thattheenvironmental question wasbeing usedfundamentally to
defend specific commercial interests onaninternational levelrather thantoachieve specific
environmental goals. Unilateral actions ofdeveloped countries oroftheirspecial interest groups,
whoselected sectors subject toenvironmental measures, appeared tohave, asaprincipal
objective, theprotection ofaspecific commercial interest. Ifthistendency continued, theefforts
which thedeveloping countries were undertaking toachieve economic andenvironmental
adjustment would befrustrated anddiscouraged.
26. Even incases where environmental measures were notadirect outcome ofcommercial
interests, international trade wasusedtotransfer environmental standards created inaspecific
context forthesolution ofspecific problems inother contexts withdifferent problems andpossibly
different priorities andchoices. Thepotential threat wasthatwhen theproducers ofpollution and
theirvictims indeveloped countries agreed onenvironmental measures which raised costs, the
existence ofathirdparty producer andexporter indeveloping countries provided apossibility for
thepolluters andtheirvictims toacttogether. They might agree jointly toabatement measures
which raised costs and,atthesame timeandinorder toprotect theproducer 'smarket, which
were accompanied byprotectionist measures toprevent competition from imports andwhich
passed theenvironmental costtotheexporter indeveloping countries. Thus there wasahighrisk
thatenvironmental conservationism andtrade protectionism would gohandinhand.
27. Theenhancement oftrading opportunities andmarket access available todeveloping
countries wasakeyprerequisite forapproaching today'sandtomorrow 'sglobal environmental
problems. Theeffects ofenvironmental measures onmarket access andtrading opportunities of
developing countries should belooked atfrom twoperspectives: theeffects ofenvironmentalPC/SCTE/M/5
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measures taken bydeveloping countries themselves onthecompetitiveness oftheirexports, oneof
themain determinants oftheirability toreach themarkets ofdeveloped countries; andtheimpact
ofenvironmental policies indeveloped countries onthetrade prospects ofdeveloping countries.
28. Onthefirstissue, thedegree towhich internalized environmental costs were paidbythe
producer indeveloping countries ortheconsumer indeveloped countries depended mainly onthe
elasticity ofthesupply anddemand curves aswellasontheability ofthetwoparties toshiftthe
curves. Itwaswellknown thatmost exports ofdeveloping countries were relatively
undifferentiated andtherefore were likely tofaceanelastic demand curve. Thesupply curve on
theother handwaslikely tobefairly inelastic, whether because oftheurgent needforforeign
exchange ortheconditions under which exports were produced. Inshort, given theshape of
supply anddemand curves, allmeasures aiming atinternalizing theenvironmental costs ofexports
ofdeveloping countries were likely toimpose aburden mainly ontheproducer andexporter in
developing countries. Headded thatagreat dealofworld trade wasdominated byintra-firm
transactions which tookplace attransfer prices designed toconcentrate profits intheplaces which
suited thefirmbest. Thiswasoften nottheexporting country ifitwasadeveloping one. It
could beargued inthiscasethatthecosts internalized through environmental measures might be
internalized elsewhere without adversely affecting atleasttheprice received bytheproducing
country. Inthisrespect, also,onemayreflect upon theeffects ofrestrictive business practices in
internalizing environmental costs.
29. With respect totheability ofthetwoparties, namely thedeveloping country producer and
thedeveloped country consumer, toshiftthedemand andsupply curves toknow whoactually paid
fortheinternalized externalities depended onmany factors which could notbeconclusively
addressed here. Forexample thetechnological factor wasdecisive inthisrespect. New
technologies, including environmentally friendly technologies, were being developed byprivate
firms indeveloped countries. These were normally private intellectual property, which replaced a
technology thatmight beinthepublic domain, resulting inanincreased flowofincome to
developed countries, i.e.tothefirms located there which owned thepatents. Ifthenew
technology imposed unilaterally agreed standards without taking other aspects intoconsideration,
inparticular afinancing mechanism, thenetresult would beonbalance unfavourable to
developing countries especially tosmall enterprises runbythepoorinthese countries. This
would worsen poverty conditions andwork against sustainable development.
30. Ifthepower toshiftthesupply curve wasconcentrated withfirms, institutions and
governments which hadthemeans toinvest inthedevelopment ofnewtechnologies, power over
thedemand curve would restlargely withthemedia andtherefore withthose whohadaccess to
them including wellorganized lobbies. Allthese forms ofpower tended tobeconcentrated in
developed countries. Inshort given theability ofbothdeveloping anddeveloped countries to
affect theconditions ofsupply anddemand whether byprice ornon-price factors, developing
country trade stood tolosefrom theintroduction ofenvironmental measures.
31. Onthesecond issue, theimpact ofenvironmental measures indeveloped countries onthe
trade prospects ofdeveloping countries, some empirical studies byinternational organizations
proved thatwhen developing countries hadtoadjust theirproduction processes inresponse to
changing environmental requirements indeveloped countries, ahigher burden wasplaced onthese
countries andtheimpact wasespecially serious onthesmall producers inthese countries. These
findings were logical since small scale exporters from developing countries competed inthe
international market onthebasis ofprice rather thannon-price factors including environmental
aspects. Thus, where environmental quality waspartoftheoverall quality oftheproduct, itwas
doubtful whether theywould beabletoobtain price premiums formaking environmental
improvements.PC/SCTE/M/5
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32. Three categories ofcosts were shown tobeimportant bythese country studies:
transaction costs, because regulations between different markets maybesubstantially different;
costs related torisksarising from theuseofenvironmentally related product measures which were
likely toriseandbecompounded byother risksassociated withexport, mayactasadeterrent to
market access; andfixed costs related toprocess ordesign modifications which were likely torise
andmaybeparticularly difficult fordeveloping countries because ofthehighopportunity costof
capital. Heconcluded thattoachieve global sustainable development, thedifficulties and
challenges must befaced inorder tofindthebestwaytoaddress them.
33. Therepresentative ofNigeria noted three conclusions which emerged from thestatements
atthismeeting andstudies being prepared onthesubject. Onewasthatenvironmental measures
hadnothadasignificant andadverse effect ontrade andmarket access; thesecond wasthat
environmental measures would havedisadvantageous effects onthetrading system, particularly for
developing countries; andthirdwasthattheresults were uncertain. Heconsidered thatitwas
important tobeaware oftheassumptions underlying suchstudies. Headdressed theissues ofthe
effects ofenvironmental measures onmarket access, especially indeveloping countries, andthe
environmental benefits ofremoving trade restrictions anddistortions. Theinterrelationships
between environmental measures andmarket access were complex anduncertain foranumber of
reasons andtheinterlinkages were inneedoffurther study. First, countries made different
assumptions about thetypes ofenvironmental measures thatwould orshould beapplicable. For
example, there wasuncertainty anddebate astowhether harmonized standards would orshould
prevail orwhether countries should operate ondomestic standards, established according totheir
national objectives andpriorities? Second, questions were raised astowhether theevolution of
environmental measures should beproduct orprocess oriented oramixofboth. Third, there
were significant andunresolved differences about thetypeofapproaches thatwould govern the
application ofenvironmental measures. Thedebate surrounding theexanteversus theexpost
approaches underlined thedifferences, although hisdelegation heldtheviewthattheywere not
mutually exclusive andthatthere wasafeasible middle ground.
34. Environmental measures varied andthelistwasgrowing, including suchinstruments as
subsidies, tradable permits, licensing, pollution charges, voluntary industry agreements, liability
arrangements, information disseminated onenvironmental impacts, etc.Thevariety of
instruments created difficulty inarriving ataconsensus onwhich types ofmeasures tostudy under
thisitem. Market access wasamore operational variable; although subject tobothtrade and
non-trade factors, itwaseasytodetermine when market access waseither restricted orenhanced.
Also, market access wasacross-cutting issue which hadtobeintegrated intheexamination of
other trade andenvironment linkages asthefullmandate oftheSub-Committee wasexplored.
35. Studying theeffects of"green" measures ontrade, particularly onmarket access wasalso
hampered bytheabsence ofhardevidence oftheeffects ofoneontheother. Therefore, itwould
beuseful tohavestudies from which adatabasecould bebuilt, andwhich would show
measurable results oftheeffects ofparticular environmental measures, atbothproduct andprocess
level, onmarket access forparticular products. Hesuggested technical andempirical studies on
specified product-categories agreed tobymembers; forinstance hisdelegation would likestudies
ontropical andagricultural products. Others maydesire suchstudies oncars, industrial plants,
etc.Itwasunderstandable whydatawere notyetavailable; many MEAs hadonlyeither just
come intoforce orhadbeeninforce forlimited periods. Intheabsence ofdatabases andstudies
which would permit amore precise, detailed discussion oftheeffects ofenvironmental measures
onmarket access, hisdelegation offered general, preliminary comments.PC/SCTE/M/5
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36. Environmental measures were formulated toachieve either process orproduct standards.
They hadtrade effects, particularly onmarket access, suchascompliance costs, competitiveness
effects, trading opportunities, andinfluence onconsumer preferences which tended tohave
implications forthedemand ofaproduct. Currently, environmental standards were neither
harmonized noruniform across countries. Consequently, higher environmental standards within a
country which were enforced byevermore stringent measures would impose higher costs on
foreign producers andexporters inorder forthem tobeabletocomply withthedomestic
regulations oftheimporting country. Transaction andcompliance costs would obviously increase.
Thus, ifevermore stringent standards were adopted, andthecosts were notinternalized, the
probable trade effects thatwould arisewere thatthedifferences inrelative costamongst and
between nations, thebasis forthegains from trade, would benullified. Higher costs would
diminish competitive advantage fortheforeign producer ifitwere assumed thatthequality of
products waseither equal orcomparable andthattheproducts were substitutable. Further, itwas
conceivable thattheadditional costs tobeborne bytheforeign producer mayactually behigher if
aparticular export market constituted onlyasmall portion oftheforeign producer 'sexport sales,
inwhich caseeconomies ofscale could notbeenjoyed. Thus, more stringent standards bysome,
under conditions where standards varied widely, could inhibit trade.
37. Increasingly, consumers were being faced with"green choices". Thisreorientation of
choices maycause changes indemand suchasanincrease infavour of"environmentally friendly"
products. Newandexpanded market opportunities could ariseforcountries which could seize the
trading opportunities thatmayarise. However, itwasalsoreasonable tosuggest thatthetrading
opportunities thatmayarisewould depend oncost. Ifasignificant adjustment process were
needed tomake theswitch from environmentally unsound products toenvironmentally friendly
ones, thenthebasis fortrade would depend onthecosts involved inmaking theadjustment and
retaining relative costdifferences between products which justified thegains from trade.
Developing countries maystand togainifconsumer preferences, translated intoaggregate
demand, ledtoareplacement ofchemical orsynthetic products bynatural products andother such
products because oftheirenvironmental friendliness.
38. Onthesecond aspect ofthisitem, namely theenvironmental benefits deriving from the
removal oftrade restrictions anddistortions, hisdelegation believed thatcause andeffect were
more direct. Trade restrictions anddistortions, suchassubsidies inthesector ofagricultural and
tropical products, hadhaddisastrous environmental consequences inmany countries. African
countries presented tragic examples. Theremoval ofthese distortions would make itpossible for
market prices toemerge, forincreased incomes forproducer countries, andforthedeceleration of
theexploitation offinite resources andhence thepreservation oftheenvironment. Declining
world prices ofprimary products were ofserious concern totheAfrican environment. This
decline inprices forprimary products waslargely, though notexclusively, explained bytrade
distortions, particularly subsidies intheconsuming countries.
39. Trade figures forAfrica overatenyearperiod showed clearly theeffects ofthedecline in
prices ofprimary products onAfrica 'sshare ofworld trade. Heconsidered thefigures shocking:
in1982, Africa 'sshare ofworld trade, excluding South Africa, was4.25percent; in1992, the
figure was1.88percent, afteranannual growth rateof-0.19 percent. Trade distortions and
restrictions didnotexclusively account forthisdismal trade performance buttheydid,inlarge
part,explain thislowexport performance inlightofthefactthatdeclining export earnings from
primary products stood incontrast toincreasing export volume.PC/SCTE/M/5
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40. Theenvironmental consequences hadbeen, andcontinued tobe,severe. Resources were
being exploited atanalarming ratewiththeresulting effects ofatoo-rapid rateofresource
depletion. Deforestation anddesertification andahostofother serious environmental problems
were magnifying. These problems would notbesosevere hadmany oftheAfrican countries
obtained fairmarket prices fortheirexport products. AtUNCED, aconsensus wasestablished
andwasbeing strengthened daily thattrade andenvironmental policies should bemutually
supportive inorder topromote thegoalofsustainable development. Trade wasameans of
increasing national income, wealth andprosperity. Inthisway, essential resources would be
released forenvironmental protection andpreservation. Iftheenvironment were preserved andits
resources prudently utilized, thenitwould continue tomake available more resources forthe
continuing expansion oftrade. Fortheenvironment tocontinue toprovide thebasis fortrade
expansion, prices ofgoods andproducts must reflect thefullsocial costofenvironmental
protection. Ifprices reflected thisfullsocial cost,thentrade would contribute tosustainable
growth.
41. Theproblem, however, wasthaturgent action fortheimplementation ofthisworthwhile
consensus wasbeing threatened byawiderange ofmultiplying concerns. Forinstance, there was
suspicion andoutrage bymany regarding theutility ofunilateral conduct toenforce environmental
standards inanareathatwasprimarily seenasaforum ofcooperative multilateral conduct. There
were concerns about theuseoftrade sanctions fortheenforcement ofMEAs. There were strong
arguments thatinterest groups maytakeoverandcolonize thevalid concerns ofenvironmental
groups forprotectionist purposes. Hence, hisdelegation considered thatthere wasaneedfor
objective, scientific conclusions onthenecessity andeffectiveness ofenvironmental standards with
trade effects soastoexclude thepossibility ofprotectionism byanother name.
42. Heconcluded byoffering views onhowbesttoproceed inresolving some oftheproblems
inthediscussions. First, thiswasnotaforum forsetting rules andstandards ontheenvironment.
Through discussion, study andanalysis, theSub-Committee should determine themost suitable
andappropriate ways ofpromoting thegoals ofsustainable development, andshould ensure that
anymeasures taken orcontemplated were GATT-consistent. Thegoverning principles remained
non-discrimination, transparency andsafeguarding andstrengthening theprinciples ofthe
multilateral trading system byacting inconcert.
43. Therepresentative ofBrazil considered thatthisitemwasmainly derived from the
discussions onUNCED follow-up intheCTD lastyear. Those discussions should bereactivated
andhisdelegation 'sintervention waslargely based onitsparticipation inthatprocess. Theparts
ofAgenda 21which were allotted fordiscussion inthatCommittee, i.e.chapter 2,Introduction
andSection A,contained repeated callsforanexpansion ofmarket access infavour ofdeveloping
countries. Agenda 21saidthatexpansion oftrade through liberalization increased development
perspectives byaugmenting exports ofdeveloping countries. Gains inallocation efficiency
reduced over-exploitation orwasteful useofnatural resources. Alinkage therefore existed
between protection oftheenvironment andthemaintenance andimprovement ofanopen
multilateral trading system. Infact,"promoting sustainable development through trade
liberalization" wasoneofthegoals established fortheUNCED follow-up.
44. From thisperspective, implementation without distortions oftheUruguay Round, whose
conclusion wascalled forinAgenda 21,wasacentral contribution thatthemultilateral trading
system could make totheattainment ofsustainable development. Butthediscussion onmarket
access derived from Agenda 21wasnotrestricted tothisgeneral liberalization perspective. An
important component ofSection AofChapter 2wasimprovement ofcommodity trade, bothPC/SCTE/M/5
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because itwasvitalforsomany developing countries andduetothedirect relationship between
commodity production andthenatural environment. Itwasnotatextdirected exclusively atthe
GATT andmany oftheissues were being dealtwithelsewhere. Nevertheless atleastthree issues
were GATT-related: access, distortions, anddiversification.
