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Question Can you tell me how WTO deal with the issue of the environment and sustainability.
Answer ROSHAN,
HERE IS SOME USEFUL MATERIAL.
REGARDS
LEO LINGHAM
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The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development. The WTO also provides a legal and institutional framework for the implementation and monitoring of these agreements, as well as for settling disputes arising from their interpretation and application. The current body of trade agreements comprising the WTO consists of 16 different multilateral agreements (to which all WTO members are parties) and two different plurilateral agreements (to which only some WTO members are parties).
Over the past 60 years, the WTO, which was established in 1995, and its predecessor organization the GATT have helped to create a strong and prosperous international trading system, thereby contributing to unprecedented global economic growth. The WTO currently has 153 members, of which 117 are developing countries or separate customs territories. WTO activities are supported by a Secretariat of some 700 staff, led by the WTO Director-General. The Secretariat is located in Geneva, Switzerland, and has an annual budget of approximately CHF 200 million ($180 million, €130 million). The three official languages of the WTO are English, French and Spanish.
Decisions in the WTO are generally taken by consensus of the entire membership. The highest institutional body is the MINISTERIAL CONFERENCE , which meets roughly every two years. A GENERAL COUNCIL conducts the organization's business in the intervals between Ministerial Conferences. Both of these bodies comprise all members. Specialised subsidiary bodies (Councils, Committees, Sub-committees), also comprising all members, administer and monitor the implementation by members of the various WTO agreements.
More specifically, the WTO's main activities are:
— negotiating the reduction or elimination of obstacles to trade (import tariffs, other barriers to trade) and agreeing on rules governing the conduct of international trade (e.g. antidumping, subsidies, product standards, etc.)
— administering and monitoring the application of the WTO's agreed rules for trade in goods, trade in services, and trade-related intellectual property rights
— monitoring and reviewing the trade policies of our members, as well as ensuring transparency of regional and bilateral trade agreements
— settling disputes among our members regarding the interpretation and application of the agreements
— building capacity of developing country government officials in international trade matters
— assisting the process of accession of some 30 countries who are not yet members of the organization
— conducting economic research and collecting and disseminating trade data in support of the WTO's other main activities
— explaining to and educating the public about the WTO, its mission and its activities.
The WTO's founding and guiding principles remain the pursuit of open borders, the guarantee of most-favoured-nation principle and non-discriminatory treatment by and among members, and a commitment to transparency in the conduct of its activities. The opening of national markets to international trade, with justifiable exceptions or with adequate flexibilities, will encourage and contribute to sustainable development, raise people's welfare, reduce poverty, and foster peace and stability. At the same time, such market opening must be accompanied by sound domestic and international policies that contribute to economic growth and development according to each member's needs and aspirations.
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WTO AND ENVIRONMENT
The environment:a specific concern
The WTO has no specific agreement dealing with the environment.However,the
WTO agreements confirm governments ’ right to protect the environment,,provided
certain conditions are met,and a number of them include provisions dealing with
environmental concerns.The objectives of sustainable development and environ-
mental protection are important enough to be stated in the preamble to the
Agreement Establishing the WTO.
The increased emphasis on environmental policies is relatively recent in the 60-year
history of the multilateral trading system.At the end of the Uruguay Round in 1994,
trade ministers from participating countries decided to begin a comprehensive
work programme on trade and environment in the WTO.They created the Trade
and Environment Committee.This has brought environmental and sustainable
development issues into the mainstream of WTO work.The 2001 Doha Ministerial
Conference kicked off negotiations in some aspects of the subject.
The committee:broad-based responsibility
The committee has a broad-based responsibility covering all areas of the multila-
teral trading system — goods,,services and intellectual property.Its duties are to
study the relationship between trade and the environment,and to make recom-
mendations about any changes that might be needed in the trade agreements.
The committee ’s work is based on two important principles:
•The WTO is only competent to deal with trade.In other words,in environmental
issues its only task is to study questions that arise when environmental policies
have a significant impact on trade.The WTO is not an environmental agency.Its
members do not want it to intervene in national or international environmental
policies or to set environmental standards.Other agencies that specialize in envi-
ronmental issues are better qualified to undertake those tasks.
