WTO E-Learning. WTO E-Learning Copyright October Trade and Environment

Size: px
Start display at page:

Download "WTO E-Learning. WTO E-Learning Copyright October Trade and Environment"

Transcription

1 WTO E-Learning WTO E-Learning Copyright October 2013 Trade and Environment

2

3 Abstract The link between trade and environmental protection, both the impact of environmental policies on trade, and the impact of trade on the environment, was recognized as early as 1970 at the GATT time. Later, with the creation of the WTO as a result of the Uruguay Round negotiations, allowing for the optimal use of the world s resources in accordance with the objective of sustainable development and seeking to protect and preserve the environment are fundamental to the multilateral trading system. These goals, enshrined in the Preamble of the Marrakesh Agreement, go hand in hand with the WTO s objective to reduce trade barriers and eliminate discriminatory treatment in international trade relations. For WTO Members, the aims of upholding and safeguarding an open and non-discriminatory multilateral trading system, on the one hand, and acting for the protection of the environment and the promotion of sustainable development, on the other, can and must be mutually supportive. Through its goals, rules, institutions and forward-looking agenda, the WTO provides an important means of advancing international environmental goals. The Marrakesh Ministerial Decision also called for the creation of the Committee on Trade and Environment. With its broad based mandate, the CTE has contributed to identifying and understanding the relationship between trade measure and environmental measures in order to promote sustainable development. Two important items of work of the CTE are the effects of environmental requirements on market access, and labelling requirements for environmental purposes. Environmental requirements can impede trade and even be used as an excuse for protectionism. The answer is not to weaken environmental standards, but to set appropriate standards and enable exporters to meet them. At the Doha Ministerial Conference in 2001, trade ministers launched, for the first time in the history of the multilateral trading system, negotiations in the area of trade and environment. The mandate of negotiations, contained in Paragraph 31 of the Doha Declaration covers the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs) (Paragraph 31(i)); procedures for regular information exchange between MEA Secretariats and the relevant WTO committees, and the criteria for the granting of observer status (Paragraph 31(ii)); and the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services (Paragraph 31(iii)). Since the entry into force of the WTO in 1995, the WTO Dispute Settlement Body has had to deal with a number of disputes concerning environment-related trade measures. Such measures have sought to achieve a variety of policy objectives from conservation of sea turtles from incidental capture in commercial fishing to the protection of human health from risks posed by air pollution. WTO jurisprudence has affirmed that WTO rules do not take precedence over environmental concerns. WTO Members can adopt trade-related measures to protect the environment and human health and life as long as such measures comply with GATT rules, or fall under the exceptions to these rules. Article XX on General Exceptions lays down a number of specific instances in which WTO Members may be exempted from GATT rules.

4

5 List of Figures and Tables MODULE 1: THE WORLD TRADE ORGANIZATION Table 1: GATT Rounds of negotiations Figure 1: WTO organization chart MODULE 3: THE RELATIONSHIP BETWEEN MULTILATERAL ENVIRONMENTAL AGREEMENTS AND THE WTO Figure 1: Use of Trade Measures in MEAs Table 1: Examples of MEAs and their Trade Measures Figure 2: WTO Principles Figure 3: EC-Swordfish Example Figure 5: Main Approaches MEA negotiations in the CTESS Figure 6: MEAs Granted Observer Status in the CTE MODULE 4: ENVIRONMENTAL GOODS NEGOTIATIONS Figure 1: Win-win-win outcome Figure 2: DDA Negotiations: Institutional Structure Figure 3: Lists of environmental goods submitted Figure 4: Type of products in the submitted environmental lists (407 HS-6 Lines) Figure 5: Categories of products in the submitted environmental lists (407 HS-6 Lines) Figure 6: Identification of environmental goods, key challenges Table 1: Approaches proposed by Members to liberalize environmental goods MODULE 5: ENVIRONMENTAL REQUIREMENTS AND MARKET ACCESS, INCLUDING LABELLING FOR ENVIRONMENTAL PURPOSES Figure 1: Environment-related TBT Notifications ( ) Figure 2: Environment-related SPS Notifications ( ) Figure 3: Environment-related TBT STCs ( ) Figure 4: Environment-related objective of TBT STCs ( ) Figure 5: Type of concern of environment-related TBT STCs ( ) Table 1: Environmental Aspects of Selected TBT STCs Figure 7: Examples of Eco-labelling Schemes Figure 8: Environmental Labelling TBT Notifications ( ) Figure 9: Environmental labelling STCs raised in the TBT Committee ( ) Figure 10: Concerns over environmental labelling STCs raised in the TBT Committee ( )

6 MODULE 6: WTO RULES AND ENVIRONMENTAL POLICIES Figure 1: Analysis under article XX of GATT

7 Acronyms APEC CBD CAA CITES CTD CTE CTESS CTG DDA DPGS DSB DSU EEE EFTA EMIT EU FAO GATS GATT GHG GMOS ISO IPRS ITC ITLOS LCA LDCS LLDC LMOS MEA MERCOSUR MFN Asia-Pacific Economic Cooperation Convention on Biological Diversity Clean Air Act Convention on International Trade in Endangered Species of Wild Fauna and Flora WTO Committee on Trade and Development WTO Committee on Trade and Environment WTO Committee on Trade and Environment (Special Session) Council for Trade in Goods Doha Development Agenda Domestically prohibited goods Dispute Settlement Body Dispute Settlement Understanding Electronic, electrical equipments European Free Trade Association GATT Group on Environmental Measures and International Trade European Union Food and Agricultural Organization General Agreement on Trade in Services General Agreement on Tariffs and Trade Greenhouse gas Genetically modified organisms International Organization for Standardization Intellectual Property Rights International Trade Centre UNCTAD/WTO International Tribunal for the Law of the Sea Life cycle analysis Least Developed Countries Least developed of the Least Developed Countries Living modified organisms Multilateral Environmental Agreement Common Market for the South Most-favoured-nation treatment

8 MRAS MTS NAMA NGO NTBS NTMS ODS OECD PIC PPMS SCM SMES SPS STOS TBT TEDS TNC TPRB TPRM TRIPS UNCED UNCLOS UNCPC UNCTAD UNEP UNFCCC WCO WIPO WSSD Mutual recognition agreements Multilateral trading system Non-agricultural market access Non-governmental Organization Non-tariff trade barriers Non-tariff measures Ozone-depleting substances Organization for Economic Cooperation and Development Prior Informed Consent Process and production methods Subsidies and Countervailing measures Small and medium size enterprises Sanitary and Phytosanitary measures Specific trade obligations Technical Barriers to Trade Turtle excluder devices Trade Negotiations Committee Trade Policy Review Body Trade Policy Review Mechanism Trade-Related Aspects of Intellectual Property Rights United Nations Conference on Environment and Development United Nations Convention on the Law of the Sea United Nations Central Product Classification United Nations Conference on Trade and Development United Nations Environment Programme United Nations Framework Convention on Climate Change World Customs Organization World Intellectual Property Organization World Summit on Sustainable Development

9 Table of Contents MODULE 0: COURSE GUIDE... 1 I. INTRODUCTION... 3 II. COURSE ORGANIZATION... 4 II.A. Objectives... 4 II.B. Structure and duration of the Course... 4 II.C. Who is who?... 6 II.D. Evaluation and Certificate... 6 III. E-LEARNING WEBSITE... 7 III.A. Training Materials... 7 III.B. Interactive Tools... 8 IV. USER AGREEMENT... 9 MODULE 1: THE WORLD TRADE ORGANIZATION I. HISTORICAL BACKGROUND OF THE WTO II. OBJECTIVES OF THE WTO III. FUNCTIONS OF THE WTO IV. ORGANIZATIONAL STRUCTURE OF THE WTO IV.A. The Ministerial Conference IV.B. The General Council IV.C. The Councils IV.D. The Subsidiary Bodies IV.E. Decision-Making at the WTO IV.F. On-going Negotiations: the Doha Development Agenda V. SUMMARY MODULE 2: INTRODUCTION TO TRADE AND ENVIRONMENT IN THE WTO VI. ENVIRONMENTAL PROTECTION AND THE WTO VI.A. VI.B. WTO goals - contribution to sustainable development and protection of the environment WTO rules - Members can adopt trade-related measures aimed at protecting the environment VI.C. WTO institutions - advance dialogue on trade and environment linkages VI.D. WTO Forward-looking agenda - The Doha Development Agenda and the environment VII. EMERGING ENVIRONMENT DEBATE IN THE GATT... 34

10 VII.A. Developments between the Stockholm Conference in 1972 and the Rio Summit in VII.B. Rio Earth Summit and after VIII. THE 1994 MARRAKESH MINISTERIAL DECISION ON TRADE AND ENVIRONMENT AND THE WTO COMMITTEE ON TRADE AND ENVIRONMENT VIII.A marrakesh MINISTERIAL decision on trade and environment VIII.B. committee on trade and environment (CTE) IX. THE DOHA MANDATE IX.A. trade and environment negotiations - CTESS IX.B. items of focus for the cte regular work X. PARAMETERS OF THE TRADE AND ENVIRONMENT DISCUSSIONS IN THE WTO X.A. The WTO is not an Environmental Protection Agency X.B. WTO Rules Provide Significant Scope for Environmental Protection X.C. Increased Market Access for Developing Countries could contribute to environmental protection X.D. Trade and Environment Coordination Should be Enhanced XI. SUMMARY MODULE 3: THE RELATIONSHIP BETWEEN MULTILATERAL ENVIRONMENTAL AGREEMENTS AND THE WTO I. INTRODUCTION TO MEAS I.A. BACKGROUND I.B. TRADE MEASURES IN MEAs II. RELATIONSHIP BETWEEN MEAs AND THE WTO: POTENTIAL CONFLICT? II.A. MEA rules and GATT Articles I, III and XI II.B. MEAs and the General Exceptions of GATT Article XX II.C. WHICH dispute settlement SYSTEM? II.D. POTENTIAL CONFLICT? THE CASE OF EC - SWORDFISH III. NEGOTIATIONS ON THE RELATIONSHIP BETWEEN WTO AND MEA RULES III.A. PARAGRAPH 31(I) MANDATE III.B. MEMBERS' PROPOSALS ON A POSSIBLE OUTCOME IV. COLLABORATION BETWEEN THE WTO AND MEA SECRETARIATS IV.A. PARAGRAPH 31(II) MANDATE IV.B. INFORMATION EXCHANGE IV.C. MEMBERS' PROPOSALS ON A POSSIBLE OUTCOME ON INFORMATION EXCHANGE.. 69 IV.D. OBSERVER STATUS IV.E. MEMBERS' PROPOSALS ON A POSSIBLE OUTCOME ON OBSERVER STATUS V. SUMMARY... 74

11 MODULE 4: ENVIRONMENTAL GOODS NEGOTIATIONS I. BACKGROUND I.A. POTENTIAL TO DELIVER WIN-WIN-WIN OUTCOMES I.B. Economic Rationale for reducing tariff and Non Tariff barriers on Environmental Goods I.C. The Institutional Structure of Negotiations II. IDENTIFICATION OF ENVIRONMENTAL GOODS II.A. ENVIRONMENTAL GOODS IDENTIFIED BY A NUMBER OF MEMBERS II.B. Challenges in IDENTIFYING Environmental Goods III. TREATMENT FOR ENVIRONMENTAL GOODS III.A. The DDA context III.B. DIFFERENT APPROACHES IV. OTHER CONSIDERATIONS IV.A. Non-Tariff Barriers IV.B. Transfer of Technology IV.C. Environmental Services V. CURRENT SITUATION VI. SUMMARY MODULE 5: ENVIRONMENTAL REQUIREMENTS AND MARKET ACCESS, INCLUDING LABELLING FOR ENVIRONMENTAL PURPOSES I. ENVIRONMENTAL REQUIREMENTS AND MARKET ACCESS I.A. ENVIRONMENTAL REQUIREMENTS I.B. RELEVANT WORK IN THE CTE COMMITTEE I.C. work in other relevant wto committees II. LABELLING REQUIREMENTS FOR ENVIRONMENTAL PURPOSES II.A. Introduction II.B. Non-Product related PROCESS AND PRODUCTION METHODS II.C. CTE'S WORK ON ENVIRONMENTAL LABELLING II.D. ENVIRONMENTAL labelling and the TBT Agreement II.E. market access Issues faced by developing countries III. SUMMARY MODULE 6: WTO RULES AND ENVIRONMENTAL POLICIES I. OVERVIEW OF GATT ARTICLE XX I.A. INTRODUCTION I.B. KEY GATT DISCIPLINES I.C. GATT ARTICLE XX GENERAL EXCEPTIONS I.D. OTHER RELEVANT WTO TEXTS II. ENVIRONMENT-RELATED DISPUTES IN GATT/WTO

12 II.A. EC ASBESTOS II.B. us SHRIMP II.C. US GASOLINE II.D. BRAZIL retreaded TYRES II.E. US TUNA II III. SUMMARY SUPPORT DOCUMENTS REFERENCE LIST ANNEX ANNEX

13 MODULE 0 Course Guide ESTIMATED TIME: ½ hour CONTENT Organization of your course Main functions of the E-Learning platform The User Agreement 1

14

15 I. INTRODUCTION Welcome to the course "Trade and Environment"! This Course Guide is envisaged to give you an overview of the organization of your course, as well as of the main functions of the E-Learning platform. At the end of the Course Guide, you will find the User Agreement, which was initially sent with your username and password. We advise you to print this Guide and have it readily available throughout the course. 3

16 II. COURSE ORGANIZATION II.A. OBJECTIVES After successfully completing the elements of the E-Learning course "Trade and Environment" you will have: enhanced knowledge of WTO discussions on trade and environment; enhanced knowledge of WTO trade and environment negotiations; enhanced knowledge of WTO rules and environmental policies; and benefited from the establishment of a network of useful contacts between course participants and experts from the WTO Secretariat. To facilitate the achievement the objectives of the course, you will have access to training materials, background documents and the interactive tools of the E-Learning platform. WTO E-Learning courses are part of the WTO Progressive Learning Strategy (PLS). The primary aim of the PLS is to promote higher levels of learning, with a view to sustaining the human and institutional capacity of beneficiary countries to participate more effectively in the WTO. This course is a level 2 (intermediate level) course in the specialist path of the PLS. TO KNOW MORE The PLS is the progressive, multi modular sequencing of products aimed at improving the delivery of WTO technical assistance and training. To know more about the WTO PLS: To know more about WTO technical assistance and training, please refer to: II.B. STRUCTURE AND DURATION OF THE COURSE WTO E-Learning courses give you the flexibility to combine your training activities and professional responsibilities. Furthermore, you will be able to wholly benefit from interactive activities such as Chat Sessions with WTO Experts. WTO E-Learning is available for government officials. While the WTO E-Learning material is freely available on the WTO E-Learning website, you have to register and submit the nomination form in order to access the course exams and obtain a WTO certificate. Once your registration process is complete, a username and password will be sent to you by . Your access codes will be available for a two month period. In this period, you will have to complete AND submit all exams. During these two months a Trainer will be available to assist you with any questions you may have. 4

17 The estimated study time per course is hours. Therefore, the course requires around 2 hours of study per working day. Note You will have access to the E-Learning website during the duration of the course and your account will expire at 23:59 (Geneva time) of the last day. In order to finalise the course in a timely manner, you should submit the Final Exam before this deadline. Structure of the course Training materials The course is divided into 6 Modules. Each module contains training materials on a specific issue, including explanatory texts and examples, which take two forms: Illustrations: A simplified explanation of WTO provisions or theoretical points developed throughout the module. Case studies extracted from WTO jurisprudence, which show how WTO rules have been interpreted by the Dispute Settlement Body. Exercises Self-assessment exercises are available in each module. They allow you to measure your personal progress in the course. Your academic profile allows you track your progress, using graphs and charts. End-of-module Exams Please note that you may take the end-of-module exam only once and it will count towards your final average. Final Exam The final Exam is the exam at the end of the last module of your course. This exam covers all the issues addressed during the course. Take your time to complete and submit it, since you will only be able to do it once and it counts double in the calculation of your final average. 5

18 II.C. WHO IS WHO? During your course, you will have the opportunity to interact with colleagues from other WTO Members and Observers, as well as with WTO experts in the subject matter of the course and the E-Learning Unit. Who is who? Participants Government officials who are taking part in the course and have the potential to interact and build a network. Trainer Your Trainer is a WTO expert, who is available to guide you and respond to your queries on the academic content of the course. Feel free to contact your Trainer using the Internal Service, whenever you need some clarification. Help Desk The E-Learning Help Desk is ready to assist you on technical issues related to the functioning of the website. II.D. EVALUATION AND CERTIFICATE At the end of each module, you will have to complete and submit an exam. These exams contain multiple-choice questions addressing the substantive content, as well as case studies, of the pertinent Module. Should you have questions on the evaluation of your exams, please remember to first carefully read the reasoning for correct answer, which you will see together with your test results. The results of each exam will be taken into account for the calculation of your final average. After completing the last module, you will find the Final Exam, which counts double in the calculation of your final average. Note You may only take the end-of-module exams once and they count towards the calculation of your final average. Upon successful completion of the course, the WTO Institute for Training and Technical Cooperation will issue and send you a certificate, signed by the Director General, if you: reach a final average of at least 60% of correct answers; have more than 50% in each exam except in one. (This means: If the course has 5 Modules, you have to have 4 exams above 50%.); have taken part in the interactive activities (chat and/or forum). Participants with outstanding results (i.e. a final average above 90% and no exam below 50%) will receive a Certificate with Distinction. 6

19 III. E-LEARNING WEBSITE The E-Learning website has been designed for you and to foster an efficient training experience and allow you to interact with other participants and WTO experts. It contains the training materials for your course, as well as background documentation and interactive tools. You may take the Online Tutorial available on the website, to get familiar with the different functions and interactive tools. Note In order to login, you should always enter the username and password that were sent to you. III.A. TRAINING MATERIALS E-Learning offers comprehensive courses. Each module consist of the following elements: Training and theoretical materials on the WTO and its Agreements; Illustrations and examples; Case studies and exercises; Text of the WTO Agreements and Official Documents; Access to further information through hyperlinks or the module support documents; End-of-module exam. Furthermore, you will have access to the elibrary, which contains background documents (WTO Agreements, the Analytical Index of jurisprudence, Glossary of Trade Terms, Trade Policy Review Reports, List of WTO members and Information on WTO Negotiations), as well as useful links to complement your study. 7

20 III.B. INTERACTIVE TOOLS The E-Learning website offers interactive tools to foster the exchange among course participants, as well as between participants and WTO experts. Please refer to the Online Tutorial for more detailed information on: Interactive tools Internal Service: Your own E-Learning account! Use it to contact your Trainer, Help Desk, other participants... and build-up your network. News Forum: This is the place to discuss the latest WTO news of interest for you by exchanging comments and views with other participants and trainers. Chat Sessions: Chat Sessions with WTO Experts and Special Guests will be organized during the course. An invitation with the date and time will be sent to you. Important note Do not wait to fully benefit from the interactive features of the E-Learning website! Take the first step in contacting your Trainer and take the initiative in the process... talk about the most important trade issues for your country and region with colleagues and share your knowledge and experiences. 8

21 IV. USER AGREEMENT The use of the E-Learning platform, the training materials and interactive features is subject to the terms and conditions contained in the User Agreement. You have automatically agreed to the User Agreement by using the log-in details (username and password) that were sent to you. The User Agreement reads as follows: 1. The E-Learning platform is property of the World Trade Organization. It is managed by the E-Learning Unit of the Institute for Training and Technical Cooperation and its objective is to deliver online courses on the WTO and its Agreements, while taking full advantage of the internet and the latest multimedia technologies. 2. The User is a trade official from a developing country or economy in transition, nominated by his/her respective government. The User enjoys access to the E-Learning platform during the duration of the course, under the following terms and conditions: a. The WTO is the copyright holder of the content of the E-Learning platform. Training materials and other tools available online shall not be disseminated without prior written authorization from the WTO E-Learning Unit; b. During the course, the User may print the training materials and documents available on the E-Learning platform for his/her personal use only; c. Citations and references to the course materials available on the E-Learning platform shall fully acknowledge the source (i.e. WTO E-Learning course); d. Only authorized Users (i.e. participants, nominated by their governments, who have received a username and password) are entitled to use the E-Learning platform; e. The User is responsible for maintaining the confidentiality of the username and password to access the E-Learning platform. If you become aware of any unauthorized use of your account, you shall notify the E-Learning Unit (elearning@wto.org) immediately; f. The utilization of the E-Learning platform and its contents shall be exclusively in relation to the course that is being followed by the User; g. Communications through and the Discussion Forum may be monitored by the WTO to ensure civility and compliance with the User Agreement; h. If the User breaches the terms and conditions of this User Agreement, his/her right to access the E-Learning Platform will be revoked unilaterally by the WTO. 9

22

23 MODULE 1 The World Trade Organization ESTIMATED TIME: 2 ½ hours OBJECTIVES OF MODULE 1 Present a synopsis of the historical background of the WTO Present the objectives and some new key WTO principles Explain the function and organizational structure of the WTO Present the negotiations launched in the Doha Development Agenda 11

24

25 I. HISTORICAL BACKGROUND OF THE WTO IN BRIEF From 1948 to 1994, the General Agreement on Tariffs and Trade (GATT) provided the rules for much of world trade. Although it appeared well established, for those 47 years it was a provisional agreement serviced by only a de facto organization. The GATT helped to establish a multilateral trading system that became progressively liberalized through successive rounds of trade negotiations. The conclusion of Uruguay Round negotiations led to the creation of new agreements, such as the General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), and the establishment of the World Trade Organization (WTO) in Rounds of trade negotiations Year Place/name Subjects covered Countries 1947 Geneva Tariffs Annecy Tariffs Torquay Tariffs Geneva Tariffs Geneva, Dillon Round Tariffs Geneva, Kennedy Round Tariffs and anti-dumping measures Geneva, Tokyo Round Tariffs, non-tariff measures, plurilateral codes Geneva, Uruguay Round Tariffs, non-tariff measures, rules, services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO, etc 123 Table 1: GATT Rounds of negotiations 13

26 IN DETAIL The project to establish a multilateral trading system to negotiate lower customs duties and the reduction or elimination of other trade barriers and to stimulate the expansion of world trade originated in the 1940s. It was supposed to go ahead on two tracks: the creation of the International Trade Organization (ITO); and the launching of multilateral tariff negotiations that involved the drafting of binding legal provisions relating to the tariffs under a "General Agreement on Tariffs and Trade" (GATT) The GATT was drafted, but the ITO was never created. However, the Interim Commission for the International Trade Organization (ICITO) was established and served as a de facto Secretariat to the GATT Contracting Parties. From 1947 to 1994, Contracting Parties organized eight rounds of negotiations. The major ones were: The Kennedy Round ( ): substantial reduction of tariff barriers. The Tokyo Round ( ): first negotiations on non-tariff barriers; plurilateral codes; and the enabling clause (the first major decision on differential treatment and non-reciprocity for developing countries). The Uruguay Round ( ): creation of the WTO; transformation of Tokyo Round plurilateral codes into multilateral agreements; strengthened dispute settlement system; and incorporation of the new agreements on trade in services and trade-related aspects of intellectual property rights which considerably broadened the scope of the multilateral trading system. Participants in the Uruguay Round of Multilateral Trade Negotiations concluded the Round by adopting the "Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations" (the Final Act). The Final Act included the "Marrakesh Agreement Establishing the World Trade Organization" (also referred to as "the WTO Agreement"). The WTO Agreement established a new organizational body, the World Trade Organization ("the WTO"), to administer the Uruguay Round agreements. 14

27 II. OBJECTIVES OF THE WTO IN BRIEF In the preamble to the Marrakesh Agreement establishing the WTO, the parties to the Agreement recognize certain objectives they wish to attain through the multilateral trading system: raise living standards; ensure full employment; ensure a large and steadily growing volume of real income and effective demand; and expand the production of and trade in, goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development. The Agreement also recognizes the need for "positive efforts to ensure that developing countries, and especially the least-developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development". IN DETAIL The Preamble to the WTO Agreement encapsulates its objectives. It declares: The Parties to this Agreement, Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development, Recognizing further that there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development. Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations... 15

28 The objectives of the WTO are not fundamentally different from the objectives contained in the preamble of the GATT However, it is important to note the following two points: Although the WTO's objectives do not mention trade liberalization as the means to establish free-trade between Members, the drafters considered "substantial reduction of tariffs and other barriers to trade and the elimination of discriminatory treatment in international trade relations" as important steps to achieving these objectives. A second means to achieve the noted objectives is the practice of Members of "entering into reciprocal and mutually advantageous arrangements" as mentioned in the text of the GATT Accordingly, the WTO adds three new dimensions to the objectives in the preamble of the GATT They include: the expansion of "the production of and trade in goods and services" to take into consideration the extension of the coverage of the WTO subject matters. That is, while the GATT covered trade in goods, under the WTO, coverage was expanded to another subject area trade in services (see the GATS Agreement); "the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so ;" the "development dimension" aiming at helping " developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development". 16

29 III. FUNCTIONS OF THE WTO IN BRIEF The WTO fulfils its objectives by: administering trade agreements between its Members; serving as a forum for trade negotiations; settling trade disputes; reviewing Members trade policies; assisting developing countries in trade policy issues, through technical assistance and training programmes; and cooperating with other international organizations. IN DETAIL Article III of the WTO Agreement expounds the functions of the WTO. They include: (1) "The WTO shall facilitate the implementation, administration and operation, and further the objectives of this Agreement and of the Multilateral Trade Agreements, and shall also provide the framework for the implementation, administration and operation of the Plurilateral Trade Agreements." (2) "The WTO shall provide the forum for negotiations among its Members concerning their multilateral trade relations in matters dealt with under the agreements in the Annexes to this Agreement The WTO may also provide a forum for further negotiations among its Members concerning their multilateral trade relations, and a framework for the implementation of the results for such negotiations, as may be decided by the Ministerial Conference." The preceding paragraphs refer to the role of the WTO of providing a permanent institutional forum for trade negotiations among its Members. These negotiations may be on subjects already covered under WTO agreements or in respect of "new issues" to be disciplined by WTO agreements. (3) "The WTO shall administer the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) in Annex 2 to this Agreement." 17

30 The above paragraph refers to the role of the WTO as a forum for the settlement of disputes between its Members in accordance with the disciplines and procedures elaborated in the Dispute Settlement Understanding ("the DSU" in Annex 2 to the WTO Agreement). When Members are unable to reach a mutually acceptable solution to a dispute arising under one of the agreements covered by the DSU, they may have recourse to the Dispute Settlement Procedure. (4) "The WTO shall administer the Trade Policy Review Mechanism (TPRM) provided for in Annex 3 to this Agreement." This function underscores the role of the WTO in the transparency mechanism designed by Members during the Uruguay Round. The Trade Policy Review Mechanism (TPRM) was one of the few elements of the WTO Agreement that formed part of the "Early Harvest" realized before the Uruguay Round ended. Early Harvest is an expression which describes the agreement by GATT contracting parties, at the "Mid-Term Review" Ministerial Meeting of the Uruguay Round negotiations, in Montreal in 1988, that certain results of the negotiations, on which a clear consensus already existed, would enter into force immediately, although on a provisional basis. That is, their agreement that some fruits (of the negotiations) would be harvested early. (5) "With a view to achieving greater coherence in global economic policy-making, the WTO shall cooperate, as appropriate, with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies." This final quote identifies one aspect that the Members need consider when they enter into negotiations to design an international regulatory framework. They should cooperate with other multilateral agencies. The quote also appears to be an implicit reference to the period when (in the context of the Havana Conference) many participants considered that an ITO could be constituted under the UN umbrella, next to the IMF and the World Bank. The ITO was envisioned as the third pillar of a system put in place to shape international economic relations in the post-war reconstruction period - the Bretton Woods system. EXERCISES: 1. What is the main objective of the WTO? 2. What are the main functions of the WTO? 18

31 IV. ORGANIZATIONAL STRUCTURE OF THE WTO With a dense network of legal provisions and procedures to govern their trade transactions, WTO Members established a working structure for the WTO to allow them to monitor the implementation and the development of the WTO. The WTO Agreement contains provisions that organize the work of the WTO. Members take their consensus-based decisions through various bodies, which are open to all Members. The "legal structure" of the WTO is shown in the diagram below: Figure 1: WTO organization chart 19

32 IV.A. THE MINISTERIAL CONFERENCE The Ministerial Conference is the highest authority in the WTO. Its sessions must take place at least once every two years. The Ministerial Conference can take decisions on all matters under all multilateral trade agreements. IV.B. THE GENERAL COUNCIL The General Council constitutes the second tier in the WTO Structure. It comprises representatives from all Member countries, usually Ambassadors/Permanent Representatives based in Geneva. It meets regularly (approximately once a month) to adopt decisions, mostly on behalf of the Ministerial Conference when the Conference is not in session. The General Council also meets as: The Trade Policy Review Body (TPRB), with a different Chairperson, to carry out trade policy reviews as mandated by the Decision on the Trade Policy Review Mechanism. The Dispute Settlement Body (DSB), with a different Chairperson, to administer the rules in the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). The DSB has the authority to establish panels, adopt Panel and Appellate Body Reports, oversee the implementation of rulings and recommendations, and authorize the suspension of concessions and other obligations under the agreements for which disputes can be settled by the DSU - the "covered agreements". The DSB establishes Panels on an ad hoc basis, at the request of a Member (or Members) usually with the following terms of reference:...to "examine, in the light of the relevant provisions in the respective covered agreements, the matter referred to the DSB by the complaining Member and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided in that/those agreement(s)". The DSB also appoints persons to serve on the Appellate Body. The Appellate Body is a standing body of seven persons that hears appeals from reports issued by Panels and makes recommendations to the DSB, accordingly. Where adopted by the DSB, the Appellate Body and the Panel Report (as upheld, amended or reversed by the Appellate Body) becomes binding on the disputing Members. 20

33 IV.C. THE COUNCILS The Councils can be described as subsidiary bodies to the General Council. There are three Councils: The Council for Trade in Goods (the Goods Council) oversees all the issues related to the Agreements on trade in goods. The Council for Trade in Services (the GATS Council) oversees all issues related to the GATS Agreement. The Council for Trade-Related Aspects of Intellectual Property Rights (the TRIPS Council) oversees issues related to the TRIPS Agreement. These Councils are composed of all WTO Members and have subsidiary bodies (see below). Several other bodies, which focus on specific issues, report to the General Council. They are usually called Committees, Working Groups or Working Parties; they are: Committee on Trade and Development (CTD); Committee on Trade and Environment (CTE); Committee on Regional Trade Agreements (CRTA); Committee on Balance-of-Payment Restrictions (BOP Committee); and Committee on Budget, Finance and Administration. Working Parties on Accession; Working Group on Trade, Debt and Finance; and Working Group on Trade and Technology Transfer. IV.D. THE SUBSIDIARY BODIES Two Councils (for Goods and Services) have subsidiary bodies. The TRIPS Council, to date, has no subsidiary body. The Goods Council has 11 committees working on specific subjects (such as agriculture, market access, subsidies, and anti-dumping measures). These committees are composed of all Members. The Services Council's subsidiary bodies deal with financial services, domestic regulations, GATS rules and specific commitments. It does not have a permanently fixed number of subsidiary bodies. For example, the Negotiating Group on Basic Telecommunications was dissolved in February 1997 when its work ended. 21

34 EXERCISES: 3. Please arrange the following WTO bodies in hierarchical order: - General Council; - Council for Trade in Services; - Ministerial Conference. 4. Please state the function of the following WTO bodies: (a) General Council; (b) Council for Trade in Services; (c) Ministerial Conference. 22

35 IV.E. DECISION-MAKING AT THE WTO CONSENSUS VERSUS... The WTO is a Member-driven, consensus-based organization. Consensus is defined as a situation in which no Member, present at a meeting where a decision is taken, formally objects to the proposed decision. The definition is contained in Footnote 1 to Article IX of the WTO Agreement: "The Body concerned shall be deemed to have decided by consensus on a matter submitted for its consideration, if no Member present at the meeting when the decision is taken, formally objects to the proposed decision." Consensus allows all Members to ensure their interests are properly considered....voting Where consensus is not possible, the WTO agreement permits voting a vote being won by a tally of the majority of votes cast, and based on the principle "one Member, one vote". Decisions are generally made by consensus, without voting. However, the WTO Agreement envisages voting whenever a decision cannot be arrived at by consensus. Voting can be exercised in the following four specific situations: a three-quarters majority of WTO Members in the Ministerial Conference or the General Council can adopt an interpretation of any of the multilateral trade agreements; the Ministerial Conference, by a three-quarters majority, can waive an obligation imposed on a Member by a multilateral agreement; all Members or a two-thirds majority (depending on the provision of the agreement) can take a decision to amend provisions of the multilateral agreements; a two-thirds majority in the Ministerial Conference or the General Council in between conferences, can take a decision to admit a new Member. FORMALS AND INFORMALS Important breakthroughs are often, but no always, made in formal meetings, or in the higher level Councils. Since decisions are generally made by consensus, without voting, WTO informal consultations play a vital role in bringing the diverse Membership to an agreement. 23