45. Intheaccess area, besides theproblem ofborder measures which, inageneral way, was
thesubject ofnegotiations intheUruguay Round, hisdelegation hadproposed examination of
internal taxation ontropical commodities. Since there wasnodomestic production ofthose
products intemperate zonecountries, highinternal taxes onthem, evenifinformal conformity
withGATT Article III,distorted competition andwere equivalent toatariff onimports. Thiswas
aproblem thathadbeenexamined intheGATT inthepastwithout significant results and,inlight
oftheresults oftheRioConference, should bere-examined. Hisdelegation believed thatthefirst
stepinthisdirection wastocheck theextent towhich thisissue hadbeendealtwithinthepastin
GATT andifthere were anyconclusions. Tothiseffect, hesuggested thattheSub-Committee
request theSecretariat toprepare apaper ontheissue.
46. Intheareaofdistortions, theUNCED message wasagainst production andexport
subsidies inagriculture. Subsidies inagriculture, bydepressing world prices, caused general
over-exploitation ofresources indeveloping countries inneedofhardcurrency. Thelarge
amount ofmoney involved insubsidization could beputtobetter use,forinstance, bysupporting
sustainable development programmes indeveloping countries. Implementation ofUruguay Round
commitments inthisareahadenvironmental anddevelopmental dimensions andfuture progress of
multilateral agricultural disciplines wasintheinterest ofpromoting sustainable development.
47. Third, references tothecommodity problem inAgenda 21alsocalled forsupport for
diversification efforts. Itwaseasytounderstand thatdiminishing dependence onarestricted
number ofcommodities helped toavoid over-exploitation duetoprice falls. Thesame logic
favoured vertical diversification, since more processed products were lesssubject toprice
fluctuation. Unfortunately, stepping upproduction faced theobstacle oftariff escalation inthe
main export markets which were important duetothesmall sizeofmarkets inmany developing
countries. Again, tariff escalation wasanareawithwhich GATT haddealtbutnot
systematically, evenintheUruguay Round where ithadthestatus ofanobjective inthemarket
access area. Here again, hisdelegation proposed thattheSecretariat prepare apaper referring to
pastGATT treatment oftheissue andanalysis oftheconsequences oftheproblem inlightofthe
discussion intheSub-Committee.
48. Thequestion ofmarket access wasahorizontal issue which ranthrough allitems ofthe
work programme. Thisassessment invited ahorizontal instrument toimprove theknowledge of
thesubject andtogivesupport tothediscussions. IntheCTD process, theideaofestablishing a
GATT database onenvironmental measures withaneffect ontrade hadbeendiscussed. TheCTD
hadhadtheopportunity tohearfrom UNCTAD about theirefforts toconstitute suchadatabase.
TheChairman 'sinvitation forvoluntary submission ofinformation onenvironmental measures
under examination inthisSub-Committee wentinthesame direction. Hesuggested thatinformal
consultations beconducted onthisissue inorder todetermine whatwasnecessary andfeasible in
terms ofmonitoring anddatacollection inthisareaunder theWTO, taking dueaccount ofwork
donebyother organizations inorder toavoid duplication ofefforts.
49. During theUNCED follow-up discussions inGATT, hisdelegation hadhighlighted
three basic notions derived from theRioConference thatwere alsovalid forthisdebate. First,
afterUNCED thedevelopment dimension hadtobepresent inanyconsideration ofthePC/SCTE/M/5
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relationship between trade andenvironment. Second, international cooperation must bethebasis
forprogress onenvironment anddevelopment issues. Third, therootcauses ofenvironmental
problems must beaddressed, which implied thenecessity ofdealing withdevelopment-related
problems. Hisdelegation hadtriedtopoint outsome areas where WTO activity could havea
positive impact ondevelopment andtheenvironment andsuggested some initial work forthe
Secretariat. Hisdelegation hoped thesuggestions were welcomed byothers andthatthe
Sub-Committee could proceed onthispath.
50. Therepresentative ofAustria saidtheSub-Committee 'sanalysis should adequately take
intoconsideration thatpossible side-effects ofenvironmental measures onmarket access could be
aconsequence oforanecessity fortheattainment oftheenvironmental objective ofan
environmental measure andshould neither beavoided nordesired. Furthermore, although
concentrating theanalysis ontheside-effects ofenvironmental measures onmarket access, other
aspects liketheenvironmental effectiveness ofameasure, itsstructure, contents andthe
underlying environmental objective, should notbeforgotten; todosowould giveapartial and
incomplete picture andrestrict therange ofanalysis.
51. Principle 11oftheRioDeclaration postulated that"States shallenact effective
environmental legislation". States didenact environmental legislation but,inorder tobeeffective,
ithadtobeadequately implemented andapplied. There wasreason tobelieve thatStates were
becoming more competent indesigning environmental legislation andinimplementing it
successfully. More andmore companies increasingly notonlyabided bylegalrules thatwere
imposed onthem, butthemselves pushed forward theprocess offinding andimplementing
innovative solutions forenvironmental problems. Consumers were becoming more andmore
sensitive totheefforts ofproducers andwere paying attention totheenvironmental impact of
products. Thisapplied toproducts assuch, butincreasingly alsotoprocesses ofproduction. For
companies, nottaking intoaccount environmental considerations could result inthelossofmarket
shares andprofit whereas taking them intoaccount often turned outtobeacompetitive advantage.
52. Thus, growing public awareness forenvironmental concerns induced many producers to
takeintoaccount these concerns andtomake efforts towards internalizing environmental costs.
Providing convincing evidence oftheirefforts toconsumers enabled thelatter tomake
environmentally sound purchasing decisions andincreased theavailability ofinformation onthe
environmental quality ofproducts. Thiswas,inprinciple, notlimited toonespecial national
economy, butgenerally applicable. Ifconsumers wanted tobuyenvironmentally friendly
products, thegeographical origin oftheproducts would notbethemost important criterion for
theirpurchasing decisions. They would lookforspecific quality from whatever producer from
whichever country wasabletoprovide it.Products from developing countries could bemore
environmentally friendly thancompeting goods from developed countries, because oftheraw
materials incorporated inthese products orbecause theywere orcould belessintensive interms
ofenvironmental resource use.
53. Turing from themacro-economic leveltothemicro-economic levelorbusiness
administration, headded thatoneimportant sub-discipline ofbusiness administration was
marketing. Inorder tobesuccessful andtosecure existence inthelong-run, companies should
make surethatthere wasdemand fortheirgoods. Inother words theyshould, bymeans of
market research, trytoincrease theprobability thattheirgoods would beaccepted andbought by
theconsumers. Atthemacro-level there wasdemand forgreen products ontheonesideand
supply oratleastpotential supply ofgreen products ontheother. Soifitwere possible toenable
producers from developing countries toeffectively communicate theenvironmental advantages ofPC/SCTE/M/5
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theirproducts toconsumers indeveloped countries, producers from developing countries would
equally beinposition tobenefit from consumers 'preference for"green products" andtheir
willingness toacknowledge environmental efforts ontheproducer side. Once initiated, the
mechanism ofmutual impact between producers andconsumers would alsowork between
producers indeveloping countries andconsumers indeveloped countries. Soinspeaking of
capacity building, theability tocommunicate relevant information tospecific target groups should
bekeptinmind asitwasanessential element ofthiscapacity. Hisdelegation considered thatthe
International Trade Centre should playanimportant roleinlaying theground fordisseminating
thenecessary skills, thereby helping toensure notonlyaccess tothemarket butrealmarket
presence.
54. Heturned from theprocess ofinformation transmission totheinformation thatwastobe
transmitted. Consumers, inorder tobeabletochoose among products onenvironmental grounds,
hadtobegiven reliable information ontheenvironmental aspects ofthese products. Ameans
serving bothproducers 'andconsumers 'interests could betheclear identification ofproduct
and/or process standards. Afirststepcould beinternationally agreed minimum standards which
could thenbefurther elaborated andserve asabasis formutual recognition. Another means
could belabelling schemes based oneither products orprocesses. "Best management practices"
defined withregard tolocalconditions could bereflected instandards oflabelling schemes. The
definition of"best management practices" would havetobeadapted overtimeinorder totake
intoaccount factors likenewtechnologies, newknowledge andthequantity andquality ofthe
resource base.
55. Therepresentative ofChile noted thatthere were different ways inwhich market access
policies could haveanegative effect ontheenvironment. Hisdelegation considered thatthis
Sub-Committee hadnotpaidenough attention totheenvironmental effects ofprotectionist policies
affecting theexports ofmany developing countries. Thissituation hadatwo-fold negative effect.
Ontheonehand, recent evidence showed thatprotectionist trade policies intheagricultural sector
were notenvironmentally sustainable andcaused damage totheecological systems ofproducing
countries. Ontheother hand, thedifficulties encountered byagricultural products from
developing countries inobtaining access toglobal markets asaresult ofsuchprotectionist policies
made itdifficult toreach thelevelofeconomic development necessary tomeettheneeds oftheir
populations andofenvironmental protection.
56. Henoted thattheEuropean Union wasintheprocess ofadopting anewagreement onthe
Generalized System ofPreferences thatincluded environmental andsocial criteria; thisconstituted
animportant precedent intheformulation ofsuchagreements. Although theapplication of
environmental criteria might bemarginal intrade onalarge scale, theprinciple thattrade
preferences should include environmental criteria wasnevertheless asource ofconcern. Asfaras
multilateral trade agreements were concerned, hedrew attention tothefactthatthese agreements
were increasingly being implemented through technical protocols andagreements, which may
include protectionist-type criteria affecting trade andnotnegotiated intheframework agreement.
57. Hisdelegation believed thatthepermanence ofgraduated tariffs, moderated bythe
Uruguay Round negotiations, alsoaffected therelationship between market access and
environmental protection because itmainly affected products closely related totheenvironment,
forexample, commodities, agriculture, forestry andmining. Thepersistence ofagraduated
structure withstringent environmental policies inthedeveloped countries could bethegreatest
obstacle todevelopment ofthese sectors andtheimplementation ofaneconomic regime based on
theapplication ofcomparative advantages. Finally, hedrew attention toanother element tobePC/SCTE/M/5
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taken intoaccount, namely, obstacles totrade which mayarisefrom theapplication ofcertain
eco-labelling programmes. Theselection ofcertain criteria might result indiscrimination against
foreign producers when localproducers andconsumers gavepreference tocertain characteristics
thatcould more easily beprovided bylocalproducers.
58. Therepresentative ofCanada considered thattheeffect ofenvironmental measures on
market access wasacentral issue thatcutacross alltheelements inthework programme, and
could beaddressed atevery meeting oftheSub-Committee. Hisdelegation welcomed the
opportunity tofocus discussion ontheconcerns ofdeveloping countries inthisarea. Hisstarting
point wastherecognition thattrade wascrucial forthecreation ofwealth and,therefore, for
environmental protection. Thisrelationship wasparticularly important fordeveloping countries.
Increased national income generated from trade could bedirected toward improved resource use
andconservation. Trade andsustainable development were notdichotomies, andsuggestions to
thecontrary were nothelpful toanexamination oftheissues.
59. Another important consideration informing thedebate wasUNCED, thefollow-up work of
which wasdiscussed intheEMIT Group. Theissues debated atUNCED were ofcontinuing
relevance, andhereiterated theimportance ofcommitments made atRio. Hisdelegation
continued tostrongly support oneofthekeymessages tocome outoftheUNCED process -the
importance ofcooperation andpartnership between thedeveloped anddeveloping world indealing
withenvironment anddevelopment issues. Thismeant taking thesituation ofdeveloping counties
intoaccount intheformulation ofnational environmental measures. Ofcourse, every country
faced constraints inadjusting tonewtrade andenvironment realities, butthese adjustments could
beparticularly onerous fordeveloping countries. Previous speakers hadreferred tothe
discussions intheCTD, which began anexamination ofhowtointegrate trade, development and
environmental issues. Thework initiated inthatCommittee hadnowbeenbrought intothis
Sub-Committee.
60. Market access fordeveloping countries wasapriority inthatregard. There hadalready
beensome discussion ofwhether further work could bedonetoaddress improved market access
fordeveloping countries, building upon theadvances made intheUruguay Round. Oneissue that
needed examination wastariff escalation andhisdelegation supported theproposals thathadbeen
made foraSecretariat paper onthissubject. Another mechanism forproviding special access for
products from developing countries wastheGeneralized System ofPreferences. Thissystem had
helped theexpansion anddiversification ofdeveloping country export sectors. Henoted thathis
government wasintheprocess ofreviewing itsgeneral preferential scheme inorder toimprove its
effectiveness inthisregard. Also, many developing countries benefited from hisgovernment 's
other preferential tariff schemes, namely theBritish Preferential Tariff, preferences for
Commonwealth Caribbean Developing Countries andapreferential tariff fortheleastdeveloped
countries.
61. Thesixth itemofthework programme focused ontheimpact ofenvironmental measures
onmarket access. Existing trade rules allowed countries toestablish highdomestic standards for
environmental protection provided these were introduced inamanner consistent withGATT rules,
including national andmost-favoured-nation treatment. Butenvironmental measures mayaffect
market access andcompetitiveness. Much ofthework inthisareahadconcentrated ontheissue
ofapplying domestic standards orprogrammes toimports. Arange ofquestions about the
necessity andeffectiveness ofrequiring imports tomeetvarious types ofenvironmental criteria
hadbeenidentified. Itseemed widely agreed thatthemost problematic would bethose relating to
theimpacts oftheproduction orprocessing method usedtoproduce agood asopposed tothePC/SCTE/M/5
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impacts oftheconsumption ordisposal ofthegood itself. Thelatter were already covered in
GATT rules, butstillcould giverisetoadverse trade impacts thatwould needtobeaddressed.
These would needtobeafocus ofattention infuture meetings.
62. Another areaforon-going work would beexploring means bywhich countries could
cooperate andcoordinate inthedevelopment andapplication ofvarious types ofenvironmental
standards andprogrammes, including measures likeeco-labelling, eco-taxes, etc.Thiswasnot
work fortheWTO butshould bepursued intheappropriate environmental fora. Itwasclear that
inmany cases differences incountries 'circumstances would mean thatdifferent standards and
policies were appropriate. Such differences must berespected. Furthermore, withregard to
proposals fortheuseoftrade restrictions toimpose onecountry 'sstandards onothers, the
effectiveness ofthisapproach inpromoting sustainable development hadtobequestioned.
Policies andprogrammes nottailored tolocalcircumstances hadthepotential todomore
environmental harm thangood.
63. Insome instances, however, there might beabasis forthedevelopment ofcore
international standards thatcould beusedtoestablish common ground andabasis forpursuing
approaches suchasmutual recognition andequivalency. Efforts inthisdirection were already
wellunderway inanumber offora. International standard setting authorities needed totakeinto
account awiderange ofconsiderations including scientific factors, countries 'individual
circumstances andcapacities, andtheenvironmental, social andeconomic implications of
alternative programmes. Once again, thiswork didnotfallwithin GATT/WTO competence, but
wasforother bodies withmandates inthatarea.
64. IntheWTO, anumber ofsteps would needtobedeveloped tomitigate potential negative
trade effects ofenvironmental policies andprogrammes. Theparameters forwhich types of
environmental measures should becapable ofapplication toimports would havetobeestablished.
Another stepwould betopursue improvements inGATT 'stransparency requirements.
Transparency didnotoffer ananswer tothePPM issue but,onproduct standards, could be
brought tobeartoensure thatcountries were provided withtimely andaccurate information anda
meaningful opportunity tomake concerns known. Recent UNCTAD casestudies concluded that
themost significant problem thatexporters from developing countries hadfaced hadbeenalack
ofsufficient, up-to-date information. Inthisregard, ithadbeensuggested thatgovernments
consider further useofenquiry points, suchasthose established under theTBTAgreement.
These could provide information ontrade-related environmental measures, including those not
subject toformal notification requirements under GATT. TheSub-Committee maywanttopursue
thisfurther, although itwould beapartial response.
65. Hisdelegation alsoconsidered itimportant torecognize thatinternationally agreed
standards could playapositive roleinpromoting environmentally responsible products from
developed anddeveloping countries andthatenvironmental standards could serve toinduce
technological innovation. Inother words, highenvironmental standards could create market
opportunities. Onecaveat wasthatnewtechnology didnotnecessarily equate withenvironmental
superiority. Anexample wascoffee exporters whose natural jutepackaging waslessacceptable
thanplastic material because ofalackofrecycling facilities forjute. Fortunately, thisproblem
wasresolved. Heconcluded byrecognizing thework ontheeffect ofenvironmental measures on
market access thatwasunderway inanumber oforganizations, including UNCTAD andUNEP.