•If the committee does identify problems,its solutions must continue to uphold
the principles of the WTO trading system.
More generally WTO members are convinced that an open,equitable and non-
discriminatory multilateral trading system has a key contribution to make to national
and international efforts to better protect and conserve environmental resources
and promote sustainable development.This was recognized in the results of the
1992 UN Conference on Environment and Development in Rio (the “Earth
Summit ”)and its 2002 successor,the World Summit on Sustainable Development
in Johannesburg.
The committee ’s work programme focuses on 10 areas.Its agenda is driven by pro-
posals from individual WTO members on issues of importance to them.The follow-
ing sections outline some of the issues,and what the committee has concluded so far:
‘Green ’ provisions
Examples of provisions in the WTO agree-
ments dealing with environmental issues
•GATT Article 20:policies affecting trade in
goods for protecting human,animal or
plant life or health are exempt from
normal GATT disciplines under certain
conditions.
• Technical Barriers to Trade ((i.e.product
and industrial standards),and Sanitary
and Phytosanitary Measures (animal and
plant health and hygiene):explicit
recognition of environmental objectives.
• Agriculture::environmental programmes
exempt from cuts in subsidies
• Subsidies and Countervail::allows subsi-
dies,up to 20%of firms ’ costs,,for
adapting to new environmental laws.
• Intellectual property::governments can
refuse to issue patents that threaten
human,animal or plant life or health,or
risk serious damage to the environment
(TRIPS Article 27).
• GATS Article 14::policies affecting trade
in services for protecting human,animal
or plant life or health are exempt from
normal GATS disciplines under certain
conditions.
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WTO and environmental agreements:how are they related?
How do the WTO trading system and “green ” trade measures relate to each other??
What is the relationship between the WTO agreements and various international
environmental agreements and conventions?
There are about 200 international agreements (outside the WTO)dealing with vari-
ous environmental issues currently in force.They are called multilateral environ-
mental agreements (MEAs).
About 20 of these include provisions that can affect trade:for example they ban
trade in certain products,or allow countries to restrict trade in certain circum-
stances.Among them are the Montreal Protocol for the protection of the ozone
layer,the Basel Convention on the trade or transportation of hazardous waste across
international borders,and the Convention on International Trade in Endangered
Species (CITES).
Briefly,the WTO ’s committee says the basic WTO principles of non-discrimination
and transparency do not conflict with trade measures needed to protect the envi-
ronment,including actions taken under the environmental agreements.It also
notes that clauses in the agreements on goods,services and intellectual property
allow governments to give priority to their domestic environmental policies.
The WTO ’s committee says the most effective way to deal with international envi-
ronmental problems is through the environmental agreements.It says this
approach complements the WTO ’s work in seeking internationally agreed solutions
for trade problems.In other words,using the provisions of an international envi-
ronmental agreement is better than one country trying on its own to change other
countries ’ environmental policies ((see shrimp-turtle and dolphin-tuna case studies ).
The committee notes that actions taken to protect the environment and having an
impact on trade can play an important role in some environmental agreements,par-
ticularly when trade is a direct cause of the environmental problems.But it also
points out that trade restrictions are not the only actions that can be taken,and they
are not necessarily the most effective.Alternatives include:helping countries
acquire environmentally-friendly technology,giving them financial assistance,
providing training,etc.
The problem should not be exaggerated.So far,no action affecting trade and taken
under an international environmental agreement has been challenged in the GATT-
WTO system.There is also a widely held view that actions taken under an environ-
mental agreement are unlikely to become a problem in the WTO if the countries
concerned have signed the environmental agreement,although the question is not
settled completely.The Trade and Environment Committee is more concerned
about what happens when one country invokes an environmental agreement to take
action against another country that has not signed the environmental agreement.
A key question
If one country believes another country ’s
trade damages the environment,what can
it do?Can it restrict the other country ’s
trade?If it can,under what circumstances?