36 One tier below the formal meetings is informal meetings. Informal meetings, such as Heads of Delegations (HOD), also include the full membership. More complex issues tend to be discussed in smaller groups. A recent common practice is for the chairperson of a negotiating group to attempt to forge a compromise by holding consultations with delegations in twos or threes, or in groups of (of the most interested delegations). These smaller meetings have to be handled sensitively. The key is to ensure that everyone is kept informed even if they are not in a particular consultation or meeting (the process must be "transparent"), and that they have an opportunity to participate or to provide input (it must be "inclusive"). HAVE YOU EVER HEARD OF THE "GREEN ROOM"? The "Green Room" is an expression originated from the informal name given to the GATT Director-General's conference room, which was green. The term nowadays refers to small meetings, which are at times called by the Director-General, and can take place anywhere, even during Ministerial Conferences. Market access negotiations also involve small groups, but for a completely different reason. The outcome is a multilateral package of individual countries' commitments, which are the result of numerous informal bilateral bargaining sessions, and in the interest of individual countries, (examples are the tariff, and market access negotiations on trade in services.) Consequently, informal consultations play a vital role in facilitating consensus, but they do not appear in organizational charts because they are informal. However, informal consultations are not separate from formal meetings. They are necessary to facilitate formal decisions in the Councils and Committees. Nor are the formal meetings unimportant. Formal meetings are the forums for exchanging views, putting countries' positions on the record, and ultimately confirming decisions. IV.F. ON-GOING NEGOTIATIONS: THE DOHA DEVELOPMENT AGENDA At the Ministerial Conference in Doha, Qatar in November 2001, Members decided to launch a new round of negotiations, and pursuant to their decision, adopted the Doha Development Agenda and its accompanying work programme. The Doha Ministerial Declaration, which sets the negotiating mandate, required WTO Members to set up a Trade Negotiations Committee (TNC). The TNC then established negotiating mechanisms and is supervising the current negotiations under the authority of the General Council. Negotiations are taking place: In new negotiating groups, on: Market access; WTO rules (anti-dumping, subsidies, regional trade agreements); and Trade Facilitation. 24

37 In existing bodies, on: agriculture: in special sessions of the Agriculture Committee; services: in special sessions of the Services Council; geographical indications (a multilateral registration system): in special sessions of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS). Other TRIPS issues are addressed in regular TRIPS Council meetings; Dispute Settlement Understanding: in special sessions of the Dispute Settlement Body; Environment: in special sessions of the Trade and Environment Committee; and Negotiations on outstanding implementation issues: in relevant bodies according to paragraph 12 of the Doha Ministerial Declaration. Considerable emphasis is placed on special and differential treatment for developing countries (S&D). S&D is an integral part of the WTO Agreements. All negotiations and other aspects of the Doha Agenda's work programme are to fully incorporate this principle. According to the Doha Development Declaration (paragraph 44) and the Decision on Implementation-Related Issues and Concerns, all S&D provisions are to be reviewed to make them more precise, effective and operational. These reviews are carried out in special sessions of the Trade and Development Committee. 25

38 V. SUMMARY OBJECTIVES OF THE WTO Improve the welfare of the peoples of the Member countries. FUNCTIONS OF THE WTO Facilitate the implementation, administration and operation, and furthering of the objectives of the WTO Agreements (including the Plurilateral Agreements); Serve as a forum for trade negotiations; Administer the Dispute Settlement Understanding (DSU); Administer the Trade Policy Review Mechanism (TPRM); and Cooperate with the IMF and the IBRD (World Bank) to achieve coherence in global economic policy/making. STRUCTURE OF THE WTO Ministerial Conference General Council (also DSB and TPRB) Councils for Goods, Services, Intellectual Property Committees, Working Groups or Working Parties Sub-Committees 26

39 PROPOSED ANSWERS: 1. The main objective of the WTO is to improve the welfare of the peoples of the Member countries (standard of living, employment, income, etc.) by expanding the production of, and trade in, goods and services. The expansion of the production and trade of goods and services is to be achieved through negotiations leading to trade liberalization. This objective should be attained in accordance with sustainable development and with due consideration of the development needs of developing countries. 2. The main functions of the WTO are to: 1. administer trade agreements; 2. serve as a forum for trade negotiations; 3. settle trade disputes; 4. review Member's trade policies; 5. assist developing countries with trade policy issues, through technical assistance and training programmes; and 6. cooperate with other international organizations. 3. (a) Ministerial Conference; (b) General Council; (c) Council for Trade in Services; 4. The Ministerial Conference is the highest authority of the WTO. It meets at least once every two years. During the interim, the Conference is represented by the General Council. It meets regularly (approximately once a month) to adopt decisions and to carry out its functions as the Trade Policy Review Body and the Dispute Settlement Body. The Council for Trade in Services (CTS ) is one the three Councils beneath the General Council. The CTS oversees the functioning of the General Agreement on Trade in Services and reports to the General Council. The CTS is open to all Members and meets several times a year in regular session and, for the conduct of the ongoing services negotiations in Special Session. All Members participate in the work of all WTO Bodies. The WTO continues the GATT principle of taking decisions by "consensus". 27

40

41 MODULE 2 Introduction to Trade and Environment in the WTO ESTIMATED TIME: 5 hours OBJECTIVES OF MODULE 2 Provide an overview of the linkages between environmental protection and the WTO Present the historical background of the WTO trade and environment discussions Explain the 1994 Marrakesh Ministerial Decision on Trade and Environment and the creation of the WTO Committee on Trade and Environment (CTE) Provide an overview of the Doha mandate on trade and environment Explain the parameters of the trade and environment debate in the WTO 29

42

43 I. ENVIRONMENTAL PROTECTION AND THE WTO IN BRIEF Allowing for the optimal use of the world s resources in accordance with the objective of sustainable development and seeking to protect and preserve the environment are fundamental to the WTO. These goals, enshrined in the Preamble of the Marrakesh Agreement, go hand in hand with the WTO s objective to reduce trade barriers and eliminate discriminatory treatment in international trade relations. For WTO Members, the aims of upholding and safeguarding an open and non-discriminatory multilateral trading system, on the one hand, and acting for the protection of the environment and the promotion of sustainable development, on the other, can and must be mutually supportive. Through its goals, rules, institutions and mutually supportive environmental agenda, the WTO provides an important means of advancing international environmental goals. IN DETAIL I.A. WTO GOALS - CONTRIBUTION TO SUSTAINABLE DEVELOPMENT AND PROTECTION OF THE ENVIRONMENT An important element of the WTO s contribution to sustainable development and protection of the environment comes in the form of furthering trade opening in goods and services to promote economic development, and by providing stable and predictable economic conditions that enhance the possibility of technological development and innovation. It is its positive impact on economic growth and poverty alleviation that makes trade a powerful ally of sustainable development. The trade liberalization objective and the WTO s key principle of nondiscrimination promote the efficient allocation of resources, economic growth and increased income levels that in turn provide additional means for protecting the environment. The importance of trade s contribution to efforts on sustainable development and the environment has been recognized in the main sustainable development fora, including the 1992 Rio Summit, the 2002 Johannesburg Summit, the 2005 UN World Summit in New York and, more recently, the 2012 Rio+20 Summit. The multilateral trading system is an important tool to carry forward international efforts aimed at achieving sustainable development. The WTO s founding Charter, the Marrakesh Agreement, recognizes sustainable development as a key objective which, for this reason, is at the heart of the currently on-going Doha negotiations. 31

44 THE PREAMBLE TO THE MARRAKESH AGREEMENT The Parties to this Agreement, "...Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development" I.B. WTO RULES - MEMBERS CAN ADOPT TRADE-RELATED MEASURES AIMED AT PROTECTING THE ENVIRONMENT... The commitment of WTO Members to sustainable development and the environment can also be seen in WTO rules. In general terms these rules, with their fundamental principles of non-discrimination and transparency, help set a predictable framework for countries to design and implement measures to address environmental concerns. Moreover, WTO rules, including specialized agreements such as the Agreement on Technical Barriers to Trade (TBT) which deals with product regulations, standards, testing and certification procedures and the Agreement on Sanitary and Phytosanitary Measures (SPS) which concerns food safety and animal and plant health measures, provide scope for environmental objectives to be followed and for necessary trade-related measures to be adopted. WTO rules set up the appropriate balance between the right of Members to take regulatory measures, including trade restrictions, to achieve legitimate policy objectives (e.g., protection of the environment) and the rights of other Members under basic trade disciplines. For example, GATT Article XX lays out a number of specific instances in which Members may deviate from GATT rules to protect the environment. At the same time, this provision seeks, among other things, to ensure that environmental measures are not applied arbitrarily nor used as disguised protectionism. (See Module 6) Since the entry into force of the WTO in 1995, the WTO Dispute Settlement Body has had to deal with a number of disputes concerning environment-related trade measures. Such measures have sought to achieve a variety of policy objectives from conservation of sea turtles and dolphins from incidental capture in commercial fishing to the protection of human health from risks posed by air pollution. WTO jurisprudence has affirmed that WTO rules do not take precedence over environmental concerns. For example, the WTO's dispute settlement allowed a member in 2001 to maintain its ban on the importation of a hazardous substance, asbestos, so it could protect its citizens and construction workers. In the US - Shrimp dispute, the Appellate Body emphasized the importance of Members' environmental collaboration relating to the protection of sea turtles. (See Module 6) 32

45 I.C. WTO INSTITUTIONS - ADVANCE DIALOGUE ON TRADE AND ENVIRONMENT LINKAGES... The WTO also supports sustainable development and the environment through its specialized bodies. One unique body is the Committee on Trade and Environment (CTE). As a forum for dialogue on trade and the environment, the Committee is an incubator for ideas on how to improve mutual supportiveness of trade and environment. This has borne fruit. Some issues first raised in the CTE have become fully-fledged negotiations for instance, on fisheries subsidies and on the relationship between the WTO and multilateral environmental agreements (MEAs). Other WTO bodies are also essential to explore further trade and environment topics. For example, the body administering the TBT Agreement (the TBT Committee) is where governments, inter alia, notify, discuss and review TBT measures of other Members ("specific trade concerns"), including various environment-related technical regulations. Similarly, in the TRIPS Council Members have been discussing the relationship between the disciplines of the TRIPS Agreement (intellectual property) and those of the Convention on Biological Diversity (CBD), which was a topic first discussed in the context of the CTE. I.D. WTO FORWARD-LOOKING AGENDA - THE DOHA DEVELOPMENT AGENDA AND THE ENVIRONMENT... The launch of the Doha Round of negotiations gave Members an opportunity to achieve an even more efficient allocation of resources on a global scale through further reduction of obstacles to trade. The Round is also an opportunity to pursue win-win-win results for trade, development and the environment. For example, the Doha Round was the first time when environmental issues have featured explicitly in the context of a multilateral trade negotiation. Members are working to liberalize trade in goods and services that can benefit the environment. They are also discussing ways to maintain a harmonious co-existence between WTO rules and the specific trade obligations in various agreements that have been negotiated multilaterally to protect the environment. Other parts of the Doha negotiations are relevant to the environment (e.g. aspects of the agriculture negotiations and the negotiations on fisheries subsidies disciplines), and the Doha Development Agenda has a section specifying the priority items in the CTE s regular work. Since environmental problems often transcend national borders, the response must involve concerted action at the international level. WTO Members have long recognized the need for coherence amongst international institutions in addressing global environmental challenges. The current Doha negotiations on the relationship between the WTO and multilateral environmental agreements (MEAs) provide a unique opportunity for enhancing mutual supportiveness between the trade and environment agendas at the international level. EXERCISES: 1. How is sustainable development and environmental protection reflected in the Marrakesh Agreement? 2. How can trade provide a means to advance environmental goals? 33

46 II. EMERGING ENVIRONMENT DEBATE IN THE GATT IN BRIEF The link between trade and environmental protection both the impact of environmental policies on trade, and the impact of trade on the environment was recognized as early as There were important developments in the environmental forum and emerging environment debate took place in the GATT during IN DETAIL Growing international concern about the impact of economic growth on social development and the environment led to a call for an international conference, the first in history of its kind and scope, on how to manage the human environment. The UN Conference on the Human Environment held in Stockholm in 1972 (the Stockholm Conference) was the response. During the preparatory phase to the Stockholm Conference, the Secretariat of the General Agreement on Tariffs and Trade (GATT) prepared a study entitled "Industrial Pollution Control and International Trade". It focused on the implications of environmental protection policies on international trade, reflecting the concern of trade officials that such policies could become obstacles to trade, as well as constitute a new form of protectionism (i.e. "green protectionism"). In 1971, GATT Director-General presented the study to GATT members (then called the "Contracting Parties"), and urged them to examine what the implications of environmental policies might be for international trade. In the discussions that followed, a number of GATT members suggested that a mechanism be created in GATT for the implications to be examined more thoroughly. For this purpose, in November 1971 the GATT Council of Representatives established the Group on Environmental Measures and International Trade (the "EMIT Group"), which was open to all GATT members. II.A. DEVELOPMENTS BETWEEN THE STOCKHOLM CONFERENCE IN 1972 AND THE RIO SUMMIT IN 1992 Between 1972 and 1992, environmental policies began to have an increasing impact on trade, and with increasing trade flows, the effects of trade on the environment had also become more widespread. This led to a number of developments in the trade and environment discussions: During the Tokyo Round of trade negotiations ( ), participants addressed the question of the extent to which certain environmental measures could form obstacles to trade. The Tokyo Round Agreement on Technical Barriers to Trade (TBT), also known as the "Standards Code", was negotiated. Amongst other things, it called for non-discrimination in the preparation, adoption and application of technical regulations and standards, including those whose stated objective was to protect the environment, and for them to be transparent. In 1982, a number of developing countries expressed concern that products prohibited in developed countries on the grounds of environmental hazards, health or safety reasons, continued to be exported 34

47 to them. With limited information on these products, they were unable to make informed decisions regarding their import. At the 1982 GATT ministerial meeting, members decided to examine the measures needed to bring under control the export of products prohibited domestically (on the grounds of harm to human, animal, plant life or health, or the environment). This led to the creation, in 1989, of a Working Group on the Export of Domestically Prohibited Goods and Other Hazardous Substances. The 1991 tuna/dolphin dispute between Mexico and the United States put the spotlight on the linkages between environmental protection policies and trade. The case concerned a US embargo on tuna imported from Mexico, caught using "purse seine" nets which caused the incidental killing of dolphins. Mexico initiated a dispute before the GATT on the grounds that the embargo was inconsistent with the rules of international trade. The panel ruled in favour of Mexico based on a number of different arguments. Although the report of the panel was not adopted, its ruling was heavily criticised by environmental groups who felt that trade rules were an obstacle to environmental protection. During the Uruguay Round ( ), trade-related environmental issues were once again addressed. Modifications were made to the TBT Agreement, and environmental considerations were reflected in the General Agreement on Trade in Services (GATS), the Agreements on Agriculture, Sanitary and Phytosanitary Measures (SPS), Subsidies and Countervailing Measures, and Trade-Related Aspects of Intellectual Property Rights (TRIPS). During this same period ( ), important developments were also taking place in environmental forums. The discussion on the relationship between economic growth, social development and environment that began at the 1972 Stockholm Conference continued throughout the 1970s and 80s. In 1987, the World Commission on Environment and Development produced a report entitled Our Common Future (also known as the Brundtland Report), in which the term "sustainable development" was coined. The report identified poverty as one of the most important causes of environmental degradation, and argued that greater economic growth, fuelled in part by increased international trade, could generate the necessary resources to combat what had become known as the "pollution of poverty". Another important development took place in The "EMIT" group (which was established in 1971) had been dormant for twenty years when in 1991 the members of the European Free Trade Association (EFTA) 1 requested, for the first time, for the EMIT Group to be convened. During its few years of activities, from 1991 until the creation of the WTO in 1994, the EMIT group served as a forum for the discussion of trade-related environmental issues. More specifically, the EMIT group was tasked with the examination of the effects of environmental measures (such as eco-labelling) on international trade; the relationship between the GATT and MEAs (such as the Basel Convention on the Transboundary Movement of Hazardous Wastes); and the transparency of national environmental regulations. In meetings of the EMIT group between 1991 and 1994, countries considered linkages between trade and environment, relating to, inter alia, trade provisions and restrictions, extraterritorial effects of environmental protection as well as cooperation with multilateral environmental agreements. 1 At the time EFTA included Austria, Finland, Iceland, Liechtenstein, Norway, Sweden and Switzerland. 35

48 II.B. RIO EARTH SUMMIT AND AFTER The activation of the EMIT group was followed by further developments in international environmental fora. The 1992 (two years before the creation of the WTO) Rio "Earth Summit" drew attention to the role of international trade in poverty alleviation and in combating environmental degradation. The "Rio Declaration" stated that an open, equitable and non-discriminatory multilateral trading system had a key contribution to make to national and international efforts to better protect and conserve environmental resources and promote sustainable development. Agenda 21, the programme of action adopted at the conference, also addressed the importance of promoting sustainable development through, amongst other means, international trade. The preparatory work for the 1992 Rio "Earth Summit" had itself influenced developing countries approach discussing trade and environment issues in the EMIT group. The concept of "sustainable development" had established a link between environmental protection and development at large. These moves were about to yield more concrete results within the trading system. The environment and trade were to be linked more explicitly in the new constitution of the multilateral trading system (WTO) that was to be signed in More recently, in June 2012, the UN Conference on Sustainable Development (the "Rio+20 Conference") was held in Rio de Janeiro, Brazil, to secure renewed political commitment for sustainable development, assess progress in the implementation of past sustainable development conferences, including Rio 1992, and address new and emerging challenges. The Rio+20 Conference's declaration recognizes the role of trade as an engine for sustainable development, as well as the WTO's contribution in this regard. 2 EXERCISES: 3. What are the main environment-related developments in the GATT during ? 4. What are the major environmental events that have impacted the trade and environment debate in the past 20 years? 2 UN (2012), "The Future We Want", United Nations Conference on Sustainable Development. 36

49 III. THE 1994 MARRAKESH MINISTERIAL DECISION ON TRADE AND ENVIRONMENT AND THE WTO COMMITTEE ON TRADE AND ENVIRONMENT IN BRIEF Towards the end of the Uruguay Round (and two decades after the EMIT group was set up in GATT), attention was once again drawn to trade-related environmental issues, and the role of the soon-to-be-created World Trade Organization (WTO). The preamble of the WTO Agreement refers to the importance of working towards sustainable development. The 1994 Marrakesh Ministerial Decision called for the creation of the Committee on Trade and Environment. With its broad based mandate, the CTE has contributed to identifying and improving the understanding on the relationship between trade measures and environmental measures in order to promote sustainable development. IN DETAIL III.A MARRAKESH MINISTERIAL DECISION ON TRADE AND ENVIRONMENT The Marrakesh Agreement establishing the WTO (also known as the "WTO Agreement"), was signed in April 1994 at the conclusion of the Uruguay Round negotiations. Its preamble refers to the importance of working towards sustainable development and to protect and preserve the environment. The fact that these issues have been recognized in the first paragraph of the preamble of the WTO's founding treaty reflects their important place within the multilateral trading system. In Marrakesh, ministers also signed a "Decision on Trade and Environment" (see Annex 1) which, is composed of two main elements, as follows. First, it states that: "There should not be, nor need be, any policy contradiction between upholding and safeguarding an open, non-discriminatory and equitable multilateral trading system on the one hand, and acting for the protection of the environment, and the promotion of sustainable development on the other." Second, the 1994 Marrakesh Ministerial Decision also called for the creation of the Committee on Trade and Environment (CTE). It mandates the committee to: identify the relationship between trade measures and environmental measures in order to promote sustainable development 37

50 make appropriate recommendations on whether any modifications of the provisions of the multilateral trading system are required, compatible with the open, equitable and non-discriminatory nature of the system. III.B. COMMITTEE ON TRADE AND ENVIRONMENT (CTE) Created in 1995, the CTE has followed a comprehensive 10-point work programme (see below). It covers a range of relevant issues, from trade and the environment in general to trade barriers, taxes and individual sectors such as services and intellectual property, and relationship with environmental organizations. The Original 10-point Work Programme of the CTE Items 1 and 5 (now in negotiations) - Trade rules, environment agreements, and disputes Relationship between the rules of the multilateral trading system and the trade measures contained in MEAs, and between their dispute settlement mechanisms. Item 2 - Environmental protection and the trading system Relationship between environmental policies relevant to trade and environmental measures with significant trade effects and the provisions of the multilateral trading system (MTS). Item 3 (now an item of focus) - How taxes and other environmental requirements fit in Relationship between the provisions of the MTS and: (a) charges and taxes for environmental purposes; and (b) requirements for environmental purposes relating to products, such as standards and technical regulations, and packaging, labelling and recycling requirements. Item 4 - Transparency of environmental trade measures Provisions of the MTS dealing with the transparency of trade measures used for environmental purposes. [3] Item 6 (item of focus) - Environment and trade liberalization How environmental measures affect market access, especially in relation to developing countries and least developed countries; and the environmental benefits of removing trade restrictions and distortions. Item 7 - Domestically prohibited goods Exports of domestically prohibited goods (DPGs), in particular hazardous waste. Item 8 (item of focus) - Intellectual property Relevant provisions of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. Item 9 Services The work programme envisaged in the Decision on Trade in Services and the Environment. 3 See environmental database (documents WT/CTE/EDB/---). 38

51 Item 10 - The WTO and other organizations Relationship and appropriate arrangements between WTO bodies and intergovernmental and non-governmental organizations (NGOs). The CTE membership is composed of all WTO Members and a number of observers from inter-governmental organizations. It reports to the WTO's General Council. The CTE first convened in early 1995 to examine the different items of its mandate. In preparation for the Singapore Ministerial Conference, in December 1996, the CTE summarized the discussions which it held since its establishment, as well as the conclusions reached in a report presented at the Conference. [4] Since then, it has met approximately three times a year. It has held a number of information sessions with MEA secretariats to deepen Members' understanding of the relationship between MEAs and WTO rules, and organized a number of public symposia for non-governmental organizations (NGOs). With its broad based mandate, the CTE has contributed to identifying and understanding the relationship between trade measure and environmental measures in order to promote sustainable development. Although the CTE has not recommended any changes to the WTO rules, its work has led to some trade and environment issues migrating to negotiations as key components of the Doha round (negotiations). One example is fisheries subsidies (under the Rules negotiations): this is an area where eliminating fisheries subsidies can help protect fish stock. EXERCISES: 5. What are the 2 main elements of the Marrakesh Ministerial Decision on Trade and Environment? 6. What are the CTE items of work? 7. What are the main items of focus of the CTE so far? 4 See document WT/CTE/1. 39

52 IV. THE DOHA MANDATE IN BRIEF At the Fourth WTO Ministerial Conference in Doha, Qatar, in November 2001, WTO Members reaffirmed their commitment to environmental protection and agreed to embark on a new round of trade negotiations, [5] including negotiations on certain aspects of the linkage between trade and environment. In addition to launching new negotiations, the Doha Ministerial Declaration requested the CTE, in pursuing work on all items in its terms of reference, to focus on three of those items. Moreover, the Doha Ministerial Declaration strongly reaffirmed Members' commitment to the objective of sustainable development as stated in the Preamble to the WTO Agreement (see Paragraph 6 of the Doha Ministerial Declaration). Ministers also called on the CTE and Trade and Development Committee to act as forums for identifying and debating the environmental and developmental aspects of the negotiations, in order to help achieve the objective of sustainable development. Furthermore, Paragraph 28 of the Doha Ministerial Declaration instructs Members "to clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries". These negotiations are taking place in the Negotiating Group on Rules. The Doha mandate has placed trade and environment work at the WTO on two tracks: The CTE Special Session (CTESS) has been established to deal with the negotiations (mandate contained in Paragraph 31 of the Doha Ministerial Declaration). The CTE Regular deals with the non-negotiating issues of the Doha Ministerial Declaration together with its original agenda contained in the 1994 Marrakesh Decision on Trade and Environment (mandate contained in paragraphs 32, 33 and 51 of the Doha Ministerial Declaration). IN DETAIL IV.A. TRADE AND ENVIRONMENT NEGOTIATIONS - CTESS The negotiations on trade and the environment are part of the Doha Development Agenda, with an overarching objective to enhance the mutual supportiveness of trade and environmental policies. In the Doha Round, WTO Members are negotiating certain aspects of the link between trade and the environment, particularly the relationship between the WTO and MEAs, and market access for environmental goods and services. These negotiations take place in "Special Sessions" of the Committee on Trade and Environment (CTESS). 5 Relevant of the Doha Ministerial Declaration can be found in Annex 2. 40

53 Paragraph 31 of the Doha Ministerial Declaration launched negotiations, "with a view to enhancing the mutual supportiveness of trade and environment" and "without prejudging their outcome", on the following issues: PARAGRAPH 31(I) - RELATIONSHIP BETWEEN WTO RULES AND MEAS SPECIFIC TRADE OBLIGATIONS Paragraph 31(i) mandated Members to negotiate on the relationship between WTO rules and specific trade obligations set out in MEAs. Negotiations are limited in scope to the applicability of such existing WTO rules as among parties to the MEA in question. Moreover, the negotiations are not to prejudice the WTO rights of any Member that is not a party to the MEA in question. (See Module 3) PARAGRAPH 31(II) - INFORMATION EXCHANGE Negotiations were mandated in Paragraph 31(ii) on procedures for information exchange between MEAs and the relevant WTO committees, and on the criteria for the granting of observer status in WTO bodies. (See Module 3) PARAGRAPH 31(III) ENVIRONMENTAL GOODS AND SERVICES Negotiations were mandated in Paragraph 31(iii) on the reduction or, as appropriate, the elimination of tariff and non-tariff barriers to environmental goods and services. (See Module 4) The end of Paragraph 32 is also relevant to these negotiations as it cautions against altering through these negotiations the balance of rights and obligations of WTO Members under existing agreements. It also adds that: The outcome of the negotiations carried out under Paragraph 31(i) and (ii) shall be compatible with the open and non-discriminatory nature of the multilateral trading system, shall not add to or diminish the rights and obligations of Members under existing WTO agreements, in particular the Agreement on the Application of the Sanitary and Phytosanitary Measures, nor alter the balance of these rights and obligations, and will take into account the needs of developing and least-developed countries. Negotiations under Paragraph 31 are taking place in the Committee on Trade and Environment in Special Session (CTESS). The Committee reports to the Trade Negotiations Committee (TNC). The Trade and Environment chapter of the Doha Round also includes negotiations aimed at clarifying and improving WTO disciplines on fisheries subsidies. These negotiations are taking place in the Negotiating Group on Rules (the "Rules Group"). 41

54 IV.B. ITEMS OF FOCUS FOR THE CTE REGULAR WORK In addition to launching negotiations in the areas listed above, the Doha Ministerial Declaration provides the CTE with a special mandate. Paragraph 32 of the Doha Declaration instructs the CTE, in pursuing work on all agenda items within its current terms of reference, to give particular attention to three items. PARAGRAPH 32 MARKET ACCESS, TRIPS AND LABELLING (i) The effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed among them, and those situations in which the elimination or reduction of trade restrictions and distortions would benefit trade, the environment and development ("win-win-win situations") (see Module 5) (ii) The relevant provisions of the intellectual property (TRIPS) Agreement (iii) Labelling requirements for environmental purposes (See Module 5) Following paragraph 32, f the CTE was mandated to report to the Fifth Ministerial Conference in Cancún on the progress made in discussing the above-mentioned items, and to make recommendations, where appropriate, with respect to future action, including the desirability of negotiations. At its meeting of 7 July 2003, the CTE adopted its report to the Fifth Ministerial Conference in Cancún. This report covered the work undertaken by the regular session of the CTE between the Fourth (Doha) and the Fifth (Cancún) Ministerial Conference of the WTO. It contains a factual summary of those issues that have been discussed and that are covered by the reporting requirement in paragraphs 32 and 33 of the Doha Ministerial Declaration. However, no recommendations were formulated in this report. [6] PARAGRAPH 33 TECHNICAL ASSISTANCE, CAPACITY BUILDING AND ENVIRONMENTAL REVIEWS Paragraph 33 states: "We recognize the importance of technical assistance and capacity building in the field of trade and environment to developing countries, in particular the least-developed among them. We also encourage that expertise and experience be shared with Members wishing to perform environmental reviews at the national level. A report shall be prepared on these activities for the Fifth Session." Following this mandate, technical assistance, capacity building and environmental reviews 7 have been standing items on the agenda of the CTE, where Members and observers organizations exchange information in these areas. 6 See document WT/CTE/8. 7 See e.g. documents WT/CTE/W/245, 4 June 2007, and WT/CTE/W/245/Add.1, 28 October

55 PARAGRAPH 51 - SUSTAINABLE DEVELOPMENT Paragraph 51 explicitly calls on the CTE, together with the Committee on Trade and Development, to act as a forum within which the environmental and developmental aspects of the negotiations can be debated, in order to help achieve the objective of sustainable development. As a result, sustainable development has been a standing item on the agenda of the CTE. The committee decided to look at the subject by sector. In 2006, the Secretariat compiled developments related to the environment in the various negotiating groups: agriculture, non-agricultural market access, rules, services and trade and environment. [8] The purpose was to help Members identify and debate the issues as prescribed in Paragraph 51. EXERCISES: 8. What is the overarching objective of the Doha trade and environment negotiations? 9. What are the three Doha trade and environment negotiation items? 10. The Doha Ministerial Declaration instructed the CTE to organize its work in what manner? 8 See document WT/CTE/W/243, 27 November

56 V. PARAMETERS OF THE TRADE AND ENVIRONMENT DISCUSSIONS IN THE WTO Certain parameters have guided trade and environment discussions in the WTO since its creation, including the following: V.A. THE WTO IS NOT AN ENVIRONMENTAL PROTECTION AGENCY As indicated above, in the Preamble to the WTO Agreement, Members affirm the importance of working towards sustainable development. In addition, the 1994 Marrakesh Ministerial Decision on Trade and Environment states that the aim of the work of the CTE is to make "international trade and environmental policies mutually supportive". WTO Members recognize, however, that the WTO is not an environmental protection agency. Its competence in the field of trade and environment is limited to trade policies and to the trade-related aspects of environmental policies which have a significant effect on trade. In addressing the link between trade and environment, WTO Members do not operate on the assumption that the WTO itself has the answer to environmental problems. However, they believe that trade and environmental policies can complement each other. Environmental protection preserves the natural resource base on which economic growth is premised, and trade liberalization leads to the economic growth needed for adequate environmental protection. To address this, the WTO's role is to continue to liberalize trade in a non-discriminatory manner, as well as to ensure that environmental policies do not act as obstacles to trade, and that trade rules do not stand in the way of adequate domestic environmental protection. V.B. WTO RULES PROVIDE SIGNIFICANT SCOPE FOR ENVIRONMENTAL PROTECTION It is generally believed that WTO rules provide significant scope for Members to adopt national environmental protection policies. For example, under the GATT and the TBT Agreement WTO Members are free to adopt national environmental protection policies provided, for instance, that such measures are not unnecessarily restrictive and that they are not applied in a manner which would constitute an arbitrary or unjustifiable discrimination or a disguised restriction on international trade. Non-discrimination is one of the main principles on which the multilateral trading system is founded. It secures predictable access to markets, protects the economically weak from the more powerful, and guarantees consumer choice. (See Module 6). V.C. INCREASED MARKET ACCESS FOR DEVELOPING COUNTRIES COULD CONTRIBUTE TO ENVIRONMENTAL PROTECTION The special situation of developing countries and the need to assist them in their process of economic growth is widely recognized and accepted in the WTO. From the point of view of developing countries, the opening up of 44

57 world markets to their exports is an essential tool to facilitate their development. WTO Members recognize that trade liberalization for developing country exports, along with financial and technology transfers, is necessary in helping developing countries generate the resources they need to protect the environment and work towards sustainable development. As many developing and least-developed countries are heavily dependent on the export of natural resources for foreign exchange earnings, trade liberalization is expected to improve allocation and more efficient use of their resources, as well as enhance export opportunities for their manufactured goods. V.D. TRADE AND ENVIRONMENT COORDINATION SHOULD BE ENHANCED It is generally considered that improved coordination at the national level between trade and environmental officials can contribute to eliminating policy conflicts between trade and environment at the international level. Lack of coordination has, in the past, contributed to the negotiation of potentially conflicting agreements in trade and environmental fora. In addition, it is widely recognized that multilateral cooperation through the negotiation of MEAs constitutes the best approach for resolving transboundary (regional and global) environmental concerns. MEAs provide a safeguard against unilateral attempts to address environmental problems. Unilateral solutions are often discriminatory, and frequently involve the extraterritorial application of environmental standards. The 1992 Rio "Earth Summit" clearly endorsed consensual and cooperative multilateral environmental solutions to global environmental problems. Such solutions reduce the risks of arbitrary discrimination and disguised protectionism, and reflect the international community's common concern and responsibility for global resources. EXERCISES: 11. What are the main parameters of the trade and environment discussions in the WTO? 45