Hisdelegation wasparticularly grateful forthecasestudies prepared byUNCTAD. Their work
wascreating aninformation basethatcould beusedintheSub-Committee 'swork.PC/SCTE/M/5
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66. Therepresentative oftheCzech Republic noted thathisdelegation welcomed theattention
thatGATT/WTO waspaying toissues ofenvironment andsustainability. Hisdelegation was
following withinterest thisdebate which itunderstood tobeoneofthekeyareas, asrecognized
byUNCED, inapproaching amodel ofsustainable development onaglobal scale. Hisdelegation
wastaking thefloor foronlythefirsttimenowforatleasttworeasons: first, thebackground
documents, invitations (airgrams) andreports were reaching hisdelegation sometimes verylate
andhisdelegation washardly abletomobilize itslimited capacities toobtain thenecessary
expertise totakeactive andconstructive partinthedeliberations; second, asacountry
undergoing theprocess oftransition andprobably asanumber ofother countries, bothdeveloped
anddeveloping, hisdelegation hadsome problems withidentifying andspecifying itsposition and
interests within thecontext ofthecurrent trade andenvironment debate. Given therichness and
multidimensional nature ofthisdebate, there wasmuch ambiguity. Notonlycould hisdelegation
notbesurethatbyletting trade move more freely were environmental benefits automatically
obtained (hisdelegation firmly believed intheoverall positive effect oftrade liberalization), it
could alsonotbesurethatbypursuing honestly stricter environmental standards tohealthe
devastated environment andbysubscribing torelevant environmental conventions there wasno
violation ofexisting trading rules.
67. Finally, hisdelegation wasfarfrom surethatthepursuit ofabetter environment would
notundermine thecompetitiveness ofhiscountry 'srevitalizing industrial andservice sectors.
Thus, hisdelegation shared most oftheconcerns ofdeveloped countries, butalsomaintained a
good dealofunderstanding forarguments voiced bysome developing countries, especially those
trying toexpand themarket elements intheireconomies. Soregarding market access issues,
which embraced other points ofthework programme andwastheessence oftheGATT/WTO, it
wasfairtosaythatsubstantial andlasting uncertainties were tobedealtwith. Their elimination
mayperhaps startfrom clarifying thenotion of"environmental measures" andthenproceed by
reviewing andclassifying allkinds ofenvironment-related export andimport measures and
policies. Trade hadalways twosides andscrutiny should notbelimited tojustoneofthem.
Dealing withsuchdifficult issues could benefit immensely from casestudies andother in-depth
analysis, forinstant thatcarried outbyUNEP orUNCTAD.
68. Headded thatbeyond theenvironmental regulations notified under theTBTAgreement,
which were exposed indocument PC/SCTE/W/1, there wasawideareaofexisting orpotential
interference intrade. Thisareashould beinvestigated andmapped sothat,inthefuture, itwould
bepossible toname other barriers totrade (iftheywere found) andtosetsome guidelines to
distinguish better whatwasjustifiable andwhatwasnot.Oneofthefirststeps maybe
disseminating more information about national environmental measures, policies andstandards,
especially those withlikely trade implications. Thismayalsobecome partofanymechanism of
dispute avoidance. Although theconcept oftransparency maybetoooften cited, itwasstilla
prerequisite foranyfurther steps inthedesired direction ofmaking trade andenvironmental
concerns mutually supportive.
69. TheCzech Republic wasinitiating membership intheOECD withthelonger-term aimof
joining theEU. Thisimplied harmonizing efforts inallareas including theenvironment. His
government wasapproaching thistaskseriously, evenifitsrecovering economy wasstillfragile
andvulnerable tochanges ofbehaviour ofitstrading partners. Hisdelegation alsoshared the
concerns ofdeveloping countries trying toexpand market opportunities. Therefore hisdelegation
remained sensitive toarguments infavour ofacautious anddifferentiated approach tothe
harmonization ofenvironmental standards, taking intoaccount thedifferent circumstances and
possibilities ofindividual countries. Thisprocess would needtime, aswellasinternational (bothPC/SCTE/M/5
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bilateral andmultilateral) cooperation andassistance, capacity building andfulfilment ofother
preconditions. Hisdelegation waswilling toincreasingly work topromote cooperation thisarea.
70. Therepresentative ofUruguay supported thestatements bytherepresentatives of
Argentina andAustralia. Thesubject ofthisitemwasofparticular importance toher
government, partially because itwasseeninthecontext oftheUNCED conclusions. Asothers
hadindicated, market access wasahorizontal issue which alsocovered other aspects ofthework
programme. However, herdelegation considered thatthemain point ofthisitemwasthereview
oftheenvironmental benefits resulting from theelimination oftrade restrictions anddistortions, in
particular, intrade inagriculture. Inthisrespect, shesupported delegations whohadunderlined
thatoneofthefundamental tasks oftheSub-Committee wastoexamine thenegative
environmental effects ofsome practices andpolicies suchasprotectionist agricultural policies, and
alsotoexamine howsuchrestrictions onmarket access hampered development efforts ofsome
developing countries. These policies hadadouble negative effect ontheenvironment: there was
anover-exploitation ofenvironmental resources used, andthrough international trade this
distortion wastransmitted toproducers inother countries forcing them tooverexploit their
resources sometimes reaching dramatic conclusions suchasdesertification.
71. Regarding restrictions affecting themarket foragricultural goods, sheadded thatthe
results oftheUruguay Round were astepforward inthecontext ofthesustainable development
concept endorsed inUNCED. However, governments should bemore ambitious because trade
liberalization wasanessential component fordevelopment andbecause restrictions affecting
market access ofagricultural goods inparticular hadnegative environmental consequences. She
concluded thattheresults attained under thisitemwould represent anessential element in
evaluating globally theconclusion oftheentire process. Herdelegation would evaluate thefull
results oftheSub-Committee andtheCommittee, justasthework programme hadbeenevaluated.
Herdelegation hoped thatprogress would beachieved asquickly onthisitemasonother items.
72. Therepresentative ofKorea agreed thatthisitemcomprised awiderange ofissues andit
seemed difficult tomaintain afocused discussion atthisstage. Hetherefore made afew
preliminary observations. First, much discussion hadoccurred onthepotential impact of
environmental measures onmarket access invarious fora, suchastheEMIT Group, aswellasin
other international organizations. Heconsidered itdesirable tohavesynthesized results ofthese
discussions inorder tofacilitate apractical discussion here. Secondly, withrespect tothe
beneficial effects ofdoing away withtrade restrictions anddistortions, heagreed thattrade
liberalization would bring environmental benefits bypromoting theefficient allocation of
environmental andeconomic resources internationally, andalsobyimproving market access for
exports from developing countries.
73. However, thisassumption wasbased largely onapriori,andnotaposteriori reasoning.
Infact,there waslittleexperience ontheenvironmental impact oftrade liberalization. Thus,
empirical evidence from country specific orsector specific casestudies wasbeing accumulated by
relevant bodies. Some preliminary studies bytheOECD showed bothpositive andnegative
factors andindicated theneedforfurther conceptual andanalytical work, including afurther
elaboration ofthescope ofenvironmentally friendly products. Hebelieved thatfortrade
liberalization tohaveapositive impact ontheenvironment, effective environmental policies, in
accordance witheachcountry 'ssocio-economic andenvironmental condition, must be
implemented along withtrade liberalization.PC/SCTE/M/5
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74. Headded thatbecause afocused andcohesive examination ofthisagenda itemseemed
difficult atthisstage, itwould benecessary torevisit thistopic andnarrow itdown oncetheother
items ofthework programme hadbeencovered. Finally, hetouched upon theinstitutional
questions relating tothisissue. Market access issues were dealtwithintheCTD, andthere was
some overlap between thework oftheCTD andthisSub-Committee. Hisdelegation believed that
proper coordination between these twoCommittees wasdesirable.
75. Therepresentative ofHong Kong considered thattheSub-Committee should dealwiththis
itemonthepremise thatitwasalsoasubject tobedealtwithintheCTD. Nevertheless, itwas
uptotheSub-Committee todetermine whether thework already donecould beadvanced and
operationalized. Hesupported thenotion thatmarket access wasacross-cutting issue andwasan
integral partofmany oftheitems ofthework programme, although itwould bedealtwith
specifically under thisitem. Heagreed withthose delegations thatstressed thattrade liberalization
andtrade itself wastheprerequisite forenvironmental protection, thecreation ofwealth, and
effective andefficient allocation ofresources, andthatthiswasthebackground forfurther work in
thisarea. Theintervention bytherepresentative oftheUnited States appeared tocastdoubt on
thispremise. Ifso,thiscould apply tocertain isolated cases which could bespecifically
examined.
76. Heconsidered thattherepresentative ofArgentina hadgiven auseful exposition ofthe
issues behind thisitem, based onanalytical work donebytheOECD. However, theissues must
beseeninperspective tocome totherightconclusions asstressed bythestatement bythe
representative ofNigeria. Under thisitem, hebelieved thattheonlyrightconclusion wasthat
subsidies, likeanyother trade distortion, were badfortheenvironment and,assuch, should be
removed atsource. Thiswasnottosaythattheywere countervailable intheGATT sense
because intheremit ofGATT, countervailing duties were based on"injury" established inthe
importing country, notintheexporting country which would beextraterritorial and
extrajurisdictional.
77. Henoted thatanumber ofdelegations hadspoken oftheneedtoemphasize thesecond
partofthesixth iteminfuture work andhisdelegation supported this. Itwould benecessary to
understand howtrade barriers, tariff escalation, internal taxes, etc.inhibited individual countries
togetattherightpolicy thatstruck thecorrect balance between developmental needs andtheright
topreserve theenvironment. Inmany cases, hebelieved thatefforts toestablish therightmix
wasinhibited bywhatactually constituted theexport market. Further study would benecessary to
understand howthisaspect could betackled. Therepresentative oftheUnited States noted studies
thatindicated thattrade measures taken forenvironmental purposes hadminimal effects ontrade.
Hewondered whether thiswasquoted outofcontext. Itwould benecessary tocompare these
findings withtariff escalations, trade barriers, andquantitative restrictions which probably had
more significant effects. Thiswasevidenced inthenumber ofpanel cases inGATT which dealt
withtrade measures taken forenvironmental purposes.
78. Another point withwhich heagreed wasthatinorder toreduce theactual orpotential
adverse trade impact, there should beeffective transparency inawaythatthere would notbelocal
biasandthatallplayers would haveasay. Thisdidnotmean thathesubscribed totheideathat
transparency equalled participation byallinterested parties. Overall abalance hadtobe
maintained. Themore imminent problems would havetobeidentified. Therepresentatives of
Egypt andNigeria hadgiven interesting perspectives andfurther work would havetobalance the
various perspectives onthisissue.PC/SCTE/M/5
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79. Therepresentative ofSwitzerland considered thatthisitemcontained twoaspects which
were ofadifferent dimension andhadtobetreated separately: first, theaspect oftheeffect of
environmental measures onmarket access andsecond theenvironmental benefits ofremoving
trade restrictions anddistortions. Therefore, shedivided herintervention intotwoparts. Under
thefirstpart,sheconsidered thatthequestion ofmarket access intrade terms dealtwiththe
reduction orelimination oftrade barriers withthegoalofincreasing market access. This
objective wasmetintheUruguay Round especially byreductions intariffs, reductions in
non-tariff support inagriculture andreductions innon-tariff barriers totrade. Thestrengthened
andexpanded rules, procedures andinstitutions would increase thelegalsecurity formarket
access. However, market access wasnotjustdefined bytrade policies butalsobydomestic
policies suchasenvironmental policies which mayimpact oninternational trade. Ifenvironmental
policies were becoming more stringent andmore comprehensive, theirpotential effects onmarket
access andoncompetitiveness would bemore important. Environmental endowments,
assimilative capacities, social andintertemporal preferences hadimportant influences onthe
environmental priorities ofacountry. Thestage oftheeconomic development ofacountry but
alsoinstitutional structures which expressed orenforced environmental concerns inlegislation may
affect thechoice ofpresent andfuture environmental policies andgoals. Many developing
nations, however, lacked theinstitutional frameworks needed toconvert public opinion with
regard toenvironmental concerns intogovernment action.
80. Theimpact ofdomestic environmental measures especially bydeveloped countries on
market access inrelation todeveloping countries wascomplex anddepended ondifferent aspects.
Inherdelegation 'sview, market access could byanalyzed along fivelines: first, thetypeof
instrument suchastechnical specifications ofaproduct, packaging requirements, andvoluntary
measures sucheco-labelling; second, thecountries 'export structure; third, thestructure ofthe
firm, which wasspecifically concerned withsuchanenvironmental measure applied bya
developed country; fourth, theaspect ofunilateral environmental measures versus measures taken
pursuant toanMEA; and,fifththetypeofenvironmental problem onwhich theenvironmental
measure wasbased.
81. Without going intodetails, sheexplained briefly these aspects, starting withthefirst
aspect, thetypeofinstrument, anditseffects ondeveloping countries. Allmeasures hadtobe
applied onanon-discriminatory basis, inatransparent manner, andtheyshould beproportional.
However, developing countries mayfacespecific problems. Forexample, compliance with
specific technical specifications inoverseas markets maybelinked todifficulties concerning
adaptation tonewregulations, particularly regarding accession toenvironmentally sound
technologies. Another problem maybecosts ofaccess toconformity assessment systems. Also
packing requirements could present problems fordeveloping countries suchasincreased costs for
producers forprocedures suchastake-back obligations, deposit refund systems, compliance costs
ofchanging thedesign ofpackaging andorthematerial usedinorder tocomply withthe
environmental regulations ofimporting countries, andcompliance withrecycled content
requirements. Similar problems could beidentified alsoforeco-labelling schemes indeveloped
countries. Specific exporting firms from developing countries maytrytocompete withunlabelled
products ortheymaybecompelled toobtain alabelbyadjusting theproduct tospecific
requirements inorder nottolosemarket share. Criteria ofeco-labels based onprocess
requirements mayposeproblems fordeveloping countries 'export firms because ofalackof
access tothecorresponding technologies, rawmaterials andinformation.
82. Regarding thesecond aspect ofthemarket access problems -developing countries 'export
structure -market access problems foracountry mayexistwhen thedeveloping country wasPC/SCTE/M/5
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export-orientated. Ifdeveloping countries 'firms were mainly export-oriented, environmental
measures inoverseas markets mayaffect export opportunities ofadeveloping country duetocosts
ofcompliance. Particularly inthetextiles, footwear, andtimber sectors, compliance with
environmental measures intheimporting overseas countries mayaffect thetrade ofthese products
andthusthetrade balance. Moreover, opportunities formainly inward-oriented firms in
developing countries toraisetheirexports maybelimited astheymayfacedifferent compliance
problems forspecific product andprocess requirements inoverseas markets.
83. Athirdimportant aspect wasthestructure ofafirm. Larger firms andparticularly those
which dealtwithforeign buyers, maybebetter prepared tomeetenvironmental requirements in
overseas markets. They alsomayhavebetter access toinformation. Larger firms mayhavea
better financial basis toinnovate andtoadjust theirtechnologies. Given thatindeveloping
countries thesizeofthefirms maytraditionally besmaller thanfirms from thedeveloped
countries, these aspects were ofsignificance. Thatwaswhyspecial structures maybeneeded to
helpsmall enterprises havebetter access toforeign markets.
84. Regarding thefourth aspect ofunilateralism andmultilateralism, trade effects of
environmental measures taken pursuant toanMEA maybedifferent forcountries, particularly for
developing countries, thantheeffects ofunilaterally applied environmental measures.
Environmental measures applied pursuant toanMEA andapplied bymany countries created
higher pressure toproduce alternative products. Depending onthedeveloping countries firms,
suchmultilateral pressure mayleadtothedevelopment ortheincrease oftrade ofsuchalternative
products. Itwasdifficult toassess theoverall impact ofthese measures onthecompetitivity of
firms indeveloping countries. However, themultilateral environmental measures offered the
possibility todevelop these measures inaconcerted manner.
