APPENDIX 3
Memorandum from English Nature
SUBMISSION TO THE HOUSE OF COMMONS ENVIRONMENTAL
AUDIT COMMITTEE INQUIRY INTO A SUSTAINABLE MILLENNIUM ROUND
1. INTRODUCTION
1.1 English Nature is the statutory body
responsible for advising both central and local government on
nature conservation and for promoting the wildlife and natural
features of England. In fulfilling its duties, English Nature:
— Advises Ministers on the development
and implementation of policies for nature conservation;
— Advises Ministers on other policies
affecting nature conservation;
— Identifies, notifies and safeguards
Sites of Special Scientific Interest (SSSIs);
— Establishes, maintains and manages
National Nature Reserves;
— Provides guidance and advice on the
principles and practice of nature conservation to a wide constituency;
— Commissions and supports a wide range
of research and other projects relevant to nature conservation.
1.2 Through the Joint Nature Conservation
Committee, English Nature works with sister organisations in Scotland,
Wales and Northern Ireland to advise Government on UK and international
nature conservation issues.
1.3 We are responding to this paper on the
basis of our statutory remit in terms of the effects of policies
on biodiversity and sustainable development in England.
1.4 English Nature has a particular interest
in policies affecting the agriculture sector, because of the close
links between agricultural policy and biodiversity. In association
with other UK Countryside Agencies, we have undertaken two major
pieces of research on the potential environmental effects of trade
liberalisation in this sector (Doyle et al (1997); Potter et al
(1999)). Our comments on agriculture issues, in section 3 below,
are based on this research. However, our concerns about the agriculture
sector are also affected by issues raised in the wider trade and
environment debate and our views on these issues are set out in
section 2 below. English Nature has no comments on trade and investment,
as this mainly relates to international issues beyond our remit.
2. SUMMARY OF
RESPONSE
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.
We recommend that all new trade measures, individually
and as a whole, be appraised in terms of sustainable development
including direct and indirect effects as described below.
We would welcome confirmation from the UK Government
that economic, environmental and social concerns are all important
in trade policy.
It is essential that clarifying the relationship
between WTO rules, production and processing methods, and sustainable
development is a specific agenda item for the coming trade discussions.
We suggest that the reasonable application of
the precautionary principle should be recognised more clearly
as a key principle in trade policy.
We recommend that the UK/EU should as a negotiating
goal ensure that the trade round takes account of the overall
objectives of the Biodiversity Convention (Rio 1992), signed by
175 nations.
We support moves to abolish environmentally
damaging production related subsidies in the agriculture sector.
However, simple removal of these subsidies will
not deliver the necessary environmental gains and additional risks
are presented as a result of structural change in farming. Consequently,
a precautionary approach is required in relation to accompanying
measures, including a significantly increased agri-environment
programme which may need to be accompanied by targetted measures
to prevent further environmental damage as a result of structural
change.
The WTO negotiations must enhance such an outcome.
In particular, domestic agri-environmental subsidies should not
be ruled out by WTO rules purely on the basis of their overall
financial scale: the key issue should be whether the form and
amount of subsidies are reasonable in terms of the environmental
public good needs that they are designed to address.
3. SUSTAINABLE
DEVELOPMENT IN
THE NEW
ROUND OF
TRADE NEGOTIATIONS
Sustainable development objectives and assessment
3.1 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 UK Government
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 give greater
weight to environmental and social concerns alongside economic
goals in the negotiations.
3.2 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 as described below. Amongst
others, DETR have begun to develop useful methodological frameworks
for such appraisals. Crucially, the DETR framework indicates the
need 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.
3.3 We welcome some of the statements in
the DTI consultation on The UK and the WTO: an introduction
to the next round, especially in relation to the UK's commitment
to integrating sustainable development under the 1998 Amsterdam
Treaty. In other respects, however, the document seems to be a
step behind the EU thinking. The foreword to the document appears
to promote economic concerns above other elements of sustainable
development, which is not consistent with the integration principle.
In contrast, the Government's strategy on sustainable development
also makes clear that Governments need policies to allow trade
liberalisation to make its full contribution to sustainable development.
We support this view. We would welcome confirmation from the UK
Government that economic, environmental and social concerns are
all important in trade policy. While the consultation document
acknowledged the opportunity the trade round presents to forward
the sustainable development agenda, it provided few suggestions
as to the areas where this may be progressed, other than the statements
about increased transparency, which we support.
3.4 We would also question the simplistic
assertion, in the DTI consultation, that more trade increases
prosperity and, as a result, promotes a better quality of life.
This may be the case, but cannot be assumed to be so. Research
suggests that the relationship between economic growth and environmental
impacts is highly complex; and that growth does not necessarily
deliver environmental improvements; indeed the relationship can
be negative. This more realistic perspective is reflected in the
trade section of the Government's new strategy on Sustainable
Development, which states that "Liberalising trade can help
to ensure that resources are used efficiently, to generate the
wealth necessary for environmental improvement, for development,
for the spread of cleaner technology and for improved social conditions.