58 VI. SUMMARY ENVIRONMENTAL PROTECTION AND THE WTO Allowing for the optimal use of the world s resources in accordance with the objective of sustainable development and seeking to protect and preserve the environment are fundamental to the WTO. These goals, enshrined in the Preamble of the Marrakesh Agreement, go hand in hand with the WTO s objective to reduce trade barriers and eliminate discriminatory treatment in international trade relations. Through its goals, rules, institutions and forward-looking agenda, the WTO provides an important means of advancing international environmental goals. HISTORY OF THE TRADE AND ENVIRONMENT DEBATE The link between trade and environmental protection both the impact of environmental policies on trade, and the impact of trade on the environment was recognized as early as This led to the establishment of the GATT EMIT Group in 1971 and a number of development during in the trade and environment discussions. For example, trade-related environmental issues were taken up both at the Tokyo Round and the Uruguay Round Negotiations. The 1991 tuna/dolphin dispute between Mexico and the United States put the spotlight on the linkages between environmental protection policies and trade. During the same period, important developments were also taking place in environmental fora, for example, the 1987 Brundtland Report, which identified poverty as one of the most important causes of environmental degradation, and the 1992 Rio "Earth Summit", which drew attention to the role of international trade in poverty alleviation and in combating environmental degradation. THE MARRAKESH AGREEMENT AND DECISION ON TRADE AND ENVIRONMENT As a result of the above development, trade and the environment were linked more explicitly in the new constitution of the multilateral trading system signed in The preamble of the Marrakesh Agreement refers to the importance of working towards sustainable development. Also, the Marrakesh Decision on Trade and Environment states that: "There should not be, nor need be, any policy contradiction between upholding and safeguarding an open, non-discriminatory and equitable multilateral trading system on the one hand, and acting for the protection of the environment, and the promotion of sustainable development on the other." The Marrakesh Decision also called for the creation of the Committee on Trade and Environment (CTE) to promote sustainable development. The CTE, created in 1995, has followed a comprehensive work programme covering a range of trade and environment issues, from trade rules and MEAs, labelling, environmental measures and market access to services and intellectual property. THE DOHA MANDATE At Doha in November 2001, WTO Members reaffirmed their commitment to environmental protection and agreed to embark on a new round of trade negotiations. The Doha Development Agenda (DDA) includes trade and environment elements, with an overarching objective to enhance the mutual supportiveness of trade and environmental policies. 46

59 The DDA has placed trade and environment work at the WTO on two tracks: Under Paragraph 31, the CTE Special Session (CTESS) has been established to deal with the negotiations on the following: relationship between WTO rules and MEAs specific trade obligations; information exchange; and environmental goods and services. Under Paragraphs 32, 33 and 51, the CTE Regular deals with the non-negotiating issues of the DDA together with its original agenda contained in the 1994 Marrakesh Decision on Trade and Environment. PARAMETERS OF THE TRADE AND ENVIRONMENT DISCUSSION IN THE WTO Environmental issues were taken up in the GATT/WTO as a result of numerous developments at the international level in trade and environmental fora. Whilst developed countries were subjected to increased pressure from environmental interest groups to reconcile what they perceived as "incompatibilities" between trade and environmental policies, developing countries feared that environmental concerns would be addressed at the expense of international trade. In particular, they feared that a new "green" conditionality would be attached to market access opportunities. Within this context, certain parameters have guided trade and environment discussions in the WTO, including the following: the WTO is not an environmental protection agency; GATT/WTO Rules provide significant scope for environmental protection; increased market access for developing countries is necessary in helping them generate the resources needed to protect the environment; and trade and environment coordination should be enhanced. 47

60 PROPOSED ANSWERS: 1. Enshrined in the Preamble of the Marrakesh Agreement, the goals of allowing for the optimal use of the world s resources in accordance with the objective of sustainable development and seeking to protect and preserve the environment go hand in hand with the WTO s objective to reduce trade barriers and eliminate discriminatory treatment in international trade relations. 2. Trade provides a means to advance environmental goals in the following ways: trade's potential impact of economic growth and poverty alleviation is a powerful ally of sustainable development; furthering trade opening in goods and services promotes economic development and provides stable and predictable conditions that enhance the possibility of innovation that can contribute to environmental protection; the WTO s key principle of non-discrimination promotes the efficient allocation of resources, economic growth and increased income levels that in turn provide additional possibilities for protecting the environment. 3. The main environment-related developments in the GATT during are: the Tokyo Round negotiations ( ), when participants took up the question of the degree to which environmental measures could form obstacles to trade, and the TBT Agreement was negotiated; the creation in 1989 of a Working Group on the Export of Domestically Prohibited Goods and Other Hazardous Substances due to the concerns expressed by a number of developing countries that products prohibited in developed countries on the grounds of environmental hazards, health or safety reasons, continued to be exported to them; in 1991, the tuna/dolphin dispute between Mexico and the United States that put the spotlight on the linkages between environmental protection policies and trade, and although the report of the panel was not adopted, its ruling was heavily criticised by environmental groups who felt that trade rules were an obstacle to environmental protection; and the Uruguay Round negotiations, when trade-related environmental issues were once again taken up, and modifications were made to the TBT Agreement, certain environmental issues were addressed in the General Agreement on Trade in Services, the Agreements on Agriculture, Sanitary and Phytosanitary Measures (SPS), Subsidies and Countervailing Measures, and Trade-Related Aspects of Intellectual Property Rights (TRIPS). 4. The major environmental events that have impacted the trade and environment debate are: the UN Conference on the Human Environment held in Stockholm in 1972, responding to the growing international concern about the impact of economic growth on social development and the environment; the 1987 Brundtland Report, identifying poverty as one of the most important causes of environmental degradation, and in which the term "sustainable development" was coined; and the 1992 Rio "Earth Summit", drawing attention to the role of international trade in poverty alleviation and in combating environmental degradation. Agenda 21, the programme of action adopted at the conference, also addressed the importance of promoting sustainable development through, amongst other means, international trade. 5. The 2 main points of the Marrakesh Decision on Trade and Environment are: (i) "There should not be, nor need be, any policy contradiction between upholding and safeguarding an open, non-discriminatory and equitable multilateral trading system on the one hand, and acting for the protection of the 48

61 environment, and the promotion of sustainable development on the other"; (ii) the creation of the Committee on Trade and Environment. 6. The 10 original work items of the CTE are: Items 1 and 5 - trade Rules, MEAs and disputes; Item 2 - environmental protection and the trading system; Item 3 - relationship between the provisions of the multilateral trading system and: charges and taxes for environmental purposes; and requirements for environmental purposes relating to products, such as standards and technical regulations, and packaging, labelling and recycling requirements; Item 4 - transparency of environmental trade measures; Item 6 environmental measures and market access; Item 7 - domestically prohibited goods; Item 8 - intellectual property; Item 9 - services; Item 10 - the WTO and other organizations. 7. With its broad based mandate, the CTE has contributed to identifying and understanding the relationship between trade measure and environmental measures in order to promote sustainable development. Although the CTE has not recommended any changes to the rules of the multilateral trading system, its work has led to some trade and environment issues migrating to negotiations as key components of the Doha round (negotiations). One example is fisheries subsidies (under the Rules negotiations): this is an area where eliminating fisheries subsidies can help protect fish stock. 8. The overarching objective of the Doha negotiations on trade and the environment is to enhance the mutual supportiveness of trade and environmental policies. 9. The three negotiation items are: paragraph 31(i) - Relationship between WTO Rules and MEAs Specific Trade Obligations; paragraph 31(ii) - procedures for information exchange between MEAs and the relevant WTO committees, and on the criteria for the granting of observer status in WTO bodies; and paragraph 31(iii) on the reduction or, as appropriate, the elimination of tariff and non-tariff barriers to environmental goods and services. 10. The Doha Ministerial Declaration instructs the CTE, in pursuing work on all agenda items within its current terms of reference, to give particular attention to three items: environmental measures and market Access; TRIPS; and Labelling requirements for environmental purposes. 11. The main parameters are: GATT/WTO rules provide significant scope for environmental protection; increased market access for developing country exports is necessary in helping developing countries generate the resources needed to protect the environment; and improving trade and environment officials' coordination at the national level can contribute to eliminating policy conflicts between trade and environment at the international level. Finally, it should be kept in mind that the WTO is not an environmental protection agency. 49

62

63 MODULE 3 The relationship between Multilateral Environmental Agreements and the WTO ESTIMATED TIME: 6 hours OBJECTIVES OF MODULE 3 Present an introduction to multilateral environmental agreements (MEAs) Explore the relationship between MEAs and the WTO, including potential for conflict Provide an overview of the Doha negotiating mandate on the relationship between MEAs and the WTO 51

64

65 I. INTRODUCTION TO MEAS IN BRIEF Multilateral Environmental Agreements (MEAs) have emerged as an important means for countries to tackle environmental problems, particularly those regional or global in scope. Several MEAs contain provisions for measures to control trade, in order to prevent damage to the environment or as a tool to encourage compliance with their objectives. There are therefore a number of interlinkages between WTO and MEAs requirements. IN DETAIL I.A. BACKGROUND It has been widely recognized by both environmental and trade policy-makers that multilateral solutions to transboundary environmental problems, whether regional or global, are preferable to unilateral solutions. Resort to unilateralism runs the risk of arbitrary discrimination and disguised protectionism which could damage the multilateral trading system. The 1992 Rio Conference has strongly endorsed the negotiation of MEAs to address global environmental problems. Agenda 21 of the 1992 Rio Conference states that measures should be taken to "avoid unilateral action to deal with environmental challenges outside the jurisdiction of the importing country. Environmental measures addressing transborder or global environmental problems should, as far as possible, be based on international consensus." Likewise, the 2012 Rio+20 Conference Declaration "encourage[s] parties to MEAs to consider further measures, [ ] as appropriate, to promote policy coherence at all relevant levels, improve efficiency, reduce unnecessary overlap and duplication, and enhance coordination and cooperation among MEAs [ ]". 1 WTO Members have been discussing the issue of the relationship between WTO and MEAs since 1995, as the issue also forms part of the work programme of the Regular CTE." RECALL The 1994 Marrakech Ministerial Decision on Trade and Environment sets out the Work Programme of the Committee on Trade and Environment (CTE). Items 1 and 5 cover the relationship between the rules of the multilateral trading system and the trade measures contained in MEAs, and their dispute settlement mechanisms. 1 UN (2012), "The Future We Want", United Nations Conference on Sustainable Development. 53

66 It is reported that there are around 250 MEAs currently in force. Out of these agreements, about 20 would actually include trade-related provisions. Discussions in WTO have tended to focus mainly on the following agreements: the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal; the Convention on Biological Diversity (CBD) and the Cartagena Protocol on Biosafety; the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES); the Montreal Protocol on Substances that Deplete the Ozone Layer; the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade; Montreal Protocol the Stockholm Convention on Persistent Organic Pollutants; and the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol. Example of a successful MEA: The Montreal Protocol on Substances that Deplete the Ozone Layer The Montreal Protocol on Substances that Deplete the Ozone Layer (the Montreal Protocol) (adopted in 1987, entered into force in 1989), a protocol to the Vienna Convention of the Protection of the Ozone Layer, is an international treaty designed to protect the ozone layer by gradually phasing out the production of certain chemical substances that deplete the ozone layer, so-called ozone depleting substances (e.g. CFCs). The Montreal Protocol is often cited as an example of successful multilateral cooperation to tackle a global environmental problem. One of the main reasons for the Protocol's success has been its ability to engage the global community to respond. In 2009 the Montreal Protocol became the first United Nations treaty to achieve universal ratification. The Protocol's wide membership has helped ensure that all countries are actively engaged in reducing their negative impact of the ozone layer, with no countries free-riding on the actions of others. Another possible reason for the Protocol's success is the support it provides to developing countries. With the assistance of the Multilateral Fund for the Implementation of the Montreal Protocol, developing countries had, by mid-2010, permanently phased out over 270,000 tonnes of ozone depleting substances that had been used to produce various products and have eliminated virtually all of their production of CFCs and halons. By 2012, the Parties had phased out the consumption of over 98 per cent of all the chemicals controlled by the Protocol. Global observations have verified that atmospheric levels of key ozone depleting substances 54

67 are going down and it is believed that with the implementation of the Protocol s provisions the ozone layer should return to pre-1980 levels by the middle of this century. More information can be found on the Ozone Secretariat's website. EXERCISES: 1. Why are multilateral solutions to environmental problems preferred to unilateral solutions? 2. Please give examples of MEAs discussed in the WTO? 55

68 I.B. TRADE MEASURES IN MEAs IN BRIEF Trade measures in MEAs may be used for several purposes. For instance, such measures can be used to control trade in order to prevent damage to the environment. Trade measures can also be used as tools to encourage compliance with the objectives of the MEAs, for instance, in cases where the threat of such measure may encourage a non-party to comply. 2 Trade measures can take the form of an export and/or import ban; export and/or import permits and licenses; packaging, labelling or transportation requirements; notification requirements; or reporting requirements. Such measures may be taken vis-à-vis another State party to the MEA, or against a State that is not a party to that MEA Trade Measures in MEAs Mainly used: For monitoring and controlling trade To encourage compliance with MEA requirements As a means of enforcing MEA objectives As an incentive for non-parties to adhere Measure may be taken against: A country Party to the MEA A country non- Party to the MEA Figure 1: Use of Trade Measures in MEAs 2 See. e.g. Article X of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Article X foresees regulations for trade with States not party to the Convention whereby comparable documentation provided by competent authorities in non-parties that "substantially conforms" with the requirements for permits and certificates under CITES "may be accepted in lieu thereof." 56

69 IN DETAIL The following table contains some examples of MEAs and the trade measures they include. MEA Objective Trade Measure Basel Convention Reduce transboundary movements of hazardous wastes; minimize the generation, in terms of quantity and hazardousness, of wastes; and promote the environmentally sound management of hazardous and other wastes. Parties may only export a hazardous waste to another party that has not banned its import and that consents to the import in writing. Parties may not import from or export to a non-party. They are also obliged to prevent the import or export of hazardous wastes if they have reason to believe that the wastes will not be treated in an environmentally sound manner at their destination. CITES Regulate international trade in wild fauna and flora for conservation purposes. Provides framework for sound management of wildlife trade based on the best biological information available; analyses how different types of trade regulations can affect specific populations. CITES does not allow the issuance of import/export permits involving the commercial international trade in an agreed list of threatened species. It also regulates and monitors (by use of permits, quotas and other restrictive measures) trade in other species that might become endangered. Montreal Protocol Develop a regime that limits the release of ozone-depleting substances (ODS) into the atmosphere. The Protocol lists certain substances as ozone depleting, and bans all trade in those substances between parties and non-parties. Similar bans may be implemented against parties as part of the Protocol's non-compliance procedure. The Protocol also contemplates allowing import bans on products made with, but not containing, ozone-depleting substances a ban based on process and production methods. Rotterdam (PIC) Convention Promote shared responsibility and cooperative effort among Parties in the international trade of certain hazardous chemicals in order to protect human health and the environment from potential harm and to contribute to their environmentally sound use. This is done by facilitating information exchange about their characteristics, by providing for a national decision-making process on their import and export and by disseminating these decisions to Parties. Under the Convention, Parties can decide, from the Convention's agreed list of chemicals and pesticides, which ones they cannot manage safely and, therefore, will not import. When trade in the controlled substances does take place, labelling and information requirements must be followed. Decisions taken by the parties must be trade neutral if a party decides not to consent to imports of a specific chemical, it must also stop domestic production of the chemical for domestic use, as well as imports from any non-party. 57

70 CBD and Protocol on Biosafety CBD: ensure conservation of biological diversity, sustainable use of its components and fair and equitable sharing of the benefits arising out of the utilization of genetic resources. Biosafety Protocol: Ensure an adequate level of protection in the field of safe transfer, handling and use of Living Modified Organisms (LMOs) that may have adverse effects on the conservation and sustainable use of biological diversity, also taking into account risks to human health. Parties may restrict the import of some living genetically modified organisms as part of a carefully specified risk management procedure. LMOs that will be intentionally released into the environment are subject to an advance informed agreement procedure, and those destined for use as food, feed or processing must be accompanied by documents identifying them. Table 1: Examples of MEAs and their Trade Measures TIP Further information on MEAs containing trade measures and their relevant provisions can be found in a document entitled "Matrix on Trade Measures Pursuant to Selected Multilateral Environmental Agreements" (TN/TE/S/5/Rev.3). EXERCISES: 3. Why do some MEAs use trade measures? 58

71 II. RELATIONSHIP BETWEEN MEAs AND THE WTO: POTENTIAL CONFLICT? [3] IN BRIEF Measures taken pursuant to MEAs could give rise to questions of consistency with certain WTO rules, such as the non-discrimination principle, or the prohibition of quantitative restrictions. IN DETAIL II.A. MEA RULES AND GATT ARTICLES I, III AND XI Under GATT Article I, any advantage or privilege granted by a country to any product originating in any other country shall be accorded to like products originating in the territories of all other WTO Members. Pursuant to GATT Article III, WTO Members must not discriminate between imported and domestic like products. Under GATT Article XI, no prohibitions or restrictions other than duties, taxes or other charges such as quotas, import or export licenses shall be applied on the import or export of any product. WTO Principles Article I: The Most Favoured Nation Non-discrimination Any advantage, or privilege granted by a country to any product originating in any other country shall be accorded to like products originating in the territories of all other Members Article III: The National Treatment WTO Members must not discriminate between imported and domestic like products Article XI: The Prohibition of quantitative restrictions No prohibitions or restrictions other than duties, taxes or other charges such as quotas, import or export licenses shall be applied on the import or export of any product Figure 2: WTO Principles 3 See also Module 6 on WTO Rules and Environmental Policies. 59

72 The situation could materialize where an MEA authorizes trade between its parties in a specific product, but bans trade in that very same product with non-parties (hence, an inconsistency with the Most Favoured Nation (MFN) clause, which requires countries to grant equivalent treatment to "like" imported products). Example 1: The Montreal Protocol on substances that deplete the Ozone Layer Article 4 of the Montreal Protocol on Substances that Deplete the Ozone Layer bans imports of controlled ozone depleting substances from non-parties to the Protocol, who may be Members of WTO. Under the Protocol, similar restrictions are not imposed vis-à-vis other Parties. The application of such a measure could give rise to questions relating to GATT Article I (MFN); Article III (National treatment); or GATT Article XI (Prohibition of quantitative restrictions). Example 2: CITES The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is an oftencited example of the use of trade measures to tackle environmental objectives. Agreed in 1973 and in effect since 1975, CITES requires parties to implement a number of trade-related environmental measures ("CITES measures"). The objective is to save certain species of wildlife from extinction by regulating and monitoring their global trade. CITES measures range from permits and quotas of enlisted species to suspension of trade. Certain WTO rules may therefore be relevant to CITES measures, e.g., GATT Articles I and III (Most-Favoured Nation and National Treatment) and GATT Article XI (Prohibition of Quantitative Restrictions). It is interesting to note that, in fact, during all the time the GATT/WTO and CITES have coexisted, now spanning more than 40 years, there has never been a single challenge under the WTO's dispute settlement system against a measure taken by a GATT contracting party, or WTO Member, implementing CITES obligations. 4 II.B. MEAs AND THE GENERAL EXCEPTIONS OF GATT ARTICLE XX In the context of a dispute on the application of a trade measure under an MEA, the respondent could invoke a defence under GATT Article XX. According to Article XX, a Member can justify derogating from its obligations in respect of a measure that is either necessary to protect human, animal or plant life or health, or that relates to the conservation of exhaustible natural resources, provided certain conditions are met. 4 See, in this regard, Yeater, Marceil and Vasquez, Juan (2001), "Demystifying the Relationship between CITES and the WTO", RECIEL 10(3), at

73 The relevant parts of Article XX of GATT read: Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures: (...) (b) necessary to protect human, animal or plant life or health; (...) (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption; (...) Measures taken pursuant to an MEA would likely fall under at least one of the exceptions described in Article XX (i.e. the protection of human, animal or plant life or health, or the conservation of exhaustible natural resources). However, in order to be able to justify a derogation from its GATT/WTO obligations, the Member having taken the measure would still have to meet the test of the introductory paragraph, or "chapeau", of Article XX (i.e. that the measure does not constitute unjustifiable or arbitrary discrimination, or a disguised restriction on international trade). (see Module 6). TIP For a GATT-inconsistent environmental measure to be justified under Article XX, a Member must perform a two-tier analysis, proving: first, that its measure falls under at least one of the exceptions (e.g. paragraphs (b) or (g)), and then, that the measure satisfies the requirement of the introductory paragraph (the "chapeau" of Article XX), i.e. that the measure is not applied in a manner which could constitute "a means of arbitrary of unjustified discrimination between countries where the same conditions prevail", and is not "a disguised restriction on international trade". II.C. WHICH DISPUTE SETTLEMENT SYSTEM? While disputes between two parties to an MEA, who are both WTO Members, are expected to be settled in the MEA, disputes between an MEA party and a non-party (both of whom are WTO Members) would probably come to the WTO since the non-party would not have access to the dispute settlement provisions of the MEA. 61

74 To date, no disputes regarding trade provisions contained in an MEA have come to the WTO. Some WTO Members have argued in the CTE (in their proposals on negotiations about the MEA-WTO relationship) that the existing principles of public international law suffice in governing the relationship between WTO rules and MEAs. The 1969 Vienna Convention on the Law of Treaties as well as the principles of customary law could themselves define how WTO rules interact with MEAs. The legal principles of "lex specialis" (the more specialized agreement prevails over the more general) and of "lex posterior" (the agreement signed later in date prevails over the earlier one) emanate from public international law, and some have argued that these principles could help the WTO in defining its relationship with MEAs. Others have argued that there is a need for greater legal clarity. II.D. POTENTIAL CONFLICT? THE CASE OF EC - SWORDFISH Although there has never been a formal dispute between the WTO and an MEA, the EC-Swordfish case has illustrated the risk of conflicting decisions rendered by two bodies having competence over a different subject-matter. In this case, the European Union (EU), then still called the European Communities, asserted that its fishing vessels operating in the South East Pacific were not allowed, under Chilean legislation, to unload their swordfish in Chilean ports. The EU considered that, as a result, Chile made transit through its ports impossible for swordfish. The EU claimed that the above-mentioned measures were inconsistent with GATT 1994, and in particular Articles V and XI. Chile however maintained that the EU had failed to cooperate with Chile to ensure the conservation of swordfish, a highly migratory species, in violation of the UN Convention on the Law of the Sea. As a result, conservation measures had become necessary to ensure sustainable fisheries for swordfish. EC Swordfish (2000) EU Chile prohibits unloading of ofswordfish in in its itsports in in violation of ofgatt Articles V (freedom( of oftransit) and and XI XI (prohibition on on quantitative restrictions) Requests access to to Chilean ports to to re-export export swordfish to to the themarkets of ofnafta Chile EU EU fails failsto to cooperate with withcoastal state to to ensure the theconservation of ofhighly migratory species,, in in violation of ofun Convention on on Law Law of ofthe thesea Need conservation measures to to ensure sustainable fisheries for for swordfish Figure 3: EC-Swordfish Example 62

75 On 12 December 2000, the Dispute Settlement Body of the WTO (DSB) established a panel further to the request of the EU. In March 2001, the EU and Chile agreed to suspend the process for the constitution of the WTO panel (this agreement was further reiterated in November 2003). At the same time, proceedings in the Case Concerning the Conservation and Sustainable Exploitation of Swordfish Stocks in the South-Eastern Pacific Ocean were instituted on 19 December 2000 at the ITLOS by Chile and the EU. Chile requested, inter alia, the ITLOS to declare whether the EU had fulfilled its obligations under UNCLOS Articles 64 (calling for cooperation in ensuring conservation of highly migratory species), (relating to conservation of the living resources of the high seas), 297 (concerning dispute settlement) and 300 (calling for good faith and no abuse of right). The EU requested, inter alia, the Tribunal to declare whether Chile had violated Articles 64, and 300 of UNCLOS, mentioned above, as well as Articles 87 (on freedom of the high seas including freedom of fishing, subject to conservation obligations) and 89 (prohibiting any State from subjecting any part of the high seas to its sovereignty). On 9 March 2001, the parties informed the ITLOS that they had reached a provisional arrangement concerning the dispute and requested that the proceedings before the ITLOS be suspended. On 25 November 2009, the parties informed that they had reached a permanent settlement in the form of an Understanding and jointly requested the ITLOS to discontinue the dispute. The ITLOS granted such request on 16 December EXERCISES: 4. What are the WTO provisions that could be relevant to trade measures taken pursuant to MEAs? 5. In the context of a dispute arising over the application of a trade measure under an MEA, the respondent could invoke a defence under which relevant parts of GATT Article XX? 63

76 III. NEGOTIATIONS ON THE RELATIONSHIP BETWEEN WTO AND MEA RULES IN BRIEF At the Doha Ministerial Conference in 2001, agreement was reached to commence negotiations on certain aspects of the WTO-MEA relationship. More specifically, Members have agreed to negotiate on the "relationship between existing WTO rules and "specific trade obligations" (STOs) set out in MEAs". IN DETAIL III.A. PARAGRAPH 31(I) MANDATE In 2001, Ministers agreed to the following mandate in paragraph 31(i) of the Doha Ministerial Declaration: "31. With a view to enhancing the mutual supportiveness of trade and environment, we agree to negotiations, without prejudging their outcome, on: (i) the relationship between existing WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs). The negotiations shall be limited in scope to the applicability of such existing WTO rules as among parties to the MEA in question. The negotiations shall not prejudice the WTO rights of any Member that is not a party to the MEA in question." WTO Members have agreed to clarify the relationship between WTO rules and MEAs. The mandate explicitly states that the negotiations should be limited to defining how WTO rules apply to WTO Members that are party to an MEA. The reason for this limitation is that while WTO Members were willing to let the negotiations define the relationship between WTO rules and MEAs they have joined, they were not ready to let them alter their WTO rights and obligations vis-à-vis MEAs they were not part of. Moreover, paragraph 32 of the Doha Ministerial Declaration carefully circumscribes the negotiations under paragraph 31(i) and (ii): "The outcome of the negotiations carried out under paragraph 31(i) and (ii) shall be compatible with the open and non-discriminatory nature of the multilateral trading system, shall not add to or diminish the rights and obligations of Members under existing WTO agreements, in particular the SPS Agreement, nor alter the balance of these rights and obligations, and will take into account the needs of developing and least-developed countries." In the early stages of the negotiations, discussions focused on the scope of the negotiating mandate. For instance, delegations have examined the different components of the mandate, such as the terms "existing WTO rules," "specific trade obligations," "set out in MEAs," "MEAs," and "among parties to the MEA in question". On the different components of the mandate, the bulk of the discussion has revolved around the terms "MEAs," "specific trade obligations," and the notion of measures being "set out in MEAs". Some focus was placed on six 64

77 MEAs that could contain "specific trade obligations". [5] However, Members have not agreed to limit the discussion to any particular number of MEAs. On "specific trade obligations," several Members believe that these must be measures that are explicitly provided for and mandatory under MEAs. However, Members have not excluded other kinds of trade measures contained in MEAs and whether they could also be considered "specific trade obligations". In addition to these discussions on the terms of the mandate, Members have also embarked on an exercise of sharing their national experiences in the negotiation and domestic implementation of trade measures under MEAs. Over the years, in the CTESS, a number of Members have shared their national experiences on the negotiation and implementation of "specific trade obligations" in MEAs. [6] III.B. MEMBERS' PROPOSALS ON A POSSIBLE OUTCOME More recently, a few Members have begun to look ahead at the possible outcome that the mandate could deliver. There are five main proposals for an outcome currently on the table. These are: EU: The EU has been seeking to include in an outcome some basic governing principles on the WTO-MEA relationship, such as mutual supportiveness; no subordination; deference; and transparency. It has proposed that WTO committees and panels "defer" to the expertise of MEAs on environment-related matters. This aspect was strongly criticized by a number of delegations who consider that it would extend well beyond the scope of the mandate. The EU proposal was presented in the form of a Ministerial Decision. Switzerland: The proposal by Switzerland focuses mainly on conflict avoidance, closely resembling the EU proposal in that they both address WTO disputes. The Swiss proposal puts forth three elements to be included in the final outcome in the form of a Ministerial Decision: (i) the availability of a nonadjudicatory procedure, e.g. requesting the CTE Chair to act as facilitator, to help Members find solutions to their differences of opinions regarding the relationship between existing WTO rules and "specific trade obligations" in MEAs; (ii) the encouragement to use the expertise of MEAs during consultations pursuant to Article 4 of the DSU; and (iii) that Panels for disputes on this issue should possess or have available the necessary expertise. Australia and Argentina: A proposal by Australia and Argentina focuses on the importance of national coordination to ensure a mutually supportive relationship of trade and environment. It proposes that Members continue to share their experience relating to the negotiation and 5 These six MEAs are: the Basel Convention, the Convention of Biological Diversity and the Cartagena Protocol on Biosafety, the Convention of International Trade in Endangered Species of Wild Fauna and Flora, the Montreal Protocol on Substances that Deplete the Ozone Layer, the Rotterdam Convention and the Stockholm Convention. 6 A number of submissions by Members, sharing their national experiences, are listed in Section IV.B of document TN/TE/INF/4/Rev.15. For example, see the European Union's submission: "Putting MEA/WTO Governance into Practice: the EC's Experience in the Negotiation and Implementation of MEAs" (TN/TE/W/53). 65

78 implementation of "specific trade obligations" in MEAs in the regular CTE. The Australian/Argentinean proposal has garnered wide support in the negotiation. It was presented in the form of a report by the CTESS. Norway: Norway has made an attempt to strike a balance between the proposals of the EU and of Australia and Argentina. The text proposed by Norway suggests, for instance, to acknowledge that both MEAs and the WTO Agreement are instruments of international law of equal standing between parties to the agreements; and all obligations under international law should be implemented harmoniously and in good faith; and that all WTO bodies and Member States be mindful of this mutual supportiveness when "negotiating, interpreting, implementing and applying WTO rules and MEAs". African Group: The proposal by the African Group addresses the issue of technical assistance and capacity-building in the area of trade and environment. More specifically, it suggests the establishment of a Group of Experts on Trade and Environment from which WTO Members, and in particular developing countries, could seek advice on the implementation of MEA measures to ensure that they remain consistent with WTO rules. Two main approaches in CTESS Relationship has been working well; nothing to fix ; no conflict to date; existing rules provide sufficient scope (US, Australia, Argentina, several developing countries) Need to clarify WTO-MEA relationship; conflict can always arise; all good relationships can be improved.. (EC, Switzerland) Figure 5: Main Approaches MEA negotiations in the CTESS These proposals reflect Members' discussions, experience sharing and submissions since The Chairman of the CTESS circulated a summary of these negotiations on 21 April Accompanying this Report, the Chairman prepared, on his own responsibility, a Draft Ministerial Decision on Trade and Environment, combining elements from the above proposals and using language derived from negotiations and consultations with Members. While the Report reflects that some progress was made on Paragraph 31(i) elements, several outstanding elements remain to be addressed. Some of these include the European Union and Switzerland proposals to include text on dispute settlement in the outcome decision, 8 the African Group proposal to create a Group of 7 TN/TE/20, 21 April See: TN/TE/20, Annex I.B 66

79 Experts on Trade and Environment, 9 and other issues related to the definition of "specific trade obligations" in MEAs, and national coordination. No further discussions have been held on this aspect of the negotiations. EXERCISES: 6. How are Paragraph 31(i) negotiations limited in scope? 7. WTO panels already have the right to consult outside sources for advice. Why then are some Members opposed to a relevant proposal under Paragraph 31(i)? 9 See: TN/TE/20, Annex I.A 67

80 IV. COLLABORATION BETWEEN THE WTO AND MEA SECRETARIATS IN BRIEF In addition to the relationship between MEA measures and WTO rules, the negotiations have also covered the issue of information exchange between the WTO and MEA secretariats and "observer" status. IN DETAIL IV.A. PARAGRAPH 31(II) MANDATE In 2001, Ministers have agreed to the following mandate in paragraph 31(ii) of the Doha Ministerial Declaration: "31. With a view to enhancing the mutual supportiveness of trade and environment, we agree to negotiations, without prejudging their outcome, on: (ii) procedures for regular information exchange between MEA Secretariats and relevant WTO committees, and the criteria for the granting of observer status." IV.B. INFORMATION EXCHANGE Close cooperation between MEA Secretariats and WTO Committees is essential to ensure that both the trade and the environment regimes continue to evolve in a coherent and mutually supportive manner. The importance of this goal was recognized in the Plan of Implementation of the 2002 World Summit on Sustainable Development (WSSD) in Johannesburg, which calls for efforts to "strengthen cooperation among UNEP and other United Nations bodies and specialized agencies, the Bretton Woods institutions and WTO, within their mandates." This goal was, more recently, reaffirmed in the 2012 Rio+20 Conference Declaration, which stated: "We underscore the need to strengthen United Nations system-wide coherence and coordination, while ensuring appropriate accountability to Member States, by, inter alia, enhancing coherence in reporting and reinforcing cooperative efforts under existing inter-agency mechanisms and strategies to advance the integration of the three dimensions of sustainable development within the United Nations system, including through exchange of information among its agencies, funds and programmes, and also with the international 68