At the moment,there are no definitive
legal interpretations,largely because the
questions have not yet been tested in a
legal dispute either inside or outside the
WTO.But the combined result of the
WTO ’s trade agreements and environmental
agreements outside the WTO suggest:
1.First,cooperate:The countries con-
cerned should try to cooperate to prevent
environmental damage.
2.The complaining country can act
(e.g.on imports)to protect its own
domestic environment,but it cannot
discriminate.Under the WTO agreements,
standards,taxes or other measures applied
to imports from the other country must also
apply equally to the complaining country ’s
own products (“national treatment ”)and
imports from all other countries
(“most-favoured-nation ”).
3.If the other country has also signed
an environment agreement ,then what
ever action the complaining country takes
is probably not the WTO ’s concern.
4.What if the other country has not
signed?Here the situation is unclear and
the subject of debate.Some environmental
agreements say countries that have signed
the agreement should apply the agreement
even to goods and services from countries
that have not.Whether this would break
the WTO agreements remains untested
because so far no dispute of this kind has
been brought to the WTO.One proposed
way to clarify the situation would be to
rewrite the rules to make clear that coun-
tries can,in some circumstances,cite an
environmental agreement when they take
action affecting the trade of a country that
has not signed.Critics say this would allow
some countries to force their environmental
standards on others.
5.When the issue is not covered by an
environmental agreement,WTO rules
apply .The WTO agreements are inter-
preted to say two important things.First,
trade restrictions cannot be imposed on a
product purely because of the way it has
been produced.Second,one country can-
not reach out beyond its own territory to
impose its standards on another country.
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WTO ECONOMIC SUSTAINABILITY
Liberalization and sustainable development:good for each other
Does freer trade help or hinder environmental protection?The Trade and
Environment Committee is analysing the relationship between trade liberalization
(including the Uruguay Round commitments)and the protection of the environment.
Members say the removal of trade restrictions and distortions can yield benefits both
for the multilateral trading system and the environment.Further work is scheduled.
Intellectual property,services:some scope for study
Discussions in the Trade and Environment Committee on these two issues have
broken new ground since there was very little understanding of how the rules of the
trading system might affect or be affected by environmental policies in these areas.
On services,the committee says further work is needed to examine the relationship
between the General Agreement on Trade in Services (GATS)and environmental
protection policies in the sector.
The committee says that the Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS)helps countries obtain environmentally-sound technology
and products.More work is scheduled on this,including on the relationship
between the TRIPS Agreement and the Convention of Biological Diversity.
Investment,competition,procurement,simpler procedures
Ministers from WTO member-countries decided at the 1996 Singapore Ministerial
Conference to set up three new working groups:on trade and investment,on com-
petition policy,and on transparency in government procurement.They also
instructed the WTO Goods Council to look at possible ways of simplifying trade pro-
cedures,an issue sometimes known as “trade facilitation ”.Because the Singapore
conference kicked off work in these four subjects,they are sometimes called the
“Singapore issues ”.
These four subjects were originally included on the Doha Development Agenda.
The carefully negotiated mandate was for negotiations to start after the 2003
Cancún Ministerial Conference,“on the basis of a decision to be taken,by explicit
consensus,at that session on modalities of negotiations ”.There was no consensus,
and the members agreed on 1 August 2004 to proceed with negotiations in only one
subject,trade facilitation.The other three were dropped from the Doha agenda.
Investment and competition:what role for the WTO?
Work in the WTO on investment and competition policy issues originally took the
form of specific responses to specific trade policy issues,rather than a look at the
broad picture.
Decisions reached at the 1996 Ministerial Conference in Singapore changed the per-
spective.The ministers decided to set up two working groups to look more gener-
ally at how trade relates to investment and competition policies.
The working groups ’ tasks were analytical and exploratory..They would not negoti-
ate new rules or commitments without a clear consensus decision.
The ministers also recognized the work underway in the UN Conference on Trade
and Development (UNCTAD)and other international organizations.The working
groups were to cooperate with these organizations so as to make best use of avail-
able resources and to ensure that development issues are fully taken into account.
