House of Commons - Environmental Audit

Select Committee on Environmental Audit Second Report

UK AND EU ENVIRONMENTAL PRIORITIES

28. The European Commission's communication on the Round states admirably that "a central benchmark of the New Round should be the WTO's overall objective of sustainable development. Trade and environment policies should play a mutually supportive role in favour of sustainable development."[55] However, by the time the document comes to defining the overall objective the language is significantly weaker, describing a desirable outcome "where environmentally friendly consequences can be identified in the relevant parts of the final package." We asked Mr Meacher whether this formulation was a recipe for a 'greenwash'. He replied "I hope not".[56] Witnesses from the NGOs were concerned that there was no attempt to define and seek a "net gain" for the environment and they were interested to know the Commission's definition of the 'relevant parts'.[57]

29. The specific environmental items for the Seattle agenda sought by the UK and WTO comprise principally the clarification of the relationship between WTO rules and:

- trade measures taken in pursuance of multilateral environmental agreements (MEAs);

- non-product related process and production methods requirements, in particular, eco-labelling schemes; and

- core environmental principles, in particular the precautionary principle.

Multilateral environmental agreements (MEAs)

30. The Government identifies a lack of full certainty about the relationship between MEAs and WTO rules which may have the effect of inhibiting or 'chilling' the development and application of trade measures in MEAs although there has never been a challenge to an existing MEA in the WTO. The Government's position is clear that there should be no hierarchy between MEAs and WTO rules but that they should be in harmony.[58] Witnesses all agreed that the WTO should not be put in the position of making judgements about environmental issues because that is not its competence.[59] However, as the situation currently stands, the validity of trade measures implemented under an MEA would, if challenged, be adjudicated by a WTO dispute panel of trade experts. And, no matter how open the panel was to environmental inputs from NGOs, or others, acting as amicus curiae, such a panel could only rule on the basis of international trade law and WTO disciplines having no other competence.[60]

31. Mr Meacher described the relationship between MEAs and the WTO as "fraught". He told us that the classic example was the breakdown in negotiations on the Biosafety Protocol to the UN Convention on Biological Diversity. He said that a key conflict was between the 'Miami Group' of grain exporters who wanted the Protocol to be subordinated to WTO rules and others including the EU whose position "was very clear, and I am absolutely convinced it was correct, namely that the Biosafety Protocol, and other MEAs, should be on a par with the WTO system, that neither should dominate or override the other and both have their appropriate place."[61]

32. There appear to be a number options for resolving the potential conflict between MEAs and WTO rules which include:

- amending Article XX of the General Agreement on Tariffs and Trade (the GATT) by adding trade measures in pursuance of an MEA under its list of permitted exceptions (where the environment already features);

- an agreed interpretation of Article XX presuming MEA trade measures to fall under the environmental exemption already in place;

- a voluntary political declaration between WTO members not to take action against each other in the WTO pursuant to actions implemented under an MEA; and

- a separate WTO agreement on MEAs exempting related trade measures from WTO challenge.[62]

We note that the Environment, Transport and Regional Affairs Committee reported on MEAs last Session including conclusions on the relationship between MEAs and WTO rules. That Committee preferred a separate WTO agreement and but principally it urged the Government to make up its mind and set about gathering international support for whichever option it chose.[63]

33. Mr Duncan Brack, Royal Institute of International Affairs, analyses the options for achieving a resolution to this problem concluding that a new agreement is the most certain and practicable route creating harmony between the two legal systems. He wrote that the biggest danger in this debate was a lack of political impetus arising from perceptions that no action is required due to: the absence of trade provisions from most MEAs; the absence of a relevant dispute within the WTO; and evidence of some sensitivity to environmental concerns in recent WTO Dispute Panel and Appellate Body findings. He described this as a "profound mistake" in view of the growth of evidence of global environmental degradation and the consequent need for global solutions.[64] Mr Brack, the NGOs and the Environment Minister all pointed to cases where arguments of WTO-incompatibility had been used to retard MEA development.[65] The recent WTO special study on trade and the environment recommended the further development of multilateral efforts protect the environment and offered an insight into why the WTO has become such a focal point for environmental disputes by contrasting the relative weakness of international governance and enforcement on environmental issues with the WTO's integrated dispute settlement system backed up by the threat of trade sanctions.[66]

34. We regard achieving consensus to negotiate new WTO rules on the treatment of trade provisions within multilateral environmental agreements (MEAs) as a high priority for the Seattle Summit. We recommend that the UK and EU adopt the inclusion of text to that effect as its bottom line for the environment in any Ministerial Declaration. This could open the door to focussed negotiations of more effective MEAs without the need for participants to have one eye constantly on the free trade implications and the possibilities of challenge within the WTO—a forum based on entirely different priorities.