81 financial institutions and other relevant organizations such as the World Trade Organization (WTO), within their respective mandates." 10 Various forms of cooperation and information exchange between WTO and MEA Secretariats are already in place. These include information sessions held by the CTE with MEA Secretariats; the organization by the WTO Secretariat of side events held in the margins of MEA Parties' meetings; exchange of documents; and collaboration between the WTO, UNEP and MEAs in providing technical assistance to developing countries on trade and the environment. IV.C. MEMBERS' PROPOSALS ON A POSSIBLE OUTCOME ON INFORMATION EXCHANGE A number of concrete elements, which consolidate or formalize existing information exchange practices of the CTE, WTO Secretariat, and MEA Secretariats, have been put forward by Members on this part of the Paragraph 31(ii) mandate. These core elements enjoy a high degree of consensus among Members. The CTESS Chairman's April 2011 Draft Ministerial Decision on Trade and Environment 11 (See: III.B above) formulated these elements into possible outcome text, summarized below: The CTE shall hold information exchange sessions with MEA secretariats on a regular basis, providing opportunity for two way information exchanges between MEA and WTO secretariats and their respective memberships on topics of common interest. The WTO Secretariat shall cooperate and collaborate with MEA secretariats, including through increased information exchange, and, as appropriate, document sharing and preparation. The WTO Secretariat shall facilitate appropriate access by MEA secretariats to derestricted WTO documents on a reciprocal basis and make information from MEA secretariats available to WTO Members, including through the use of indexing and internet-based tools. Access to derestricted WTO documents by MEA secretariats shall be facilitated in accordance with the General Council Decision of 14 May 2002 on Procedures for the Circulation and Derestriction of WTO documents. [12] The WTO Secretariat shall continue to cooperate and collaborate with MEA secretariats on enhanced trade and environment-related technical assistance and capacity building activities for developing and Least-developed countries, particularly those related to implementation of "specific trade obligations" set out in MEAs. TIP More background material on "information exchange" can be found in the WTO Secretariat's note "Existing forms of cooperation and information exchange between UNEP/MEAs and the WTO" (TN/TE/S/2/Rev.2). This note contains information on, inter alia, MEA information sessions in the CTE, WTO side events in MEAs, and 10 UN (2012), "The Future We Want", United Nations Conference on Sustainable Development, paragraph TN/TE/20, 21 April 2011, pp WT/L/

82 WTO technical assistance events in which MEAs participated or were represented. EXERCISES: 8. Why is information exchange between the WTO and MEAs important? 9. What are the current forms of information exchange between the WTO and MEAs? 70

83 IV.D. OBSERVER STATUS The issue of criteria for the granting of observer status to MEA Secretariats is also part of the negotiations. Several MEA Secretariats and international organizations have already been granted observership to the CTE, and a number of them are also invited to attend meetings of the CTESS, as "ad hoc" observers. The negotiations could further enhance the participation of these organizations in the work of various WTO committees. MEAs granted Observer Status in the CTE As well as... UNCTAD Figure 6: MEAs Granted Observer Status in the CTE IV.E. MEMBERS' PROPOSALS ON A POSSIBLE OUTCOME ON OBSERVER STATUS With respect to observer status, Members' proposals have outlined a number of key ideas. Some Members believe that certain criteria should be applied by the CTE when assessing requests for observer status from MEAs, while other Members believe that the process should be accelerated for those MEAs with longstanding observership requests. In the April 2011 Draft Ministerial Decision on Trade and Environment 13 (See: III.B above), the CTESS Chairman formulated these elements into possible outcome text: Members reaffirm that requests for observer status of international intergovernmental organizations are subject to the criteria and procedures set out in Annex 3 of the Rules of Procedure for Sessions of the Ministerial Conference and Meetings of the General Council. [14] 13 TN/TE/20, 21 April 2011, pp WT/L/

84 When examining requests for observer status from MEA Secretariats, the CTE shall further have particular regard to the following: 15 the relevance of the MEA's scope of work to the CTE as well as the relevance of the CTE's scope of work to the MEA. (Examples of relevance would be whether the MEA contains provisions that have potential implications for international trade or whether the CTE's work covers aspects and rules that have potential implications for the environmental issues covered by the MEA.) the MEA Secretariat's participation in the CTE and its prior contribution to WTO work, including workshops, capacity building activities and preparation of documents; and/or the mutual benefit that may accrue to the Committee and the MEA from the MEA Secretariat's participation in meetings of the CTE. The Draft Ministerial Decision includes additional text in square brackets (i.e. text which is not agreed and remains under negotiation) which would grant observer status to the following MEA Secretariats, which have pending observership requests, have met the criteria elaborated above and in Annex 3 of the Rules of Procedure of the General Council, and which currently participate as observers in meetings of the CTE on an ad hoc basis: Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal International Tropical Timber Organization Montreal Protocol on Substances that Deplete the Ozone Layer Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade While negotiations may result in the adoption of criteria for the granting of observer status to MEAs that would complement existing criteria for observer status of international organizations contained in the Rules of Procedure of the General Council, it is not clear whether formal observer status would be granted to MEAs because of the long-standing political deadlock over observer status of international organizations in the General Council since before the launching of the Doha Round. It should be noted that while certain MEAs already have observer status in WTO bodies, other requests that came after the deadlock are still pending. These include, for example, requests by the Basel Convention on the Transboundary Movements of Hazardous Wastes, the Ozone Secretariat of the Montreal Protocol on Substances that Deplete the Ozone Layer, and the International Tropical Timber Organization in the Regular CTE, requests by the Convention on Biological Diversity in the TRIPS Council, the SPS and TBT Committees, and requests by CITES in the SPS and TBT Committees. It should be noted that despite the deadlock, several WTO Committees have developed a practice of granting observer status to international organizations on an ad hoc, meeting-by-meeting basis. While no 15 Two additional criteria have been proposed by some Members, but not included in the Draft Ministerial Decision: (i) the MEA's membership, e.g., whether it broadly reflects the membership of WTO; and (ii) the reciprocity provided by the MEA to the WTO with respect to access to proceedings, documents, and other aspects of observers status. 72

85 intergovernmental organizations have observer status in the CTESS, a number of them are invited on an ad-hoc/meeting-by-meeting basis. This practice could therefore allow MEAs in many cases to continue to participate in the work of WTO Committees. [16] EXERCISES: 10. Why is MEA observership important in the CTE and the CTESS? 16 A full list of intergovernmental organizations granted observer status to the CTE can be found on the WTO website. 73

86 V. SUMMARY TRADE AND ENVIRONMENT NEGOTIATIONS IN THE WTO The Doha Ministerial Conference in 2001 covered three elements: (i) relationship between existing WTO rules and specific trade obligations set out in MEAs; (ii) procedures for regular information exchange between MEA Secretariats and the relevant WTO committees, and the criteria for the granting of observer status; and (iii) reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services. Following intense negotiations between 2003 and 2011, in April 2011 the Chairman of the CTESS prepared on his own responsibility a Draft Ministerial Decision on Trade and Environment. 17 This document, inter alia, confirmed that Members agree to address Paragraphs 31(i) and 31(ii) in a combined outcome. PARAGRAPH 31(I): THE RELATIONSHIP BETWEEN WTO AND MEA RULES MEAs have been negotiated to deal with environmental problems in a multilateral setting. Trade measures contained in MEAs can include export and/or import bans, export and/or import permits and licenses, packaging, labelling or transportation requirements, notification requirements or reporting requirements. Measures taken pursuant to MEAs could give rise to questions on their relationship with WTO rules, such as the non-discrimination principle, or the prohibition of quantitative restrictions. In the context of a dispute on the application of a trade measure under an MEA, the respondent could invoke a defence under GATT Article XX. Negotiations On The Relationship Between WTO And MEA Rules A number of proposals for an outcome under Paragraph 31(i) have been put forth by Members covering core areas, inter alia, national coordination and experience sharing on the negotiation and implementation of "specific trade obligations" set out in MEAs, principles governing the relationship between WTO rules and MEAs including in relation to dispute settlement, and aspects of technical assistance. Some outstanding elements that remain to be addressed include, proposals to include text on dispute settlement in the outcome decision, the African Group proposal to create a Group of Experts on Trade and Environment, and other issues related to the definition of "specific trade obligations" in MEAs and national coordination. Paragraph 31(ii): Collaboration Between WTO and MEA Secretariats: On information exchange between the WTO and MEA secretariats and observer status, a number of elements have been put forward by Members. With respect to the former, Members' proposals would consolidate or formalize existing practices of the CTE, WTO Secretariat, and MEA Secretariats, 17 TN/TE/20, 21 April

87 including with respect to information exchange sessions, reciprocal access to documents, and enhanced collaboration and cooperation between WTO and MEA Secretariats such as on delivery of technical assistance and capacity building. With respect to the latter, some Members' proposals have sought to elaborate certain criteria, in addition to the WTO General Council criteria and procedures (Annex 3 of the Rules of Procedure for Sessions of the Ministerial Conference and Meetings of the General Council), which may be used by the CTE to judge requests for observer status from MEAs. These include the relevance of the MEA's scope of work to the CTE, and, the MEA Secretariat's participation in the CTE and its prior contribution to WTO work. Moreover, some Members' proposals aim to automatically grant observer status to those MEAs with longstanding observership requests, which have actively participated in the CTE as ad hoc observers. 75

88 PROPOSED ANSWERS: 1. Multilateral negotiated solutions to environmental problems are preferred to unilateral solutions when the environmental problem being addressed is regional or global in scope. Cooperation to address such environmental problems helps to ensure that the most efficient solution is put in place and that efforts to reduce environmental damage are not hindered by "free-riders". Furthermore, resort to unilateralism runs the risk of arbitrary discrimination and disguised protectionism which could damage the multilateral trading system. 2. Examples of MEAs discussed in the WTO are: The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal; the Convention on Biological Diversity (CBD) and the Cartagena Protocol on Biosafety; the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES); the Montreal Protocol on Substances that Deplete the Ozone Layer; the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade; the Stockholm Convention on Persistent Organic Pollutants; and the United Nations Framework Convention on Climate Change (UNFCCC) and its Kyoto Protocol. 3. MEAs can use trade measures for a number of reasons: for monitoring and controlling trade to encourage compliance with MEA requirements as a means of enforcing MEA objectives as an incentive for non-parties to adhere 4. The relevant WTO provisions that could relate to trade measures taken pursuant to an MEA include: GATT Article I, any advantage, or privilege granted by a country to any product originating in any other country shall be accorded to like products originating in the territories of all other Members; GATT Article III, WTO Members must not discriminate between imported and domestic like products; and GATT Article XI, no prohibitions or restrictions other than duties, taxes or other charges such as quotas, import or export licenses shall be applied on the import or export of any product. 5. In the context of a dispute on the application of a trade measure under an MEA, the respondent could invoke a defence under GATT Article XX, letter: (b) necessary to protect human, animal or plant life or health; (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption. 6. The scope of Paragraph 31(i) negotiations are limited to: existing WTO rules; specific trade obligations set out in MEAs; and applicability of such existing WTO rules as among parties to the MEA in question. 7. Several Members are of the opinion that dispute settlement falls outside the mandate of paragraph 31(i) of the Doha Declaration. Furthermore, it has been argued that deference to MEA expertise could result in WTO law being subordinated to rules contained in MEAs. 76

89 8. Information exchange between the WTO and various MEAs is essential to ensure that the trade and the environment regimes continue to evolve in a coherent and mutually supportive manner. 9. Current forms of information exchange between the WTO and MEAs include information sessions held by the CTE with MEA Secretariats; the organization by the WTO Secretariat of side events held in the margins of MEA Parties' meetings; exchange of documents; and collaboration between the WTO, UNEP and MEAs in providing technical assistance to developing countries on trade and the environment. 10. MEA observership in the CTE and the CTESS is important to establish means for information exchange between the WTO and other multilateral institutions. Observer status for MEAs allows these organizations to follow discussions on matters of direct interest to them. 77

90

91 MODULE 4 Environmental Goods Negotiations ESTIMATED TIME: 6 hours OBJECTIVES OF MODULE 4 Introduce and explain the rationale for the environmental goods negotiations contained in the Doha mandate on trade and environment Give an overview of the current state of the negotiations on environmental goods and services, including product identification, treatment and key challenges Present some of the cross-cutting issues related to the negotiations, including non-tariff barriers 79

92

93 I. BACKGROUND IN BRIEF One of the key elements of negotiations in the area of Trade and Environment concerns the liberalization of trade in environmental goods and services. The mandate contained in Paragraph 31(iii) of the Doha Ministerial Declaration reads as follows: "With a view to enhancing the mutual supportiveness of trade and environment, we agree to negotiations, without prejudging their outcome, on:... the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services." IN DETAIL I.A. POTENTIAL TO DELIVER WIN-WIN-WIN OUTCOMES Reducing barriers to trade in environmental goods and services can improve global market access to more efficient, diverse, and less expensive goods and services that can contribute to environmental objectives. Increasing access to, and use of, environmental goods and services can yield a number of environmental benefits, such as reducing air and water pollution, facilitating waste management and resource conservation, and improving energy efficiency. By facilitating access to these environmental technologies, trade liberalization can also assist developing countries achieve sustainable development objectives. Furthermore, market opening in these sectors can be a powerful tool for economic development by facilitating the transfer of valuable skills and technology embedded in such goods and services. As environmental goods and services are produced and used by developed and developing countries alike, liberalizing trade is seen as a way to improve market access and to further the trade, environmental and developmental goals of WTO Members. In short, the Doha mandate provides an unprecedented opportunity for the multilateral trading system to contribute to furthering mutual supportiveness of trade and the environment. TIP More information on the negotiations on environmental services is available in Module 7 (section II.H) of the E-training course "Trade in Services in the WTO". In initiating negotiations under Paragraph 31(iii) of the Doha Ministerial Declaration, trade ministers recognized the potential environmental, developmental and trade benefits of enhanced trade opening in environmental goods and services sectors. Since then, WTO Members have clarified that the outcome of the environmental goods negotiations should deliver a mutually reinforcing "win-win-win outcome", i.e. one that is beneficial for trade, environment and development, thereby contributing to broader sustainable development goals. 81

94 First, negotiations should result in a win for trade with the reduction or elimination of tariff and nontariff barriers (NTBs), as domestic purchasers, including business and governments at all levels, will be able to acquire environmental technologies at lower costs. Second, negotiations should result in a win for the environment by improving access to high quality environmental technologies needed to protect the environment or to help mitigate and adapt to climate change. This can lead to direct benefits for citizens in all countries in terms of a cleaner environment, while satisfying basic human needs such as improved access to safe water, sanitation or clean energy. In addition, the use of environmental goods can reduce negative externalities in the form of detrimental environmental and human health effects and can assist in the realization of important energy efficiency gains. Finally, the negotiations should result in a win for development to the extent that liberalization can assist developing countries in obtaining the tools needed to address key environmental priorities as part of their on-going development and poverty reduction strategies, reaffirmed in the Rio+20 outcome document. Opportunity for win-win-win outcome Lower prices through tariff reductions (Eliminate gap between green goods and their standard counterpart) Increased availability / access to green goods and services, environmentallyfriendly technology and know-how trade environment Assist developing countries in obtaining tools needed to address key environmental priorities as part of their ongoing development strategies development Figure 1: Win-win-win outcome I.B. ECONOMIC RATIONALE FOR REDUCING TARIFF AND NON TARIFF BARRIERS ON ENVIRONMENTAL GOODS There is a twofold rationale for reducing barriers to trade in environmentally-friendly goods and services. First, reducing or eliminating import tariffs and non-tariff barriers should reduce their price and therefore facilitate their widespread deployment at the lowest possible cost. Access to low-cost and more environmentallyfriendly technologies may be particularly important for industries which are faced with increasingly stringent environmental requirements. Tariff reductions, for instance, can ease the economic barriers to the use of environmentally friendly technologies. This is particularly important in sectors where cost is the principle obstacle to the deployment of 82

95 such technologies, such as the renewable energy sector. [1] In such cases, the reduction or removal of tariffs could contribute significantly to improving access to these technologies. Second, reducing tariffs and non-tariff barriers to trade in environmentally-friendly goods would provide incentives to producers - and help build necessary domestic expertise - to expand the production and export of these goods. It is argued that trade liberalization of such goods would allow developing countries, in particular, to promote the industrial diversification of their economies and realize economies of scale. [2] Increased trade allows larger markets for environmental goods, leading to profits from economies of scale and gives producers the opportunity to learn and benefit from technological advances. [3] Furthermore, increased competition from market opening can foster technological innovation in areas related to the protection of the environment. Trade liberalization of environmental goods, in particular in developing countries, could help increase local capabilities for innovation and adaptation of domestic technology rather than fostering dependence on transfer of foreign technology. [4] I.C. THE INSTITUTIONAL STRUCTURE OF NEGOTIATIONS So far, most of the discussions relating to Paragraph 31(iii) have taken place in the Committee on Trade and Environment in Special Session (CTESS). However, the mandate is also relevant to the work of other negotiating groups, such as the Council for Trade in Services in Special Session as regards environmental services; and the negotiating group on Non-Agricultural Market Access (NAMA) as regards industrial products. DDA Negotiations: Institutional Structure GENERAL COUNCIL Special Session of the Committee on Agriculture Special Session of the Council for Trade in Services Trade Negotiations Committee (TNC) Negotiating Group on TRIPS Special Market Session Access Special Session of the Dispute Settlement Body CTE Special Session Negotiating Group on Rules Figure 2: DDA Negotiations: Institutional Structure 1 Steenblik and Matsuoka (2008), Facilitating trade in selected climate change-mitigation technologies in the electricity generation and heavy industry sectors, COM/TAD/ENV/JWPTE(2008)28. 2 Claro and Lucas (2007), Environmental goods: trade flows, policy considerations and negotiating strategies, in ICTSD Trade in Environmental Goods and Services and Sustainable Development, Domestic Considerations and Strategies for WTO negotiations, Policy Discussion Paper, pp Stern (2006), The Economics of Climate Change: The Stern Review, Cambridge University Press, Cambridge, p Claro and Lucas (2007), see note 2. 83

96 Although the Doha Ministerial Declaration calls for negotiations on environmental goods, the mandate does not provide any definition of environmental goods. Therefore, initially the focus of the negotiations has been on identifying environmental goods. In addition, CTESS discussions have focused on the tariff treatment for environmental goods and other considerations such as non-tariff barriers, transfer of technology and the link to the environmental services negotiations. EXERCISES: 1. Please explain how the Doha Paragraph 31(iii) negotiations could deliver a "win-win-win" outcome. 2. What is the economic rationale for liberalizing trade in environmental goods? 84

97 II. IDENTIFICATION OF ENVIRONMENTAL GOODS IN BRIEF The most significant challenge to date for the negotiations under Paragraph 31(iii) undertaken in the CTE in Special Session has been the lack of an agreed definition of an "environmental good", and lack of agreement on the criteria that should apply to the identification of such goods (which can be found across a whole range of Harmonized System (HS) headings). IN DETAIL II.A. ENVIRONMENTAL GOODS IDENTIFIED BY A NUMBER OF MEMBERS Since the beginning of the negotiations, a number of delegations have put forward goods which they consider to be environmental. The Members that have identified environmental goods are: Canada, the European Union, Japan, Korea, New Zealand, Norway, Chinese Taipei, Switzerland and the United States of America (which together form the "Group of Friends"), as well as Qatar, Saudi Arabia, Singapore, the Philippines and Japan (on an independent basis). 259 Number of HS-6 lines "Group of friends" Philippines Japan Qatar Saudi Arabia Singapore Figure 3: Lists of environmental goods submitted 85

98 A broad range of products (amounting to 407 HS-6 tariff lines) have been put forward to date. More than half of the submitted tariff lines correspond to industrial manufactured goods (i.e. machinery and electrical and other manufactured articles). Textiles, 9, 2% Wood & Wood Products, 6, 2% Transportation, 29, 7% Mineral Products, 10, 2% Plastics / Rubbers, 20, 5% Chemicals & Allied Industries, 29, 7% Machinery / Electrical, 200, 49% Metals, 48, 12% Miscellaneous, 56, 14% Figure 4: Type of products in the submitted environmental lists (407 HS-6 Lines) These products have been categorized by Members according to their environmental use. The main category in which the goods fall is environmental technologies, such as: efficient consumption of energy technologies, gas flaring emission reduction, and environmental monitoring, analysis and assessment equipment. Other categories include carbon capture and storage, renewable energies, waste management and water treatment and air pollution control. 86

99 Number of HS-6 lines Others Air Pollution Control Waste Management and Water Treatment Renewable Energies Carbon Capture and Storage Environmental Technologies Figure 5: Categories of products in the submitted environmental lists (407 HS-6 Lines) Note A compilation list made up of all submissions on environmental goods submitted by Members can be found in Annex III to the 2010 Report by the Chairman to the Trade Negotiating Committee (TN/TE/19). II.B. CHALLENGES IN IDENTIFYING ENVIRONMENTAL GOODS Environmental goods in the CTESS have been identified on the basis of several Members' submissions ("defining by doing"). II.B.1. MULTIPLE USE While some goods, such as wind turbines or solar panels, may seem to be intrinsically environmental, there are many other industrial goods that may not come across as being environmental per se, but which are nevertheless essential when carrying out environmental activities or projects. In fact, this is the case for most of the goods that have been proposed by Members under Paragraph 31(iii), many of which are industrial goods that have different types of applications, some of which may be environmental, others not. 87

100 The "multiple use" of goods is a source of concern for several Members in the CTESS. In particular, some countries have been worried about the scope of the liberalization exercise under Paragraph 31(iii). This is particularly the case given that many of the goods considered in the context of Paragraph 31(iii) negotiations will already be subject to tariff cuts as a result of NAMA negotiations. II.B.2. TARIFF CLASSIFICATION With respect to the goods put forward so far, Members have proposed specific product descriptions, or "ex outs", which could serve to identify with more specificity environmental goods in the national tariff nomenclatures. That being said, there are many outstanding questions as to how environmental goods can be identified under the Harmonized System and whether ex-outs can easily be implemented at the border, especially in developing country Members. II.B.3. INDUSTRIAL VS. AGRICULTURAL GOODS Some delegations have indicated an interest in some goods classified under the Harmonized System as agricultural products - namely ethanol and organic agriculture - there is no formal proposal on the table at this stage suggesting to include such products under Paragraph 31(iii). II.B.4. RAPIDLY EVOLVING TECHNOLOGY Another challenge in the identification of environmental goods has to do with the fact that environmental technology is evolving rapidly. Goods that are considered environmentally friendly today may no longer be considered as such in five or ten years' time. In the context of the on-going DDA negotiations, this gives rise to the question of whether the mandate in Paragraph 31(iii) calls for a one-off liberalization exercise, or whether some kind of review mechanism should be included in the outcome to ensure that the liberalization exercise continues to benefit the environment. Identifying goods/product coverage: Some challenges No agreed definition or criteria (work in OECD, APEC defining by doing ) Coverage: industrial and agricultural goods? Majority of goods proposed have multiple uses (not just environmental) end-use) Technical issues relating to tariff classification (ability to distinguish at border; use of ex -outs) Constant evolution of the technology (Review mechanism needed? one off exercise?) Figure 6: Identification of environmental goods, key challenges 88

101 EXERCISES: 3. Try to identify examples of environmental goods that could fall under the various categories mentioned in section II.A. (e.g. renewable energy, air pollution control, etc.). 4. Briefly summarize the challenges Members have faced in identifying environmental goods. 89

102 III. TREATMENT FOR ENVIRONMENTAL GOODS IN BRIEF In addition to identifying environmental goods under the Paragraph 31(iii) mandate, Members have to agree on the extent of trade opening - in other words, the treatment that will apply to such goods. IN DETAIL III.A. THE DDA CONTEXT III.A.1. NAMA As mentioned in Section II.B.1, most of the goods proposed so far are industrial goods that will already be subject to tariff cuts as a result of negotiations in the NAMA Group. The view has been expressed that the fact that environmental goods were singled out in the DDA mandate would seem to suggest that goods considered as "environmental" should be subject to additional tariff cuts, but the question remains open at this stage. III.A.2. SPECIAL AND DIFFERENTIAL TREATMENT WTO Members have agreed that "the negotiations and the other aspects of the Work Programme shall take fully into account the principle of special and differential treatment for developing and Least-developed countries..." (Doha Ministerial Declaration, Para. 50). Any provisions for special and differential treatment should form an "integral part" of the outcome of the negotiations, and be "precise, effective and operational" (Doha Ministerial Declaration, Para. 44). Furthermore, as regards to non-agricultural market access, the Doha Declaration states that any outcome should "take fully into account the special needs and interests of developing and least-developed country participants, including through less than full reciprocity in reduction commitments" (Doha Ministerial Declaration, Para. 16). Several proposals have touched upon the issue of special and differential treatment under Paragraph 31(iii), or the treatment to apply to environmental goods more generally. III.B. DIFFERENT APPROACHES Different approaches to goods identification have been proposed by Members for environmental goods liberalization. These include: negotiating a list of environmental goods that would be subject to liberalization; proceeding on the basis of requests and offers; liberalizing goods utilized in environmental projects; 90

103 a mix of the previous approaches proposed. The following table briefly outlines the different approaches that have been proposed by Members for environmental goods liberalization. Approach Proposing Member(s) Details List Approach Group of Friends, Philippines, Saudi Arabia, Qatar and Singapore Members submit lists of environmental goods, along with tariff lines, proposed for liberalization. Request and Offer Approach Brazil Interested Members would draw up their own individual list of goods to be liberalized on an MFN basis. Negotiations would proceed on a bilateral basis. Integrated Approach Argentina and India Members would multilaterally agree on "categories of environmental activities". In accordance with these categories, Members would then identify specific goods used in the context of national projects. Similarly, goods required in the context of the Kyoto Protocol's Clean Development Mechanism would qualify for tariff concessions. Combined Approach Chile and Mexico Members would self-selected products drawn from the universe of goods tabled so far in the CTESS (See Section II.A.). In addition, interested Members could select goods through a complementary list based on a request and offer process. Hybrid Approach Australia, Colombia, Hong Kong (China), Norway and Singapore Members would undertake commitments on a multilaterally agreed 'common core list' of environmental goods. Developed Members would also choose products for tariff elimination from a 'complementary selfselected list', while Developing Members would be encouraged to do so. A request and offer process would also complement the two lists. Finally, other goods used in environmental projects could be unilaterally liberalized when used in environmental projects by the Member concerned. Table 1: Approaches proposed by Members to liberalize environmental goods 91

104 Modalities of Tariff Reductions and S&D Lesser reductions, implementation delays and other forms of flexibilities have been discussed. Product exemptions as well as the liberalization by developing country Members of a lesser number of tariff lines have also been envisaged. For least-developed country Members and small and vulnerable economies, additional flexibilities could also be envisaged. In the context of the list approach proposed by the Group of Friends, Members would have to negotiate the treatment that would apply to the various goods identified on a list. In this regard, one suggestion is that tariffs could be eliminated as soon as possible for developed country Members and those developing country Members declaring themselves in a position to do so; for other developing country Members, tariffs could be eliminated by "X" years thereafter. The Group of Friends further suggested that special and differential treatment for developing country Members could take the form of lower rates of liberalisation, different timeframes for the elimination of tariffs, or additional flexibilities, including product exemptions. Under Brazil's proposed request and offer approach both the identification of goods and their treatment would take place in the context of a series of request-offer negotiations. In this respect, developing country Members could decide on the proportion of goods to be liberalized, as well as on their own levels of reduction. As a result of bilateral or plurilateral negotiations, the agreed goods would be liberalised on an MFN basis. Under the integrated approach, proposed by India and Argentina, Members would first agree multilaterally on categories of environmental activities; in accordance with these categories, they would then proceed to identify environmental goods which would be subject to tariff reduction or elimination in the context of national environmental projects. The elimination of tariffs and NTBs in relation to the goods selected would therefore be limited in time. In other words, tariff concessions would be made only for the duration of the project in which the goods are used. In the context of the combined approach, elaborated by Mexico and Chile, developed Members would eliminate tariffs on [α] self-selected products, while participating developing Members would reduce, on top of the cuts resulting from the application of the Swiss Formula in the NAMA negotiations, tariffs by an additional 50 % on [β] self-select products, with [α] > [β] to fully integrate the principle of "less than full reciprocity". In addition, the implementation period for tariff cuts would be 5 years for developed Members and 10 years for participating developing Members. Other products from the overall universe not covered by Members' selfselected lists could be committed under a request and offer process, where both products and treatment would be determined through bilateral negotiations but consolidated and multilateralized via the MFN principle. Under the hybrid approach, proposed by Australia, Colombia, Hong Kong (China), Norway and Singapore, Members would undertake commitments on tariff elimination (Zero for Zero) or reduction (Zero for X and/or X% reduction from bound tariffs) with respect to the multilaterally agreed 'common core list' of environmental goods. Special and differential treatment is envisioned in the form of longer implementation periods and/or differential tariff cuts for developing Members. Regarding the 'complementary self-selected list', developed Members would commit to tariff elimination, while developing Members would be encouraged to select some environmental goods from this list for tariff elimination (Zero for Zero) or reductions (Zero for X and/or X% reduction from bound tariffs). The second 'complementary list', would be based on a bilateral request and offer process, whose agreed outcomes, including special and differential treatment, would subsequently be multilateralized via the MFN principle. Finally, goods used in environmental projects, that are otherwise not included in the common core list, the complementary self-selected list or the subject of request/offer, could be unilaterally liberalized when used in environmental projects by the Member concerned. 92

105 In order to illustrate how the hybrid approach could work, Australia, Colombia, Hong Kong (China), Norway and Singapore identified, without prejudice to any of the co-sponsors positions in the DDA Paragraph 31(iii) Negotiations, the following 25 goods as a starting point for the discussion in the CTESS on a common core-list: Mats/screens of vegetable materials HS Heat pumps HS Towers and lattice masts for wind turbine HS Solar water heaters HS Solar stoves HS Solar collector and solar system controller, heat exchanger HS Water saving showers HS Industrial catalysers HS Super-heated water boilers and parts of steam generating boilers Auxiliary plant for steam, water and central boiler Producer gas or water gas generators, with purifiers HS Wind turbines HS HS Static converters HS HS Photovoltaic system controller HS Turbines, steam and other vapour, over 40 MW, not elsewhere specified or included HS Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels; light emitting diodes HS Hydraulic turbines HS / HS Solar concentrator systems HS Engine catalysers/silencers HS Solar concentrator systems HS Hydraulic turbines and water wheels; parts including regulators Gas turbines of a power not exceeding 5,000 kw HS Spectrometers HS HS Thermostats HS Gas turbines of a power exceeding 5,000 kw HS Table 2: Illustrative common-core list - Goods identified for discussion without prejudice EXERCISES: 5. Describe the main frameworks that have been proposed by Members for liberalizing trade in environmental goods. 6. How could the concept of S&D treatment feature into the list approach? 93

106 IV. OTHER CONSIDERATIONS IN BRIEF In Paragraph 31(iii), Ministers also called on WTO Members to reduce or eliminate non-tariff barriers (NTBs) to trade in environmental goods. The importance of this part of the mandate has been underscored by several WTO Members. Also, a number of WTO Members have noted that transfer of environmental technologies is linked to the mandate, although Paragraph 31(iii) does not explicitly refer to "technology transfer." Finally, the provision of environmental services is closely linked to trade in related goods. Some Members have indicated that the development of their list of environmental goods had been informed by the types of products used in environmental services. IN DETAIL IV.A. NON-TARIFF BARRIERS While the elimination of tariffs is an important means of making environmental goods more affordable and widely available, non-tariff barriers (NTBs) can be equally, or even more significant, impediments to trade in such goods. It has been proposed that specifically identified NTBs on environmental goods should be addressed and reduced to the maximum extent possible so as to facilitate trade in environmental goods. So far, discussions in the CTESS on the NTB component of the mandate have been relatively limited but some examples of NTBs have been mentioned by Members. These include, for instance: restrictive technical regulations and conformity assessment procedures on specific products; complications related to customs procedures; immigration procedures; local content requirements; and intellectual property rights protection. Some proposals have also alluded to problems relating to the lack of international standards, including with respect to energy efficient goods (Japan) and organically produced food (Brazil). It was further suggested that Members consider establishing a structured work programme to address NTBs faced by developing country Members in the export of environmental goods. IV.B. TRANSFER OF TECHNOLOGY As noted above, reducing tariff and non-tariff barriers to environmental goods and services is one way of reducing the cost and increasing the availability of environmental technologies. However, a number of WTO Members have noted that additional efforts are likely to be required to ensure that effective transfer of the technology takes place in practice. 94