85. Regarding thelastaspect, thetypeoftheenvironmental problem, thequestion was
whether theeffects onmarket access duetodomestic environmental measures addressing localor
regional environmental problems were ofthesame dimension asmeasures applied pursuant toan
MEA. Theeffect onmarket access persemaybethesame, buttheconsequences concerning a
developing country 'sresource management maybedifferent. Itwasineachcountry 'ssovereignty
toapply highenvironmental standards. However, theapplication oftrade-related measures
applied bydeveloped countries fortackling strictly localenvironmental problems orevenregional
problems maycause difficulties fordeveloping countries. Inorder tomaintain acertain levelof
market access, developing countries would beforced todevote more resources tocertain
environmental improvements rather thanchoosing onthebasis oftheirownenvironmental and
developmental conditions andpriorities. Concerning MEA-based measures addressing global
environmental problems, which contained transitional periods andspecific financing mechanisms,
devoting resources toachieve aglobal environmental improvement maycorrespond more with
environmental anddevelopmental conditions andpriorities indeveloping countries astheurgency
oftackling global environmental problems waswidely recognized.
86. Sheconsidered thatthisbriefillustration listed some aspects which mayplayarolein
analysing market access problems fordeveloping countries. Toconclude, theanalysis ofthe
effect ofenvironmental measures onmarket access, especially inrelation todeveloping countries
wasextremely complex andwould require further analysis. Inthelongterm, theonlywayto
protect theglobal environment wasthrough international cooperation, notonlyregarding the
environmental measures themselves butalsoregarding theirtrade effects. Togetabetter
overview ofthese effects, casestudies ontrade effects ofspecific environmental measures for
specific developing countries would beuseful. Such studies hadalready beenmade especially byPC/SCTE/M/5
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UNCTAD anditwould behelpful fortheSub-Committee 'swork iftheSecretariat could prepare a
document onexisting analytical results.
87. Thesecond aspect ofthisitemrelated totheenvironmental benefits ofremoving trade
restrictions anddistortions. Removing trade restrictions meant especially reducing tariffs,
reducing non-tariff support especially inagriculture andreducing non-tariff barriers totrade. All
these elements would contribute toasteady elimination oftrade distortions. Furthermore, the
elimination andreduction oftrade barriers mayhaveapositive sideeffect: theenvironment may
profit from liberalizing trade. Shementioned some aspects ofenvironmental benefits. Firstwas
themacro-economic aspect ofliberalizing trade. Itcould beargued thateconomic growth may
haveanegative impact ontheenvironment. Theprediction ofwhatgrowth would dotothe
environment depended alsoonhowgrowth would affect theproduction ofpollution. Studies had
notshown anabsolute correlation between these twofactors. However, itmight bearather
narrow approach tolookjustatthese twofactors without taking intoaccount theeffect ofother
existing (flanking) policies. Moreover, economic growth mayenable governments totaxandraise
resources foravariety ofobjectives, including theabatement ofpollution andthegeneral
protection oftheenvironment. Economic growth mayalsoincrease awareness foragood
environment.
88. Asecond aspect wasthereduction oftariffs andnon-tariff barriers. Indeveloped and
developing countries agrowing market existed forenvironmental goods andservices, largely
because ofmore stringent environmental standards. Ashiftinthecomposition ofproduction had
developed major sectors, suchastheenvironmental equipment sector. Trade inthese sectors
depended onexisting trading conditions, andwould alsobenefit from thereduction oftariffs and
non-tariff barriers.
89. Athirdaspect wasthereduction ofsubsidies especially intheagricultural sector.
Government protection stillexisted forparticular industry sectors. Subsidies were particularly
prevalent intheagricultural sectors, especially indeveloped countries. Inthecontext of
international trade andtheenvironment, agricultural subsidies presented several major problems.
Misallocation ofresources mayincrease environmentally damaging farming practices, suchassoil
salinisation brought onbyover-irrigation withsubsidized water, anddamage toaquatic ecosystems
through run-off ofsubsidized pesticides. Reduction insubsidies fortheagricultural sector may
leadtoareallocation ofresources andpromote agriculture inother countries, which benefited
from amore appropriate production context. Thismayleadinthemiddle andlongterms tomore
environmental friendly agricultural production. Without presenting acomplete picture of
environmental benefits duetoliberalizing trade, itcould beconcluded thatremoving trade
restrictions could foster theproduction ofmore environmentally friendly products, butitwasnot
sufficient ifnotaccompanied byenvironmental measures. Inthatsense, therealeffect ofthe
reduction andelimination oftrade barriers depended largely ontheentire policy framework and
priorities ofacountry.
90. Therepresentative ofMalaysia, speaking onbehalf oftheASEAN countries, noted that
theUruguay Round hadresulted inanimpressive market access package. Therecent analysis
undertaken bytheGATT Secretariat highlighted thebenefits thatcould begained byboth
developed anddeveloping countries. According tothestudy, global income wasenvisaged tobe
boosted byUS$510 billion peryearbythetimemarket access commitments were fully
implemented intheyear2005 because oftheresulting market opening. Thereport alsoprovided
thefollowing impressive estimates ofannual income gains: US$122 billion fortheUnited States;
US$164 billion fortheEuropean Union; US$27 billion forJapan; andUS$116 billion forPC/SCTE/M/5
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developing andtransition economies asagroup. Thisanalysis alsopointed outthatdeveloping
countries were expected tosecure anevengreater expansion intrade: a14percent increase. The
report alsohighlighted thefactthattheUruguay Round hadbrought about theelimination of"grey
areameasures" andtherestoration ofsome discipline ontheuseofanti-dumping measures. His
delegation considered thattheSecretariat could nothavefactored intheenvironment inthe
analysis. Theprospects ofmarket access were largely based onliberalization measures tobe
implemented overthose years.
91. After having attained theabove market access package, hebelieved allgovernments would
bekeentoseethefruitoftheirefforts translated intotangible results. Thatofcourse would only
bepossible iftheWTO would come intoeffect. Further, hisdelegation noticed disturbing trends
emerging including theintroduction ofenvironmental conditionalities which threatened tonegate
theimpressive results pointed outbytheSecretariat report. Headded thatnewchallenges were
arising from "grey areameasures "turning into"green areameasures" which ineffect hadthe
potential impact ofstifling trade. Specifically, there wasalready legislation being introduced
which prohibited thebuilding ofofficial buildings withtropical timber. What thiseffectively
meant wasthatthetrade potential thatwasenvisaged from market access concessions could notbe
realized because ofthiskindofmeasure being introduced without regard toscientific evaluation
butrather motivated more bypolitical expediency. Themarket access package wasinrealdanger
ofbeing a"white elephant". Inthelongruntheemergence ofconditionalities associated withthe
environment would onlymake contracting parties feelshort changed. Itwaspertinent thatthisbe
avoided inthelong-term interest oftheinternational trading system.
92. Therepresentative oftheEuropean Communities gavesome preliminary views onsome of
thepoints covered bythisitem. UNCED concluded thattrade, environment andsustainable
development should beapproached inaintegrated manner, andthatpolicies inthose fields should
bemade towork inamutually supportive way. Anumber ofprinciples andconcepts agreed at
Rioshould benoted, astheymayberelevant tothisitem. Principle 2wasofimportance, inthat
itacknowledged thesovereign rightofstates toexploit theirownresources pursuant totheirown
environmental anddevelopmental policies, butalsoimposed onthem theresponsibility toensure
thatactivities within theirjurisdiction orcontrol didnotcause damage totheenvironment ofother
states orofareas beyond thelimits ofnational jurisdiction.
93. Principle 4oftheRioDeclaration stated that"inorder toachieve sustainable development,
environmental protection should constitute anintegral partofthedevelopment process andcould
notbeconsidered inisolation from it".Ontheother hand, Principle 6affirmed that"thespecial
situation andneeds ofdeveloping countries, particularly theleastdeveloped andthose most
environmentally vulnerable, should begiven special attention. International action inthefieldof
theenvironment anddevelopment should alsoaddress theinterest andneeds ofallcountries".
AlsoPrinciple 11oftheRioDeclaration wasrelevant inthisdiscussion, inthatitspecified that
while "states should enact effective environmental legislation, standards applied bysome countries
maybeinappropriate andofunwarranted economic andsocial costtoother countries, inparticular
developing countries". Finally, Principle 12,inparticular itsfirstsentence, provided that"States
should cooperate topromote asupportive andopeninternational economic system thatwould lead
toeconomic growth andsustainable development inallcountries, tobetter address theproblems of
environmental degradation".
94. Aswasacknowledged byUNCED, theconclusion oftheUruguay Round hadbeena
major stepforward. Freetrade facilitated theefficient allocation ofresources. Themain result of
thiswasthat,through theprinciple ofcomparative advantage, eachcountry specialised inthePC/SCTE/M/5
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production ofgoods inwhich itwasmore efficient. Thisresulted inhigher world welfare. Inall
these ways, removing tariff andnon-tariff barriers notonlyhadapositive impact interms of
wealth andstandards ofliving measured inmonetary terms, butmayalsohaveapositive impact
ontheenvironment provided thattheappropriate environmental policies were adopted.
Consequently, alsoforenvironmental reasons, thebenefits oftheUruguay Round should nowbe
finalized through ratification andimplementation andthework ofthisSub-Committee should
continue toproceed constructively.
95. Asfarasenvironment anddevelopment were concerned, themajor taskwastorender
compatible andsupportive therighttoenvironmental protection atahighlevel, withtherightof
allcountries, butparticularly lessandleastdeveloped countries, tobenefit from trade, through
agreed market access. Thefirstpartofthisequation, namely therightofWTO members toadopt
ahighlevelofdomestic environmental protection, wasclarified intheUruguay Round texts, in
particular inthePreamble oftheWTO Agreement which acknowledged theimportance of
"seeking tobothprotect andpreserve theenvironment". Furthermore, thePreambles ofthe
TBTandSPSAgreements clarified thatnoWTO member should beprevented from adopting and
enforcing measures necessary toprotect human, animal, orplant lifeorhealth, andthe
environment, subject, ofcourse, totheconditions contained inthose Agreements.
96. Atthesame time, hisdelegation believed thattheUruguay Round Agreements
substantially further developed theapproach, already presented forexample inPartIVofthe
General Agreement, toallow intheframework ofthenon-discriminatory trading system more
favourable treatment toLDCs, especially LLDCs, taking account oftheirspecial needs and
specific problems. The1979 Tokyo Round Decision ofDifferential andMore Favourable
Treatment, Reciprocity andFuller Participation ofDeveloping Countries wasunderpinned bythe
same spirit. More specifically, theSPSandtheTBTAgreements provided forthepossibility ofa
consensual decision togrant special anddifferential treatment toLDCs. Forexample, Article 10,
paragraph 3oftheSPSAgreement provided forthepossibility thattheSPSCommittee grant
LDCs specific time-limited exceptions from obligations under theSPSAgreement. Hisdelegation
found particularly interesting forpurposes ofthisdiscussion Article 10,paragraph 2oftheSPS
Agreement, which provided that,"where theappropriate levelofsanitary orphytosanitary
protection allows scope forthephased introduction ofnewsanitary orphytosanitary measures,
longer time-frames forcompliance should beaccorded onproducts ofinterest todeveloping
country members soastomaintain opportunities fortheirexports".
97. TheTBTAgreement, while envisaging, inArticle 12.8, asimilar possibility forthe
TBTCommittee asfortheSPSCommittee, i.e.togrant time-limited exceptions infavour of
LDCs, alsoputemphasis ontheaspect ofproviding (Article 12.7), onconsensual terms, technical
assistance todeveloping countries "toensure thatthepreparation andapplication oftechnical
regulations, standards andconformity assessment procedures donotcreate unnecessary obstacles
tothediversification andexpansion ofexports from developing countries". There were many
similar provisions intheUruguay Round Agreements which were notnecessarily exclusively
related toenvironmental protection butwhich urged developed countries tohavespecial regard to
thespecial situation ofdeveloping country members when using measures which could havea
negative effect ontheiraccess tomarkets. Forinstance, Article 15oftheAntidumping
Agreement recommended that"special regard must begiven bydeveloped country members tothe
special situation ofdeveloping country members when considering theapplication ofanti-dumping
measures..." Afinalexample wastheDecision onMeasures inFavour ofLeast Developed
Countries, which wasadopted inMarrakesh andwhich recognized "thespecific needs ofleastPC/SCTE/M/5
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developed countries intheareaofmarket access where continued preferential access remains an
essential means ofimproving theirtrading opportunities".
98. These provisions showed thattheGATT/WTO system wasprepared toallow acertain
degree offlexibility todeveloping countries regarding theircompliance withrules, ifthatwould
beinappropriate given theirspecific problems. Itmight beconsidered that,when dealing withthe
inter-relationships between environmental protection, market access anddevelopment, asimilar
approach could bepursued. Forinstance thepossibility could beconsidered thatdeveloped
countries, when introducing environmental measures affecting inparticular market access for
developing countries, should consider whether itcould bepossible touseadifferentiated schedule
forcompliance, suchasatime-limited exception from complying withtherelevant obligations, or
other forms ofphase-in orphase-out periods. Another option was,asindicated inthe
TBTAgreement, toensure thatdeveloped countries positively consider granting technical and/or
financial assistance, onconsensual terms, todeveloping countries inorder tohelpthem comply
withnewenvironmental regulations.
99. Anoteofcaution wasnecessary though. Especially withregard tophase-in periods, it
wasessential thattheybecompatible withachieving theenvironmental aim. Inother words, such
time-limited exceptions should notcreate theriskofundermining theenvironmental objective ofa
measure. Article 10,paragraph 2oftheSPSAgreement provided agood model inthesense that
longer timeframes forcompliance could begranted onproducts which were ofinterest to
developing country members, butonlywhere theappropriate levelofsanitary orphytosanitary
protection allowed scope fordoing so.Asimilar approach could alsobeimagined for
environmental measures, where thatwasappropriate. Such anapproach could beconsidered by
negotiators ofMEAs when measures which either directly orindirectly affected trade were
considered. However, itwasuptothose negotiators ofMEAs todecide whether thegranting of
phase-in periods tolessandleastdeveloped countries would beenvironmentally sustainable.
100. Finally, withregard tospecial treatment fordeveloping countries, anapproach which
would betheother sideofgranting phase-in periods while theyimprove theircapacity tomove to
higher environmental standards could beconsidered. Thiswould grant special treatment interms
ofmarket access forproducts whose characteristics orwhose method ofproduction hadbeen
internationally recognized asenvironmentally friendly. Hisdelegation would beinterested tohear
theviews ofother delegates, especially ofdeveloping countries, onsuchanapproach.
101. Headded thatanimportant instrument toavoid unnecessary effects ofenvironmental
measures onmarket access waseffective transparency andinformation dissemination. Especially
exantetransparency could helpavoid clashes between environmental protection andmarket
access. Thisissue could befurther discussed inthefuture under thefourth itemofthework
programme. Forthemoment, hesimply noted thatthemodels ofArticle 2oftheUruguay Round
TBTAgreement, aswellasofAnnex BoftheSPSAgreement could beuseful, i.e.topublish
exantenotices ofmeasures which didnotconform tointernational standards orwhere there were
none, toreceive comments anddiscuss those upon request. Ofcourse, aswasgenerally agreed in
theEMIT Group, transparency obligations should notbecome soadministratively burdensome that
theywould beunworkable.
102. Headded thatanumber ofdelegations hadmentioned thepossible negative environmental
effects duetotrade distortions andtheenvironmental benefits ofremoving those distortions, in
particular thedelegation ofArgentina withrespect toagriculture. Hisdelegation considered that
asfarasthese negative environmental effects would indeed occur, itcould notbeunderlinedPC/SCTE/M/5
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enough thatagreat stepforward wasalready being made bytheUruguay Round since themarket
access improvements stemming from theRound provided enhanced possibilities forproduction to
takeplace incountries which hadtheenvironmental capacity tocarry itoutinanenvironmentally
efficient manner. AlsotheUruguay Round Agreement onAgriculture could beconsidered to
increasingly allow production totakeplace insuchcountries andatthesame timeallow increased
market access fordeveloping countries. Itshould beunderlined thattrade liberalization mayvery
wellbring environmental benefits provided thatthecountries benefitting from thatliberalization
applied appropriate environmental policies. Ifincentives from theRound would therefore lead
some countries tochange agricultural production strategies ormethods, thisshould be
accompanied bythecorrect policy instruments which should alsotakeintoaccount the
environmental impact ofagriculture.
