APPENDIX
GOVERNMENT RESPONSE TO THE ENVIRONMENTAL
AUDIT COMMITTEE'S SECOND REPORT, SESSION 1999-2000, HC 45, ON:
WORLD TRADE AND SUSTAINABLE DEVELOPMENT:
AN AGENDA FOR THE SEATTLE SUMMIT
Introduction
1. The Government welcomes the Committee's report,
published immediately prior to the 3rd Ministerial conference
of the World Trade Organisation (WTO) that took place in Seattle
from 30 November to 3 December 1999. This is a joint reply by
the Department of Trade and Industry, Department of Environment,
Transport and the Regions, and the Department for International
Development.
2. The Committee will be aware that the Seattle conference
was suspended without agreement on the terms for a new Round of
trade negotiations. The Government regrets that Trade Ministers
did not reach agreement on the terms for the launch of a Round.
The UK, EU and many other member governments of the World Trade
Organisation (WTO) had hoped to launch a comprehensive Round reflecting
our belief that this is the best means of delivering substantial
trade liberalisation, consistent with sustainable development,
and real gains for developing countries. The preparatory process
for the launch of a Round has been remitted back to Geneva under
the direction of WTO Director General Mike Moore who has also
been asked to make recommendations on the timing and location
of a future Ministerial Conference. No agreement has yet been
reached on the timing for this Conference and the launch of a
new Round. Most WTO member governments, including the UK and EU,
remain committed to launching a new Round at the earliest opportunity.
In the meantime, negotiations are beginning on agriculture and
services from January 2000 as part of the built-in agenda agreed
during the Uruguay Round.
3. The Government believes that the experience of
the WTO to date and the failure of Seattle demonstrates an urgent
need for the WTO to review the way it works to increase its effectiveness
in launching and conducting future negotiations. The Government
would like to see an inclusive process urgently launched to look
at reform, preferably with the assistance of a Group of Eminent
Persons which could carry out consultations and make proposals
for improving its procedures. The Government is open to ways for
taking this process forward providing it carries sufficient political
credibility. And while the Government does not want to prejudge
this process and possible solutions, in looking at reform it puts
emphasis on two aspects: consensus building and communication.
In relation to consensus building, the nature of the formal and
informal WTO groupings and their relationships need attention
to ensure the WTO builds genuine consensus. In relation to communication,
we need to look at the wider issues of external consultation,
transparency and communication with stakeholders and the public
to see what more needs to be done both by the WTO itself and by
national governments.
The Committee's conclusion and recommendations
4. The Government has the following comments on the
Committee's conclusions and recommendations.
Overall
(a) The case for a comprehensive round has yet
to be made convincingly. The existing 'built-in agenda' appears
to: contain sufficient scope for benefits for all participants;
constitute an already challenging task for negotiations in the
time-scale proposed, particularly for developing countries; and
cover the key areas in terms of sustainable development. A more
satisfactory approach would, in our view, be to address this agenda
with a view to consolidating the achievements of the multilateral
trading system, building in environmental and development considerations,
to achieve real and lasting promotion of development that is sustainable.
5. We disagree with this assessment. First, the built-in
agenda contains no clear commitment to take account of environmental
considerations throughout negotiations. It provides only for negotiations
on agriculture and services, and reviews of some other agreements.
Second, the built-in agenda does not allow the EU's priorities
for trade and environment to be addressed: clarifying the relationship
between Multilateral Environmental Agreements (MEAs) and trade
rules; clarifying the relationship between non-product related
process and production methods and in particular eco-labelling
schemes; and examining the role of the core environmental principles,
particularly the precautionary principle. Third, important potential
areas for trade and sustainable development wins are not included,
such as fisheries (this is not part of the agricultural schedules).
Fourth, the built-in agenda alone will deliver far fewer gains
for many developing countries than would a comprehensive Round.
Finally, a comprehensive Round will be important in building up
a broad political consensus to address environmental and development
issues. A comprehensive Round is also the best way of allowing
the interests of all WTO Members to be negotiated in a balanced
way.
Developing countries
(b) We fail to see from our evidence what has
changed since the Uruguay Round that rules out the danger of another
'stitch-up' by developed countries as described by the Environment
Minister.
6. We disagree with this analysis. The Environment
Minister's comment was made in the context of affirming the potential
benefits to developing countries from a comprehensive Round. The
WTO operates on a consensual basis and developing countries have
their own interests and agendas for a new Round. At the Seattle
conference, developing countries played a much more prominent
and vigorous role in high level discussion than previously. This
is a highly significant and positive development in global politics.