An indication of how closely trade is linked with investment is the fact that about
one third of the $6.1 trillion total for world trade in goods and services in 1995 was
trade within companies — for example between subsidiaries in different countries
or between a subsidiary and its headquarters.
The close relationships between trade and investment and competition policy have
long been recognized.One of the intentions,when GATT was drafted in the late
1940s,was for rules on investment and competition policy to exist alongside those
for trade in goods.(The other two agreements were not completed because the
attempt to create an International Trade Organization failed.)
Over the years,GATT and the WTO have increasingly dealt with specific aspects of
the relationships.For example,one type of trade covered by the General Agreement
on Trade in Services (GATS)is the supply of services by a foreign company setting
up operations in a host country — i..e.through foreign investment.
The Trade-Related Investment Measures Agreement says investors ’ right to use imported
goods as inputs should not depend on their export performance.
The same goes for competition policy.GATT and GATS contain rules on monopo-
lies and exclusive service suppliers.The principles have been elaborated consider-
ably in the rules and commitments on telecommunications.The agreements on
intellectual property and services both recognize governments ’ rights to act against
anti-competitive practices,and their rights to work together to limit these practices.
Transparency in government purchases:towards multilateral rules
The WTO already has an Agreement on Government Procurement.It is plurila-
teral — only some WTO members have signed it so far..The agreement covers such
issues as transparency and non-discrimination.
The decision by WTO ministers at the 1996 Singapore conference did two things.It
set up a working group that was multilateral — it included all WTO members..And
it focused the group ’s work on transparency in government procurement practices.
The group did not look at preferential treatment for local suppliers,so long as the
preferences were not hidden.
The first phase of the group ’s work was to study transparency in government pro-
curement practices,taking into account national policies.The second phase was to
developments for inclusion in the agreement.
Trade facilitation:a new high profile
Once formal trade barriers come down,other issues become more important.For
example,companies need to be able to acquire information on other countries ’
importing and exporting regulations and how customs procedures are handled.
Cutting red-tape at the point where goods enter a country and providing easier
access to this kind of information are two ways of “facilitating ” trade..
The 1996 Singapore ministerial conference instructed the WTO Goods Council to
start exploratory and analytical work “on the simplification of trade procedures in
order to assess the scope for WTO rules in this area ”.Negotiations began after the
General Council decision of 1 August 2004.
Electronic commerce
A new area of trade involves goods crossing borders electronically.Broadly speak-
ing,this is the production,advertising,sale and distribution of products via telecom-
munications networks.The most obvious examples of products distributed elec-
tronically are books,music and videos transmitted down telephone lines or through
the Internet.
The declaration on global electronic commerce adopted by the Second (Geneva)
Ministerial Conference on 20 May 1998 urged the WTO General Council to estab-
lish a comprehensive work programme to examine all trade-related issues arising
from global electronic commerce.The General Council adopted the plan for this
work programme on 25 September 1998,initiating discussions on issues of elec-
tronic commerce and trade by the Goods,Services and TRIPS (intellectual property)
Councils and the Trade and Development Committee.
In the meantime,WTO members also agreed to continue their current practice of
not imposing customs duties on electronic transmissions.
developments for inclusion in an agreement.
Trade facilitation:a new high profile
Once formal trade barriers come down,other issues become more important.For
example,companies need to be able to acquire information on other countries ’
importing and exporting regulations and how customs procedures are handled.
Cutting red-tape at the point where goods enter a country and providing easier
access to this kind of information are two ways of “facilitating ” trade..
The 1996 Singapore ministerial conference instructed the
WTO Goods Council to
start exploratory and analytical work “on the simplification of trade procedures in
order to assess the scope for WTO rules in this area ”.Negotiations began after the
General Council decision of 1 August 2004.
Labour standards:consensus,coherence and controversy
Labour standards are those that are applied to the way workers are treated.The term
covers a wide range of things:from use of child labour and forced labour,to the
right to organize trade unions and to strike,minimum wages,health and safety con-
ditions,and working hours.
Consensus on core standards,work deferred to the ILO
There is a clear consensus:all WTO member governments are committed to a nar-
rower set of internationally recognized “core ” standards — freedom of association,,
no forced labour,no child labour,and no discrimination at work (including gender
discrimination).