103. Finally, headded thatseveral countries, including developing countries, adopted non-tariff
measures onanumber ofproducts inthenatural resource andrawmaterials sectors. These
measures provided anartificial competitive advantage todomestic producers incomparison to
foreign competitors. These measures could begrouped intothree categories: thesupply ofraw
materials tolocalproducers atlower prices thanworld market prices, export restrictions onraw
materials, anddifferential export taxes applied torawmaterials andtoprocessed products. His
delegation considered thatitwaspossible thatincertain cases these policies could impact
negatively ontheenvironment through inefficient allocation ofresources andover-exploitation by
localproducers using those natural resources. Therefore, inanydiscussion ontheenvironmental
benefits ofremoving market restrictions anddistortions, thisissue should alsobetaken into
account andfurther analyzed.
104. Therepresentative ofIndia agreed withthefundamental hypothesis thattrade liberalization
wascrucial andthatitreleased resources fordeveloping countries toafford better environmental
protection. Herealized thatforsome developed countries there were excessive levels of
consumption andother factors which might leadthem toquestion thathypothesis. Hisdelegation
believed thatifmarket access wasnotavailable andiftrade liberalization wasnotpossible through
anopen, non-discriminatory andequitable multilateral trading system, itwould havedisastrous
consequences forenvironmental protection indeveloping countries. Thiswould havetobe
accepted unconditionally iftheSub-Committee wastoproceed further onthisitem.
105. When speaking oftheeffect ofenvironmental measures onmarket access, themeasures
being discussed, according totheSub-Committee 'smandate, were charges andtaxes, requirements
forenvironmental purposes relating toproducts including standards, packaging, labelling, and
recycling. Also, theissue oftransparency wasrelevant formarket access. Asfarastheeffect of
these measures onmarket access wasconcerned, hisdelegation envisaged three possible effects:
obstacles totrade fordeveloping countries which would affect market access; competitiveness
concerns could arise, although theevidence wasnotconclusive inthisregard, andleadtoeffects
onmarket access; andgoods andservices notbeing allowed market entry onthese grounds. His
delegation considered thattheSecretariat paper could lookatthese three possible effects. Only by
looking atthedegree towhich market access wasaffected indeveloping countries andatthe
product range which wasofimportance todeveloping countries could adispassionate analysis of
theeffect ofenvironmental measures onmarket access ofinterest todeveloping countries bedone.
106. Heconsidered thatultimately theSub-Committee 'sanalysis based ontheabove criteria
should leadtosome prescriptions. Heasked howmarket access, which wassocritical tothe
environmental protection ofdeveloping countries, could beachieved while atthesame time
enabling achievement ofsustainable development. Hisdelegation believed thattighter disciplinesPC/SCTE/M/5
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andclearer rules were necessary forthese environmental measures. Ifnot,there would bea
tendency towards protectionism andabuse andthiswould haveanegative impact onmarket access
fordeveloping countries. Hisdelegation alsobelieved thatitwasnecessary tofollow theroute of
MEAs based oninternational consensus. Itwaspossible thatthiswould create anunavoidable
negative impact onmarket access, inwhich casehisdelegation would propose thatthere would
havetobesome mechanism forfinancial assistance andtechnology transfer within thecontext of
thatMEA.
107. Hislastpoint wasthatunilateral trade measures forenvironmental purposes almost always
affected market access fordeveloping countries because thenotion ofunilateral trade measures
wasthatstronger countries could impose measures onweaker ones. Apart from thefactthatsuch
measures were based onunacceptable principles, hisdelegation believed thattheywould affect
market access, would leadtodepletion ofvaluable resources andintheultimate analysis would be
counter-productive totheachievement ofsustainable development. Hesuggested thattheSub-
Committee beinclose contact withUNCTAD which haddonesignificant work inthisareawhich
could beofuse. Itwould alsobeuseful towatch whattheCTD wasdoing inthisarea. Inthe
finalanalysis, thesafeguarding ofanopen, non-discriminatory, andequitable multilateral trading
system would guarantee market access fordeveloping countries.
108. Headded thatthere were specific areas where removal oftrade restrictions anddistortions
could beforeseen, suchastheareas oftextiles andagriculture. Heagreed withtherepresentative
ofHong Kong interms ofwhatsubsidies didintheareaofagriculture. Heconsidered thatthe
biggest threat tomarket access wasgreen protectionism. Intheareaoftextiles, forthepast
thirty years there wasanarbitrary quota regime inwhich trade restrictions were imposed on
products exclusively from developing countries. Now, asaresult oftheUruguay Round, there
wasadefinitive commitment toeliminate theMultiFibre Arrangement intenyears time. Atthe
same timethere wasasudden interest inprocess andproduction methods intheareaoftextiles.
Thenatural inclination wastobelieve thatthere wasalinkbetween these twotrends which
indicated protectionism. Thiswasthetypeofanalysis thathisdelegation expected. Thehistory
ofinternational trade hadindicated thatwhere there wasthepossibility ofcompetitive advantage
fordeveloping countries, there hadbeenanattempt toimpose restrictions onewayoranother.
Developed countries hadadutytoshow thatthiswasnotthecase. Forthose whogenuinely
believed insustainable development, thiswould notbethecasebuttheonuswasonthem toprove
this.
109. Therepresentative ofSweden, speaking onbehalf oftheNordic countries, considered that
indiscussing theeffect ofenvironmental policies onmarket access itwasimportant toestablish
thatthisconcerned environmental problems which allcountries hadacommon responsibility to
solve. Theconcern forenvironmental protection waswidespread andcould notbeignored. In
many countries there wasanincreasing consumer demand thatwould affect thepattern of
international trade. Herdelegation 'sviewwasshaped bythefactthatitwascomprised ofsmall
andopeneconomies, heavily dependent onexports. Therefore theyshared theconcern ofmany
developing countries thatenvironmental protection could bemisused asameans forhidden
protectionism. However, theroleofenvironmental protection asabarrier totrade must notbe
overemphasized incomparison toanumber ofother factors which made trade farfrom free.
110. TheNorth-South dimension could bemisused asapretext fordelaying theintroduction of
more ambitious environmental standards atatimewhen these were needed. Thisshould notbe
allowed tohappen. Thechallenge wastofindways toimplement sound environmental policies
while atthesame timetaking careofthevitaleconomic anddevelopment interests oftheleastPC/SCTE/M/5
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developed countries, forinstance byuseofgrace periods andtheprovision oftechnical and
financial assistance when formulating environmental policies. Itwastooeasytofocus on"green
protectionism" while forgetting other forms ofprotectionism towards theleastdeveloped
countries. Environmental measures andrequirements hadapositive impact ontheenvironment as
wellasondevelopment inthedeveloping countries. Some measures hadbeenestablished upon
therequest andunder pressure from developing countries. Forinstance under theBasel
Convention itwasagreed toprohibit exports ofhazardous wastes from OECD tonon-OECD
countries. Thiswasoriginally aproposal from theG77countries. IntheFAO the
Nordic countries hadrecently given theirsupport toaprocess forstringent restrictions ontrade
withdangerous chemicals based onPrior Informed Consent. Alsointhiscasetheinterest from
developing countries hadbeenstrong. Alsoinaprotocol onbio-safety under theBiodiversity
Convention, Prior Informed Consent would beacentral element. Thedeveloping countries had
beenandwere stillfrontrunners ofthisproposal.
111. Herdelegation believed thatthere were environmental benefits tobegained from
removing trade restrictions andimproved market access onaworld-wide level. TheUruguay
Round hadresulted inanumber ofimprovements fordeveloping countries 'opportunities for
market access. However, itcould gofurther. Thegoalwasclear -tomake room fortrade and
environment tobemutually supportive. Freer trade would enhance economic growth overall and
improve theeffective allocation ofresources ifenvironmental concerns were alsotaken into
account. Herdelegation hadfourpoints tomake ontheways inwhich increased market
opportunities could beachieved.
112. First, transparency andaccess toinformation wasofvitalimportance inensuring that
environmental measures would notbecome anunnecessary obstacle totrade. Here, theTBTand
SPSAgreements oftheUruguay Round were useful examples. These Agreements included
provisions ontransparency aswellasontheestablishment ofnational enquiry points andefficient
notification procedures. Oneopportunity toenhance market access fordeveloping countries was
eco-labelling systems which could promote environmentally friendly products. Toensure thisit
was,however, important thatproducers alsoindeveloping countries were abletocontribute in
setting therelevant criteria. Apart from scientific criteria, shealsoconsidered thatthe
Precautionary Principle wasrelevant. Eco-labelling systems were auseful toolinstriving fora
sustainable society. They hadaspects relating totrade which maybetechnical andcomplicated
andneeded tobediscussed further. Forinstance, whether mutual recognition could beawayto
improve market access wasoneissue which could beexplored further, possibly inexpert groups.
Inthisrespect, theUNCTAD AdHocWorking Group might supply useful input.
113. Second, inorder toimprove export possibilities itwasimportant thatenvironmentally
sound technologies were made available toasmany countries aspossible. TheUruguay Round,
onceimplemented, would facilitate technology transfer. Theintention oftheTRIPs Agreement,
forexample, wastoenhance opportunities forcompanies toinvest inforeign countries, asit
ensured thatthevalue oftechnology wasnotlost. Thiswaytechnological know-how would
spread more evenly across theworld. Studies, suchasthose oftheOECD, hadshown thatan
important prerequisite fortechnology transfer wasappropriate national environmental legislation.
Thiswould force companies toinvest inenvironmentally sound technology which wasnot
necessarily much more expensive. Here theroleoftechnical assistance fortheleastdeveloped
countries wascrucial. Legislation anditsimplementation would havealarger impact than
additional financing. Butthere wasaneedtogofurther. Therefore, herdelegation supported
international work ontrade andinvestment anditsimpact onmarket access, technology transferPC/SCTE/M/5
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andtheenvironment. Animportant waytoensure thediffusion oftechnological know-how was
through greater predictability andstability innational rules andpractices.
114. Third, thereform andliberalization oftrade inagricultural goods included inthe
Uruguay Round andtheintegration ofthetextiles andclothing sector intotheWTO system would
bring sizable benefits tothedeveloping countries. Aninteresting topic forfurther analysis would
alsobetheimpact ofsubsidies ingeneral. Thisanalysis should aimatassessing boththeimpact
onmarket access ofdeveloping countries aswellastheimpact ontheenvironment inexporting
andimporting countries. Fourth, another feature inthecontext ofmarket access wastariffication
anditsimpact ontheenvironment which would merit further analysis. Toconclude, shehad
presented ideas which would increase opportunities formarket access without compromising
appropriate environmental policies thereby promoting thecommon goalofsustainable
development, increasing thestability andpredictability ofthemultilateral trading system and
making thetrading system mutually supportive withenvironmental protection. Sheconsidered
thatnextyeartheCommittee should focus itsdiscussion further onsome oftheitems ofthework
programme, inorder tofulfil itsterms ofreference. Atthesame time, shestressed theneedto
ensure fulltransparency foralldelegations when working withtechnical questions. Only by
deepening thework could itbeensured thattheCommittee could present results andappropriate
recommendations tothefirstMinisterial meeting oftheWTO.
115. Therepresentative ofMexico considered thatthesixth itemhadtwodistinct facets which,
although related, should bedealtwithseparately: (i)theeffect ofenvironmental measures on
market access, especially inrelation todeveloping countries, inparticular totheleastdeveloped;
and(ii)consideration ofthepossible benefits totheenvironment ofremoving trade restrictions
anddistortions. Regarding thefirstaspect, herdelegation shared theviewexpressed byothers
thatitshould beconsidered asa"cross cutting issue" present indiscussions onallother subjects
ofthework programme. ThiswasinlinewithChapter 2ofAgenda 21which concerned aspects
thatwere fundamental fortheinternational trading system suchasthepromotion ofmarket access
asacatalyst foreconomic development andconsequently forsustainable development, especially
thatofdeveloping countries.
116. Itshould bepointed outthatthetrade impact ofenvironmental measures onmarket access
could affect notonlydeveloping butalsodeveloped countries. Nevertheless, itmust beborne in
mind thattheglobal impact andthesecondary effects ofsuchmeasures maybemore important
andharmful fordeveloping countries inviewoftheirsituation andtheirspecial needs inthearea
offinance andtechnology. Inaddition, trade wasavitalprerequisite forthesustainable
development ofdeveloping countries. Thiswasfullyrecognized inthebasic principles and
recommendations arising outofRioandherdelegation didnotbelieve thatitshould be
questioned. Trade wasthemost important channel through which these countries could have
access tomonetary resources thatwould allow them totakeaction aimed atensuring
environmental protection andtheconservation ofnatural resources. Regarding thisitem, the
imperative needwastoensure theeffective andgrowing integration ofdeveloping countries inthe
international trading system through greater andmore predictable access tomarkets thatwas
equitable, non-discriminatory andnon-conditional.
117. Inherdelegation 'sview, thequestion ofmarket access should beconsidered from
twoperspectives. Ontheonehand, aneffort should bemade toseekforms andmechanisms to
increase market access forexports from developing countries sothatthelatter could obtain the
resources necessary toimprove standards ofliving andinvest inenvironmental protection. The
rapid implementation oftheresults oftheUruguay Round would constitute animportantPC/SCTE/M/5
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contribution inthisregard, eventhough there were other unexplored channels which might be
discussed, forexample, those mentioned byCanada, Brazil andothers, suchasgraduated tariffs.
Another interesting channel toconsider wastheexport potential ofdeveloping countries in
environmental services and"environmentally friendly" products, forexample, natural materials
forpackaging whose utilization hadproved tobemore efficient from theenvironmental point of
viewthanthematerials currently utilized invarious packaging andrecycling programmes in
developing countries.
118. Ontheother hand, itwasvitaltocreate thenecessary means toguarantee thepreservation
ofmarket access thatdeveloping countries already hadandforwhich theyhadpaid, inviewofthe
possible effects oftrade distortions arising outoftheimplementation ofenvironmental measures.
Thismeant thatconsideration oftheissue ofmarket access should cover boththe"positive"
aspect, consisting ofexploring newopportunities andnon-conditional preferences forexports from
developing countries (onwhich thisSub-Committee could initially baseitself onstudies already
carried outbyother bodies suchasUNCTAD andtheITC), aswellasonthe"negative" aspect,
consisting ofidentifying, monitoring anddealing withenvironmental regulations whose effects
maycause possible losses ornullification ofexisting access. Thislatter element wasofcrucial
importance because oneofthemajor concerns ofdeveloping countries today wasnotonlygreater
market access butalsohowtoconserve themarket access theyalready had. Thetrade restricting
ordistorting effects ofenvironmental measures maybearesponse tolegitimate measures and
criteria, although theymust nothaveanysignificant negative impact onmarket access andthe
competitiveness ofexports from developing countries, buttheycould alsobearesult of
protectionist aims.
119. Ithadbeennoted thatcertain measures which maybelegitimate suchasthose concerning
therequirements ofenvironmental packaging andlabelling programmes hadeffects which could
practically nullify market access because itwasdifficult forforeign suppliers tomeetthecriteria
onwhich theywere based. Suppliers could suffer anegative impact onthecompetitiveness of
theirproducts, evenwhen these were found onthemarket, because ofthestrong influence such
programmes hadonconsumer preferences. Theimposition ofsuchcriteria inprogrammes and
standards (especially those related toPPMs) forimports from developing countries raised serious
problems ofmarket adaptation andinmany cases could result incounterproductive effects, even
ontheenvironment, bothinthecountry enforcing themeasure andinthecountry obliged toadapt
toit.
120. Inviewofthepossibility thatsuchsituations would become more commonplace astheuse
ofmeasures andrequirements forenvironmental purposes increased, itwasvitaltoidentify and
monitor measures thatmight havethiskindofimpact onmarket access, particularly for
developing countries. Thiscould bedonewiththehelpofadatabase, asdiscussed intheCTD
andproposed byBrazil, which could benefit from thework already undertaken byother bodies
suchasUNCTAD aswellasthecontributions made bycountries participating inthis
Sub-Committee. Once these measures hadbeenidentified, theireffectiveness andtheneedfor
theirapplication toimports from developing countries (including possible secondary effects)
should bestudied together withpossible mechanisms toberecommended bythisSub-Committee
inorder toovercome sucheffects, forexample, greater transparency, mutual recognition and
equivalency ofstandards andrules, aswellasfrom thecreation ofstricter regimes forcertain
requirements andmeasures.