107 Note The mandate contained in Paragraph 37 of the Doha Declaration, referring to the relationship between trade and technology transfer, led to the establishment of a Working Group on Trade and Transfer of Technology. Although Paragraph 31(iii) does not explicitly refer to "technology transfer", it is understood that liberalizing tariff and non-tariff barriers to trade in environmental goods and services can contribute to making these goods and services more affordable and available, which in turn may facilitate access to relevant technologies. A number of developing countries have noted that environmental goods negotiations provide an opportunity within the WTO mandate to increase flows of technology to developing countries, and that an explicit focus on opportunities for doing so will be particularly important in order to achieve "wins" for the environmental and developmental dimensions of the Paragraph 31(iii) mandate. Some recent submissions from developing countries have proposed some ideas for advancing this element, including: developing work programmes on technology transfer; cooperative research and development of environmental technologies; technical assistance and capacity building; and elements related to intellectual property rights and finance to promote transfer of environmental technology. Considering that the environmental goods sector is only just emerging in most developing countries, it has been underlined that an important outcome of the negotiations should be to strengthen this sector in developing Members. Some Members have provided examples of aid and technical assistance activities that have contributed to technology transfer with respect to certain environmental goods. IV.C. ENVIRONMENTAL SERVICES It has been stated that the provision of environmental services is closely linked to trade in related goods. Indeed, there are many environmental activities that entail the use of goods in conjunction with the delivery of services. Some Members have indicated that the development of their list of environmental goods had been informed by the types of products used in environmental services: many goods are environmental goods because they are used in environmental services. The current classification of environmental services is based on the Services Sectoral Classification List developed during the Uruguay Round, which is in turn largely based on the United Nations Provisional Central Product Classification (CPC). The environmental services sector includes: sewage services; refuse disposal services; sanitation and similar services; and other environmental services. 95

108 Although the "other" category does not refer to any CPC item, it presumably includes the remaining elements of the CPC environmental services category, e.g. cleaning of exhaust gases, noise abatement services, nature and landscape protection services, and other environmental protection services not included elsewhere. This list has been used by many Members in their schedules of specific commitments. TIP More information on the United Nations Provisional Central Product Classification (CPC) can be found on the United Nations Statistics Division's website. Environmental services are covered by the negotiations in the Council for Trade in Services in Special Session. The main negotiating method in the area of services is the request and offer approach, which is similar to the request offer approach traditionally, used in the goods negotiations. As a result of these negotiations, some Members may take additional specific commitments in the area of environmental services. It has been reported that as of April 2012, some 51 Members had already undertaken specific commitments in at least one sub-sector of the environmental services sectors. Most of them, however, have undertaken specific commitments in several, and for some Members, in all sub-sectors. The number of commitments across sub-sectors is roughly equal. As compared to other services sectors, such as tourism, financial services or telecommunications, liberalization bound under the GATS in environmental services appears rather limited. However, one should remember that Members' policies may be more liberal in practice than is reflected in their schedules of specific commitments. The four modes of supply are relevant in the environmental services sector, although their importance varies depending on the services concerned. Environmental services is a sector where most trade takes place through commercial presence (mode 3) with the accompanying presence of natural persons (mode 4). Crossborder trade (mode 1) and consumption abroad (mode 2) offer an avenue for some supporting services, but appear to be technically limited for a number of relevant activities. These patterns are reflected in specific commitments undertaken by Members. Note Mode 1 cross-border supply Mode 2 consumption abroad Mode 3 establishment of commercial presence Mode 4 presence of natural persons Ex: Remote monitoring and control of air pollution levels Ex: Solid waste are treated abroad Ex: Subsidiary provides solid waste treatment services Ex: Foreign technician provides natural disaster assessment services In 2010, the WTO Secretariat produced a Background Note on Environmental Services, with the view to stimulating discussions in the Council for Trade in Services on the sector of environmental services (S/C/W/320). The note outlines general patterns and trends of environmental services markets, main features of the environmental services market, environmental services classifications, and the application of GATS to trade in environmental services. 96

109 EXERCISES: 7. Give examples of possible NTBs to trade in environmental goods. 8. Explain why transfer of technology is an important element for developing countries of an outcome under the environmental goods negotiations? 9. How will an outcome under paragraph 31(iii) contribute to the overarching objective of the trade and environment negotiations? 97

110 V. CURRENT SITUATION In April 2011, the serving Chairman of the CTESS circulated a report on the state of play of the negotiations, including under Paragraph 31(iii) (see: TN/TE/20). 98

111 VI. SUMMARY ENVIRONMENTAL GOODS AND SERVICES NEGOTIATIONS IN THE WTO At the Doha Ministerial Conference in 2001, trade ministers launched, for the first time in the history of the multilateral trading system, negotiations in the area of trade and environment. These negotiations address the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services. Negotiations should result in a 'win-win-win' outcome, for environment, development, and trade. Liberalization of trade in environmental goods can facilitate access to, and encourage the use of, environmental technologies, which can in turn stimulate innovation and technology transfer to developing countries. Moreover, developing country Members may have a rapidly growing commercial interest in some of the environmental goods that are being discussed. IDENTIFICATION OF ENVIRONMENTAL GOODS There is no internationally agreed definition of an "environmental good" for trade liberalization purposes. Nor is there any agreement on the criteria that should apply to their identification. To date, in the negotiations, some Members have put forward a broad range of products which they consider to be "environmental." These products have been categorized according to their environmental benefit or rationale, including: air pollution control, renewable energy, waste management, environmental technologies, and others. Members have faced a number of specific challenges in the identification of environmental goods: Environmental friendliness is a relative concept. Goods that are considered environmentally friendly in one country might not be in another country. Numerous environmental goods also have alternative "non-environmental" uses. Additionally, HS-6 categories are broad and can include both environmental and non-environmental products under the same tariff heading. Some Members have suggested using ex-outs in order to narrow the scope of liberalization. Members have to consider whether their negotiating mandate is limited to industrial goods or also covers agricultural goods. Environmental technology is rapidly evolving. Goods that are considered environmental today may not be so in 10 years' time. Different frameworks have been proposed by Members for environmental goods liberalization. These include: negotiating a list of environmental goods that would be subject to liberalization; proceeding on the basis of requests and offers; liberalizing goods utilized in environmental projects; a mix of the previous frameworks proposed 99

112 OTHER CONSIDERATIONS IN THE ENVIRONMENTAL GOODS NEGOTIATIONS The negotiating mandate under Paragraph 31(iii) also calls for the elimination or reduction of nontariff barriers to trade in environmental goods. While NTBs can be even more important impediments to trade than tariffs, to date, discussions in the CTESS on NTBs have been relatively limited. While the removal of tariff and non-tariff barriers to trade in environmental goods is one way of reducing the cost and increasing the accessibility of such goods, a number of WTO Members have noted that additional efforts are likely to be required to ensure that effective technology transfer takes place in practice. While technology transfer is not a part of the mandate under paragraph 31(iii), discussions have taken place on the issue in the CTESS. Negotiations on liberalizing trade in environmental services are taking place in the Council for Trade in Services. Trade in environmental services is often directly tied to trade in environmental goods, therefore, a successful outcome in both sets of negotiations will prove to be mutually supportive. 100

113 PROPOSED ANSWERS: 1. A successful outcome under Paragraph 31(iii) should result in a triple win for WTO Members: a win for the environment, a win for trade and a win for development. The environmental benefits would come from better access to safe water, sanitation or clean energy; trade benefits, since producers of such goods and technologies can find new markets; and development wins because poorer countries can better afford the tools needed to address key environmental priorities as part of their on-going development strategies. 2. There is a twofold rationale. First, reducing or eliminating tariffs and non-tariff barriers for environmental goods would reduce their price and therefore facilitate their deployment. Access to low-cost and more environmentally-friendly technologies may be particularly important for industries which must comply with environmental regulations. Second, trade liberalization of environmentally-friendly goods would provide incentives to producers to expand the production and export of these goods. Increased trade allows larger markets, leading to profits from economies of scale, and provides producers the opportunity to benefit from technological advances. This would allow, in particular, developing countries to promote diversification of their economies. 3. Examples of environmental goods include: Renewable energy: solar panels, wind turbines, solar water heaters Waste water management and potable water treatment: waterless urinals, composting toilets Management of solid and hazardous waste and recycling systems: waste containers, biomass boilers Air pollution control: air or vacuum pumps, fuel efficient vehicles Clean up or remediation of soil and water: oil skimmers Heat and energy management: glass fibres for thermal insulation of buildings, electricity meters Natural resources protection: fishing nets that include turtle excluder devices (TEDs) Noise and vibration abatement: industrial mufflers Environmental monitoring, analysis and assessment equipment: thermostats, gas or smoke analysis apparatus Cleaner or more resource efficient technologies and products: solar stoves Environmentally preferable products, based on end use or disposal characteristics: fabrics made with biodegradable or sustainable sources (e.g. jute vs. synthetic) 4. The challenges Members have faced identifying environmental goods stem from the fact that there is no internationally agreed definition of an "environmental good". Nor is there any agreement on the criteria that should apply to their identification. Specific challenges include: The concept of "environmental friendliness" is relative. Goods that may be considered environmentally friendly in one country might not correspond to the same priority in another country. Similarly, goods could be considered environmentally preferable when compared to other products, but could still be harmful to the environment. This challenge applies to most industrial goods identified by Members in the negotiations. Many environmental goods also have other "non-environmental" uses. Challenges exist in ensuring that the goods benefiting from trade liberalization under Paragraph 31(iii) are in fact being used for environmental purposes. 101

114 Members have to define the scope of negotiations, whether to liberalize trade in industrial environmental goods only, or to also include agricultural environmental goods. Environmental technology is rapidly evolving. Goods that are considered environmental today may not be environmental in 10 years time. In the context of the on-going DDA negotiations, this gives rise to the question as to whether the mandate in Paragraph 31(iii) calls for a one-off liberalization exercise, or whether some kind of review mechanism should be included in the outcome to ensure that the liberalization exercise indeed benefits the environment. 5. Under the list approach, Members submit lists of environmental goods of interest to them. Members would then negotiate the treatment that would apply to the various goods identified on a list. Under the request and offer approach, interested Members would draw up their own individual list of goods to be liberalized on an MFN basis. Negotiations would proceed on a bilateral basis. Under the integrated approach, Members would first agree multilaterally on categories of environmental activities; in accordance with these categories, they would then proceed to identify environmental goods which would be subject to tariff reduction or elimination in the context of national environmental projects. The elimination of tariffs and NTBs in relation to the goods selected would therefore be limited in time. In other words, tariff concessions would be made only for the duration of the project in which the goods are used. Under the combined approach, Members would self-select products drawn from the universe of goods tabled so far in the CTESS and interested Members could also select goods through a complementary list based on a request and offer process. Under the hybrid approach, Members would undertake commitments on environmental goods based on a multilaterally agreed 'common core list'. Developed Members and interested developing Members would also choose products for tariff elimination from a 'complementary self-selected list'. Other products could be selected through a request and offer process, while other goods used in environmental projects could be unilaterally liberalized when used in environmental projects. 6. Under the list approach, it has been suggested that tariffs could be eliminated as soon as possible for developed country Members and those developing country Members declaring themselves in a position to do so; for other developing country Members, tariffs could be eliminated by "X" years thereafter. The Group of Friends further suggested that special and differential treatment for developing country Members could take the form of lower rates of liberalisation, different timeframes for the elimination of tariffs, or additional flexibilities, including product exemptions. 7. NTBs could include complications related to customs procedures, immigration procedures, local content requirements and intellectual property rights protection. 8. Technology transfer is important in order to achieve a "win" for the developmental dimension of the Paragraph 31(iii) mandate. Given that the environmental goods sector is just emerging in most developing countries, it has been underlined that an important outcome of the negotiations should be to strengthen this sector in developing Members. 9. Recall that the overarching objective of the Doha negotiations on trade and the environment is to enhance the mutual supportiveness of trade and environmental policies. A successful outcome under Paragraph 31(iii) should result in a triple win for WTO Members (i.e. environmental, trade and developmental benefits) enhancing the mutual supportiveness of trade and environment. 102

115 MODULE 5 Environmental Requirements and Market Access, including Labelling for Environmental Purposes ESTIMATED TIME: 8 hours OBJECTIVES OF MODULE 5 Part one of Module 5 deals with environmental requirements and market access. It gives an overview of environment requirements and provides a general summary of relevant work in the Committee on Trade and Environment (CTE) and the Committee on Technical Barriers to Trade (TBT). Part two of Module 5 focuses on labelling for environmental purposes. It gives an overview of environmental labelling; provides a general summary of relevant work in the CTE; describes relevant disciplines in the TBT Agreement; and explains market access issues faced by developing countries. 103

116

117 I. ENVIRONMENTAL REQUIREMENTS AND MARKET ACCESS IN BRIEF Environmental requirements and market access: preventing green protectionism Environmental requirements are requirements adopted to achieve environmental objectives. There is a risk that these requirements impede trade and even be used as an excuse for protectionism. The answer is not to weaken environmental standards, but to set appropriate standards and enable exporters to meet them. IN DETAIL I.A. ENVIRONMENTAL REQUIREMENTS I.A.1. WHAT ARE ENVIRONMENTAL REQUIREMENTS? Policies adopted to achieve environmental objectives take the form of environmental requirements. They may include bans and restrictions; product-content and product- process- requirements; product performance requirements; packaging, waste management and recycling requirements; charges and taxes; labelling requirements; testing, inspection and certification; amongst others. Examples of environmental requirements... Requirements on products or processes: Requirements specifying certain product characteristics, performance or production methods in the pursuit of environmental objectives are often elaborated in (mandatory) technical regulations, or in (voluntary) standards. These requirements can be product-content requirements (e.g., a ban on use of characterizing flavours in tobacco products or on the use of fur/skin of endangered animal species in the production of garments) or maximum residue limits (e.g., bans and restrictions on the use of certain hazardous pesticides). They can also be minimum product performance standards (e.g., energy efficiency requirements on electronic and electrical appliances, or maximum emissions standards on vehicles). Labelling requirements: Environmental-labels inform consumers and raise their awareness about the environmental characteristics of a product. Frequently, they aim at changing both consumers' and producers' behaviour in favour of environmentally-friendly production, products, technologies and consumption. They may be set out as (voluntary) standards and also as (mandatory) technical regulations, and may lead to the award of eco-labels. Packaging and disposal requirements: These requirements aim at reducing the quantity of packaging waste, facilitating its recovery, reuse, recycling or disposal, obliging producers and consumers to take more direct responsibility for tackling the environmental problems they create. They are applied to alter the 105

118 characteristics of packaging, for instance, its recyclability, recycled content and bans on certain types of packaging material or substances, as well as how packaging is disposed of, for instance, handling requirements, take-back obligations and deposit-refund schemes. I.A.2. RECENT TRENDS [1] Proliferation and growing complexity Consumers, producers, regulators and other stakeholders are becoming increasingly aware of environmental and health issues, and are looking for versatile tools to address these effectively. As a result, environmental requirements have proliferated, in particular in developed countries, as well as in some developing countries. They are becoming more complex, aimed at fulfilling not only environmental objectives but often also other public policy objectives, connecting to health, food safety, environmental and occupational safety concerns. These requirements may be stringent, have broad impacts and be subject to frequent changes. They often differ from market to market. Since they are multidimensional, involving various groups of stakeholders, they are more difficult to harmonize across markets. In recent years, there has been an increasing number of eco-labelling schemes relying on life cycle assessment (LCA) in order to assess and quantify the environmental impacts of a given product throughout its lifecycle, from production, processing, transportation, sale, use until disposal. For instance, concerns about climate change have witnessed the emergence of new carbon footprint labelling schemes, whose objective is to quantify the total amount of greenhouse gases emitted during the different stages in the life cycle of goods. The growing number of carbon footprint schemes at the private but also national level over the last five years has raised some concerns in the trade community about the potential impact of the proliferation of these carbon footprint schemes in terms of market access. Rise in private sector voluntary initiatives In addition to those set out in (mandatory) technical regulations and (voluntary) standards, environmental requirements are increasingly prevalent in so-called 'private standards', set by companies or non-governmental organizations (NGOs). The importance of private standards is on the rise, for instance, in food and beverage, fisheries and forestry sectors. Private standards may include more stringent specifications than those contained in government technical regulations or standards, and are evolving fast. Although private standards are by definition voluntary, in many cases, they may have to be met to effectively gain market access, and become commercial imperatives for certain markets. In such cases, a clear separation between mandatory and voluntary requirements is not clearly discerned at the level of the producer and exporter. Increase in global supply-chain driven requirements With a globalized production system, producers and exporters are obliged to meet specifications required by multinational companies, including those set out in private standards. For example, there is an increase in environmental requirements imposed by big retailers along the global supply chain. Producers, including small and medium-sized enterprises (SMEs) have to abide by requirements set by global supply chains or risk being 1 Based on OECD Trade Policy Studies 2005 and the UNCTAD Trade and Environment Review 2006 (WT/CTE/W/244). 106

119 phased out as input providers. For instance, in the food sector, one of the global purchasing standards is the Good Agricultural Practice (GlobalGAP) launched by the Euro Retailer Produce Working Group, which includes the leading supermarkets in Europe. [2] GlobalGAP includes environment-related standards for "green coffee", which covers issues such as waste and pollution management, recycling and re-use as well as environment and conservation. EXERCISES: 1. What are environmental requirements, give three examples? 2. What are the recent trends in environmental requirements? 2 GLOBALGAP is a global partnership of voluntary members, bringing together like-minded parties with the shared vision of harmonising Good Agricultural Practice (G.A.P.) world-wide. The partnership is open to any organization agreeing to the Terms of Reference committed to responding to consumer concerns on food safety, animal welfare, environmental protection and worker welfare. 107

120 I.B. RELEVANT WORK IN THE CTE COMMITTEE IN BRIEF The effect of environmental measures on market access, especially for developing countries and in particular to least developed countries (LDCs), is one of the items of work of the Committee. In 2001, the Doha Ministerial Declaration instructed the CTE to give particular attention to this subject. IN DETAIL I.B.1. CTE WORK PROGRAMME The effect of environmental measures on market access is one of the items (Item 6) on the Committee s work programme established in the 1994 Marrakesh Ministerial Decision on Trade and Environment. In 2001, the Doha Ministerial Declaration instructed the Committee to give particular attention to this subject. Marrakesh Ministerial Decision on Trade and Environment - Item 6 - (First Part) The effect of environmental measures on market access, especially in relation to developing countries, in particular to the least developed among them Doha Declaration - Paragraph 32(i) (First Part) We instruct the Committee on Trade and Environment, in pursuing work on all items on its agenda within its current terms of reference, to give particular attention to: ( ) (i) the effect of environmental measures on market access, especially in relation to developing countries, in particular the least developed among them ( ). I.B.2. GENERAL DISCUSSION SINCE 1995 Environmental requirements and market access is a main area of work of the CTE. It is particularly important as it holds the key to the complementarities that exist between sound trade and environmental policy-making. Moreover, improved market access for developing countries' products is key to the goal of achieving sustainable development. Since the establishment of the CTE, discussions under this work item have covered a large number of issues that aim generally at overcoming market access challenges while pursuing legitimate environmental policy objectives. In the early years, discussions started in the context of a number of general principles contained in the 1992 Rio Declaration on Environment and Development (e.g. the principle of common but differentiated responsibility; the understanding that poverty is a basic cause for environmental degradation; the polluter pays principle; and the importance of multilateral cooperation). 108

121 Further discussions highlighted a list of issues that could be useful to overcome market access challenges due to environmental requirements: transparency; notification; early warning; impact assessment; consultation and taking into account comments on draft measures; technical assistance and capacity building to assist compliance; and coordination within exporting countries. I.B.3. KEY ASPECTS OF THE DISCUSSIONS WTO Member governments consider that the protection of the environment and health are legitimate policy objectives. But they also acknowledge that measures designed to meet these objectives could hinder exports. And they agree that sustainable development depends on improved market access for developing countries products. Key aspects of the CTE discussions on environmental requirements and market access are: (i) positive potential of environmental requirements for sustainable trade; (ii) key concerns and developing countries' specific conditions; and (iii) ways to enable compliance with environmental requirements. Positive potential of environmental requirements for sustainable trade The positive potential of environmental requirements for sustainable trade has been highlighted on a number of occasions in the CTE: they are seen as capable of creating market opportunities and offering developing countries the possibility to use their comparative advantage in exporting their products to markets where environmental protection is an important consideration. To recall, the World Summit on Sustainable Development (WSSD) in 2002 reiterated the need to support WTO compatible voluntary market-based initiatives for the creation and expansion of domestic and international markets for environmentally friendly goods. In the discussion, some Members have mentioned concrete examples where environment-related trade measures, sometimes even in the form of bans, resulted in a positive environmental outcome. For instance, Malaysia's export controls on unprocessed logs were levied to meet sustainable developmental objectives and had helped to reduce the rate of deforestation. Another example is the German ban imposed on carcinogenic Azo dyes for public health reasons, which resulted in a dangerous substance being removed more quickly. Key concerns and developing countries' specific conditions The fact that environmental requirements could adversely affect exports has been acknowledged on several occasions. Principle 11 of the 1992 Rio Declaration on Environment and Development says that standards, objectives and priorities do need to reflect the particular environmental and developmental context to which they apply. [3] In other words, environmental standards applied in some countries could be inappropriate in others. They could cause unwarranted economic and social cost to others, particularly developing countries, by hindering exports. SMEs are especially vulnerable. Developing countries face particular difficulties in adjusting to the increasing number of environmental requirements in their export markets and some environmental measures require prohibitive compliance costs. A study presented by India 4 in October 2000 highlighted various reasons for the vulnerability of developing 3 Principle 11 says "States shall enact effective environmental legislation. Environmental standards, management objectives and priorities should reflect the environmental and development context to which they apply. Standards applied by some countries may be inappropriate and of unwarranted economic and social cost to other countries, in particular developing countries." 4 WT/CTE/W/177 (October 2000). 109

122 countries when environmental measures were introduced in developed countries, including inadequate access to information and technology as well as lack of necessary skills and capital. Colombia also presented a study on the negative market access implications of private environmental requirements. 5 One particular concern raised by developing country Members was the difficulties encountered by their SMEs to comply with certain environmental measures. Developing country Members also expressed concerns that environmental requirements adopted by developed countries did not take into account the country-specific natural and socioeconomic conditions of developing countries. Enabling compliance to environmental requirements Members consider that a balance is needed between safeguarding market access and protecting the environment. WTO Agreements help ensure that environmental measures do not unnecessarily restrict trade. Examples of such Agreements include the SPS Agreement which deals with food safety and animal and plant health and, in particular, the TBT Agreement which deals with technical regulations, product standards and labelling. Furthermore, WTO Member governments agree that there is a need to examine how environmental measures could be designed so that they are consistent with WTO rules and inclusive, while taking into account the capabilities of developing countries and meeting the legitimate objectives of the importing country. The objective is not to weaken environmental standards, but to enable exporters to meet them. Most environmental requirements are in the form of (mandatory) technical regulations or (voluntary) standards, and some of them are based on international standards. The importance of improving the effective participation of developing countries in international standard setting activities has been highlighted on a number of occasions, in particular as a way of mitigating negative trade effects. Moreover, flexibility in the application of environmental measures was seen as key, including through longer time-frames. Also, several Members emphasized the principles of equivalence and mutual recognition. In order to enable exporters to meet environmental requirements, technical assistance, capacity building and technology transfer, as well as investment in domestic infrastructure were emphasized. It has also been proposed to use the Enhanced Integrated Framework (EIF) 6 to mainstream capacity building and technical assistance to enable developing countries to respond to environment-related challenges that impacted on trade. In this regard, Aid for Trade is also a conduit mentioned in general but not taken up in the CTE context. I.B.4. RECENT DISCUSSIONS Recently, CTE discussions focused on some specific areas, such as private voluntary standards and organic agricultural products. 5 WT/CTE/W/76 (9 March 1998). 6 Set up in 1997 in the WTO, and subsequently reviewed in 2005, the EIF is a "multi-donor programme, which supports LDCs to be more active players in the global trading system by helping them tackle supply-side constraints to trade." 110

123 Private voluntary standards The issue of private (voluntary) standards as such was taken up for the first time in the CTE in [7] To recall, private standards usually refer to standards set by companies or NGOs, for example, as often applied in retail supply chains. Members, including developed and developing countries, raised concerns on: the de facto mandatory nature of these requirements; the difficulties in keeping up with rapid proliferation of private schemes; their effect on market access, in particular for SMEs in developing countries; the lack of transparency of some of the schemes; and the difficulties faced by producers to participate in standards development. The need for more transparency and harmonization in this area has generally been emphasized. Argentina and a number of delegations also raised concerns on the non-product related processes and production methods (npr-ppms) content of some private standards. Some emphasized that these requirements should not become a condition for market access, and should conform to the rules of the Code of Good Practice for the Preparation, Adoption and Application of Standards under the TBT Agreement. Other concerns related to the lack of scientific basis in standards development; insufficient data; the large variety of methodologies used; and the need for disciplines governing the development and implementation of standards that go beyond transparency disciplines. The European Communities and the United States have expressed caution in this debate, highlighting the need to reflect on the right format and approach for discussions on standards prepared by private entities. In July 2009, the WTO Secretariat organized a Workshop on Environment-related Private Standards, Certification and Labelling Requirements. A variety of environment-related private standards, certification and labelling schemes in the fisheries, coffee, horticulture and forestry sectors were presented. Information was provided in areas such as standard-setting process; suitability of standards to producers; conformity assessment procedures; distribution of costs and benefits; and relationship between government regulations and private standards. It was explained that private standards responded greatly to the concerns of NGOs and consumer organizations, but were also influenced by big retailers in developed countries that wanted to differentiate products. The general issues that were discussed related to proliferation and harmonization, transparency and standard development processes, environmental impact and effectiveness, and capacity building. Opportunities and challenges faced, in particular by producers and exporters in developing countries, were also addressed. On transparency and standard development processes, a recurring theme throughout the event was the recognition of the existence of key principles and best practice guidelines available to standard setters, for example, the TBT Agreement, ISO Guides, the FAO Code and the various ISEAL Codes. [8] Organic agricultural products In , a number of developing countries (Uganda, Kenya, India, China and Egypt) shared their national and regional experiences in exporting organic agricultural products. Growing consumer demand for these products could provide new market opportunities for farmers, in particular small holders, in developing countries. The development of this sector could have positive effects not only on income generation, but also on the conservation of natural resources and social development. While highlighting the possible contribution of organic production to creating a win-win-win situation for trade, the environment and development, Members also raised concerns on the difficulties faced by producers due to the proliferation of both different government regulations and private voluntary standards, the lack of international standards, as well as the high cost of multiple inspection, certification and accreditation requirements. The importance of providing the possibility for small 7 WT/CTE/M/47 (July 2009) and WT/CTE/M/48 (November 2009). 8 See report of the workshop in JOB(09)/

124 holder group certification, as well as the need for a multilateral solution on harmonization, equivalency and mutual recognition was emphasized. [9] EXERCISES: 3. Why are private voluntary standards in the environmental realm a growing area of concern for some WTO Members? 4. How has the work of the CTE in the area of environmental requirements and market access helped promote coherence between trade and environment policy making? 9 WT/CTE/M/

125 I.C. WORK IN OTHER RELEVANT WTO COMMITTEES IN BRIEF The TBT and SPS Committees provide a unique framework for work on environmental requirements through notifications and debates at committee meetings. [10] IN DETAIL I.C.1. NOTIFICATIONS WTO Members regularly notify their environmental measures to the WTO, as per the transparency provisions contained in the TBT and SPS Agreements, amongst others. In fulfilment of the recommendation in the 1996 Report of the Committee on Trade and Environment (CTE) to the Singapore Ministerial Conference, the Secretariat compiles and updates annually all environment-related measures that were notified to the WTO. This environmental database (WT/CTE/EDB) also includes environment-related measures, provisions or programmes noted in Trade Policy Reviews. TBT notifications The TBT Agreement covers technical regulations, standards and conformity assessment procedures applying to agricultural and industrial goods. Technical regulations: measures which lay down product characteristics or their related processes and production methods, with which compliance is mandatory. Standards: measures approved by a Recognised Body that provide, for common and repeated use, rules, guidelines or characteristics for products or related processes and production methods, with which compliance is voluntary. Conformity assessment procedures: procedures used, directly or indirectly, to determine the fulfilment of relevant requirements contained in technical regulations or standards. One of the objectives of the TBT Agreement is to ensure that these technical regulations, standards and conformity assessment procedures do not constitute unnecessary barriers to international trade while recognizing the right of Members to take regulatory measures to achieve their legitimate objectives such as the protection of animal or plant life or health, or protection of the environment. 10 In 2006, the Secretariat prepared a note considering the work in these two committees on environment-related information which Members have notified and specific trade concerns (STCs) which they have raised (document JOB(06)263). 113

126 Over the past years, the number of such notifications has steadily increased, in particular those under the TBT Agreement. Recently, on average, around 13 per cent of all proposed regulations notified under the TBT Agreement indicate environmental protection as the objective, covering a wide range of sectors and measures % 9% 9% 11% 15% 12% 16% 20% 12% 13% 17% 16% 18% 16% 19% 18% 19% 22% 7% 6% 5% Share of environment-related TBT notifications Number of environment-related TBT notifications Figure 1: Environment-related TBT Notifications ( ) The notified TBT environment-related measures addressed, among others, chemicals, ozone depleting substances, volatile organic compound, waste, toxic and hazardous substances, fertilisers and pesticides, gas, biofuels, other liquid fuels and petroleum products, electronic and electrical appliances, vehicles, vessels, engines and motors, buildings, batteries, tyres, drugs, wood, food and agricultural products. These measures included general environmental requirements, ban and prohibition, performance and efficiency standards, technical or quality specifications, safety specifications, eco-design requirements, classification, harmonization, labelling and packages requirements, handling, transportation, storage and distribution requirements, testing, certification and other conformity assessment procedures. The environment-related notified measures aimed at environmental protection in areas such as increased energy/fuel efficiency, energy/resources conservation, GHG emission reduction (including meeting national emission or renewable energy targets), pollution reduction, waste, radioactive waste, chemicals and toxic substances management, recycling and recovery, protection of animal and plant health, biodiversity, promotion of sustainable production and consumption, compliance with multilateral environmental agreements (e.g. Kyoto Protocol and Montreal Protocol), and contribution to mitigation of climate change. Among the above, measures related to energy conservation and efficiency were the most frequently notified. 114

127 SPS notifications The SPS Agreement covers measures that are taken by countries to ensure the safety of foods, beverages and foodstuffs from additives, toxins or contaminants, or for the protection of countries from the spread of pests or diseases. It recognizes the right of Members to adopt SPS measures but stipulates that they should follow international standards and must be based on a risk assessment, should be applied only to the extent necessary to protect human, animal or plant life or health, and should not arbitrarily or unjustifiably discriminate between countries where similar conditions prevail. Article 5.7 of the SPS Agreement allows Members to take SPS measures in cases where the scientific evidence is insufficient, provided that these measures are only provisional, and that a more objective assessment of risk is being conducted. In general, the TBT and SPS Agreements are designed to complement one another, although the application of these Agreements is mutually exclusive. Article 1.5 of the TBT Agreement excludes SPS measures from the scope of the TBT Agreement. Likewise, Article 1.4 of the SPS Agreement provides that nothing (in the SPS Agreement) shall affect rights of Members under the TBT Agreement with respect to measures not within the scope of the SPS Agreement. So, in short: a TBT measure cannot be an SPS measure and vice-versa. Notwithstanding such distinctions, governments may, and indeed do, draft and implement regulations that are broad in scope, where some requirements within the regulation are covered by the TBT Agreement and others by the SPS Agreement. The share of environment-related SPS notifications with respect to all proposed regulations notified under the SPS agreement has been, on average, around 8 per cent % 7% 3% 6% 4% 8% 7% 9% 8% 16% 12% 9% 11% 8% 8% Share of environment-related SPS notifications Total number of SPS notifications Figure 2: Environment-related SPS Notifications ( ) 115

128 Frequently, the SPS environment-related notifications addressed, among others, sanitary and phytosanitary requirements for the importation of nursery stocks of forest and plant species; fruits and seeds; wild birds and eggs; live fish, live animals and animal products; animal feed and veterinary products; fertilizers and pesticides; toxic chemicals and bio-chemical products. Some other measures related to wood packaging material; quarantine requirements; import risk analysis (IRA); environmental and toxicological evaluation procedures. They aimed solely or partly at protecting animal health, plants from animal/plant pests or diseases, and the territory from other damage from pests (e.g. protection against the outbreak of Avian Influenza). I.C.2. SPECIFIC TRADE CONCERNS WTO Members regularly use the TBT and SPS committee meetings to raise specific concerns on potential adverse trade effects, or any perceived non-compliance with the obligations of the Agreements, of other Members' measures. These specific trade concerns (STCs) relate to existing measures or draft measures notified to the Committees. In the case of the TBT Committee, in the period , 330 STCs have been raised, [11] of which approximately 25 per cent were environment-related. [12] Environment-related STCs Total STCs Figure 3: Environment-related TBT STCs ( ) STCs have been raised in the SPS Committee, around 8 per cent of which were environment-related. 12 This number may not necessarily represent the full range of TBT trade concerns that exist among Members. Many trade concerns are dealt with bilaterally, and not raised at the Committee level. 116

129 Most frequently, these environment-related STCs involve the following product groups: chemicals, electrical and electronic equipment, fertilizers and other industrial goods. These include environmental concerns related to the control of hazardous substances, emissions reduction and resource and waste management. They cover measures such as bans and restrictions, production rules, labelling (e.g. energy efficiency labelling schemes), eco-design, fuel economy and emission standards, pollution control requirements, collection, treatment, recycling and recovery, certification and registration, risk assessment and sustainable management schemes. [13] 30 Number of STCs Figure 4: Environment-related objective of TBT STCs ( ) Among the environment-related STCs, the most frequently invoked concern is to avoid unnecessary barriers to trade. Others, for example, relate to the need for more information or clarification, including with respect to the rationale of the measure or the use of international standards. 13 For more information, TBT STCs can be found in document G/TBT/GEN/74/*. 117

