Annex A
THE EU'S
OVERALL APPROACH
TO TRADE
AND ENVIRONMENT
ISSUES
1. We welcome the statement in The EU
Approach to the Millennium Round that the new trade negotiations
should "promote sustainable development". However, it
will be insufficient simply to have a broad statement in relation
to sustainable development in the pre-amble to the launch of the
coming round. The key immediate priority is that the agenda for
the next trade round, including that for the "built-in"
agenda, should make the promotion of sustainable development a
specific objective and outcome for the negotiations. The EU should
support the inclusion of a specific statement to this effect in
the agreement emerging from the Seattle Ministerial meeting in
November. While it is recognised that the World Trade Organisation
(WTO) should not become responsible for resolving environmental
policy issues, the new trade round can and should treat economic,
social and environmental concerns with equal weight in the negotiations.
2. We also welcome the EU's commitment to
an assessment of trade measures for their impact on sustainable
development. We recommend that all new trade measures, individually
and as a whole, be appraised in terms of sustainable development
including direct and indirect effects. The EU proposed methodology
needs to identify both the direct impacts of a proposal on the
environment, and any indirect impacts on the environment via the
effects of increased trade on the general scale and pattern of
economic growth. It is essential that this latter element is included
in the appraisals.
Multi-lateral environmental agreements
3. We welcome the EU's suggestion that the
new trade round investigates the relationship between Multi-lateral
Environmental Agreements (MEAs) and trade agreements. However,
we believe that this emphasis only highlights part of the problem.
Much of the debate about trade and environment issues concentrates
on the validity and operation of the 20 or so MEAs that apply
or may in the future apply explicit trade measures. Thus the debate
on environmental effects in relation to MEAs often focuses on
the validity and operation of the CITES, Basel and Montreal agreements.
Similarly, debate about trade and biodiversity centres around
specific aspects of the Biodiversity Convention, such as the Bio-safety
protocol, rather than the impacts of trade on the overall objectives
of the convention. Such consideration of the indirect effects
of trade policy on the objectives of MEAs as a whole, most of
which do not contain explicit trade measures.
4. In this context we recommend that the
EU should as a negotiating goal ensure that the trade round takes
account of the overall objectives of MEAs, in particular the Biodiversity
Convention (Rio 1992). For example, article 11 of that convention
requires the 175 signatory nations to encourage biodiversity-friendly
production through incentives for conservation and sustainable
use. This is likely to require the use of "public good"
subsidies, which may cause conflict with trade liberalisation
objectives.
Production and processing methods (PPMs)
5. In today's market economies, different
producers of like products may impose very different costs upon
society, depending on the PPMs they use. We support the use of
well-designed economic measures which can address environmental
externalities, such as environmental taxes and eco-labelling.
However, current WTO mechanisms can make it difficult for countries
to implement policies which encourage environmentally sustainable
production measures. Where goods can be produced in either more
or less sustainable ways, but the final look or form of the product
itself is not affected by the production method, policy intervention
is more difficult under WTO rules. Eco-labelling, and border tax
adjustments in support of environmental policy, are key issues
in the trade debate. It is essential that clarifying the relationship
between WTO rules, PPMs, and sustainable development is a specific
agenda item for the coming trade discussions. Currently, such
important issues are being dealt with incrementally through case
law, which is unsatisfactory.
6. The EU needs to ensure that the next
trade round debates and institutes a new process which agrees
reasonable circumstances where protection of domestic markets
may be legitimate and necessary in pursuit of domestic environmental
objectives. Such a strategy can be legitimate assuming the measures
taken are designed carefully so as not to impose any unfair or
unnecessary trade restrictions; note that some trade consequences
may be inevitable. The recent Shrimp-Turtle ruling is helpful,
to some extent, in defining possible circumstances where such
action may be legitimate. However, we are concerned that this
still imposes too great a burden of proof, and of necessary process,
on countries who wish to impose environmental standards on domestic
markets and then level the playing field in terms of domestic
competition.
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