121. With regard tomeasures laiddown inMEAs, generally acknowledged tobelegitimate
because theywere supported byabroad international consensus, sheawaited withinterest thePC/SCTE/M/5
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study bytheSecretariat ontheireffectiveness, especially concerning countries which were not
parties tosuchagreements. Thisstudy could highlight, inparticular, aspects which concerned
developing countries andthedirect orindirect effect ofapplying these measures tomarket access
fortheirexports inparticular, andtothedevelopment process asawhole. Itwasalsoprobable
thatdistortional effects onmarket access were theresult ofmeasures which mayrespond to
criteria withprotectionist objectives. Thebestwaytoactinorder toavoid and/or rectify this
trend would befortheSub-Committee 'swork toadhere strictly tothebasic principles and
recommendations ofUNCED, inparticular those which stated, firstly, thatenvironmental
problems must beattacked attherootandnotnecessarily through trade restrictions; secondly,
thatenvironmental problems within acountry which didnotaffect other countries should be
resolved bythenational authorities, through appropriate policies thatwere consistent withits
objectives andpriorities andwithitsownenvironmental anddevelopmental situation; thirdly, that
environmental problems which wentbeyond national frontiers andhadtransboundary orglobal
effects should beresolved through international cooperation andconsensus.
122. Another principle which herdelegation believed wasessential tobearinmind andwhich
should betaken intoaccount horizontally throughout thediscussions inthisSub-Committee
concerned thediffering responsibilities among States inthepursuit ofsustainable development in
lightoftheirdifferent contributions toglobal environmental degradation andinviewofthe
differences intheirability toobtain technologies andfinancial resources. Lastly, shereferred
briefly tothesecond aspect ofthesubject under consideration, namely, theenvironmental benefits
ofremoving trade restrictions anddistortions. Thisaspect wasalsoofvitalimportance.
Argentina, Australia andBrazil, among others, hadhighlighted theurgent needtodealwithtrade
restrictions anddistortions which hadanegative effect ontheenvironment, especially those which
rancounter totheefficient allocation ofenvironmental resources suchasagricultural subsidies,
causing among other problems over-exploitation ofnatural resources, inparticular of
commodities. Although shewasinterested inseeing thetrading system contribute tobetter
environmental protection andtheachievement ofsustainable development, thisaspect could notbe
leftaside andshould bediscussed indetail within theframework oftheWTO.
123. Therepresentative ofJapan agreed thatthisitemhadwide-ranging scope andwasa
cross-cutting issue intheentire work programme. Itcould besaidthattheeffect ofenvironmental
measures onmarket access andenvironmental benefits ofremoving trade restrictions and
distortions were central themes oftheSub-Committee 'sdeliberations. Asthescope oftheterm
"environment" wasbroad andnoteasytodefine, thescope of"measures forenvironmental
purposes" wasalsoverywide-ranging. Theeffect ofenvironmental measures onmarket access
would vary, depending onmany elements suchasthescope andnature ofthemeasure, who
should takethemeasure, forwhatpurposes, towhom itshould beapplied, atwhich stage
(production, exportation, distribution, importation, consumption, etc.), etc.
124. Market access issues, therefore, could arisenotonlybetween developing anddeveloped
countries, butalsowithin developed countries. Furthermore, suchissues could arisewithin
developing countries andevenbetween companies located inacountry. Many delegations,
including Argentina, theUnited States, Egypt andNigeria hadillustrated wellhowcomplex,
far-reaching andevenuncertain these issues andtheirimplications maybe.These considerations,
hisdelegation believed, underlined theneedforacase-study approach. Generalized arguments
could runtheriskofmissing many important aspects. Totrytowrite alegalprescription atthis
stage could leadtohasty conclusions, which would becounter-productive. Inthisregard, his
delegation appreciated theanalysis bytheSwiss representative.PC/SCTE/M/5
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125. Several guiding concepts hadbeensuggested inthediscussions, suchasnational
treatment, themost favoured nation principle, transparency, necessity, leasttrade restrictiveness,
unnecessary obstacle tointernational trade, arbitrary orunjustifiable discrimination between
countries where thesame conditions prevailed, disguised restriction ontrade, andavoidance of
unilateral application ofdomestic standards andregulations toobjectives outside thejurisdiction of
thecountry taking themeasure. These concepts should betaken intoaccount asthecasestudy
approach waspursued. Ithadbeenwidely recognized thattheincrease inincome generated by
trade expansion wasamajor source offurther efforts forbetter environmental protection, andthat
successful conclusion oftheUruguay Round wasanimportant contribution tosustainable
development. Themost urgent tasktotackle wastoratify theUruguay Round Agreements as
scheduled andtoimplement theresults quickly andingood faith. TheCommittee should continue
todiscuss avariety ofissues positively andconstructively, withaviewtoensuring thatbothtrade
measures forenvironmental purposes andnon-trade measures which could havetrade impacts
would beanother stepforward inthedirection ofmaintaining andoffurther strengthening the
rules anddisciplines ofthemultilateral trading system.
126. Therepresentative ofNewZealand agreed thatthisitemwasacross-cutting issue andwith
anumber ofcomments made bydelegations regarding theinverse relationship between trade
protectionism andenvironmental protection andsustainable development, especially inthe
agricultural sector. Thegeneral starting hypothesis forallcountries thattrade underpinned
sustainable development wasuncontrovertible, asanumber ofstudies hadshown, although in
some cases there wastheconsequent needforcomplementary environmental mechanisms,
particularly inthedomestic context. Regarding comments bytheUnited States, hepresumed that
thestudies referred tohadconcentrated onmajor industrial economies andpointed tothelackof
animpact ofenvironmental measures oncompetitiveness particularly because ofthepositive
effects ofstandards inpromoting efficiency andalsooftheireffect inthedevelopment of
associated environmental industries andservices.
Itemoneofthework programme
127. Therepresentative ofColombia considered thatstudy ofthisitemshowed thattheproblem
wastodetermine whether aprocedure tomake MEAs consistent withGATT provisions should be
established. Hisdelegation believed thistobethecaseandthatthisexercise should commence by
recognizing thefactthatanumber ofMEAs contained trade clauses. Hisdelegation considered it
would bepreferable toavoid theinclusion ofsuchclauses inagreements which, bytheirvery
nature, hadobjectives thatwere notinaccord withtrade regulations, butrecognized thatin
practice itwasnoteasytomake suchaclear delimitation. Bearing inmind theindisputable
premise thatGATT, andthefuture WTO, wastheforum from which therules oftrade emanated
andinwhich trade disputes were settled, itwasnecessary toformulate some principles toensure
thatpresent andfuture commitments inthemultilateral trading system which regulated trade
relations among itsmembers were notnullified orjeopardized onthepretext ofpostulates
regarding protection oftheenvironment. Inother words, GATT could notallow theopening of
anecological window through which short-term protectionist measures mayenter.
128. Inorder tohaveconsistency between MEAs andGATT regulations andtoavoid undue
interference, itwasnecessary todefine some specific criteria within GATT/WTO regarding the
appropriateness andeffects ofincluding trade measures inMEAs. Inthisconnection, his
delegation shared theviews expressed byanumber ofdelegations thatsuchcriteria should include
aspects suchasnon-discrimination, national treatment, theneedforthemeasure anditsscientific
basis, transparency, proportionality, effectiveness, andthatthecriteria should betheleastPC/SCTE/M/5
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restrictive possible. Hisdelegation found interesting andwell-meaning theideathatthere should
beex-post monitoring oftrade measures inMEAs, although thismight giverisetolongand
complex procedures which would undoubtedly include disagreements regarding thecompetence
andlegitimacy oftheWTO tocarry outsuchaqualification procedure. Themost appropriate
wayofensuring thatthese measures were consistent withthecriteria adopted within GATT/WTO
would betodecide that,intheevent ofanytrade dispute arising outoftheprovisions ofthe
MEA, theparties totheMEA should havetherighttoresort totheWTO dispute settlement
mechanism andthatthisforum should decide inlightofitsprovisions. Such anoption would
provide anappropriate procedure thatwould avoid obstructions anddelays intheliberalization of
trade.
129. Therepresentative ofIndia referred totheintervention ofthedelegation ofthe
United States atthelastmeeting under thisitemofthework programme andsaidthe
United States hadimplied thattheuseoftrade sanctions could bejustified inthecontext ofan
MEA because MEAs were vague, broad, difficult toachieve, maynottakeintoaccount all
relevant factors, andmany might nothaveworked. Hisdelegation would notaccept thenotion of
trade sanctions merely because there were some issues andproblems thatwere encountered in
MEAs. Trade sanctions created many problems forthemultilateral trading system which were a
lotmore difficult toresolve thantheissues related toworking outapossible MEA. There was
alsoapresumption bytheUnited States thatanexantesolution wasabsolutely necessary. Hedid
notconsider thattheSub-Committee hadreached theprescriptive stage yetandhisdelegation, as
many others, wasconsidering alloptions. Inaddition, theUSintervention hadreferred toseveral
MEAs inwhich theideaoftrade sanctions wasentertained forenforcement orimplementation ofa
prevailing scientifically-based environmental norm. Again, hisdelegation hadconcerns andwould
havetoexamine thiscarefully.
130. Therepresentative ofNewZealand noted thattheUnited States intervention hadmade the
point thatboththeUSenvironmental andbusiness communities were lessthanhappy withthe
current situation. Butnegative perceptions, perse,should notbethebasis forchanging therules.
Theperceptual problem highlighted thefactthatthisprocess would helptoimprove understanding
oftheissues, astheEMIT Group haddone, sothatthesubstantive work could bebased ona
thorough analytical approach. While hisdelegation agreed thatthere wasaplace fortrade
measures under MEAs, subject toappropriate disciplines, theUSstatement thattrade measures
could beappropriate to"enforce orimplement aprevailing scientifically-based international
environmental orconservation norm" raised anumber ofquestions. Hisdelegation would
question whether inthese circumstances trade measures were necessary. Alternatively, would an
MEA notbepossible insuchcases andcould notamore appropriate vehicle foranytrade action
beenvisaged? Hisdelegation would beinterested inanelaboration ofthispoint.
131. Henoted thattheUnited States recalled thelimitations ofMEAs. However, didthese in
themselves detract from thedesirability ofreaching multilateral consensus ontheuseoftrade
measures? Forexample, howdidthese supposed limitations compare withthelimitations of
unilateral action, e.g.effectiveness? These were afewofthequestions which occurred tohim,
andhewould findituseful iftheUnited States could provide further elucidation ofthese points
when theCommittee returned tothisitemnextyear.
132. Therepresentative ofCanada considered thebasis ofthediscussion onMEAs tobea
recognition thattheonlyappropriate andeffective waytoaddress environmental issues atthe
international levelwasthrough multilateral cooperation. Hisdelegation would notexpect trade
measures tonecessarily bearegular feature ofMEAs. ThishadnotbeenthecasesofarandPC/SCTE/M/5
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trade measures were infactnotafirstbestsolution. Nevertheless, there might beinstances inthe
future where trade measures were proposed. Insuchcases, hisdelegation could seemerit inthe
basic principle thatiftheinternational community decided toadopt anMEA thatenjoyed
broadly-based support andparticipation, thentheGATT rules should notbeanarbitrary
impediment toprovisions fortheuseoftrade measures thatmight beincluded. Hisdelegation
agreed thatitwasnecessary toconsider howbesttoprevent possible conflicts between such
provisions inanMEA anditsparties 'obligations under theWTO.
133. Insupporting multilateral approaches, hisdelegation alsostrongly rejected unilateral
actions. Itdidnotbelieve thatthere wasanybasis forproviding authority intheWTO fortheuse
ofunilateral trade penalties toapply environmental programmes orstandards extra-territorially. It
wasnotforonecountry oraminority ofcountries todecide forothers whataction should be
taken domestically orintheglobal commons. There must beagreement onwhatneeded tobe
done. Multilateral agreement maynotmean 100percentparticipation. Thethreshold ofsupport
thatcould constitute international consensus might varyfrom case-to-case depending onthenature
oftheproblem andtheprogramme tobeused. Having ameans torecognize agreements that
reflected actual international consensus, andnotjustthenature ofthenegotiation process, would
becritical toanyapproach foraccommodating potentially GATT-inconsistent trade measures in
MEA's.
134. Hisdelegation wastroubled bytheUnited States 'suggestion thataccommodation should
befound intheGATT/WTO rules fortrade restrictions usedbyanindividual country toapply or
toenforce whatwasreferred toas"aprevailing scientifically-based international environmental or
conservation norm". What would bethenature ofsuch"norms"? How would thisconcept be
defined? Intheabsence ofanMEA thatenjoyed broadly-based support andparticipation, onwhat
basis could itbesaidthatsomething didinfactrepresent anorm? Intheabsence ofagreement
under suchanMEA onspecific trade measures toimplement orenforce it,onwhatbasis would
theuseofsuchmeasures beauthorized intheWTO? Itseemed tohisdelegation thattheplace for
decision-making about enforcement measures forinternationally agreed environmental programmes
wasintherelevant environmental forum during thedevelopment andnegotiation ofanMEA
itself. TheWTO wasnottherightplace formaking these judgements. Indeed, tolooktothe
WTO forauthority tousetrade penalties insituations where there wasnotagreement onthe
environmental issue orprogramme would betocasttheWTO intheroleofdeciding
environmental policy andacting asanarbitrator between WTO Members onmatters relating to
environmental policy. Thiswasnotthebusiness oftheWTO.
135. Itwastherejection ofanyrolefortheWTO insecond guessing MEA'sthathadledtothe
discussion ofexanteasopposed toexpostapproaches, withsome delegations insisting onthe
former. Theproblem herewasthattoprovide ageneral, exanteexception forany
GATT-inconsistent measures thatmight betaken inconnection withanMEA, before even
knowing whatthatMEA anditstrade restrictions consisted of,would amount toablank check.
Delegations hadgenerally agreed thatthiswasnotdesirable. There must besome reasonable
checks andbalances, whether through theestablishment ofclear criteria setting outwhattypes of
measures might beacceptable orthrough anexceptions procedure withsome control mechanisms.
136. Atanappropriate stage inthework itwould benecessary tolookmore closely atpossible
approaches. With respect totheexceptions procedure issue, thepurpose asfarashisdelegation
wasconcerned would notbetosubject theMEA itself oritsenvironmental objectives to
provisions ofscrutiny intheWTO. Rather, thefocus would beonaddressing specific trade
measures under anMEA inthecontext oftherights andobligations governments hadassumed inPC/SCTE/M/5
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theGATT. Those rights andobligations should notbetaken lightly orsetaside without due
process. Itwasforthisreason thatitwould benecessary toknow whatwastobeexempted from
therules andonwhatbasis thatshould bedone. Thiswould callforacase-by-case consideration
ofexceptions requests relating totrade measures specifically andformally called forinanMEA
thatreflected broad international consensus ontheenvironmental programme anditsenforcement.
When thetimewould come, there might beanumber ofoptions thatcould bediscussed.
However, more analytical work would havetobedoneonMEAs, aswellasontheother items on
thework programme, before theSub-Committee wasinaposition toagree onthenature and
extent oftheproblems thatmight needtobeaddressed andhowbesttoproceed.
137. Therepresentative ofBrazil saidtheissue oftherelationship between MEAs andthe
multilateral trading system wasanimportant one. Given thatenvironmental policy makers had
feltitnecessary, insome cases, toadopt attheinternational leveltrade measures with
environmental purposes, potential problems ofcompatibility mayindeed occur. Although no
concrete problem hademerged, itwould beuseful towork towards greater certainty and
orientation bothforenvironment andtrade policy makers. From theprevious analysis inthe
EMIT Group, itwaspossible tounderstand thatanumber ofpossible GATT-illegal trade
measures adopted inthecontext ofMEAs could findjustification under Article XX,like,for
instance, quantitative restrictions applied onanMFN basis thatcould satisfy therequirements of
theexceptions ofArticles XX(b) orXX(g). Butitwasalsopossible toidentify atleasttwobasic
situations inwhich thedirect application ofArticle XXwould poseproblems, namely theuseof
trade measures toimpose PPMs extrajurisdictionnally andtheuseofdiscriminatory trade
measures against non-parties.
138. Inthecaseofsituations which were possibly compatible withArticle XX,itwould be
useful toreassure those thatfeared thattheArticle wasnotexplicit about environmental measures,
while reasserting thebasic principles under which those exceptions tothegeneral GATT rules
operated. Incases where Article XXmight notbedirectly applied, asolution should befound to
avoid problems intheoperation oftrulymultilateral environmental agreements. Before examining
possible solutions, some basic assumptions would havetoberecognized byall;hisdelegation
believed thatpastdiscussions pointed towideconvergence onthefollowing three points.