130 57 Number of STCs Figure 5: Type of concern of environment-related TBT STCs ( ) Environmental Concerns Products affected Type of measures Control hazardous substances of Chemical products Registration, risk assessment and management, labelling obligations and restrictions Electrical and electronic equipment Bans on the use of certain substances, collection, treatment, recycling and recovery Fertilizers Limits on the use of certain substances in fertilizers (e.g. arsenic, cadmium, lead, chromium and mercury etc.) Emissions reduction Energy-using products such as electrical and electronic equipment (e.g. air conditioners, refrigerators and lamps) and other household or office appliances Eco-design requirements (e.g. standby and off-mode electric power consumption) and energy efficiency labelling scheme Taxis, road vehicles, passenger cars with compression ignition engines and aircrafts Emission standards, particle filters for diesel engines, registration, certification and fuel economy standards 118

131 Environmental Concerns Products affected Type of measures Resource management Wood Certification for sustainable management forests, tracing systems for sustainably produced wood and labelling Seal products Ban on the marketing, transit, import and export of seal products Organic agricultural and aquaculture products Production and labelling rules Waste management Various industrial goods Promotion of waste reduction, reuse and recycling, post consumption collection, take-back obligations and substitution of substances Table 1: Environmental Aspects of Selected TBT STCs EXERCISES: 5. Explain how the TBT and SPS Committees provide a framework for work on environmental requirements and market access. 119

132 II. LABELLING REQUIREMENTS FOR ENVIRONMENTAL PURPOSES II.A. INTRODUCTION IN BRIEF Often, environmental labels are used to differentiate environmentally friendly products and capture market opportunities. They also serve to raise consumer environmental awareness; provide timely information on certain environmental aspects of products and their processes and production methods; and direct manufacturers to account for the environmental impacts of their products and production. They can contribute to the development of a more environmentally conscious market. They can also have impacts on the market, in particular with their recent proliferation and increasing complexity. IN DETAIL II.A.1. TYPES OF ENVIRONMENTAL LABELLING SCHEMES There are different types of environmental labelling schemes, depending on their design and implementation, for example: Voluntary or mandatory: Most environmental labelling schemes are voluntary (e.g. environmental labels on detergents and paper products). However, sometimes, they can be mandatory requirements imposed by governments (e.g. energy efficiency label for home appliances). Single or multiple sector/issue: Some labels focus on a specific product sector with multiple criteria, looking into products' entire life cycle from their production, processing, transportation, sale, use until their disposal (e.g. wood products, coffee and fisheries), while others focus on certain environmental issues and may cover several product categories (e.g. organic production, recycle material and energy efficiency). Information or rating: Some labels provide direct information or quantitative data on products' environmental performance, while others provide rating or select leadership based on criteria and comparison (e.g. electronic and electrical appliances). Self-declared or third party: Often labelling schemes require third party verification, but some labels are in the form of self-declaration. Government or non-governmental: Labelling schemes can be government-run or privately-administered. There are also voluntary government-sponsored schemes. On the other hand, a programme can be government-run, and subject to independent third-party certification. Many governments were among the first to recognise the benefits of environmental labelling, and started programmes that now successfully label a multitude of environmentally preferable products. 120

133 ISO Classification Labelling schemes can be classified based on the following International Organization for Standardization (ISO) classification: Type I labels are defined as voluntary, multiple-criteria-based programmes, administered by third parties. Under these programmes, a license is awarded which authorises the use of an environmental label intended to indicate the environmental preferability of a product, based on life cycle considerations. These programmes provide a license to manufacturers to use a certification mark, owned by an independent body, on their products. Type II labels are self-declared environmental claims. Under the ISO s definition, these are environmental claims that are made, without independent third-party certification, by manufacturers, importers, distributors, retailers, or anyone else likely to benefit from such a claim. Type III labels can be generally described as declarations of quantified environmental data relating to a product. Eco-labels Eco-labels are specific environmental labelling schemes that are based on life-cycle analysis 14 or cradle-to-grave approach (raw material, production, consumption and disposal). 15 The purpose is to help consumers identify products that are environmentally preferable to other products in the same category. Examples of eco-labelling labelling schemes include: the German "Blue Angel" (covers different product groups e.g., heating systems, copying machines and paper products); the Japanese "Eco Mark" (covering around 69 product categories, including stationary products - ballpoint and marker pens, mechanical pencils, correction products and notebooks); and the Danish "Nordic Swan" label (e.g. on toilet paper, paper towels and detergents). Recently, eco-labelling schemes have been developed in many developing countries, such as the Brazilian eco-label "Qualidade Ambiental"; China's "Environmental Labelling Scheme", the Chinese Taipei's eco-label "Green Mark"; the Indian "Ecomark"; the "Green Choice Philippines"; and the "Korea Eco-Label". Figure 7: Examples of Eco-labelling Schemes 14 "Life-cycle analysis" looks at environmental impacts of a product throughout all stages, beginning from extraction of raw materials used to produce the product, to production, transportation and distribution, sale, use, repair and maintenance, disposal, recycling and end of life. 15 Introduction to Ecolabelling, Global Ecolabelling Network,

134 Note: Differences between environmental labelling and eco-labelling The term eco-labelling is often misused to refer to all labels relating to the environment. In reality, environmental labelling refers to a large and composite set of labels, declarations and claims of environmental performance, while eco-labelling is a sub-group of environmental labelling schemes relying on specific criteria based on life cycle considerations and awarded by an independent third party. II.A.2. IMPACTS OF ENVIRONMENTAL LABELLING REQUIREMENTS [16] The effects of environmental labels on producers, consumer behaviour, markets and the environment are closely linked: producer and consumer behaviour will, to a certain extent, affect markets, and may in turn lead to effects on the environment. Impacts on producers More and more companies are making improvements to their environmental performance as they strive to meet consumers increased demand for environmentally preferable products. This also has an influence on suppliers since manufacturers are increasingly demanding proof of their products environmental soundness in order to prevent future liability or negative publicity. Environmental labels may serve as a communication tool, allowing for "environmental benchmarking". 17 The criteria of an environmental label may help orient companies R&D activities and internal requirements. Impacts on consumers Some studies reveal that consumers are willing to pay more for eco-labelled products. The effects depend on consumers levels of education and environmental involvement, the media and the type of additional information available. In general, environmental labels seem to raise consumers awareness of environmental issues and change their purchasing behaviour while leading manufacturers to increasingly produce environmentally preferable goods. Impacts on environmental protection Environmental labels can contribute to the development of a more environmentally conscious market (and market behaviour) and help set standards for product development and manufacturing, directives and support programmes, and contribute to a systematic approach in decision-making (e.g. "life-cycle analysis"). They can also have a multiplier effect (raising public awareness for environmentally preferable products beyond the labelled product group), and make the public aware of the environmental impacts of consumption, and can therefore be employed to influence national policies. 16 Effects of Eco-labelling Schemes: Compilation of Recent Studies, OECD, "Environmental benchmarking" involves an actor (company, government, organization, etc.) measuring its environmental performance for the purpose of self-assessment of progress at a future date, or assessment against other actors. 122

135 The environmental effectiveness of environmental labelling requirements in terms of measuring improvements to the environment is difficult to evaluate owing mainly to difficulties in isolating environmental benefits achieved through eco-labelling from environmental benefits attained by other environmental measures. Impacts on the market The impact of environmental-labelling requirements on the market is directly linked to the general level of environmental awareness and, consequently, the consumer demand for green products. Environmental labelling schemes may have greater impact when they become a requirement imposed by retailers or when they are used as instruments for green public procurement and institutional purchasing. However, empirical evidence assessing trade effects of environmental-labelling is limited, and may depend inter alia on the design of the measure, market structure in the trading countries and products covered. II.A.3. RECENT TRENDS IN ENVIRONMENTAL LABELS Proliferation The use of labelling requirements by governments, industry and non-governmental organizations for environmental purposes is increasing. The reason can be found in growing global concern for environmental protection on the part of governments, businesses and the public. Environmental labelling schemes are increasingly becoming an integral part of a government environmental toolbox. Moreover, as businesses recognise that environmental concerns may be translated into a market advantage, various environmental declarations/claims/labels (e.g. natural, organic, recyclable, eco-friendly, low energy and recycled content) have emerged on products and services. These labels are common in the marketplace and become price of entry for competition. However, the proliferation of labelling schemes could confuse consumers (i.e. prevent them from being able to recognize or trust any particular label) and could make it difficult for exporters to meet many different criteria and requirements. Competing schemes There are in essence two markets in which labelling schemes compete - the market for the label and the market for the product itself. The market for the label includes not only competition between programmes that make the same claim, but also competition between and among programmes making different claims for the same product. For instance, a farm-raised fish that could qualify for one of several competing labels indicating that it was produced under environmentally friendly conditions, could also qualify for an organic label, a fair trade label, a country-of-origin label, or a label indicating freshness or making health claims. Increase in complexity The growing complexity and diversity of environmental labelling schemes raise difficulties for developing countries, and particularly SMEs in export markets. Increasingly, environmental labelling requirements tend to be based on "life-cycle analysis", i.e. the consideration of the environmental effects of a product from its production to its final disposal. 18 In practice, life-cycle analysis is not easy to conduct. Frequently, criteria are related not only to environmental issues but other sustainability aspects of the process of production or of the product itself. 18 See also footnote 14, above. 123

136 EXERCISES: 6. What are eco-labels? 7. What are the potential impacts of environmental labelling requirements on environmental protection? 124

137 II.B. NON-PRODUCT RELATED PROCESS AND PRODUCTION METHODS The CTE has discussed extensively the question of whether eco-labelling based on life-cycle analysis or nonproduct related process and production methods (nprppms) were covered by the TBT Agreement. Labelling requirements for environmental purposes can cover product-related PPMs and non-product-related PPMs. Product-related PPMs - the use of a different production method (e.g. no chlorine) may be visible in the final product (paper not bleached), so it is a PPM that is related to the characteristics of the final product. Non-product related PPMs - the use of a different production method (e.g. filters to reduce pollution) may not be visible in the final product, so it is a PPM that is not related to the characteristics of the final product. Since eco-labels were often based on a mixture of criteria relating to product and performance characteristics, product-related and non product-related PPMs, some Members were of the view that it would not be practical to separate the coverage under WTO provisions of eco-labelled products according to the nature of the criteria used, and that all criteria involved in granting an eco-label should be covered by WTO disciplines. According to some Members, the TBT Agreement provided sufficient flexibility to permit nprppm-based eco-labelling to be used, subject to appropriate trade disciplines. However, several other Members argued that the TBT Agreement did not cover requirements based on nprppms. In their view, accepting nprppms and life-cycle analysis under the TBT Agreement would permit one country to impose its environmental priorities on another since these schemes reflected exclusively the environmental preferences of the importing country. There was an objection to any attempt through CTE work on eco-labelling to extend the scope of the TBT Agreement to permit the use of requirements based on nprppms. [19] EXERCISES: 8. Give an example of a product related PPM and an nprppms. 19 WT/CTE/1 (November 1996). 125

138 II.C. CTE'S WORK ON ENVIRONMENTAL LABELLING IN BRIEF Labelling requirements for environmental purposes is one of the subjects assigned to the CTE. It is part of item (3b) of the 1994 Marrakesh Ministerial Decision on Trade and Environment on the Committee s work programme in which the Committee is assigned to consider the relationship between the provisions of the WTO s Agreements and the requirements governments make for products in order to protect the environment. In 2001, the Doha Ministerial Conference made labelling requirements for environmental purposes an issue of special focus for the CTE. IN DETAIL Marrakesh Ministerial Decision on Trade and Environment - Item 3(b) The relationship between the provisions of the multilateral trading system and requirements for environmental purposes relating to products, such as standards and technical regulations, and packaging, labelling and recycling requirements Doha Declaration - Paragraph 32(iii) We instruct the Committee on Trade and Environment, in pursuing work on all items on its agenda within its current terms of reference, to give particular attention to: labelling requirements for environmental purposes. II.C.1. CTE DISCUSSIONS Environmental labelling schemes are complex, causing concerns about developing countries and small businesses ability to export. How do you use labelling to inform consumers about environmental protection without jeopardizing these weaker players? Opinions are divided. Effective policy tools Members have debated the possible trade effects of eco-labelling schemes on a number of occasions. Some Members believed these schemes are effective policy tools to encourage the use of environmentally sound products and services; and, that it would be difficult to imagine a less trade restrictive alternative, as eco-labelling schemes are often voluntary. Negative market access effects However, other Members reported that negative market access effects were real and that the environmental efficiency and effectiveness of eco-labelling schemes had yet to be fully determined. A number of developing countries also reported difficulties in complying with requirements based on nprppms. These problems were particularly acute for SMEs, because e.g. of difficulties in obtaining and adapting to the required technology. 126

139 They argued that this is particularly the case when label criteria are determined through consultations only with interested parties at the national level. For example, a common complaint by the users of eco-labels has been that eco-labelling criteria tend to focus on local concerns and do not address the views of foreign suppliers, nor the specific environmental situation in the countries of these suppliers. For instance, an eco-label developed in a country with a serious air pollution problem may put the emphasis on air pollution control measures, whereas the main environmental problem in the foreign country could have to do with water and not air. Concerns have been also raised about the lack of transparency, potential for discrimination, proliferation, growing complexity and diversity of environmental labelling schemes. It has also been noted that environmental labelling schemes could be misused for the protection of domestic markets. Developing countries concerns Several developing country Members reported that developing countries were severely affected by environmental requirements such as eco-labelling schemes. Some of the problems faced by developing countries resulted from the multiplicity and growing complexity of eco-labelling schemes in developed countries, their differing criteria, the increased costs in complying with eco-labels and the need for greater transparency. One of the main concerns was that eco-labelling criteria did not take into account the conditions of individual developing countries. These schemes often necessitated the acceptance of inappropriate criteria, mainly as a result of a lack of participation of all interested countries in their formulation. This is especially the case, they claimed, with labelling schemes based on life-cycle analysis and the use of nprppm criteria. They considered that these requirements could create difficulties for developing countries, and particularly SMEs in export markets. [20] They expressed concern that their SMEs lacked the technical expertise to adhere to such schemes. They argued that compliance costs and lack of capacity of developing country industries, particularly SMEs, should be taken into account in designing eco-labelling criteria. Technical assistance and capacity building Developing country Members urged developed country Members to provide them with the necessary technical assistance and capacity building to improve their environmental performance and their market access. It was necessary to ensure the effective participation of developing countries, sufficient technology transfer, and credit lines for developing country producers. The "principle of common but differentiated responsibility" was recalled in this context and the idea that developing countries should be given longer periods to phase-in environmental standards was mentioned. Another idea was to establish partnerships in order to adapt to these eco-labels, especially in terms of compliance costs. Adequate WTO disciplines Most Members were also of the view that existing WTO disciplines were adequate to deal with the issue of environmental labelling, including specific trade concerns (STCs) that could arise. In their view, no compelling argument had been made for the need for a common understanding or guidance to be negotiated. Nor was it clear that further work on this issue needed to include the clarification of existing rules. The TBT and SPS 20 For further information, see document WT/CTE/W/150, 29 June 2000, "Information Relevant to the Consideration of the Market Access Effects of Eco-Labelling Schemes", Note by the Secretariat. 127

140 Agreements, it has been claimed, had created the appropriate balance of rights and obligations for both mandatory and voluntary labelling programmes. [21] 21 WT/CTE/8 (July 2003). 128

141 National experience sharing Several Members have shared their national experience in developing and implementing eco-labelling schemes. For instance, Brazil presented its voluntary eco-labelling programmes in the leather and forestry sectors, which aimed to encourage Brazilian consumer awareness, and ensure the competitiveness of Brazilian forestry and leather and footwear products in the international market. Japan explained the development process of its "Eco-mark" programme, which allowed for public review and participation by industry, consumers, and academia. India reported mixed experience with the introduction of an eco-label called "Indian Eco Mark". Iceland presented a report of the Working Group to the Nordic Council of Ministers on an eco-labelling scheme, which provided fishing communities with market incentives to support responsible and sustainable fisheries management. Some other Members explained the difficulties they had in meeting the requirements of ecolabels in general. For instance, Colombia presented evidence of reduced market access due to eco-labelling schemes in the bananas, flowers and textiles sector. This exchange of national experience has illustrated the variety of approaches that have been adopted on eco-labelling by WTO Members and highlighted the perceived environmental benefits and cost effectiveness of the different approaches. Members generally encouraged further experience sharing on eco-labelling in order to enhance an understanding of the various approaches used. II.C.2. RECENT WORK IN THE CTE Recent CTE work on environmental labelling touch upon the following areas: schemes and carbon labelling schemes. energy efficiency labelling Energy efficiency labelling schemes Recent CTE work on labelling requirements for environmental purposes has focused on national experience sharing on energy efficiency labelling schemes. For instance, in 2007, the United States gave a presentation on the US Energy Star energy efficiency programme, a voluntary performance based labelling scheme covering more than 50 product categories. This self-certification scheme was created with the objectives of reducing greenhouse gas emissions and to enable consumers to better identify and choose products with enhanced energy efficiency. There is a demand for these products in the market, since energy efficient appliances, equipment, windows and doors, for example, reduce consumers' energy bills. Information was provided on how the relevant requirements are developed including guiding principles and involving stakeholder consultations; how the label is used inside and outside the US; how the integrity of the label can be protected; and how coordination efforts have been made with other WTO Members on harmonization of specifications and testing procedures. In 2008, Australia informed the CTE of its national experience on minimum energy performance standards and mandatory labelling requirements that had led to an increase in sales of energy efficient appliances in Australia. In September 2010, Chile shared its national experience with public and private sector collaboration in developing labelling schemes for energy efficiency, among others. 22 Carbon labelling schemes 22 WT/CTE/

142 Concern over climate change has stimulated interest in estimating the total amount of greenhouse gases (GHG) emitted in the provision of goods and services. Carbon labelling schemes and their related standards intend to reflect the total amount of GHGs emitted throughout the complete life cycle of goods and services i.e. including raw material extraction, manufacturing, processing, transportation, sale, use and disposal. These schemes variously permit comparison of carbon footprint values between different products, between the same product from different producers, and between the same product from the same producer in different locations. In , a number of delegations mainly from the Southern Hemisphere (e.g. Argentina, Australia, Kenya, New Zealand, Colombia and Uruguay) raised concerns over the recent proliferation of unilateral voluntary carbon footprint labelling schemes. Some countries believed that these schemes often did not reflect the entire life cycle of a product by only focusing on transportation, and generally lacked consistency. Concerns were also raised on challenges related to data collection and high costs, the effectiveness of these schemes, as well as their possible trade impacts. It was proposed that the CTE should study various initiatives being developed at the international and national levels (both by governments and private bodies) and assess their trade impacts, effectiveness and environmental benefits. In this respect, an Information Exchange session was organized in February [23] Following this session, some Members, including Chile, the Republic of Korea and New Zealand, shared their national experiences on the development of new carbon footprint and labelling schemes. 24 EXERCISES: 9. What are the concerns expressed by some WTO Members with regard to carbon labelling schemes? How do these concerns differ from concerns that have been raised with eco-labelling schemes? 23 WT/CTE/M/49/Add WT/CTE/

143 II.D. ENVIRONMENTAL LABELLING AND THE TBT AGREEMENT IN BRIEF Most Members believe that existing disciplines on technical barriers to trade are adequate to deal with environmental labelling, and that the TBT Agreement has created the appropriate balance of rights and obligations for both mandatory and voluntary labelling programmes. For voluntary environmental labelling schemes, the TBT Agreement contains a Code of Good Practice for the Preparation, Adoption and Application of Standards. Agencies and organizations that develop labelling requirements are encouraged to accept this Code. IN DETAIL II.D.1. TBT COMMITTEE'S WORK ON ENVIRONMENTAL LABELLING REQUIREMENTS Notifications A number of environmental labelling measures have been notified to the TBT Committee by WTO Members in compliance with their transparency obligations. These labelling requirements relate to environmental issues such as GMOs, energy efficiency, emissions reduction, toxic and hazardous substances, waste management, natural resources conservation and organic products % 34% 13% 21% 13% 19% 19% 18% 16% 26% 23% 31% Percentage of environment-related notifications related to labelling Number of environmental labelling TBT notifications Figure 8: Environmental Labelling TBT Notifications ( ) 131

144 Specific trade concerns Moreover, environmental labelling-related STCs are frequently raised in the TBT Committee. The concerns, ranging from seeking further information to challenging the legitimacy of the measures, are often resolved through discussions at Committee meetings Number of STCs related to environmental labelling Number of STCs related to labelling Figure 9: Environmental labelling STCs raised in the TBT Committee ( ) Number of STCs Figure 10: Concerns over environmental labelling STCs raised in the TBT Committee ( ) 132

145 II.D.2. TBT DISCIPLINES The TBT Agreement seeks to ensure that product specifications, whether mandatory or voluntary (known as "technical regulations" and "standards"), as well as procedures to assess compliance with those specifications (known as "conformity assessment procedures"), do not create unnecessary obstacles to trade. In its Preamble, the TBT Agreement recognizes the right of countries to adopt such measures at the level which they consider appropriate, and recognizes in Article 2.2 the protection of human, animal or plant life or health, and the protection of the environment as being legitimate objectives for countries to pursue. The Agreement calls for non-discrimination and the avoidance of unnecessary trade barriers in the preparation, adoption and application of standards, technical regulations and conformity assessment procedures. It also encourages Members to harmonize these specifications with international standards. Transparency through notifications and the establishment of national enquiry points is a central feature of the Agreement. Most Members are of the view that existing WTO disciplines are adequate to deal with the issue of environmental labelling. For these Members, the TBT Agreement has created the appropriate balance of rights and obligations for both mandatory and voluntary labelling programmes. II.D.3. TRANSPARENCY AND DEVELOPING COUNTRIES' PARTICIPATION The importance of transparency in the development and implementation of eco-labels has been reiterated on a number of occasions. Information on regulations has to be properly disseminated for foreign producers not to be at a disadvantage and not to suffer unnecessary losses. The benefits that have been highlighted include: reduction of the risk that environmental criteria in eco-labelling schemes only reflect national considerations and timely reflection of different environmental approaches; ensuring that foreign producers or countries with significant trade interests in a labelled product have both timely and effective input throughout the entire eco-labelling process; avoidance of negative impact on market access, including unnecessary discrimination; increase of the legitimacy of such schemes; and promotion of the understanding of eco-labelling schemes. Members generally agree that participation of all relevant stakeholders in developing and implementing eco-labelling scheme is crucial to reduce the risk of a negative impact on market access. The participation of developing countries in particular needs to be improved so as to ensure that their interests are taken into account. The existence of multiple schemes and constantly changing criteria and the lack of capacity have made developing countries' participation more difficult. Developing countries tend to be standard-takers rather than standard-setters and it has been pointed out that international standards are frequently skewed towards developed country interests. Information from international standards setting organizations has been shared in the TBT Committee, from instance from ISO on its efforts to improve developing countries' participation in standards development. 133

146 II.D.4. TBT CODE OF GOOD PRACTICE FOR THE PREPARATION, ADOPTION AND APPLICATION OF STANDARDS With respect to voluntary environmental labelling schemes, the TBT Agreement's Code of Good Practice for the Preparation, Adoption and Application of Standards (Annex 3 of the TBT Agreement) is important, and acceptance of this Code by the bodies developing labelling requirements is encouraged. The Code contains similar disciplines as the main TBT Agreement itself: non-discrimination, avoiding unnecessary barriers to trade, harmonization, and transparency. According to Article 4 of the TBT Agreement, Members are required to ensure that their central government standardizing bodies adhere to the Code, and are to take reasonable measures for ensuring that other standardizing bodies in their territories adhere to the Code. Members generally agreed on the desirability of standardizing bodies preparing eco-labelling schemes to adhere to the TBT Code of Good Practice, as this would help address trade concerns, while maintaining an environmentally-credible eco-labelling programme. Moreover, it has been recalled that the TBT Committee's Decision on the "Principles for the Development of International Standards" provided useful guidance. 25 This decision contains principles for the development of international standards, including environmental labelling standards. These are: transparency, inclusiveness or openness (that all stakeholders be involved in the development of the standard), impartiality and consensus, effectiveness and relevance, coherence, and, wherever possible, responsiveness to the needs and interests of developing countries. II.D.5. HARMONIZATION, MUTUAL RECOGNITION AND EQUIVALENCE Given the growing number of eco-labelling schemes, the importance of harmonization or equivalence among standards as well as mutual recognition of conformity assessment results was discussed on several occasions. The importance of regional harmonization of environmental requirements was also mentioned. Harmonization could help avoid trade and market distortions or consumers' confusion. Several Members repeatedly insisted on the importance of equivalence and mutual recognition in order to take into account different approaches and circumstances of Members and facilitate trade. It was indicated that a more flexible use of equivalence and mutual recognition was important to developing country exporters, particularly SMEs. For developing countries, the recognition of the equivalence of their own labelling/certification systems was an area of particular concern; it was important to concentrate on assisting developing countries to design schemes that supported environmental objectives within their own domestic context. Some countries also noted that equivalence could be complex to implement in particular in environmental areas where life-cycle analysis was applied to different eco-systems. II.D.6. DISCUSSIONS IN DIFERENT COMMITTEES Since 1995, discussion on eco-labelling has been taking place in parallel both in the CTE and the TBT Committee. Some Members preferred discussing eco-labelling in the CTE, believing that the subject was mentioned explicitly in the CTE's work programme and that the issues it raised went beyond the mandate of the TBT Committee. With the DDA mandating the CTE to give particular attention to labelling requirements for 25 G/TBT/1/Rev

147 environmental purposes, some Members were of the view that the discussion in the CTE could then be used as an input to the debate in the TBT Committee. On the other hand, some Members favoured discussions on the impact of eco-labelling to take place in the TBT Committee. They argued that the TBT Committee was better suited for the task of deliberating WTO rules vis-à-vis labelling since it was already discussing labelling in general, including in the context of specific trade concerns (STCs) on environmental labelling. They were of the view that it would be unwise for the CTE either to pre-empt or to duplicate such work and more preferable to consider the results of the work carried out in the TBT Committee before taking a decision on the course of action for the CTE. II.E. MARKET ACCESS ISSUES FACED BY DEVELOPING COUNTRIES IN BRIEF Developing-country producers, in particular the SMEs, may find it challenging to meet environmental requirements in export markets. They may find it difficult to make the needed investments. In addition, there can be lack of infrastructure, capital and skills, and insufficient access to information and technology. Developing-country responses to environmental requirements vary, ranging from a firefighting approach to a holistic approach to harness the sustainable development benefits. A number of activities, including improving information flows, technical assistance and capacity building, have been carried out both at the national and international level to ease the challenges faced by developing countries. IN DETAIL II.E.1. BACKGROUND [26] The extent to which a country is affected by environmental requirements in export markets depends on the degree of diversification of its exports (i.e. whether or not its total exports are concentrated in products that are subject to environmental requirements in major export markets). Often, developing countries' exports are concentrated in a small number of products and sectors (e.g. textiles and clothing, leather and leather products, footwear, timber, wooden furniture and paper, food and fishery products) in which environmental requirements apply. Limited diversification also makes these countries more affected by changes in requirements. Moreover, often large shares of their exports are low value-added products deriving from natural resource intensive industries that compete on the basis of price in international markets. In developing countries, SMEs often account for a significant proportion of exporters but export only a small share of their total output. Compared to large firms, making adjustments to environmental requirements is 26 Document WT/CTE/W/

148 generally more difficult for SMEs. Investments required to comply with some environmental standards and regulations, such as installations for recycling industrial waste or waste water treatment, may not be economical on a small scale. These problems are exacerbated in the case of SMEs that are often family-run, located in urban areas with deficient infrastructure, working with obsolete technologies, with a weak market and financial position and little scope for improvement. The relatively weak domestic environmental legislation and demand for environmentally-friendly products in developing countries, does not necessarily provide developing country producers with sufficient incentives to make the investments needed for changes in production methods, and makes it more challenging for them to comply with stringent environmental requirements in developed country markets. New market opportunities There is growing demand in developed countries for environmentally preferable products. For instance, the demand for organic agricultural products has been growing faster than overall food products over the past two decades. This presents promising export opportunities for producers and exporters of organic products in developing countries. In addition to income generation, organic agriculture also has the potential to offer a range of local and national sustainable development opportunities. II.E.2. MAIN CHALLENGES Lack of information Disseminating information on environmental requirements to domestic industry in a timely manner requires effective communication networks, and it could be a challenge, in particular for LDCs and for SMEs in developing countries. Information disseminated on draft regulations through the WTO, including through the internet, facilitates developing countries' access to relevant information. This early awareness may avoid situations in which exporting country governments or industries may have insufficient time to respond to the requirements before their exports are affected. Lack of capacity and resources Some developing country producers may not have the needed knowledge to comply with environmental requirements. This is particularly the case when changes in processes and production methods are required, and the know-how is lacking due to insufficient prior research. In some cases, exporters, in particular SMEs, may not be able to understand fully the details of the requirements due to technical complexity. Often, they lack the capital to invest in the new processes and production methods (e.g. pollution control installation, specific machinery or chemical agents). Difficulties may also arise due to the lack of substitution products that are sometimes linked to technologies held exclusively by a company or are simply too expensive and not readily available to developing-country producers, in particular SMEs. Proliferation of heterogeneous requirements One of the main challenges for developing country exporters is the need to both keep up with changing requirements and deal with divergent measures in different markets. The associated costs include the expenditure on information and conformity assessment, as well as the loss of economies of scale. Concerns can be heard regarding requirements that assume "one size fits all" and therefore do not take into account the 136

149 special circumstances of certain developing countries. international standards or to negotiate equivalence agreements. Possible solutions can be to develop relevant Costs of conformity assessment In many developing countries, local certification bodies are not recognized or accredited by the importing countries' authorities. In some cases, there may be a lack of supporting infrastructure such as laboratories, metrology, data and technologies. For example, importers may fix a very low limit on residues that has to be measured by sophisticated laboratory equipment operated by highly qualified technicians. This leaves exporters with no choice but to pay the high cost of using laboratories and certifying bodies recognized by, and usually based in, importing countries. The situation can be particularly difficult for SMEs who need to provide proof of compliance with diverse requirements in different markets. Although mutual recognition agreements (MRAs) could provide a solution to multiple certifications, their use has generally been limited, since the conclusion of MRAs tend to be complex and time-consuming. II.E.3. DEVELOPING-COUNTRY RESPONSES [27] Developing-country responses to environmental requirements vary. It depends, for instance, on the characteristics of the industry, producers and countries involved. More advanced developing countries tend to attract subcontractors, subsidiaries and branches of large companies from developed countries, and therefore tend to be better informed of, or prepared for new requirements. Many of the large producers may be partly or wholly owned by companies based in developed countries, and therefore be able to obtain the needed knowledge and capital to adapt to new processes and production methods. On the other hand, producers in LDCs and locally owned SMEs may be less able to adapt to new environmental requirements in export markets. A holistic approach Some developing countries address environmental requirements in a holistic way, attempting to promote reconciliation at a high level of environmental protection and stronger growth in exports. The impetus appears to be coming from a desire to promote policy coherence and regulatory reform to make government regulations more efficient and trade-friendly. For instance, proactive policies of this kind can be observed in China, the Philippines and Thailand on their adjustment strategies to new electronic electrical equipment (EEE) environmental requirements in the global markets and their need to address problems related to the growing domestically generated EEE waste. 28 Actions include information-sharing; better understanding on environmental requirements in key export markets; participation in standard-setting consultations where there are significant implications for exporters; coordinating efforts to assess implications of new requirements; raising general public's awareness on environmental and health issues; improving infrastructure for waste management; developing an appropriate legislative framework and enforcing environmental regulations; collaboration between government and private sector stakeholders; training and strengthened research; and enhancing SMEs' capabilities to adopt environmental management systems Document WT/CTE/W/ Environmental Requirements and Market Access, OECD Trade Policy Studies, OECD, Trade and Environment Review 2006, UNCTAD, Relevant discussions have taken place in the context of the "UNCTAD Consultative Task Force on Environmental Requirements and Market Access for Developing Countries" (CTF). 137