On the other hand, where economic activity is unsustainable, trade
can act to magnify this, increasing pollution and depletion of
natural resources such as forests, fish and other wildlife, and
minerals". We recommend that the UK Government works to ensure
the inclusion of this statement in the December 1999 Seattle declaration
about the new round of trade talks. We strongly support economic
growth which is environmentally and socially sustainable, and
trade policies which achieve this, but they must be subject to
tests of sustainability. Biodiversity protection is a key test
of sustainable development. This is particularly important in
relation to GMO.
Multi-lateral environmental agreements
3.5 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 considerations are valid and important.
However, the debate needs to extend into 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.
3.6 In this context we recommend that the
UK/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)
3.7 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, such as environmental taxes and
eco-labelling, which can address environmental externalities.
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.
Precautionary principle and technical barriers
to trade
3.8 We welcome the EU's suggestion that
key principles, such as the precautionary principle, be clarified
in the new round. We suggest that the reasonable application of
the precautionary principle should be recognised more clearly
as a key principle in trade policy. Recent rulings suggest that
the reasonable use of precaution is acceptable providing proper
risk assessment procedures have been followed. We welcome this
approach but remain concerned about the body of evidence that
may be required before precautionary approaches are deemed to
be reasonable. Such judgements need to be recognised as inherently
subjective and contestable, and no single methodology for risk
assessment exists. We have argued strongly for a precautionary
approach to commercial production in England of certain genetically
modified food products until scientific trials have established
the effects on wildlife. Trade agreements need to be compatible
with the freedom to implement such policies.
4. AGRICULTURE
SECTOR
4.1 The DTI consultation discusses the Government's
objectives in relation to the agriculture sector. In particular
it supports further progress in relation to the removal of tariff
reduction, export subsidy reduction and domestic subsidy reduction.
We also support the objective of removing environmentally damaging
production-related subsidies. However, the document's discussion
of domestic agricultural subsidies fails to acknowledge the need
for legitimate "public good" subsidies in pursuit of
environmental objectives.
4.2 Recent research for the UK Country Agencies
(English Nature, Countryside Agency, Countryside Council for Wales
and Scottish National Heritage), challenges the view that agricultural
trade liberalisation will automatically provide win-win economic
and environmental gains. The study surveyed European farmers'
economic intentions in response to significant trade liberalisation,
and interpreted the consequent environmental effects. While caution
is required in interpreting the results, the following conclusions
are suggested:
— No economic changes can be identified
that are likely to lead, in themselves, to the replacement of
"lost" conservation features on the scale that is necessary
to meet the Government's Biodiversity Action Plan commitments
(representing our contribution to the 1992 Biodiversity Convention).
— There are likely to be some environmental
gains through a reduction in the intensity of farming. However,
the dominant effect will be long term structural change in farming,
which carries high environmental risks from processes of amalgamation,
changes in farm layout and management and loss of land out of
farming.
4.3 Our analysis is that the current system
of domestic support for production needs to be reformed. Perverse
needs to be phased out and a new system of environmentally-based
subsidy payments, costing perhaps one quarter to one third of
the current bill for the CAP, needs to be phased in. Such subsidies
are justified in principle on the following economic grounds:
— Environmental benefits are "joint
products" with environmentally sustainable agricultural processes.
Consequently, the provision of environmental benefits inevitably
has an effect on agricultural production levels. However, the
environmental benefits are difficult to deliver by other means.
— The "public good" nature
of these environmental benefits suggests that they will be under-supplied
by the market and consequently justify publicly financed support.
— This means that legitimate subsidies
of this kind should be considered as correcting market failures,
rather than being "trade distorting".
4.5 It is essential, therefore, for the
UK/EU to ensure that legitimate environmental protection and enhancement
subsidies are allowable in the new trade agreements. However,
the current "green box" rules may disqualify such payments
on the level we feel to be necessary, on the grounds of their
being "more than minimally trade distorting".
4.6 The focus on "trade distortion"
makes little economic sense. Legitimate public good subsidies
as described above improve efficiency by removing market failures.
4.7 Consequently, we recommend an approach
to negotiations based on the following principles:
— We support moves to abolish environmentally
damaging production related subsidies.
— However, simple removal of these
subsidies will not deliver the necessary environmental gains and
additional risks are presented as a result of structural change
in farming. Consequently, a precautionary approach is required
in relation to accompanying measures, including a significantly
increased agri-environment programme which may need to be accompanied
by targetted measures to prevent further environmental damage
as a result of structural change.
— The WTO negotiations must enable
such an outcome. In particular, domestic agri-environmental subsidies
should not be ruled out by WTO rules purely on the basis of their
overall financial scale: the key issue should be whether the form
and amount of subsidies are reasonable in terms of the environmental
public good needs that they are designed to address.
4.8 While further work is required on the
scale of environmental payments necessary, it is clear that a
way forward is possible that can enable the environment to be
adequately protected while reducing the overall level of subsidies
from the current position.
4.9 We recommend that the UK Government
confirms its commitment to the Biodiversity Action Plan and the
overall objectives of the Biodiversity Convention in its approach
to agriculture sector negotiations.
REFERENCES:
Potter C, Lobley M and Bull R. 1998.,
Agricultural liberalisation and its environmental effects. Report
prepared by Wye College, University of London for the UK Countryside
Agencies (in preparation).
September 1999
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