(i) GATT/WTO wasnotanenvironmental policy making institution andshould
therefore avoid discussing environmental policy options andrelative efficiency ofmeasures
enshrined onMEAs. Although trade wasacomponent ofsustainable development, only
totheextent thattrade measures were usedforenvironmental purposes attheinternational
levelinMEAs would environmental measures become anissue inthemultilateral trading
system.
(ii) Inorder toallow forproper absorption oftheconsequences ofMEAs inthe
multilateral trading system, itwasessential thattheyreflect atrueinternational consensus,
achieved intheappropriate environmental negotiating fora. Itwould beprejudicial tothe
WTO tobefaced withanattempt tolegitimize otherwise inconsistent trade measures
adopted inanMEA thatwould notbebacked byinternational consensus, since itwasnot
expected thatsuchaconsensus could bereached within GATT. Atthesame time, it
would beunacceptable thatMEAs beusedasaninstrument toforce onother countries,
through trade, behaviour desired byoneorafewother countries. Multilateralism could
notbeusedtolegitimize unilateralism.PC/SCTE/M/5
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(iii) Inorder toreduce potential problems, theprinciple thatenvironmental problems
should betackled attheirrootshould beemphasized inenvironmental fora, reducing the
useoftrade restrictions towhatwasreally necessary.
139. InpastGATT discussions onthisissue, hisdelegation hadsupported theideaofexploring
asolution onthelinesofaninterpretation ofArticle XX,eventually involving presumption of
conformity forqualified MEAs, andhadsupported thegeneral thrust oftheproposal bythe
European Communities intheEMIT Group. Hisdelegation remained opentoother proposals,
andnoted thatsuggestions hadbeenmade thatother approaches, liketheArticle XXV:5 orthe
Article XX(h) approaches could beexplored. Hisdelegation 'ssupport oftheArticle XX
interpretation wasbased ontwomain aspects thatshould bepresent inanyproposed solution.
First, thesolution should provide aclear incentive forthemultilateral course ofaction indealing
withenvironmental problems ofatransboundary nature through theprovision ofaclear
orientation ontherelationship between MEAs andthemultilateral trading system. Inthiswayit
could beconsidered thatatrueMEA, although timeconsuming, would provide foranundisputed
solution withabetter chance ofsuccess. Thisorientation would notimpinge ontheenvironmental
options made bytheMEA drafters, butrather onconditions ontheuseoftrade restrictions. To
achieve those objectives, thesecond aspect wasthatthesolution should beanexanteone.
140. Inthisdirection, atleastfourareas would require discussion:
(i) Criteria would beneeded todefine themultilateral character ofanagreement
which would require discussion ofthefollowing aspects: openness ofthenegotiating
process androleofUNsponsorship, producer andconsumer participation, where relevant,
therange ofthelevels ofdevelopment andgeographical distribution ofparticipants, and
theissue ofregional agreements toexamine howtodealwithpotential trade effects on
non-regional countries;
(ii) Criteria would needtobedeveloped onwhathadbeentermed the"specificity"
issue toavoid theuseofMEAs asjustification forunilateral actions; anMEA should be
clear onwhich trade measures should beadopted under itsprovisions, aswellasthe
circumstances fortheiradoption;
(iii) Some form ofassurance ofenforceability ofMEA trade restrictions ontrade
among parties, according totheMEAs 'rules, tojustify theirapplication tonon-parties,
andifsuchprovisions would presuppose dispute settlement procedures intheMEA; and
(iv) Whether itwasfeasible todistinguish, assuggested intheEuropean Communities
proposal, between discriminatory trade measures necessary toachieve theobjectives ofthe
MEA andpunitive sanctions toforce acountry tojoinanMEA, without entering intothe
environmental discussion oftheobjectives andmethods chosen bytheMEA.
141. Hisdelegation 'sstatement didnottrytobring newproposals oraspects intothe
discussion, noranswer comments made intheprevious meeting, but,rather, showed where it
stood inrelation tothemain aspects ofthediscussion. Hisdelegation hoped thatthese
propositions could coincide withthebasic views ofmany delegations.
142. Therepresentative ofAustralia noted thatthepurpose ofhisstatement wastooffer some
reflections onthediscussion attheprevious meeting onthisissue. Inparticular, hepointed to
fiveimportant themes thatseemed toemerge from thediscussion: onlyasmall number ofMEA'sPC/SCTE/M/5
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contained trade provisions; many trade provisions inthissmall number ofMEA'smaybefully
consistent withthemultilateral trade rules; theGATT hadalways recognized theexistence of
certain overriding public policy objectives, andhadaccommodated these objectives through the
general exceptions ofArticle XX. Consequently, accommodation inthemultilateral trading rules
fortrade measures taken pursuant toMEA'sinorder toachieve overriding public objectives
would notappear tocreate anyproblems inprinciple forthemultilateral trading system.
However, italsoneeded tobeemphasized thatArticle XXimposed anumber ofcarefully defined
disciplines ontheapplication oftrade measures taken toachieve theoverriding public policy
objectives covered byArticle XX.
143. Unilateral resort totrade restrictive measures posed fundamental challenges tothe
multilateral trading system anditsbasic principles ofencouraging mutually advantageous
cooperation between countries ontrade issues. Bycontrast, there should benoinherent conflict
between international cooperation ontrade andinternational cooperation inanother areas suchas
theenvironment, asboththemultilateral trading system andMEA'swere based onthesame
search forequitable andcooperative solutions toissues ofglobal concern. Thechallenge wasto
ensure thatinternational cooperation ineachareawascompatible withandsupportive of
international cooperation inother fields.
144. Thediscussion highlighted andcontrasted theexanteandexpostapproaches to
accommodating trade measures taken pursuant toMEA'sinthemultilateral trading rules.
However, thedelegations ofArgentina andKorea hadpointed tothepossibility ofacombined
approach which drew ontheattractive features ofbothapproaches. Inthiscontext, itwasperhaps
useful todraw attention totheArticle XX(h) approach anditsinterpretative noteinregard to
measures taken pursuant toobligations under intergovernmental commodity agreements.
Interestingly, thisapproach combined three alternative means ofaccommodating suchmeasures:
ifthemeasures were under agreements which conformed toasetofprinciples approved bythe
Economic andSocial Council in1947; ifthemeasures were under agreements which conformed
tocriteria submitted totheCONTRACTING PARTIES andnotdisapproved bythem; andifthe
measures were contained inindividual agreements thatwere submitted totheCONTRACTING
PARTIES andnotdisapproved bythem. Some ofthediscussion attheprevious meeting seemed
tosuggest theneedtochoose between theexanteandexpostapproaches which involved amenu
ofoptions asinthecaseofArticle XX(h) orwhich, atleast, combined theuseofgeneric criteria
tocover some situations withprovision foracase-by-case examination forothers.
Reflecting onthese themes mayhelpgainabetter sense oftheproper dimensions ofthe
issue. Hisdelegation suggested thefollowing observations might beworth further consideration:
(i) Itmaybethecasethatthesituations where trade measures were necessary forthe
achievement oftheenvironmental objectives ofanMEA were relatively small innumber;
(ii) Even when trade measures were included inanMEA, there maybesignificant
scope forachieving theenvironmental objective concerned through measures which were
fullyconsistent withthemultilateral trade rules;
(iii) There maybeonlyalimited number ofMEA's,andalimited range oftrade
measures, thatrequired accommodation inthemultilateral trade rules asexceptional
measures thatserved certain overriding public policy objectives, soitmaybepossible to
develop afairly specific setofguidelines orcriteria todealwiththese situations while, atPC/SCTE/M/5
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thesame time, taking aforward-looking approach andensuring thatanyguidelines or
criteria were flexible enough tocater toarange ofdifferent situations.
145. Therepresentative ofHong Kong considered ituseful tomaintain aregular dialogue on
thisitembecause hisdelegation believed thatthiswastheareawhere theSub-Committee might be
abletoachieve some early results andsendapositive signal totheenvironment world. Regarding
apoint made bytherepresentative ofIndia andearlier bytherepresentative ofCanada ontheuse
oftrade sanctions tosupport anMEA, itwasabasic factthat,under GATT, governments signed
away thisrightvis-à-vis other contracting parties. Given thatthere wasnorighttousetrade
sanctions, itfollowed thatresort totrade sanctions would havetofindcoverage under the
exception rules oftheGATT. With respect totherules onburden ofproof, whenever the
exception rules were resorted toGATT jurisprudence saidthattheywould havetobeinterpreted
most narrowly andthattheburden orproof would always beontheparty seeking coverage.
Resort totheex-ante approach versus theex-post approach would change this. Regarding the
comment made bytherepresentative ofColombia ontherighttodispute settlement, henoted that
thiswasarightunder GATT andwould assure governments ofstability andpredictability inthe
multilateral trading system. Thisrightcould notbegiven upeasily which waswhyanex-ante
approach wasaverydrastic oneifitmeant giving ablank check ofanykind.
146. Furthermore, regarding Sweden 'sreference totheprecautionary principle, which waswell
recognized intheenvironmental field, hepointed outthatitinherently conflicted withwhathad
become knows astheprinciple ofnecessity. TheSub-Committee would havetoreturn tothis
issue toseewhere abalance could befound. Hesubscribed tothepoints byNewZealand and
Canada that,inwhatever exercise undertaken, theSub-Committee must notattempt to
accommodate unilateral action orextraterritorial action intheGATT. Thiswould havetobe
handled withcareandonacase-by-case basis. Theobjective should betwofold: tooffer some
incentive formultilateral solutions totransboundary orglobal problems, andnottooffer an
encouragement tousetrade measures inMEAs, especially trade measures thatwould be
inconsistent withtheGATT. Henoted hisinterest intheinterventions made bythe
representatives ofAustralia ofBrazil. Hisdelegation wasnotinsisting thatthere beoneparticular
approach; there could beahybrid ofthevarious alternatives, buttheCommittee must proceed
withcaution andmust notenter theprescriptive stage prematurely.
147. Therepresentative oftheUnited States saidhisdelegation would undoubtedly return toa
number ofthepoints thathadbeenmade andthequestions thathadbeenraised notonlyearly
nextyear, butprobably onanongoing basis. Serious discussion ofMEAs andthevarious options
thathadbeenlaidoutwould require more detailed analysis andcommentary. Itwould also
require abetter recognition andunderstanding ofthebackground toMEAs, inparticular the
process ofdecision making thatwentintothem, recognizing thatthenegotiators ofthose MEAs
considered theuseoftrade measures notapreferred option therecord would show, butgavedue
consideration andreflection totheissue. Totheextent thatthese negotiations tookadecision on
thenecessity andtheexpected effectiveness ofthose trade measures (adecision taken inthe
context ofabroader agreement involving environmental objectives) there hadtobecertain respect
forthatdecision andthepackage. Thiswasoneoftheunderlying reasons forhisdelegation 's
preference foranex-ante approach. Nevertheless, itwasimportant toexamine alloftheideas
andtheirimplications thathadbeenputforward andwould beputforward later. Itwasalso
important torecognize thatthere were differences inMEAs. Trade measures inthem didnot
always playthesame roleandthismight berelevant aspossible solutions were considered.PC/SCTE/M/5
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148. Hisdelegation 'sintervention attheprevious meeting spoke oftrade measures, notof
sanctions. Alotofmention hadbeenmade ofsanctions andofunilateralism, andheconsidered
thatsome countries practised theveryconcepts which theyseemed toberejecting inthis
Sub-Committee. Itwasimportant tounderstand thatunilateralism hadmany forms andshapes.
Unilateralism could mean acountry onitsowndeciding theconditions formarket access for
certain products inawaythatdisadvantaged foreigners because ofthecontainer inwhich their
imports presented themselves attheborder. Itcould taketheform ofcountries choosing ontheir
owntoadminister conservation concepts beyond theirterritorial borders through measures other
thantrade measures butwhich were, nevertheless, unilateral. There were allsortsofways in
which countries acted inaformal sense unilaterally, iftheonlyalternative wasaction under an
MEA. Infactinimplementing MEAs, national action wasnecessary togiveeffect tothem.
Thus, inthinking about these issues, carewould beneeded. Heunderstood thesensitivities on
unilateralism andheemphasized thathisdelegation wasnottalking anddidnottalkabout
sanctions initsprevious intervention. Butitdidbelieve thatexamination wasneeded ofthe
variety ofsituations which would giverisetotheuseoftrade measures sometimes pursuant to
recognized MEAs, sometimes pursuant tonorms which maynotnecessarily intheminds ofallbe
MEAs butwhich hadadegree ofinternational legitimacy.
149. Therepresentative ofJapan stated thathisdelegation could notshare theUSapproach on
thisissue. Theuseoftrade measures inMEAs, aswellasunilateral measures, hadarange of
problems which deserved serious andcareful analysis intheSub-Committee. Heshared the
concerns expressed bytherepresentatives ofNewZealand, Canada, andAustralia andsupported
theBrazilian intervention. MEAs should notbeusedasapretext forunilateral measures orfor
protectionist purposes. Hisdelegation would liketopursue thisissue more carefully andnotina
hasty manner toreach asatisfactory conclusion.
150. Therepresentative oftheEuropean Communities wasinterested inthesuggestions by
several delegations onawiderange ofapproaches ranging from fullex-antetofullex-post .His
delegation hadmade itspreference foranexanteapproach clear. Thisdidnotmean thatitwould
notconsider theinteresting ideas putforward carefully. Henoted thathisdelegation hadnever
considered theexanteapproach asafullblank check. MEAs should fulfil certain conditions asto
theiropenness during negotiation andtheirlevelofparticipation specifically ofproducer countries.
Also, where MEAs provided forcertain measures butdidnotspecify exactly which, iftheylefta
large margin ofdiscretion intheirapplication ofmeasures, including trade measures, itshould be
possible toexamine howthespecific trade measures usedtoimplement anMEA related toGATT
testslikenotaffording protection todomestic production andthose intheheadnote ofArticle XX.
151. With respect tothepoint made bytheHong Kong representative thattheburden ofproof
should beontheparties totheMEA, henoted therepresentative ofAustralia 'sintervention
referring toArticle XX(h). Article XX(h) spoke about submitting agreements which could either
fulfil pre-agreed conditions orother constructions suchasthattheagreements would havetobe
explicitly disproved ofbythecontacting parties andfuture WTO members orthattheburden of
proof would benotnecessarily ontheparties tothespecific commodity agreement. His
delegation welcomed theintervention bytherepresentative ofBrazil andwasinterested inhisthird
point ontheassurance ofenforceability ofMEA trade restrictions ontrade among parties. This
would deserve further consideration asithadnotbeenraised before.
152. Therepresentative ofSweden, speaking onbehalf oftheNordic countries, underlined that
shehadnotheard anydelegation advocating giving ablank check tonegotiators ofMEAs. Ifthe
existing alternatives were tobeexamined, thenitwasimportant tohaveaclear perception ofwhatPC/SCTE/M/5
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theywere. Herdelegation considered thattheexanteapproach would contain criteria thatshould
determine whatwould becounted asanMEA eligible forexception under GATT. Relevant
parameters could bethelevelofglobal representation, extent ofparticipation ofcountries
concerned withtheissue athand, iftheMEA wasopenforaccession byallgovernments, etc.
Another important issue wastowhatextent thetrade measures would havetobespecified inthe
MEA. Aminimum, important requirement wasthattheMEA could establish thattrade measures
were necessary andthattheyhadalinktotheenvironmental problem. Criteria would alsohave
tobeestablished thatwould provide thebasis forthedemand thatGATT/WTO would place on
thetrade measures taken. Thecriteria should include concepts suchasleast-trade restrictiveness,
effectiveness andother suchcriteria. Thiswould provide guidance forthenegotiators ofMEAs
andnational governments when implementing them.