150 Improving information flows On improving information flows to key actors at the national level, some countries operate an early warning system aimed at helping exporters to anticipate new requirements including environmental ones(e.g. the system of the Brazil's national standards institute INMETRO). 30 Information provided can cover areas such as requirements set out in environmental measures; market opportunities offered by the measures; and the most effective ways for producers to adjust to the measures. Some other vehicles for disseminating information can be holding workshops and seminars, sending information missions or undertaking longer-term outreaching projects to exporters. Such "outreach" activities with direct interaction with producers and exporters provides an effective means of transferring information and knowledge. 31 I.B.4. ACTIVITIES TO EASE DEVELOPING COUNTRIES' CHALLENGES [32] A number of activities could usefully ease developing countries' market-access challenges as a result of environmental requirements. Procedures for the preparation, implementation and review of environmental requirements Environmental requirements, if well designed and implemented, can minimize their trade impacts, create new export opportunities for developing countries, while improving environmental performance. In this respect, the importance of inclusiveness and transparency to facilitate participation of developing country in stakeholder consultations and ex-ante assessments has been highlighted. The usefulness of periodic reviews to avoid regulations and standards becoming obsolete has also been underlined. Information and communication At the multilateral level, the WTO's TBT and SPS Agreements provide disciplines on transparency to improve information flow. WTO Members are obliged to notify draft regulations and conformity assessment procedures, including environmental requirements, and to provide opportunities for comments and consultations. Capacity building and technical assistance There is a substantial role of targeted capacity-building initiatives from bilateral and multilateral donors to assist developing countries to overcome challenges regarding environmental requirements. Capacity building may cover a broad range of activities aimed at improving a country's human, scientific, technological, organizational and institutional capacities and resources. Although these initiatives may not be able to address short-term problems of market access, in the long run they can increase the ability of exporters and their governments to anticipate and react positively to new environmental requirements. Capacity building 30 More information on TBT national enquiry points is available in the TBT Information management System. 31 The International Trade Centre (ITC) is involved in several environment-related projects in order to assist developing country exporters in exploring environmental market opportunities. 32 Document WT/CTE/W/

151 initiatives are also carried out by Multilateral Environmental Agreements (MEAs). For example, the Montreal Protocol's mechanism provides financial and technical assistance, including technology transfer, to reduce the cost for developing countries of measures to control emissions of ozone-depleting substances. There are also private organization initiatives. For instance, the Marine Stewardship Council assists developing countries in sustainable managed fishery. For example, on organic agriculture, at the multilateral level, the International Task Force on Harmonization and Equivalence in Organic Agriculture was created by the International Federation of Organic Agricultural Movements, the Food and Agriculture Organization (FAO) and the UNEP- UNCTAD Capacity Building Task Force on Trade, Environment and Development provide capacity building activities. EXERCISES: 10. What are the main challenges faced by developing countries producers in complying with environmental requirements in export markets? 11. What can developing countries do to address new environmental requirements in the global markets in a proactive way? 12. What can be done in the preparation, implementation and review of environmental requirements to ease the challenges faced by developing countries? 13. What is the view of most WTO Members regarding the TBT disciplines dealing with environmental labelling? 139

152 III. SUMMARY ENVIRONMENTAL REQUIREMENTS AND MARKET ACCESS Introduction Environmental requirements are requirements adopted to achieve environmental objectives. Recently, consumers, producers, regulators and stakeholders are becoming increasingly aware of environmental and health problems, and are looking for versatile tools to address them effectively. As a result, in particular in developed countries, environmental requirements are becoming increasingly complex, aimed at fulfilling not only environmental objectives but often also other public policy objectives. Developing country exporters, in particular SMEs, may face challenges to implement environmental requirements, for instance due to the proliferation of heterogeneous requirements, resources restraints, the lack of information and capacity, as well as costly conformity assessment procedures. Approaches such as early warning, improved information flow, targeted capacity-building initiatives are undertaken by government and non-governmental agencies at the national and international levels to respond to these challenges. There is a general view that environmental requirements, if well designed and implemented, can create new export opportunities for developing countries while improving the environmental performance of affected industries. Needs have been highlighted, including inclusiveness and transparency, facilitating participation of developing country representatives in stakeholder consultations and ex-ante assessments; the usefulness of periodic reviews to avoid regulations and standards becoming obsolete or out of date; and delays in implementation to address difficulties faced by developing countries. CTE discussions The effects of environmental measures on market access is an important subject in the work of the CTE (DMD Paragraph 32 (i)). The discussion in the CTE has highlighted a list of issues that could be useful to overcome market access challenges: transparency, notification (early warning), consultation, impact assessment, taking into account comments while a measure is being prepared, technical assistance and capacity building to assist the implementation of environmental requirements, and coordination within exporting countries. Various views have been expressed among WTO Members, including the following: WTO Member governments consider that the protection of the environment and health are legitimate policy objectives. But they also acknowledge that measures designed to meet these objectives could hinder exports. The answer is not to weaken environmental standards, but to enable exporters to meet them. WTO Agreements (e.g. TBT and SPS Agreements) have enough scope to ensure that environmental measures do not unduly restrict exports. A balance is needed between safeguarding market access and protecting the environment. There is a need to examine how environmental measures could be designed so that they are: consistent with WTO rules; inclusive; take into account capabilities of developing countries; and meet the legitimate objectives of the importing country. Environmental standards, objectives and priorities need to reflect the particular environmental and developmental context to which they apply so says Principle 11 of the 1992 Rio Declaration on 140

153 Environment and Development. It is recognized that it is essential to involve developing countries in the design and development of environmental measures as a way of mitigating negative trade effects. Once developed, flexibility in the application of environmental measures is seen as key. The Plan of Implementation adopted at the World Summit on Sustainable Development (WSSD) in Johannesburg in 2001 has reiterated the need to support voluntary, WTO-compatible market-based initiatives for the creation and expansion of domestic and international markets for goods which are environmentally friendly. The CTE could look at incentives and means to assist developing countries to identify products, and develop export markets or environmentally friendly products in areas where these countries enjoy a comparative advantage. Recently, the CTE discussion has been focusing on a number of specific environmental requirements, including organic product requirements, biofuel certification, private voluntary standards and carbon footprint measures. TBT and SPS Committees' work Furthermore, the TBT and SPS Committees provide a unique framework for work on environment-related regulations and standards through notifications and debates at committee meetings on specific trade concerns. LABELLING REQUIREMENTS FOR ENVIRONMENTAL PURPOSES Introduction Increasingly, labels are used to inform consumers that a labelled product is more environmentally friendly relative to other products in the same category. The objectives are to differentiate environmentally friendly products and capture market opportunities; raise consumer environmental awareness; provide accurate and timely information to consumers; and direct manufacturers to account for the environmental impact of their products. There are different types of labelling schemes (e.g. voluntary or mandatory, single or multiple issue, selfdeclaration or third party verification, government-run or privately-administered schemes). Eco-labels are specific environmental labelling schemes that are generally based on a life-cycle analysis approach. The effects of eco-labels on producers, consumer behaviour, markets and the environment are closely linked: producer and consumer behaviour will, to a certain extent, affect markets, and may in turn lead to effects on the environment. Recently, there has been an increase in environmental labelling requirements and in their complexity. CTE discussions Labelling for environmental purposes is one of the subjects assigned to the CTE (DMD Paragraph 32(iii)). Environmental labelling schemes are complex, causing concerns about developing countries and small businesses ability to comply and export. WTO Members generally agree that voluntary, participatory, market-based and transparent environmental labelling schemes are potentially efficient economic instruments to inform consumers about environmentally friendly products. Moreover, they tend to be less trade restrictive than other instruments. However, environmental labelling schemes could be misused for the 141

154 protection of domestic markets. Hence, these schemes need to be non-discriminatory and not result in unnecessary barriers or disguised restrictions on international trade. A common concern by the users of eco-labels has been that eco-labelling criteria tend to focus on local concerns in markets where they are developed and applied, and do not address the views of foreign suppliers, nor the specific environmental situation in the countries of these suppliers. Concerns have been also raised about the lack of transparency, potential for discrimination, proliferation, growing complexity and diversity of environmental labelling schemes. This is especially the case with labelling based on life-cycle analysis and the use of nprppm criteria. These requirements could create difficulties for developing countries, and particularly SMEs in export markets. There are divergent views among Members on the appropriate forum to discuss the issue of environmental labelling. Some Members are of the view that, considering the mandate contained in Paragraph 32(iii) of the Doha Ministerial Declaration, which instructs the CTE to give particular attention to labelling requirements for environmental purposes, the CTE needs to intensify its work on environmental labelling. Other Members, however, argue that the TBT Committee is better suited for the task of examining WTO rules vis-à-vis labelling since it is already discussing labelling in general, including under specific trade concerns. TBT disciplines Most Members believe that existing TBT disciplines are adequate to deal with environmental labelling, and that the TBT Agreement has created the appropriate balance of rights and obligations for both mandatory and voluntary labelling programmes. For voluntary environmental labelling schemes, the TBT Agreement contains a Code of Good Practice for the Preparation, Adoption and Application of Standards. The TBT Agreement provides a number of principles that countries must adhere to in the development of labelling requirements, such as non-discrimination, avoidance of unnecessary trade obstacles, harmonization, and transparency, amongst others. 142

155 PROPOSED ANSWERS: 1. Environmental requirements are requirements adopted to achieve environmental objectives. They can be requirements aimed at ensuring a certain standard on product characteristic and performance to pursue environmental objectives (e.g. energy efficiency requirements on electronic and electrical appliances); environmental-labels to inform consumers and raise their awareness about the environmental characteristics of a product; and packaging requirements that aim at reducing the quantity of packaging waste, facilitating its recovery, reuse, recycling or disposal, and obliging producers to take more direct responsibility for tackling the environmental problems they poses. 2. Recent trends in environmental requirements include: proliferation and growing complexity; rise in private sector voluntary initiatives; and increase in global supply chain-driven requirements. 3. Some WTO Members are concerned that private voluntary standards are becoming de facto mandatory for market access, and that at the same time these standards are not developed subject to the disciplines contained in TBT Agreement Code of Good Practice for the Preparation, Adoption and Application of Standards. More specially, concerns with regard to private voluntary standards include: the de facto mandatory nature of these requirements; the difficulties in keeping up with rapid proliferation of private schemes; their effect on market access, in particular for SMEs in developing countries; the lack of transparency of some of the schemes; lack of harmonization across schemes; the difficulties faced by producers to participate in standards development; lack of scientific basis in standards development; insufficient data; and, the large variety of methodologies used. Other WTO Members have expressed caution in this debate, highlighting the need to reflect on the right format and approach for discussions on standards prepared by private entities. 4. In the past four years, under its agenda item environmental requirements and market access, the CTE has held focussed discussions on organic agricultural products, biofuels and private voluntary standards. 5. The TBT and SPS Committees provide a unique framework for work on environmental requirements through notifications to provide transparency, and opportunities for comments and consultations. Moreover, WTO Members regularly use the TBT and SPS committee meetings to raise specific concerns on potential adverse trade effects or any perceived non-compliance with the obligations of the Agreements of other Members' measures, including environmental measures. 6. Eco-labels are specific environmental labelling schemes that based on life-cycle analysis or craddle-tograve approach (raw material, production, consumption and disposal). In general, eco-label criteria are set so that only a small percentage of products in a product category (typically, 5 to 30%) can meet these criteria. The purpose is to selectively identify a sub-set of products that are environmentally preferable to other products in the same category. 7. Environmental labels can contribute to the development of a more environmentally conscious market. For example, they can have a multiplier effect to raise public awareness for environmentally preferable products beyond the labelled product group, and make the public aware of the environmental impacts of consumption. 8. Product-related PPM implies that the production method leaves a trace in the final product (e.g. cotton grown using pesticides, with pesticide residue in the cotton itself), while non-product-related PPM or 143

156 "unincorporated PPMs" are PPMs which leave no trace in the final product (e.g. cotton grown using pesticides, with there being no trace of the pesticides in the cotton). 9. Some WTO Members are concerned that carbon labelling schemes sometimes did not reflect the entire life cycle of a product by only focusing on transportation, and generally lacked consistency. Concerns were also raised on challenges related to data collection and high costs, the effectiveness of these schemes, as well as their possible trade impacts. With regard to eco-labelling schemes, developing country Members have stressed they were severely affected by the multiplicity and growing complexity of eco-labelling schemes in developed countries. Moreover, the fact that the criteria subject to eco-labelling often did not take into account the conditions of individual developing countries was highlighted. For instance, an ecolabel developed in a country with a serious air pollution problem may put the emphasis on air pollution control measures, whereas the main environmental problem in the foreign country could have to do with water pollution and not air pollution. 10. The main challenges faces by developing country producers in complying environmental requirements in export markets are: lack of information; lack of capacity and resources; difficulties to keep up with proliferating heterogeneous requirements; and high costs of related testing and certification requirements. 11. Developing countries can address new environmental requirements in the global market in a proactive way by adopting a holistic approach aiming at achieving environmental protection and stronger export growth at the same time. Actions can include information-sharing; raising general public's awareness on environmental and health issues; coordination and collaboration between government and private sector stakeholders; improving infrastructure; developing an appropriate legislative framework and enforcing environmental regulations; training and strengthened research; and enhancing SMEs' capabilities to adopt environmental management systems. 12. Environmental requirements, if well designed and implemented, can minimize their unnecessary trade barriers and create new export opportunities for developing countries, while improving the environmental performance of affected industries. Needs have been highlighted for inclusiveness and transparency to facilitate participation of developing country representatives in stakeholder consultations and ex-ante assessments. The usefulness of periodic reviews to avoid regulations and standards becoming obsolete, and delays in the implementation of requirements by developing countries have also been underlined. 13. Most WTO Members believe that existing disciplines on technical barriers to trade are adequate to deal with environmental labelling, and that the TBT Agreement has created the appropriate balance of rights and obligations for both mandatory and voluntary labelling programmes. For voluntary environmental labelling schemes, the TBT Agreement contains a Code of Good Practice for the Preparation, Adoption and Application of Standards. Agencies and organizations that develop labelling requirements are encouraged to accept this code. 144

157 MODULE 6 WTO Rules and Environmental Policies ESTIMATED TIME: 7 hours OBJECTIVES OF MODULE 6 Provide an overview of Article XX of the GATT 1994 addressing, in particular, its role in allowing WTO Members to adopt trade-related measures to protect the environment Identify some key WTO disciplines and explain their relation with the exceptions contained in Article XX of the GATT 1994 Identify other provisions contained in various WTO Agreements that are relevant for the protection of the environment Provide an overview of the existing environment-related panel and Appellate Body decisions, and determine whether, in light of this jurisprudence, Members can adopt measures to address environmental concerns without infringing upon their GATT and WTO commitments 145

158

159 I. OVERVIEW OF GATT ARTICLE XX I.A. INTRODUCTION IN BRIEF WTO Members can adopt trade-related measures to protect the environment and human health and life, as long as such measures comply with GATT rules or fall under the exceptions to these rules. Article XX on General Exceptions lays down a number of specific instances in which WTO Members may be exempted from GATT rules. IN DETAIL Measures aimed at protecting the environment come in various shapes and forms. Under WTO rules, as confirmed by WTO jurisprudence, Members can adopt trade-related measures aimed at protecting the environment, subject to certain specified conditions. It is not uncommon for some of these measures to be raised and discussed at the WTO Committee level (e.g. at the TBT Committee). However, certain measures taken to achieve environmental protection goals may, by their very nature, restrict trade and thereby impact on the WTO rights of other Members. They may violate basic trade rules, such as the non-discrimination obligation and the prohibition of quantitative restrictions. The Appellate Body in Brazil Retreaded Tyres recognized that such a tension may exist between, on the one hand, international trade and, on the other hand, public health and environmental concerns. This is why exceptions to such rules are particularly important in the trade and environment context. These exceptions exist to ensure a balance between the right of Members to take regulatory measures, including trade restrictions, to achieve legitimate policy objectives (e.g. the protection of human, animal or plant life and health, and natural resources) and the rights of other WTO Members under basic trade rules (such as non-discrimination). Since the entry into force of the WTO in 1995, the WTO dispute settlement body has had to deal with a number of disputes concerning such measures. Four disputes are of particular relevance: the US Gasoline case (clean air), the US Shrimp case (turtles), the EC Asbestos case (human life and health), the Brazil Retreaded Tyres case (human, animal and plant life and health) and US Tuna II (dolphins). So far, most of these disputes have been brought in relation to the application of GATT rules. 62 Several other WTO agreements may be relevant to the protection of the environment as well. In particular, the TBT Agreement and the SPS Agreement seek to ensure that environmental product requirements do not create unnecessary obstacles to international trade. At the same time, these agreements explicitly recognize Members' rights to protect animal or plant health, and the environment, at the level they choose. In light of 62 However, more recently, the US - Tuna II dispute also involved claims under the TBT Agreement. 147

160 the jurisprudence to date, it is fair to say that WTO rules provide ample space for environmental concerns to be accommodated. Even if a measure is found to be inconsistent with basic disciplines, it may be justifiable under one of the exceptions contained in Article XX, for example, if it pursues an environmental or human health objective, and its application does not reveal protectionist intent. I.A.1. WTO MEMBERS HAVE THE RIGHT TO ADOPT TRADE-RELATED MEASURES TO PROTECT THE ENVIRONMENT... WTO Members can adopt trade-related measures to protect the environment and human health and life as long as such measures comply with GATT rules or fall under their exceptions. This right has been reaffirmed by panels and the Appellate Body time and again. In the first case decided by the new WTO dispute settlement body, US Gasoline, the Appellate Body asserted WTO Members' autonomy to determine their own environmental policies. The Appellate Body cautioned, however, that a balance needed to be maintained between market access obligations, on the one hand, and the right of Members to invoke the environmental justifications foreseen in the GATT, on the other, so that one objective is not eroded or compromised by the pursuit of another. More recently, in US Clove Cigarettes and US Tuna II, the Appellate Body has also clarified that, as expressed by the sixth recital of the preamble of the TBT Agreement, a balance must exist between, on one hand, the desire to avoid creating unnecessary obstacles to international trade and, on the other hand, the recognition of Members' right to regulate. I.A.2. AND EVEN TO BE EXEMPTED FROM BASIC GATT PROVISIONS, AS LONG AS THE MEASURES ARE JUSTIFIED UNDER ARTICLE XX GATT Article XX on General Exceptions lays down a number of specific instances in which WTO Members may be exempted from GATT rules. Two exceptions are of particular relevance to environmental and human health protection: Articles XX(b) and (g) allow WTO Members to justify GATT-inconsistent measures if these are either necessary to protect human, animal or plant life or health, or if the measures relate to the conservation of exhaustible natural resources, respectively. In addition, the introductory paragraph of Article XX (or its chapeau, as it is commonly referred to) has been designed to prevent the misuse of trade-related measures. Pursuant to the chapeau, an environmental measure may not be applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade. These additional safeguards seek mainly to ensure that, by allowing a measure to be inconsistent with GATT rules through the use of exceptions, protectionism is not introduced through the back door. EXERCISES 1. Please briefly explain whether it is possible under the GATT 1994 to adopt measures aimed at protecting the environment, even if those measures have trade-restrictive effects that contravene GATT disciplines. 148

161 I.B. KEY GATT DISCIPLINES IN BRIEF Certain measures taken to achieve environmental protection goals may, by their very nature, restrict trade and thereby impact on the WTO rights of other Members. They may violate basic trade rules, such as the non-discrimination obligation and the prohibition of quantitative restrictions. This is why exceptions to such rules, as contained in Article XX, are particularly important in the trade and environment context. Article XX being an exception clause, comes into play only once a measure is found to be inconsistent with GATT rules. I.B.1. THE PRINCIPLE OF NON-DISCRIMINATION In the GATT, the principle of non-discrimination stipulates that a Member shall not discriminate: between like products from different trading partners (giving them equally most favoured-nation or MFN status; GATT Article I); and between its own and "like" foreign products (giving them national treatment ; GATT Article III). This principle is also enshrined in provisions contained in other WTO Agreements, such as in Article 2.1 of the TBT Agreement, Article 2.3 of the SPS Agreement, Articles 3 and 4 of the TRIPS Agreement and Article II of GATS. LIKE PRODUCTS If trade-related environmental or health measures are to be consistent with WTO rules, they cannot result in discrimination between like products. Therefore, the principle of non-discrimination raises two key questions: Are products at issue like products? If so, is the foreign product treated less favourably than the domestic product or than another foreign product? To take an example from public health protection, in the EC Asbestos case, which dealt with measures (prohibiting the import, sale and use of asbestos) to address the dangers posed to human health from an exposure to asbestos and products containing asbestos, Canada the complainant had to prove that products (containing asbestos) imported from Canada to France were "like" French domestic substitutes (PVA, cellulose and glass fibres) and that the French regulation accorded imported products less favourable treatment than "like" domestic products. In fact, in this case, the panel found that domestic and imported products were like. However, the Appellate Body modified this finding and explained that several criteria should have been taken into account by the panel in the determination of "likeness" in this specific case, including not only the "competitive relationship" between products, but also the risk to health posed by the two products, due to their different physical characteristics. 149

162 In WTO case law, four main, non-exhaustive, criteria have been used in determining whether products are like : (i) (ii) the physical characteristics of the products; the extent to which the products are capable of serving the same or similar end-uses; (iii) the extent to which consumers perceive and treat the products as alternative means of performing particular functions, in order to satisfy a particular want or demand (consumers' tastes and habits); and (iv) the international tariff classification of the products at issue. It is important to bear in mind that, as recently explained by the Appellate Body, 63 ultimately, the examination of the above "likeness" criteria is done in order to determine the nature and extent of the "competitive relationship" of the products at issue. If two products are found to be like, the question remains whether imported products are treated in a less favourable manner than domestic products. In the US Gasoline case, for instance, the panel ruled that a US measure aimed at regulating the composition and emission effects of gasoline in order to reduce air pollution in the United States violated Article III:4 of the GATT: imported gasoline was effectively prevented from benefiting from sales conditions as favourable as domestic gasoline; therefore, the panel found that imported gasoline was treated less favourably than domestic gasoline. A RELATED QUESTION: THE ISSUE OF PROCESSES AND PRODUCTION METHODS (PPMS) An important question in relation to environmental measures is whether, under WTO law, products may be treated differently because of the way in which they have been produced. In other words, whether in determining if two products are "like", it is relevant to consider the processes and production methods (PPMs) used to produce them. 64 The WTO jurisprudence indicates that the fact that different PPMs were used in the manufacture of two products do not, per se, render them unlike. In the WTO dispute US - Tuna II, although dealing with a TBT not a GATT claim, the US labelling scheme established the conditions for the use of the dolphin-safe label in tuna products based on the different PPMs (i.e. the fishing technique) used to harvest this fish. Nevertheless, despite the fact that different PPMs were used to harvest the fish, for the purpose of assessing whether the measure had discriminated against tuna products imported from Mexico, the panel considered all tuna products "like". 65 As previously mentioned, a determination of "likeness" must be based on the competitive relationship between and among products, rather than on the regulatory objectives of the measure. This analysis should be also always carried out on a case-by-case basis, as pointed out by the Appellate Body in EC Asbestos In Philippines - Distilled Spirits and US - Clove Cigarettes, with respect to "likeness" under GATT and the TBT Agreement. 64 See Module 5 for background information on PPMs. 65 For a complete summary of the US - Tuna II dispute, see section [II.E], below. 66 For a complete summary of the EC - Asbestos dispute, see section [II.A], below. 150

163 Another important question is whether WTO rules cover measures based on non-product related PPMs (nprppms), i.e. those that do not leave a trace in the final product. In other words, when nprppms are used, the characteristics of the final products being compared are not affected even though they were produced using different PPMs. The US - Shrimp dispute provides an interesting example of a measure that provided for different treatment to products on the basis of nprppms but which was nevertheless provisionally justifiable under Article XX(g) of the GATT. The dispute concerned the manner in which fishermen harvested shrimp. Certain production methods, involving the use of fishing nets and shrimp trawl vessels, resulted in a high rate of incidental killing of sea turtles, as turtles can be trapped and drowned by the nets used to harvest shrimp. The United States aimed to reduce the killing of turtles by imposing an import ban on shrimp harvested by methods which may lead to the incidental killing of sea turtles. In order to avoid the ban, exporters were required to demonstrate the use of TEDs (turtle excluder devices which limit the incidental catch of endangered sea turtles), or similar equipment, when harvesting shrimp. However, the various fishing techniques to catch shrimp did not have any traceable effect on the characteristics of the harvested shrimp, the final product (i.e. they were nprppms). The Appellate Body viewed the United States' measure as directly connected to the policy of conservation of sea turtles and the measure was thus considered to be provisionally justified under Article XX(g). 67 More recently in US Tuna II, although the Appellate Body ultimately considered that the US dolphin-safe label was discriminatory and therefore inconsistent with Article 2.1 of the TBT Agreement, it did not base its conclusion on the fact that the measure distinguished among tuna products on the basis of the different PPMs used to harvest the tuna. Moreover, protecting dolphins by discouraging the use of certain fishing techniques (PPMs) that are harmful to dolphins (through the use of a dolphin-safe label) was considered by the panel to be a legitimate regulatory objective. I.B.2. THE PROHIBITION OF QUANTITATIVE RESTRICTIONS Certain environmental measures (such as bans) may also violate another key discipline of the GATT, which is contained in Article XI and provides, among other things, that restrictions on the importation or sale of products from other WTO Members are prohibited. In the US Shrimp case, already mentioned above, the US embargo was found to be inconsistent with Article XI: the United States had prohibited the import of shrimp originating from non-certified countries, i.e. countries that did not use a technology known as TEDs. More recently, in the Brazil Retreaded Tyres dispute, Brazil's import ban on retreaded tyres was also found to be inconsistent with Article XI. This does not mean, however, that WTO Members are barred from restricting imports (or exports) on the basis of environmental concerns. For instance, in the above-mentioned Retreaded Tyres dispute, Brazil successfully proved that the ban on these products, although a violation of Article XI, was nevertheless necessary to protect human, animal or plant life or health, against the risks arising from the accumulation of waste tyres under GATT Article XX(b). GATT Article XX, explained in more detail immediately below, contains the main exceptions to the GATT obligations. 67 For a complete summary of the US - Shrimp dispute, see section [II.B], below. 151

164 EXERCISES 2. Please briefly explain what the principle of non-discrimination requires in relation to domestic and imported products. 3. In WTO case law, four criteria have been used in determining whether products are like. What are these criteria? 152

165 I.C. GATT ARTICLE XX GENERAL EXCEPTIONS IN BRIEF GATT Article XX on General Exceptions lays down a number of specific instances in which WTO Members may be exempted from GATT rules. Two exceptions are of particular relevance to the protection of the environment: those contained in paragraphs (b) and (g) of Article XX. Pursuant to these two paragraphs, WTO Members may adopt policy measures that are inconsistent with GATT disciplines, but necessary to protect human, animal or plant life or health (paragraph (b)), or relating to the conservation of exhaustible natural resources (paragraph (g)). GATT Article XX on General Exceptions consists of two cumulative requirements. For a GATT-inconsistent environmental measure to be justified under Article XX, a Member must perform a two-tier analysis proving: First, that its measure falls under at least one of the exceptions (e.g. paragraphs (b) or (g), two of the ten exceptions under Article XX) and, Second, that the measure satisfies the requirements of the introductory paragraph (the chapeau of Article XX), i.e. that it is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, and is not a disguised restriction on international trade. I.C.1. ENVIRONMENTAL POLICIES COVERED BY ARTICLE XX WTO Members' autonomy to determine their own environmental objectives has been reaffirmed on a number of occasions (e.g. in US Gasoline, Brazil Retreaded Tyres). The Appellate Body also noted, in the US - Shrimp case, that conditioning market access on whether exporting Members comply with a policy unilaterally prescribed by the importing Member was a common aspect of measures falling within the scope of one or other of the exceptions of Article XX. In past cases, a number of public health and environmental policies have been found to fall within the realm of these two exceptions: policies aimed at reducing the consumption of cigarettes, protecting dolphins, reducing risks to human health posed by asbestos, reducing risks to human, animal and plant life and health arising from the accumulation of waste tyres (under Article XX(b)); and policies aimed at the conservation of tuna, salmon, herring, dolphins, turtles, clean air (under Article XX(g)). Interestingly, the phrase exhaustible natural resources under Article XX(g) has been interpreted broadly to include not only mineral or non-living resources but also living species which may be susceptible to depletion, such as sea turtles. To support this interpretation, the Appellate Body noted, in the US Shrimp case, that modern international conventions and declarations made frequent references to natural resources as embracing both living and non-living resources. Moreover, in order to demonstrate the exhaustible character of 153

166 sea turtles, the Appellate Body noted that sea turtles were included in Appendix 1 on species threatened with extinction of the Convention on International Trade in Endangered Species of Wild Fauna and Flora ( CITES"). Also in the US Shrimp case, the Appellate Body accepted as a policy covered by Article XX(g), one that applied not only to turtles within the United States waters but also to those living beyond its national boundaries. The Appellate Body found that there was a sufficient nexus between the migratory and endangered marine populations at issue and the United States, for purposes of Article XX(g). Moreover, the panel in China Raw Materials found that "a proper reading of Article XX(g) in the context of the GATT 1994 should take into account the challenge of using and managing resources in a sustainable manner that ensures the protection and conservation of the environment while promoting economic development". I.C.2. DEGREE OF CONNECTION BETWEEN THE MEANS AND THE ENVIRONMENTAL POLICY OBJECTIVE In order for a trade-related environmental measure to be eligible for an exception under Article XX, paragraphs (b) and (g), a Member has to establish a connection between its stated environmental policy goal and the measure at issue. The measure needs to be either: necessary for the protection of human, animal or plant life or health (paragraph (b)); or relating to the conservation of exhaustible natural resources (paragraph (g)). To determine whether a measure is necessary to protect human, animal or plant life or health under Article XX(b), a process of weighing and balancing a series of factors has been used by the Appellate Body. This process is commonly known as the "necessity" analysis. First, a panel must weigh and balance certain factors that include: (i) the importance of the common interests or values protected by the measure; (ii) the contribution made by the environmental measure to the policy objective, and (iii) the impact of the measure on international trade. If the above analysis yields a preliminary conclusion that the measure is "necessary", this result must be confirmed by comparing the measure with its possible alternatives, which may be less trade restrictive while providing an equivalent contribution to the achievement of the objective pursued. 154

LL.M. in International Legal Studies WTO LAW

LL.M. in International Legal Studies WTO LAW LL.M. in International Legal Studies WTO LAW Prof. Dr. Friedl WEISS Institute for European, International and Comparative Law - University of Vienna Winter Semester 2012/13 Part II History & Institutions

More information

WTO and the Environment: Case Studies in WTO Law. Dr. Christina Voigt University of Oslo, Department of Public and International Law

WTO and the Environment: Case Studies in WTO Law. Dr. Christina Voigt University of Oslo, Department of Public and International Law WTO and the Environment: Case Studies in WTO Law Dr. Christina Voigt University of Oslo, Department of Public and International Law 1. Overview: 1. Trade and Environment: the Debate 2. The Multilateral

More information

The GATT WTO System: How it Works and The Challenges of Doha

The GATT WTO System: How it Works and The Challenges of Doha The GATT WTO System: How it Works and The Challenges of Doha Patrick Low Director of Economic Research and Statistics World Trade Organization (WTO) ESCAP/WTO Fifth ARTNeT Capacity Building for Trade Research

More information

THE LEGAL TEXTS THE RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS WORLD TRADE ORGANIZATION

THE LEGAL TEXTS THE RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS WORLD TRADE ORGANIZATION THE LEGAL TEXTS THE RESULTS OF THE URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS WORLD TRADE ORGANIZATION PUBLISHED BY THE PRESS SYNDICATE OF THE UNIVERSITY OF CAMBRIDGE The Pitt Building, Trumpington

More information

TRADE AND ENVIRONMENT IN THE MULTILATERAL TRADING SYSTEM

TRADE AND ENVIRONMENT IN THE MULTILATERAL TRADING SYSTEM TRAINFORTRADE 2000 TRADE AND ENVIRONMENT IN THE MULTILATERAL TRADING SYSTEM Module 2 2 Table of Contents PREFACE...3 I. TRADE AND ENVIRONMENT IN THE WTO...4 A. BACKGROUND...4 B. THE COMMITTEE ON TRADE

More information

Introduction to the WTO. Will Martin World Bank 10 May 2006

Introduction to the WTO. Will Martin World Bank 10 May 2006 Introduction to the WTO Will Martin World Bank 10 May 2006 1 Issues What is the WTO and how does it work? Implications of being a member of the WTO multilateral trading system 2 WTO as an international

More information

STATE GOVT S - WTO & FTA ISSUES CENTRE FOR WTO STUDIES, IIFT AUGUST 2012

STATE GOVT S - WTO & FTA ISSUES CENTRE FOR WTO STUDIES, IIFT AUGUST 2012 STATE GOVT S - WTO & FTA ISSUES TRAINING OF TRAINER S PROGRAMME CENTRE FOR WTO STUDIES, IIFT 22-23 AUGUST 2012 OUTLINE Why should State Govt s be interested in international trade and WTO issues The context?

More information

WTO LAW IN THE LIGHT OF ENVIRONMENTAL PROTECTION

WTO LAW IN THE LIGHT OF ENVIRONMENTAL PROTECTION WTO LAW IN THE LIGHT OF ENVIRONMENTAL PROTECTION Overview of the WTO s mandate and institutional structure History of the Trade and Environment debate The WTO Committee on Trade and Environment The Doha

More information

Course on WTO Law and Jurisprudence Part III: WTO Dispute Settlement Procedures. Which legal instruments can be invoked in a WTO dispute?