Non-product related process and production methods (PPMs)

35. PPMs refer to the processes and conditions in which a product is manufactured rather than the characteristics of the product itself. WTO rules do not allow national policy measures which discriminate on the basis of PPMs (other than products made using slave labour). This is in line with EC rules on government procurement on which we have commented in other reports.[67] However, PPMs are relevant to the encouragement of sustainable consumption and the production of goods that have lower environmental impacts over their life-cycle. The Government states that it fully supports the development of labelling schemes which inform consumers about the wider impacts of the goods they consume.[68] Mr Meacher told us that he thought that there was another opportunity for a win-win solution if the development of eco-labelling schemes that open markets for sustainably-produced goods from developing countries, particularly forestry products and tropical fruit. However, he identified this area as one where accusations by developing countries of developed countries raising non-tariff trade barriers were rife.[69]

Core environmental principles

The precautionary principle

36. The Government states that WTO rules do not prevent measures being taken on the precautionary principle but that its application is limited to measures taken under the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) for human, animal and plant life and health. The Government is seeking an incorporation of the principle in relation to wider environmental concerns. The Government wants to ensure that WTO rules do not inhibit appropriate precautionary action being taken, based on objective assessments of the risks, costs and benefits involved.[70]

37. The RSPB pointed out what they saw as a contradiction in the Government's evidence in that, while Ministers told us that the precautionary principle was incorporated into WTO rules, Mr Jeff Rooker, MP, Deputy Minister, Ministry of Agriculture, Fisheries and Food (MAFF) had said that a moratorium on the import of GMOs was impossible because of the potential for challenge under WTO rules.[71] We put this to Mr Meacher who responded: "I do agree with that I think the precautionary principle, whilst it is there, is not significantly reflected in a number of other key and controversial areas, that is absolutely right. Getting agreement on that is one of our core objectives."[72] WWF also criticised the reliance on 'sound science' in the current formulation of the principle in WTO disciplines. Mr Mabey pointed to the growing body of respectable academic work on decision-theory which indicates that scientific evidence is often an inadequate basis for policy-making and that something needs to bridge the gap between scientists and politicians to create rules and methods for decision-making which can gather public confidence in the face of different levels and sorts of risk, uncertainty and ignorance.[73]

Other environmental principles

38. The Government and the EU have focussed on the precautionary principle but Mr Mabey identified prior informed consent (PIC) and the related principle the polluter pays as two further principles that should inform the whole negotiations.[74] PIC requires the exporter of certain products, deemed to be hazardous or to involve some kind of risk, to secure the agreement of the importing country and to provide information on the product involved. This principle was another sticking point in the negotiation of the Biosafety Protocol where the grain exporting countries did not accept the imposition of what they saw as onerous reporting requirements in relation to exports of Live Modified Organisms (LMOs (equivalent to GMOs)). NGOs said that the principle of ecological limits should be set by MEAs but respected by the WTO which came back to the priority of clarifying the respective jurisdictions of MEAs and WTO rules.[75]

Environmental agenda

39. The overall conclusion of the NGOs was that the UK and EU agendas contained some fine words on the environment, if little evidence of the need to integrate environmental considerations across all areas. However, there were grave concerns about the ability of the Commission, as lead negotiator, to deliver its environmental objectives.[76] Mr Bridge, DTI, assured the Committee that the Trade and Environment Directorates General had performed a 'double act' in developing and presenting the EU's position.[77] However, the NGOs were concerned that this act might not survive throughout the negotiating process and recommended to us that concerned Member States must ensure that adequate environmental expertise was on hand from a range of sources including both Member States and NGOs to boost the Commission's capacity in this regard throughout the negotiations.[78] We agree with these views. Mr Mabey concluded that "on the environment specifically, although the EU has a lot of nice words on paper, we do not think it is prepared to achieve that at Seattle or beyond Seattle at the moment. We do not see any signs that it is preparing to prepare to achieve its shopping list".[79]