At the 1996 Singapore Ministerial Conference,members defined the WTO ’s role on
this issue,identifying the International Labour Organization (ILO)as the compe-
tent body to negotiate labour standards.There is no work on this subject in the
WTO ’s Councils and Committees.However the secretariats of the two organiza-
tions work together on technical issues under the banner of “coherence ” in global
economic policy-making.
However,beyond that it is not easy for them to agree,and the question of interna-
tional enforcement is a minefield.
Why was this brought to the WTO?What is the debate about?
Four broad questions have been raised inside and outside the WTO.
•The analytical question:if a country has lower standards for labour rights,do its
exports gain an unfair advantage?Would this force all countries to lower their
standards (the “race to the bottom ”)?
What the 1996 Singapore ministerial
declaration says on core labour standards
“We renew our commitment to the
observance of internationally recognized
core labour standards.The International
Labour Organization (ILO)is the compe-
tent body to set and deal with these stan-
dards,and we affirm our support for its
work in promoting them.We believe that
economic growth and development
fostered by increased trade and further
trade liberalization contribute to the pro-
motion of these standards.We reject the
use of labour standards for protectionist
purposes,and agree that the comparative
advantage of countries,particularly
low-wage developing countries,must in
no way be put into question.In this
regard,we note that the WTO and ILO
Secretariats will continue their existing
collaboration.”
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WTO IS WORKING WITH IISD BODY
*ENERGY
IISD undertakes policy research focused on how countries can achieve energy security in a manner that supports sustainable development.
*LONG TERM STRATEGY
IISD undertakes work within and outside of Canada to support the development of a post-2012 climate regime that will facilitate long-term, deep reductions in greenhouse gas emissions, enhance the capacity of all nations to adapt to the impacts of climate change, and foster sustainable development.
*MARKETS,MITIGATION AND CLIMATE CHANGE
IISD seeks to examine how markets and economic instruments—such as the Kyoto Protocol's market mechanisms—can be used to enable developed and developing countries to meet their sustainable development objectives.
*TRADE AND CLIMATE CHANGE
There are a number of ways in which trade policy might help serve climate change goals, but this will only happen if we fully understand the potential and map out how to exploit it. As well, a number of climate change measures may have negative trade impacts, and we need to understand these well enough to take those impacts into account and avoid them where possible.
*CLIMATE CHANGE AND SECURITY
Understanding how climate change could affect political and economic stability, and developing effective ways to address those problems.
*VULNERABILITY AND ADAPTATION
Our efforts contribute to understanding and enhancing the ability of communities, sectors and countries to prepare for and respond to the anticipated impacts of climate change.
*KYOTO PROTOCOL
IISD is actively engaged in reporting on and contributing to the ongoing negotiations under the auspices of the United Nations Framework Convention on Climate Change and its Kyoto Protocol.
*GOVERNANCE : STRUCTURE AND PROCESS FOR DECISION MAKING AND ACCOUNTABILITY
IISD's exploration of decision-making and accountability mechanisms of Type 2 partnerships emerging from the 2002 World Summit on Sustainable Development in Johannesburg, and other large networks.
*GLOBAL ENVIRONMENTAL GOVERNANCE
Given increasing evidence of environmental degradation, our system of global environmental governance needs reform urgently—not because it has failed, but because it has outgrown its original design. IISD has published and presented extensively on the subject.
*INTERNET GOVERNANCE AND SUSTAINABLE DEVELOPMENT
Internet governance has been on the international agenda for a relatively short time and IISD is at the forefront in the effort to understand the points of convergence between Internet governance and sustainable development.
SUSTAINABLE DEVELOPMENT STRATEGIES
IISD's work in understanding sustainable development strategy development includes a sharp focus on national-level strategies, including a discussion on the necessary governance structures.
*TRANSPARENCY IN INTERNATIONAL ENVIRONMENTAL DECISION MAKING.
IISD provides access to credible and timely information regarding negotiations of multilateral environmental agreements that is accessible to the public as well as experts in the field
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