Course on WTO Law and Jurisprudence Part III: WTO Dispute Settlement Procedures. Which legal instruments can be invoked in a WTO dispute? Course on WTO Law and Jurisprudence Part III: WTO Dispute Settlement Procedures Which legal instruments can be invoked in a WTO dispute? Session 5 2 November 2017 AGENDA a) What instruments can be invoked

More information

Introduction to the WTO Non-tariff Measures and the SPS & TBT Agreements

Introduction to the WTO Non-tariff Measures and the SPS & TBT Agreements Introduction to the WTO Non-tariff Measures and the SPS & TBT Agreements Gretchen H. Stanton Agriculture and Commodities Division World Trade Organization Introduction to the WTO 1. General Introduction

More information

THE WTO DISPUTE SETTLEMENT PROCEDURES

THE WTO DISPUTE SETTLEMENT PROCEDURES THE WTO DISPUTE SETTLEMENT PROCEDURES The third edition of The WTO Dispute Settlement Procedures collects together the treaty texts, decisions and agreed practices relating to the procedures that apply

More information

Trade and Public Policies: NTMs in the WTO

Trade and Public Policies: NTMs in the WTO Trade and Public Policies: NTMs in the WTO Xinyi Li Trade Policies Review Division, WTO Secretariat 12 th ARTNeT Capacity Building Workshop December 2016 1 Disclaimer The views and opinions expressed in

More information

international law of contemporary media session 7: the law of the world trade organization

international law of contemporary media session 7: the law of the world trade organization international law of contemporary media session 7: the law of the world trade organization mira burri, dr.iur., spring term 2014, 1 april 2014 globalization the goals of the day dimensions, essence, effects

More information

PART III (TRADE) TITLE I INITIAL PROVISIONS ARTICLE X.X. Establishment of a Free Trade Area ARTICLE X.X. Objectives

PART III (TRADE) TITLE I INITIAL PROVISIONS ARTICLE X.X. Establishment of a Free Trade Area ARTICLE X.X. Objectives Disclaimer: In view of the Commission's transparency policy, the Commission is publishing the texts of the Trade Part of the Agreement following the agreement in principle announced on 21 April 2018. The

More information

THE WTO DISPUTE SETTLEMENT PROCEDURES

THE WTO DISPUTE SETTLEMENT PROCEDURES THE WTO DISPUTE SETTLEMENT PROCEDURES World Trade Organization THIRD EDITION A Collection of the Relevant Legal Texts CAMBRIDGE UNIVERSITY PRESS CONTENTS Preface ix List of abbreviations x I. Understanding

More information

The 4 th WTO Ministerial Conference and WTO Work Programme Emerging from Doha: An Assessment

The 4 th WTO Ministerial Conference and WTO Work Programme Emerging from Doha: An Assessment The 4 th WTO Ministerial Conference and WTO Work Programme Emerging from Doha: An Assessment According to the WTO a Ninth Round of Multilateral Trade Negotiations Launched According to the WTO on November

More information

AGREEMENT BETWEEN JAPAN AND THE EUROPEAN UNION FOR AN ECONOMIC PARTNERSHIP PREAMBLE

AGREEMENT BETWEEN JAPAN AND THE EUROPEAN UNION FOR AN ECONOMIC PARTNERSHIP PREAMBLE Disclaimer: The negotiations between the EU and Japan on the Economic Partnership Agreement (the EPA) have been finalised. In view of the Commission's transparency policy, we are hereby publishing the

More information

THE UNITED NATIONS AND THE EMERGING SYSTEM OF GOVERNANCE IN INTERNATIONAL TRADE

THE UNITED NATIONS AND THE EMERGING SYSTEM OF GOVERNANCE IN INTERNATIONAL TRADE THE UNITED NATIONS AND THE EMERGING SYSTEM OF GOVERNANCE IN INTERNATIONAL TRADE Carlos Fortin The establishment of the World Trade Organization(GATF) 1994 with its related instruments, as well as (WTO)

More information

Environmental Debates in the WTO: Defining Bangladesh s Interests

Environmental Debates in the WTO: Defining Bangladesh s Interests CPD Occasional Paper Series Environmental Debates in the WTO: Defining Bangladesh s Interests Paper 35 Fahmida A Khatun Price: Tk. 90.00 Centre for Policy Dialogue House No 40/C, Road No 11 (new), Dhanmondi

More information

WORLD TRADE ORGANIZATION

WORLD TRADE ORGANIZATION WORLD TRADE ORGANIZATION 10 common misunderstandings about the WTO Is it a dictatorial tool of the rich and powerful? Does it destroy jobs? Does it ignore the concerns of health, the environment and development?

More information

TRADE AND SUSTAINABLE DEVELOPMENT

TRADE AND SUSTAINABLE DEVELOPMENT Disclaimer: In view of the Commission's transparency policy, the Commission is publishing the texts of the Trade Part of the Agreement following the agreement in principle announced on 21 April 2018. The

More information

2 WTO IN BRIEF. Global trade rules

2 WTO IN BRIEF. Global trade rules WTO IN BRIEF In brief, the World Trade Organization (WTO) is the only international organization dealing with the global rules of trade. Its main function is to ensure that trade flows as smoothly, predictably

More information

World business and the multilateral trading system

World business and the multilateral trading system International Chamber of Commerce The world business organization Policy statement Commission on Trade and Investment Policy World business and the multilateral trading system ICC policy recommendations

More information

TRADE AND ENVIRONMENT An Agenda for Developing Countries

TRADE AND ENVIRONMENT An Agenda for Developing Countries TRADE AND ENVIRONMENT An Agenda for Developing Countries Some trade and environment linkages work out in the same way for developing countries as for developed countries. However, most of the positive

More information

Introduction to Trade Policy Review in the WTO

Introduction to Trade Policy Review in the WTO WTO E-LEARNING COPYRIGHT 12 Introduction to Trade Policy Review in the WTO OBJECTIVE Introduction to the Trade Policy Review Mechanism. M y C o u r s e s e r i e s I. INTRODUCTION The Marrakesh Agreement

More information

CHAPTER TWELVE TRADE AND SUSTAINABLE DEVELOPMENT

CHAPTER TWELVE TRADE AND SUSTAINABLE DEVELOPMENT CHAPTER TWELVE TRADE AND SUSTAINABLE DEVELOPMENT SECTION A Introductory Provisions Article 12.1 Context and Objectives 1. The Parties recall the Agenda 21 of the United Nations Conference on Environment

More information

Review of the Operation of the SPS Agreement DRAFT FOR DISCUSSION

Review of the Operation of the SPS Agreement DRAFT FOR DISCUSSION Review of the Operation of the SPS Agreement Gretchen Stanton Paper prepared for: The World Bank s Integrated Program Of Research And Capacity Building To Enhance Participation Of Developing Countries

More information

Environment features in Uruguay Round results

Environment features in Uruguay Round results TE 005 17 February 1994 Environment features in Uruguay Round results and emerges as priority issue in post-uruguay Round work of GATT With the successful conclusion of the Uruguay Round negotiations,

More information

Bipartisan Congressional Trade Priorities and Accountability Act of 2015: Section-by-Section Summary

Bipartisan Congressional Trade Priorities and Accountability Act of 2015: Section-by-Section Summary Bipartisan Congressional Trade Priorities and Accountability Act of 2015: Section-by-Section Summary Overview: Section 1: Short Title Section 2: Trade Negotiating Objectives Section 3: Trade Agreements

More information

Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU)

Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) I Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) Members hereby agree as follows: Article 1 Coverage and Application 1. The rules and procedures of this Understanding

More information

WORLD TRADE ORGANIZATION

WORLD TRADE ORGANIZATION WORLD TRADE ORGANIZATION Committee on Regional Trade Agreements WT/REG209/1 14 March 2006 (06-1125) Original: English FREE TRADE AGREEMENT BETWEEN TURKEY AND MOROCCO The following communication, dated

More information

INTERNATIONAL ORGANIZATIONS IN WTO DISPUTE SETTLEMENT

INTERNATIONAL ORGANIZATIONS IN WTO DISPUTE SETTLEMENT INTERNATIONAL ORGANIZATIONS IN WTO DISPUTE SETTLEMENT How Much Institutional Sensitivity? MARINA FOLTEA CAMBRIDGE UNIVERSITY PRESS List of abbreviations page xii Table of WTO reports xiv - - Table of GATT1947

More information

R ESEARCHERS T EST Q UESTION P APER. By Dr. Nicolas Lamp Assistant Professor, Faculty of Law, Queen s University

R ESEARCHERS T EST Q UESTION P APER. By Dr. Nicolas Lamp Assistant Professor, Faculty of Law, Queen s University RESEARCHERS TEST By Dr. Nicolas Lamp Assistant Professor, Faculty of Law, Queen s University INSTRUCTIONS FOR PARTICIPANTS: The duration of this test is 90 minutes. There are 30 questions, so you have

More information

Introduction to WTO and the SPS Agreement. Anneke Hamilton Agriculture and Commodities Division 12 September 2013 SADC Workshop, South Africa

Introduction to WTO and the SPS Agreement. Anneke Hamilton Agriculture and Commodities Division 12 September 2013 SADC Workshop, South Africa Introduction to WTO and the SPS Agreement Anneke Hamilton Agriculture and Commodities Division 12 September 2013 SADC Workshop, South Africa Outline Introduction to WTO Use of Non-Tariff Measures (NTMs)

More information

TRADE AND SUSTAINABLE DEVELOPMENT

TRADE AND SUSTAINABLE DEVELOPMENT Disclaimer: the negotiations between EU and Japan on Economic Partnership Agreement are not concluded yet, therefore the published texts should be considered provisional and not final. In particular, the

More information

TRADE AND SUSTAINABLE DEVELOPMENT

TRADE AND SUSTAINABLE DEVELOPMENT Disclaimer: The negotiations between the EU and Japan on the Economic Partnership Agreement (the EPA) have been finalised. In view of the Commission's transparency policy, we are hereby publishing the

More information

The World Trade Organization...

The World Trade Organization... The World Trade Organization......In brief, the World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure

More information

CHAPTER ONE INITIAL PROVISIONS AND GENERAL DEFINITIONS. Section A - Initial Provisions. Article 101: Establishment of the Free Trade Area

CHAPTER ONE INITIAL PROVISIONS AND GENERAL DEFINITIONS. Section A - Initial Provisions. Article 101: Establishment of the Free Trade Area CHAPTER ONE INITIAL PROVISIONS AND GENERAL DEFINITIONS Section A - Initial Provisions Article 101: Establishment of the Free Trade Area The Parties to this Agreement, consistent with Article XXIV of the

More information

FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND MONTENEGRO

FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND MONTENEGRO FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND MONTENEGRO PREAMBLE Iceland, the Principality of Liechtenstein, the Kingdom of Norway, and the Swiss Confederation (hereinafter referred to as the EFTA

More information

The (Non)Use of Treaty Object and Purpose in IP Disputes in the WTO Henning Grosse Ruse - Khan

The (Non)Use of Treaty Object and Purpose in IP Disputes in the WTO Henning Grosse Ruse - Khan Max Planck Institute for Intellectual Property and Competition Law The (Non)Use of Treaty Object and Purpose in IP Disputes in the WTO Henning Grosse Ruse - Khan Centre for International Law National University

More information

Green government procurement and the WTO. Harro van Asselt

Green government procurement and the WTO. Harro van Asselt Green government procurement and the WTO Harro van Asselt W-03/06 April, 2003 Institute for Environmental Studies IVM Institute for Environmental Studies Vrije Universiteit De Boelelaan 1115 1081 HV Amsterdam

More information

BACKGROUND NOTE PROPOSAL TO PERMANENTLY EXCLUDE NON-VIOLATION AND SITUATION COMPLAINTS FROM THE WTO TRIPS AGREEMENT. 20 September

BACKGROUND NOTE PROPOSAL TO PERMANENTLY EXCLUDE NON-VIOLATION AND SITUATION COMPLAINTS FROM THE WTO TRIPS AGREEMENT. 20 September Development, Innovation and Intellectual Property Programme BACKGROUND NOTE PROPOSAL TO PERMANENTLY EXCLUDE NON-VIOLATION AND SITUATION COMPLAINTS FROM THE WTO TRIPS AGREEMENT 20 September 2017 1. Background

More information

Joint Report on the EU-Canada Scoping Exercise March 5, 2009

Joint Report on the EU-Canada Scoping Exercise March 5, 2009 Joint Report on the EU-Canada Scoping Exercise March 5, 2009 CHAPTER ONE OVERVIEW OF ACTIVITIES At their 17 th October 2008 Summit, EU and Canadian Leaders agreed to work together to "define the scope

More information

10 common misunderstandings about the WTO

10 common misunderstandings about the WTO 10 common misunderstandings about the WTO The debate will probably never end. People have different views of the pros and cons of the WTO s multilateral trading system. Indeed, one of the most important

More information

Session 6: GATT/WTO Dispute settlement cases involving environmental goods and services

Session 6: GATT/WTO Dispute settlement cases involving environmental goods and services Session 6: GATT/WTO Dispute settlement cases involving environmental goods and services Mr. Vincent Chauvet International Adviser, International Institute for Trade and Development (ITD) Session 6: GATT/WTO

More information

General Interpretative Note to Annex 1A

General Interpretative Note to Annex 1A WTO ANALYTICAL INDEX GATT 1994 General (Jurisprudence) 1 GENERAL... 1 1.1 Relationship between GATT 1994 and other Annex 1A agreements... 1 1.1.1 Text of the General Interpretative Note... 1 1.1.2 The

More information

Introduction to Rules of Origin in the WTO

Introduction to Rules of Origin in the WTO WTO E-LEARNING COPYRIGHT 12 Introduction to Rules of Origin in the WTO OBJECTIVE Overview of the Rules of Origin in the WTO. M y C o u r s e s e r i e s I. INTRODUCTION Rules of origin are the criteria

More information

THE COLLEGE OF THE BAHAMAS LL.B. Programme and Centre for Continuing Education & Extension Services

THE COLLEGE OF THE BAHAMAS LL.B. Programme and Centre for Continuing Education & Extension Services THE COLLEGE OF THE BAHAMAS LL.B. Programme and Centre for Continuing Education & Extension Services LL.B. Programme Moss Road Oakes Field Campus Nassau, New Providence, The Bahamas INTRODUCTION TO THE

More information

CHAPTER ONE INITIAL PROVISIONS AND GENERAL DEFINITIONS. Section A General Definitions. 1. For purposes of this Agreement, unless otherwise specified:

CHAPTER ONE INITIAL PROVISIONS AND GENERAL DEFINITIONS. Section A General Definitions. 1. For purposes of this Agreement, unless otherwise specified: CHAPTER ONE INITIAL PROVISIONS AND GENERAL DEFINITIONS Section A General Definitions Article 1.01: Definitions of General Application 1. For purposes of this Agreement, unless otherwise specified: Agreement

More information

RULES OF ORIGIN CHAPTER 10 A. OVERVIEW OF RULES 1. BACKGROUND OF RULES. Chapter 10: Rules of Origin

RULES OF ORIGIN CHAPTER 10 A. OVERVIEW OF RULES 1. BACKGROUND OF RULES. Chapter 10: Rules of Origin CHAPTER 10 Chapter 10: Rules of Origin RULES OF ORIGIN A. OVERVIEW OF RULES 1. BACKGROUND OF RULES Rules of origin are used to determine the nationality of goods traded in international commerce. Yet,

More information

AGREEMENT ESTABLISHING THE MULTILATERAL TRADE ORGANIZATION

AGREEMENT ESTABLISHING THE MULTILATERAL TRADE ORGANIZATION AGREEMENT ESTABLISHING THE MULTILATERAL TRADE ORGANIZATION The Parties to this Agreement, Recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to

More information

MODULE. Conclusion. ESTIMATED TIME: 3 hours

MODULE. Conclusion. ESTIMATED TIME: 3 hours MODULE 11 Conclusion ESTIMATED TIME: 3 hours 1 Overview I. MODULE 1 INTRODUCTION TO THE WTO SUMMARY... 3 II. MODULE 2 INTRODUCTION TO THE TRIPS AGREEMENT SUMMARY... 5 III. MODULE 3 COPYRIGHT AND RELATED

More information

GATT Article XX Exceptions. 17 October 2016

GATT Article XX Exceptions. 17 October 2016 GATT Article XX Exceptions 17 October 2016 GATT Article XX Exceptions - Purpose Allow WTO members to adopt and maintain measures that aim to promote or protect important societal values and interests Even

More information

Harnessing trade for sustainable development and a green economy

Harnessing trade for sustainable development and a green economy Harnessing trade for sustainable development and a green economy World Trade Organization Centre William Rappard Rue de Lausanne 154 CH-1211 Geneva 21 Switzerland Tel: +41 (0)22 739 51 11 Fax: +41 (0)22

More information

How to make EPAs WTO compatible?

How to make EPAs WTO compatible? How to make EPAs WTO compatible? Reforming the rules on regional trade agreements Bonapas Onguglo Taisuke Ito Discussion Paper No. 40 July 2003 - Executive Summary European Centre for Development Policy

More information

Intellectual Property in WTO Dispute Settlement

Intellectual Property in WTO Dispute Settlement Intellectual Property and the Judiciary 17 th EIPIN Congress Strasbourg, 30 January 2016 Intellectual Property in WTO Dispute Settlement Roger Kampf WTO Secretariat The views expressed are personal and

More information

Executive Summary of the Report of the Track Two Study Group on Comprehensive Economic Partnership in East Asia (CEPEA)

Executive Summary of the Report of the Track Two Study Group on Comprehensive Economic Partnership in East Asia (CEPEA) Executive Summary of the Report of the Track Two Study Group on Comprehensive Economic Partnership in East Asia (CEPEA) 1. Economic Integration in East Asia 1. Over the past decades, trade and investment

More information

Annexure 4. World Trade Organization. General Agreement on Tariffs and Trade 1947 and 1994

Annexure 4. World Trade Organization. General Agreement on Tariffs and Trade 1947 and 1994 Annexure 4 World Trade Organization General Agreement on Tariffs and Trade 1947 and 1994 The original General Agreement on Tariffs and Trade, now referred to as GATT 1947, provided the basic rules of the

More information

WORLD TRADE ORGANIZATION

WORLD TRADE ORGANIZATION WORLD TRADE ORGANIZATION WT/MIN(11)/11 17 December 2011 (11-6661) MINISTERIAL CONFERENCE Eighth Session Geneva, 15-17 December 2011 EIGHTH MINISTERIAL CONFERENCE Chairman's Concluding Statement My statement

More information

Advanced Trade Policy Course COURSE BOOKLET 19 January 12 March 2015 Geneva, Switzerland

Advanced Trade Policy Course COURSE BOOKLET 19 January 12 March 2015 Geneva, Switzerland Advanced Trade Policy Course COURSE BOOKLET 19 January 12 March 2015 Geneva, Switzerland One must learn by doing the thing; for though you think you know it, you have no certainty until you try. Sophocles

More information

The WTO at Twenty. Challenges and achievements

The WTO at Twenty. Challenges and achievements The WTO at Twenty Challenges and achievements The WTO at Twenty Challenges and achievements Contents 3WTO widening Foreword by WTO Director-General Roberto Azevêdo 1Introduction 06 2 Building a trade

More information

Green Growth and WTO Rules: Harmonization from Korea s Perspective

Green Growth and WTO Rules: Harmonization from Korea s Perspective May 31, 2013 Vol. 3 No. 25 Green Growth and WTO Rules: Harmonization from Korea s Perspective Sherzod Shadikhodjaev Associate Professor, KDI School of Public Policy and Management (sherzod1@kdischool.ac.kr)

More information

FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND UKRAINE

FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND UKRAINE FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND UKRAINE PREAMBLE Iceland, the Principality of Liechtenstein, the Kingdom of Norway, the Swiss Confederation (hereinafter referred to as the EFTA States

More information

The Association Agreement between the EU and Moldova

The Association Agreement between the EU and Moldova Moldova State University Faculty of Law Chisinau, 12 th February 2015 The Association Agreement between the EU and Moldova Environmental Cooperation Gianfranco Tamburelli Association Agreements with Georgia,

More information

Trade WTO Law International Economic Law

Trade WTO Law International Economic Law Trade WTO Law International Economic Law Prof. Seraina Grünewald / Prof. Christine Kaufmann 13/20/27 March 2014 III. Dispute Settlement 2 1 Dispute Settlement 1. Principles Prompt and amicable settlement

More information

Compliance with International Trade Obligations. The Common Market for Eastern and Southern Africa

Compliance with International Trade Obligations. The Common Market for Eastern and Southern Africa Compliance with International Trade Obligations The Common Market for Eastern and Southern Africa Henry Kibet Mutai KLUWER LAW INTERNATIONAL About the Author Acknowledgments Abbreviations and Acronyms

More information

World Trade Organization

World Trade Organization World Trade Organization Konstantina Gkountaropoulou Rodrigo Ortiz-Mendoza 19 th November 2013 Stefanos Sinos International Agrifood Economics WTO in brief... Is the only international organization dealing

More information

EU-Georgia Deep and Comprehensive Free-Trade Area

EU-Georgia Deep and Comprehensive Free-Trade Area Reading guide The European Union (EU) and Georgia are about to forge a closer political and economic relationship by signing an Association Agreement (AA). This includes the goal of creating a Deep and

More information

Participation of Developing Countries in the World Trade Organizations Dispute Settlement System

Participation of Developing Countries in the World Trade Organizations Dispute Settlement System Participation of Developing Countries in the World Trade Organizations Dispute Settlement System Name: Anna Jüngen (36489) University: Erasmus University Rotterdam, Department of Public Administration

More information

RESTRICTED MTN.GNG/W/28 COMMUNICATION FROM THE CHAIRMAN OF THE GROUP OF NEGOTIATIONS ON GOODS TO THE TRADE NEGOTIATIONS COMMITTEE

RESTRICTED MTN.GNG/W/28 COMMUNICATION FROM THE CHAIRMAN OF THE GROUP OF NEGOTIATIONS ON GOODS TO THE TRADE NEGOTIATIONS COMMITTEE MULTILATERAL TRADE NEGOTIATIONS THE URUGUAY ROUND Group of Negotiations on Goods (GATT) RESTRICTED MTN.GNG/W/28 29 July 1991 Special Distribution Original: English COMMUNICATION FROM THE CHAIRMAN OF THE

More information

For a Strong and Modern World Trading System

For a Strong and Modern World Trading System POSITION PAPER - SUMMARY For a Strong and Modern World Trading System May 2016 Create new market access worldwide, stop protectionism Subsequent to the December 2015 WTO Ministerial Conference in Nairobi,

More information

The following text reproduces the Agreement1 between the Republic of Turkey and the Slovak Republic.

The following text reproduces the Agreement1 between the Republic of Turkey and the Slovak Republic. WORLD TRADE ORGANIZATION WT/REG68/1 24 March 1999 (99-1190) Committee on Regional Trade Agreements Original: English FREE TRADE AGREEMENT BETWEEN THE SLOVAK REPUBLIC AND THE REPUBLIC OF TURKEY The following

More information

AGREEMENT BETWEEN THE EFTA STATES AND THE REPUBLIC OF CROATIA

AGREEMENT BETWEEN THE EFTA STATES AND THE REPUBLIC OF CROATIA AGREEMENT BETWEEN THE EFTA STATES AND THE REPUBLIC OF CROATIA The Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway, the Swiss Confederation (hereinafter called the EFTA States),

More information

PETER SUTHERLAND DISMISSES FEARS THAT THE WORLD TRADE ORGANIZATION WILL INFRINGE NATIONAL SOVEREIGNTY AS UNFOUNDED

PETER SUTHERLAND DISMISSES FEARS THAT THE WORLD TRADE ORGANIZATION WILL INFRINGE NATIONAL SOVEREIGNTY AS UNFOUNDED CENTRE WILLIAM-RAPPARD, RUE DE LAUSANNE 154, 1211 GENÈVE 21. TÉL. 022 73951 11 GATT/1634 30 May 1994 ft PETER SUTHERLAND DISMISSES FEARS THAT THE WORLD TRADE ORGANIZATION WILL INFRINGE NATIONAL SOVEREIGNTY

More information

Chapter 9. Figure 9-1. Types of Rules of Origin

Chapter 9. Figure 9-1. Types of Rules of Origin Chapter 9 RULES OF ORIGIN 1. OVERVIEW OF RULES Rules of origin are used to determine the nationality of goods traded in international commerce. Yet, no internationally agreed upon rules of origin exist.

More information

JOB(03)/ July Preparations for the Fifth Session of the Ministerial Conference. Draft Cancún Ministerial Text

JOB(03)/ July Preparations for the Fifth Session of the Ministerial Conference. Draft Cancún Ministerial Text 18 July 2003 Preparations for the Fifth Session of the Ministerial Conference Draft Cancún Ministerial Text The attached Draft Ministerial Text is being circulated by the Chairman of the General Council

More information

Article 1. Coverage and Application

Article 1. Coverage and Application 1 ARTICLE 1 AND APPENDIX 1 AND 2... 1 1.1 Text of Article 1... 1 1.2 Article 1.1: "covered agreements"... 2 1.2.1 Text of Appendix 1... 2 1.2.2 General... 2 1.2.3 The DSU... 3 1.2.4 Bilateral agreements...

More information

Chapter 10 STANDARDS AND CONFORMITY ASSESSMENT SYSTEMS

Chapter 10 STANDARDS AND CONFORMITY ASSESSMENT SYSTEMS Chapter 10 STANDARDS AND CONFORMITY ASSESSMENT SYSTEMS 1. OVERVIEW OF RULES (1)Background of Rules 1) Standards and conformity assessment system Quality related to products "Standards" and assessment of

More information

N O T E. The Course on Dispute Settlement in International Trade, Investment and Intellectual Property consists of forty modules.

N O T E. The Course on Dispute Settlement in International Trade, Investment and Intellectual Property consists of forty modules. ii Dispute Settlement N O T E The Course on Dispute Settlement in International Trade, Investment and Intellectual Property consists of forty modules. This Module has been prepared by Mr. Peter Van den

More information

The WTO and Climate Change: What Are the Options? Gary Clyde Hufbauer & Jisun Kim

The WTO and Climate Change: What Are the Options? Gary Clyde Hufbauer & Jisun Kim The WTO and Climate Change: What Are the Options? Gary Clyde Hufbauer & Jisun Kim PIIE/WRI Event on Climate Change and Trade Policy September 14, 2009 UNFCCC Approach to Trade Issues The climate regime

More information

WTO E-Learning. WTO E-Learning Copyright February Sanitary and Phytosanitary Measures

WTO E-Learning. WTO E-Learning Copyright February Sanitary and Phytosanitary Measures WTO E-Learning WTO E-Learning Copyright February 2014 Sanitary and Phytosanitary Measures Abstract The Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) seeks to strike

More information

FREE TRADE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF BULGARIA AND THE GOVERNMENT OF THE STATE OF ISRAEL

FREE TRADE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF BULGARIA AND THE GOVERNMENT OF THE STATE OF ISRAEL FREE TRADE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF BULGARIA AND THE GOVERNMENT OF THE STATE OF ISRAEL PREAMBLE The Government of the State of Israel and the Government of the Republic of Bulgaria

More information

Response to the EC consultation on the future direction of EU trade policy. 28 July 2010

Response to the EC consultation on the future direction of EU trade policy. 28 July 2010 Response to the EC consultation on the future direction of EU trade policy 28 July 2010 Question 1: Now that the new Lisbon Treaty has entered into force, how can we best ensure that our future trade policy

More information

FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF TURKEY AND THE REPUBLIC OF CHILE

FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF TURKEY AND THE REPUBLIC OF CHILE FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF TURKEY AND THE REPUBLIC OF CHILE PREAMBLE The Republic of Turkey and the Republic of Chile (hereinafter referred to as the Parties or Turkey or Chile where

More information

WTO E-Learning. WTO E-Learning Copyright February Sanitary and Phytosanitary Measures

WTO E-Learning. WTO E-Learning Copyright February Sanitary and Phytosanitary Measures WTO E-Learning WTO E-Learning Copyright February 2014 Sanitary and Phytosanitary Measures Abstract The Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) seeks to strike

More information

Multilateral Aspects of Trade Facilitation and the Doha Round

Multilateral Aspects of Trade Facilitation and the Doha Round World Bank and EU Seminar on Trade Facilitation in East Asia 3-5 November 2004 Shanghai, China Multilateral Aspects of Trade Facilitation and the Doha Round Xiaobing Tang Counsellor Market Access Division

More information

WORLD TRADE ORGANIZATION

WORLD TRADE ORGANIZATION WORLD TRADE ORGANIZATION WT/L/412 3 September 2001 (01-4194) Original: English JOINT STATEMENT BY THE SAARC 1 COMMERCE MINISTERS ON THE FORTHCOMING FOURTH WTO MINISTERIAL CONFERENCE AT DOHA New Delhi,

More information

WORLD TRADE ORGANIZATION

WORLD TRADE ORGANIZATION WORLD TRADE ORGANIZATION G/TBT/1/Rev.8 23 May 2002 (02-2849) Committee on Technical Barriers to Trade DECISIONS AND RECOMMENDATIONS ADOPTED BY THE COMMITTEE SINCE 1 JANUARY 1995 Note by the Secretariat

More information

29 May 2017 Without prejudice CHAPTER [XX] TRADE AND SUSTAINABLE DEVELOPMENT. Article X.1. Objectives and Scope

29 May 2017 Without prejudice CHAPTER [XX] TRADE AND SUSTAINABLE DEVELOPMENT. Article X.1. Objectives and Scope 29 May 2017 Without prejudice This document is the European Union's (EU) proposal for a legal text on trade and sustainable development in the EU-Indonesia FTA. It has been tabled for discussion with Indonesia.

More information

EU-MERCOSUR CHAPTER. Article 1. Objectives and Scope

EU-MERCOSUR CHAPTER. Article 1. Objectives and Scope EU-MERCOSUR CHAPTER TRADE AND SUSTAINABLE DEVELOPMENT Article 1 Objectives and Scope 1. The objective of this Chapter is to enhance the integration of sustainable development in the Parties' trade and

More information

PROTOCOL AMENDING THE FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND THE REPUBLIC OF SERBIA

PROTOCOL AMENDING THE FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND THE REPUBLIC OF SERBIA PROTOCOL AMENDING THE FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND THE REPUBLIC OF SERBIA Iceland, the Principality of Liechtenstein, the Kingdom of Norway, the Swiss Confederation (hereinafter referred

More information

PROCESSES AND PRODUCTION METHODS (PPMs) IN WTO LAW

PROCESSES AND PRODUCTION METHODS (PPMs) IN WTO LAW PROCESSES AND PRODUCTION METHODS (PPMs) IN WTO LAW Interfacing trade and social goals CHRISTIANE R. CONRAD CAMBRIDGE UNIVERSITY PRESS List of figures and tables, page xv Preface and acknowledgements xvii

More information

The Principle of Integration in WTO/TRIPS Jurisprudence Henning Grosse Ruse - Khan

The Principle of Integration in WTO/TRIPS Jurisprudence Henning Grosse Ruse - Khan Max Planck Institute for Intellectual Property and Competition Law The Principle of Integration in WTO/TRIPS Jurisprudence Henning Grosse Ruse - Khan Sustainable Development Principles in the Decisions

More information

CRS Report for Congress Received through the CRS Web

CRS Report for Congress Received through the CRS Web CRS Report for Congress Received through the CRS Web Order Code RS20139 Updated April 2, 2002 China and the World Trade Organization Summary Wayne M. Morrison Specialist in International Trade and Finance

More information

One main book, supplementary reading Treaty collection, Global and Regional Treaties Web pages

One main book, supplementary reading Treaty collection, Global and Regional Treaties Web pages The ITL course One main book, supplementary reading Treaty collection, Global and Regional Treaties Web pages http://www.uio.no/studier/emner/jus/jus/jus5850/h12/ http://www.wto.org/ http://ictsd.org/

More information

The World Trade Organization s Doha Development Agenda The Doha Negotiations after Six Years Progress Report at the End of 2007 TRADE FACILITATION

The World Trade Organization s Doha Development Agenda The Doha Negotiations after Six Years Progress Report at the End of 2007 TRADE FACILITATION The World Trade Organization s Doha Development Agenda The Doha Negotiations after Six Years Progress Report at the End of 2007 TRADE FACILITATION LAW OFFICES OF STEWART AND STEWART 2100 M STREET NW WASHINGTON,

More information

United States Panama Trade Promotion Agreement

United States Panama Trade Promotion Agreement United States Panama Trade Promotion Agreement Objectives The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, most-favored-nation

More information

Non-Tariff measures: Currently available evidence and future research agenda

Non-Tariff measures: Currently available evidence and future research agenda Non-Tariff measures: Currently available evidence and future research agenda Research Workshop on Emerging Trade Issues in Asia and the Pacific: Meeting contemporary policy challenges Nakorn Pathom, 4-5

More information

FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF TURKEY AND THE REPUBLIC OF ALBANIA

FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF TURKEY AND THE REPUBLIC OF ALBANIA FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF TURKEY AND THE REPUBLIC OF ALBANIA Free Trade Agreement Between the Republic of Turkey and the Republic of Albania PREAMBLE Desirous to develop and strengthen

More information

Also available as an App to download to your tablet.

Also available as an App to download to your tablet. Annual Report 2015 Who we are The World Trade Organization deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

More information