153. Therepresentative ofArgentina noted thatattheprevious meeting, hisdelegation had
made aproposal which attempted toreconcile twodifferent approaches. Heconsidered thatthe
Australian proposal atthismeeting wasextremely interesting andwanted towork further on
looking intothepossibility ofapplying Article XX(h). Hisdelegation wasconcerned thatafterso
much effort toseehowtodealwithtrade provisions orclauses which might beincluded in
MEAs, itwasimportant toensure thatwhen acertain window wasopened, protectionist measures
would notslipin.Many ideas hadbeenputforward, including thatunilateral measures maybe
taken. Thelatter didnothelpprogress inthediscussions. Unilateralism didexistandwasalways
apossibility, butinfactithadtobedetermined where theenvironmental externality was. Wasit
inonemarket, onejurisdiction, orwhere wasitlocated? Ifitwasinonejurisdiction, then
obviously unilateral measures maybetaken within certain limitations. Externalities outside one
jurisdiction andinseveral jurisdictions ormarkets andthose affecting theglobal commons were
theonesreferred towhen MEAs were discussed. Forthose externalities acooperative attitude
hadtobeadopted. Itwasonthisparticular criteria thathisdelegation proposed aflexible
approach which would reconcile thepredictability oftheexanteapproach, would respect the
decisions taken byenvironmental negotiators, andatthesame timewould avoid anyblank check
andwould givetheflexibility ofacase-by-case analysis inlightofthespecific measure taken.
154. Hisdelegation frankly didnotwanttogiveflexibility andallow unilateralism atthesame
time; itwaseither flexibility orunilateralism. Hisdelegation would liketosetunilateralism
aside. Inorder tomake progress andtoreach some sortofphase where theSub-Committee could
begin toevolve rules, theSub-Committee must reach anagreement andanunderstanding ona
clear renunciation ofunilateral measures ifthere were externalities which affected more than
market oronejurisdiction. These must beapproached withacooperative attitude. Thus,
cooperation andflexibility should bethealternatives tounilateralism.
Itemthree ofthework programme
155. TheChairman introduced apublication submitted bythedelegation oftheUnited
Kingdom, entitled "Making Markets Work fortheEnvironment". Itwaspublished in1993 bythe
UKDepartment oftheEnvironment andexamined indetail sixtypes ofeconomic instruments:
emission charges, tradeable permits, product charges, deposit andrefund schemes, legalliability
andsubsidy. Itlooked athowtheyworked, howtheycould beimplemented, andhowtheycould
bemonitored.
156. Therepresentative ofArgentina drew attention tothemeeting oftheUNCTAD Adhoc
Working Group onTrade, Environment, andSustainable Development, thefocus ofwhich would
beeco-labelling andenvironmentally friendly products. Itwould beuseful iftheSub-CommitteePC/SCTE/M/5
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could givesome guidance onwhatitexpected from thatwork. Thiswould beonewaytoinitiate
coordination between inter-governmental organizations. Henoted thattheUnited States '
submission oneco-labelling (PC/SCTE/W/5) setoutmany points andconcerns which should be
discussed under eco-labelling. Itflagged aseries ofquestions onwhich itwould beuseful tohave
input from other organizations which could dealwiththemore technical details. Forexample, he
highlighted thepoints insection IV:B ofthesubmission which would benefit from other
organizations 'input, specifically withregard totheenvironmental justification ofmeasures. The
Sub-Committee should havefullinput inthetrade andenvironment discussions going on
elsewhere.
157. Therepresentative ofBrazil noted thatduring theSeptember meeting ofthe
Sub-Committee, some delegations hadmanifested doubts about therelationship between
eco-labelling schemes andtheAgreement onTechnical Barriers toTrade. Inorder tocontribute
tothatdebate, hisdelegation presented apreliminary analysis oftheproblem mainly inthelight
ofthenewAgreement onTechnical Barriers toTrade thatresulted from theUruguay Round. The
issue involved twomain questions: first, toanalyze howcomplex eco-labelling schemes fitinto
thecoverage oftheAgreement andsecond, todetermine thelevelofobligations involved
according tothenature ofthescheme (mandatory versus voluntary, governmental versus
non-governmental).
158. Theestablishment ofaneco-labelling scheme inmost cases would involve three activities:
setting ofprocess andproduct standards ortechnical regulations, setting ofalabelling standard or
technical regulation andsetting ofaconformity assessment procedure. Eco-labelling, therefore,
wasatthesame timealabel, asetofstandards andaconformity assessment procedure. Thefact
thateco-labelling schemes involved stipulations bothabout product characteristics andabout PPMs
wasattheorigin ofmost ofthediscussion oftherelationship between eco-labels andthe
TBTAgreement disciplines. Thetrade andenvironment debate brought totheforefront the
discussion onthevalidity ofapplying toimports (therefore affecting international trade)
regulations thatdistinguished among products onthebasis oftheirPPMs, evenifthose were not
reflected inthecharacteristics ofthefinalproduct. While notentering intothisdebate, he
recalled thattheadequacy inenvironmental andtrade terms ofasking foreign producers toadopt
environmental behaviour which tookintoconsideration domestic conditions hadbeenstrongly
challenged.
159. Inconsequence, some seemed toquestion theapplicability oftheTBTAgreement to
eco-labelling inorder toavoid legitimizing trade distinctions among products based onPPMs not
reflected inthecharacteristics ofthefinalproduct (PPMs unrelated totheproduct). According to
thisview, ifthose PPMs were considered tobecovered bytheTBTAgreement, there wasarisk
thatthiswould beinterpreted asmeaning thatGATT "recognized", therefore "allowed", theuse
ofrestrictions onimports based onPPMs unrelated toproducts. More specifically, iftheiruse
were tobeconsidered tobesubject tothenational treatment discipline, thismight beunduly
construed soastomean thattheirapplication toimports would beallowed (border adjustment), as
longasdomestic production wasalsosubject tothesame PPM requirements. There was,
nevertheless, ageneral recognition thatGATT rules applied toproducts andguaranteed market
access toproducts, independent oftheirproduction conditions, andhisdelegation remained ofthe
viewthatthiswasanessential characteristic ofthemultilateral trading system.
160. More worrying wasthefactthatthere were those whoseemed toquestion theapplicability
oftheTBTAgreement toeco-labels simply toavoid anydiscipline onitsuse. TheTokyo Round
TBTAgreement clearly excluded PPMs from itsscope, independent oftheirrelation tothePC/SCTE/M/5
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product. Although excluded from thedefinitions ofstandard andtechnical regulation, theissue
wasatthecentre ofoneofthefewdisputes thathadarisen: thedispute overtheECdirective that
prohibited imports ofmeatfrom hormone treated animals. Itwasthiscasethatwasontheminds
ofthenegotiators ofthenewTBTAgreement when thefirstproposals toinclude PPMs inthe
agreement were made. Theinclusion ofcertain PPMs inthecoverage ofthenewTBT
Agreement, therefore, responded toapreoccupation withPPMs thataffected thefinal
characteristics ofaproduct. Accordingly, theconcept ofrelatedness totheproduct waspresent in
thedefinitions ofstandards andtechnical regulations found inAnnex 1ofthenewAgreement.
161. Hisfirstconclusion then, wasthat,totheextent thateco-label schemes created standards
(iftheywere voluntary) ortechnical regulations (iftheywere mandatory) stipulating product
characteristics orPPMs related tothose product characteristics, theywere subject tothe
disciplines oftheTBTAgreement andthebodies thatproduced those standards ortechnical
regulations should beconsidered standardizing bodies. Thiswasthecase, forinstance, ifthey
created theirownstandards onthedefinition ofthedegradability ofaproduct instead ofusing
existing ones. Thiswasnotthecaseifthescheme created astandard ofsulphur emissions which
wasnotrelated totheproduct. Itwasinteresting tonotethatthefactthattheAgreement didnot
trytoregulate whatwentbeyond theproduct reflected apreoccupation ofnotinterfering witheach
countries 'prerogative ofestablishing theprocess standards itconsidered more appropriate forits
domestic conditions, including thelevelofrisksocially acceptable. Theunacceptability of
differentiating products onthebasis ofPPMs wassimply acounterpart tothisprerogative.
162. Inthesecond place, aneco-labelling scheme always created aparticular standard or
technical regulation onthelabelwhich wastobeimposed onproducts thatsatisfied the
requirements (thedefinition ofitsformat, colours etc.). Although thiswasexpected tobethe
more visible partofthescheme, thisshould notcause great doubt totheextent thatlabelling was
explicitly mentioned inthedefinitions ofstandards andtechnical regulations under theAgreement.
Thesecond conclusion was,therefore, thatthestatement ofthelabelcharacteristics wassubject to
thedisciplines oftheTBTAgreement. Third, eco-labels were aconformity assessment procedure.
Rules, methods andprocedures were established toensure thataproduct complied withthe
requirements andhadtherighttousethelabeldefined bythescheme. Conformity assessment
procedures, which were covered byspecific disciplines inthenewTBTAgreement, were defined
inabroad wayinitsAnnex 1.
163. Having expressed hisopinion ontheissue ofcoverage, heturned tothequestion ofthe
levelofdisciplines. TheTBTAgreement hadtriedtoreach anequilibrium between addressing
comprehensively theproblems inthestandards areaandbuilding feasible ways ofimplementation,
bothfrom thepoint ofviewofthepractical operation, forinstance, ofthenotification
mechanisms, andfrom thepoint ofviewoflegalorpolitical limitations, forinstance, offederal
states. Theresult wastheexistence ofdifferent levels ofobligations forcentral governmental
bodies, localgovernmental bodies andnon-governmental bodies, aswellasdifferent obligations,
especially inthenotifications area, according tothemandatory orvoluntary nature ofthe
document. ThenewTBTAgreement hadtriedtoreduce thedistance between those different
levels ortoreinforce theultimate responsibility ofsignatories fortheimplementation ofthe
disciplines atalllevels. Thecreation ofacodeofconduct forstandardization bodies wentinthis
direction, aswellas,forinstance, theobligation ofmembers to"take suchreasonable measures as
maybeavailable tothem" toensure thatbothlocalgovernment bodies andnon-governmental
bodies complied withthebasic disciplines onconformity assessment procedures, except
notifications.PC/SCTE/M/5
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164. Eco-labelling schemes were normally voluntary andinmost cases non-governmental. But
eveninnon-governmental schemes, governments hadanimportant participatory roleintheir
implementation andpromotion. Therefore, there wasanobligation totakereasonable measures to
ensure theircompliance withbasic disciplines likenon-discrimination andnational treatment, as
wellastheobligation touseinternational standards asthefirstoption ortheprocedural disciplines
ontheaccess toandfunctioning ofconformity assessment procedures thatwere established in
Article 5.Also, although notsubject tothesame transparency requirements astechnical
regulations, inparticular inthecaseofnotifications, standards were subject totransparency
requirements, including availability ofinformation through enquiry points. Some doubts may
ariseinrelation tovoluntary conformity assessment procedures: thetextofthenew
TBTAgreement referred to"cases where apositive assurance ofconformity isrequired", which
seemed tobequite general andallencompassing, while Article 5.6,relating tonotifications,
contained nosuchqualifications andreferred simply toa"proposed conformity assessment
procedure". Thatimplied thatavoluntary eco-labelling scheme implemented byacentral
governmental body, wassubject, forinstance, toalltransparency obligations established bythe
Agreement, including theobligation tonotify.
165. Itcould notbedenied thattheTBTAgreement wasnottailored witheco-labelling
schemes inmind. Inparticular, thenewTBTAgreement waspractically completed by1990,
before thestartofformal discussions ontrade andenvironment within GATT. Thediscussion
wastherefore, farfrom closed, especially inrelation totheconsequences oflifecycle analysis
which usedprocess standards. TheSub-Committee should continue todiscuss theissue,
including, assuggested bysome delegations intheSeptember meeting, byexploring thepossibility
ofcomplementing theTBTAgreement intheeco-labelling area. Meanwhile, governments should
ensure thatthepresent disciplines, although notverydemanding, were strictly observed. His
delegation hadrecently beeninformed thattheCommission oftheEuropean Communities
approved thecriteria foreco-labelling ofcertain paper products thathisdelegation hadcriticized
inthepast. Itnoted withregret that,although thepresent TBTAgreement already had
notification requirements oncertification schemes, theECeco-labelling scheme hadnotbeen
notified. Italsoregretted thatalthough theelaboration ofthecriteria inquestion didnotfollow
thetransparency requirements thattheCommission itself hadestablished recently, theywould
guide theconcession oftheECeco-label fortheproducts concerned. Headded thatthiscertainly
would notfavour thecredibility ofthescheme.
166. Therepresentative ofNewZealand saidthathisdelegation would study theBrazilian
statement. Heconsidered, however, thattheinterpretation ofboththecoverage andobligations of
theTBTAgreement andtheimplications ofthatcoverage andobligations would beamatter for
themembers ofthatAgreement.
167. Therepresentative oftheEuropean Communities saidthatitwould study thestatements
made atthismeeting onthisitem. Heagreed withtherepresentative ofNewZealand thatthis
wasprobably nottherightforum forfinaldecisions onthecoverage oftheTBTAgreement. He
stressed thattheECeco-labelling scheme wasavoluntary scheme which could award labels; it
wasnotaformal restriction onimports. Thescheme wasapplied onamost-favoured-nation and
national treatment basis. Furthermore, ashisdelegation hadsaidbefore, UNCED specifically
recognized theimportance ofgiving appropriate information toconsumers onenvironmental
issues. Finally, hisdelegation wasopen, without anyprejudice tothequestion ofcoverage ofthe
TBTAgreement, toexplore inthisSub-Committee theissue oftherelationship between
appropriate transparency andthesetting ofeco-labelling criteria.PC/SCTE/M/5
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168. Therepresentative oftheUnited States alsonoted thathisdelegation would reflect onthe
Brazilian statement; heshared some oftheconcerns Brazil hadexpressed about theevolution of
theeco-labelling scheme intheEC. ItmaywellbethatthisSub-Committee wasnottheproper
place forproviding definitive interpretations oftheTBTAgreement. There were nonetheless
environment-related issues thatarose from initiatives related toeco-labelling andthatrelated tothe
TBTAgreement. TheSub-Committee hadamandate tolookattheadequacy oftheexisting
disciplines ofthemultilateral trading system indealing withvarious sortsofissues. Hetherefore
considered itappropriate forthisSub-Committee toexamine thesortsofissues thatarose inthe
context ofdeveloping eco-labelling schemes, many ofwhich hisdelegation hadalluded toinits
paper, some ofwhich were specifically mentioned byArgentina.
169. TheChairman tooknoteofthecomments made. Hereiterated hisinvitation to
delegations tosubmit individually andonavoluntary basis, totheSecretariat forcompilation
information thatreflected theirownnational experiences withmeasures thatwere covered under
thethirditemofthework programme. Henoted thattheSecretariat hadreceived, todate, only
tworeplies tothisinvitation.
170. Hefurther reported thathewascontinuing consultations onthequestion ofappropriate
arrangements withnon-governmental organizations. Those consultations hadnotyetcome toa
conclusive stage. Heunderstood thatdelegations were consulting among themselves. Hehoped
thatthiswould soonleadtoameeting ofminds sothattheSub-Committee could conclude this
issue andtransmit conclusions tothePreparatory Committee before itfinalized itswork.
171. With regard tothefuture work, presuming thatnextyeartheWTO Committee onTrade
andEnvironment would come intoforce, heenvisaged thatthefirstmeeting oftheCommittee
could beheldinearly February. Thiswould allow theSecretariat timetoprepare therequested
documentation. Hewould consult withdelegations andtheSecretariat todetermine anappropriate
datearound thistime. Atthenextmeeting, aswasagreed attheprevious meeting, theCommittee
would takeuptheseventh itemofthework programme, exports ofdomestically prohibited goods,
forafirstsubstantive exchange ofviews. Healsoconsidered itimportant thattheCommittee
continue toprogress inexamining theother items ofthework programme thathadbeenidentified
asareas offocus, items one,three andsix.Heproposed doing thisbyagain allowing for
discussion onallthree ofthese items atthenextmeeting. Based onthisdiscussion andperhaps
further discussion inthesubsequent meetings, theCommittee maywanttoconsider thepossibility
ofbreaking these items down intospecific sub-issues around which theCommittee could organize
itswork. Hedidnotwishtopropose anysuchsub-issues butsuggested thatdelegations consider
moving forward inthiswayandthattheyreflect onpossible sub-issues under thethree items the
Sub-Committee hadbeenaddressing onwhich theymaywishtofocus work. Thiswasallwithout
prejudice toanyother items orissues thatdelegations maywishtoraiseorpapers theymaywish
topresent forconsideration bytheCommittee atanytime.