Developing countries said no to deals that they had not been sufficiently
involved in negotiating and which they did not view as benefiting
them. Nevertheless, as we have always emphasised, there is a need
to ensure that the WTO's decision making processes include all
members, and ensure that their interests are adequately reflected
in all negotiations.
(c) Assistance to build the negotiating capacity
of developing countries to enable the effective participation
at the WTO is as important as their presence at the table. The
scope and progress of negotiations should therefore be linked
in a concrete way to achievements in capacity-building programmes
rather than simply relying on the provision of inputs to the process.
7. We agree with the importance of capacity building
for developing countries. We have been providing direct UK support
over the last two years, and are actively seeking more support
from other international organisations. We have joined others
in calling for a substantial increase in the WTO's technical assistance
resources. We have also supported initiatives to mainstream trade
in the development activities of the World Bank, and work in the
OECD to identify best practice in trade related assistance. And
we are working internationally in support of more consistent and
comprehensive trade related assistance by all concerned agencies,
multilateral and bilateral.
8. The UK is providing approximately £16m of
traderelated technical assistance to enable developing countries
to participate more effectively in the multilateral trading system
in general and in trade negotiations in particular. Details of
this support, which is provided on a bilateral basis as well as
through multilateral institutions often better placed to deliver
it, have been placed in the Library of the House. Our capacitybuilding
work aims not just at getting developing countries to the negotiating
table, but also at assisting them to articulate their needs and
participate meaningfully in negotiations.
(d) The Government must apply the relevant advice
from the British Government Panel on Sustainable Development (Fifth
Annual Report) in the forthcoming review of the agreement on Trade-related
Intellectual Property Rights (TRIPs) which is an important issue
for developing countries and which should certainly be on the
agenda agreed at Seattle.
9. As the Government has said in reply to the Panel,
we will continue to be active in international efforts to reach
workable solutions in this area. We particularly welcome the work
being carried out by the World Intellectual Property Organisation
(WIPO) on the protection of traditional knowledge and the intellectual
property rights of indigenous and local communities. We will continue
to participate in this work together with other WIPO members and
interested parties.
10. We believe the current wording of the TRIPs agreement
allows WTO members sufficient flexibility to implement patent
and other intellectual property regimes appropriate to their circumstances.
The UK will ensure that specific concerns, such as those over
intellectual property rights covering lifeforms, will be at the
fore of our approach to the built-in agenda of reviews of the
TRIPS agreement.
The environment
(e) The overall conclusion of the non-governmental
organisations (NGOs) was that the UK and the EU environmental
agendas contained some fine words and important priorities, if
little evidence of environmental integration across all areas.
But there were grave concerns about the ability of the Commission,
as lead negotiator, to deliver its environmental objectives. The
Department of Trade and Industry assured the Committee that the
Trade and Environment Directorates-General had performed a "double-act"
in developing and presenting the EU's position. The NGOs were
concerned however, that this act might not survive through to
the negotiating process and recommended to us that concerned EU
Member States must ensure the adequate environmental expertise
was on hand to boost the Commission's capacity in this regard
throughout the negotiations. We agree with these views.
11. The Commission and Member States consistently
gave environmental considerations high priority in the preparation
of the EU's negotiating position, in preparatory discussions with
other WTO members, and at Seattle itself. The Commission delegation
to the Ministerial included DG Environment officials. The Environment
Minister, Michael Meacher, was a member of the UK delegation.
A number of other EU delegations included environment Ministers,
and most included environment officials. The Commission negotiates
on the basis of positions agreed with Member States, and any new
WTO agreements would require the approval of Member States. The
UK and other Member States are therefore able to prevent the Commission
agreeing to an outcome which would not be acceptable.
12. At Seattle, Member States voiced opposition within
the General Affairs Council to the Commission's informal agreement
to the establishment of a WTO Biotechnology Working Group. This
demonstrated the ability of the UK and other Member States to
intervene when they consider the Commission's negotiating stance
is not in line with our broader policy objectives. In this case,
Member States were concerned about the damaging message that the
establishment of a Biotechnology Working group would have sent
in relation to our commitment to the ongoing negotiations to complete
a Biosafety Protocol under the Convention on Biological Diversity.
13. In the course of negotiations during the Round
itself, environmental experts, both within the Commission and
Member States, would be closely involved to ensure that the Commission's
evolving position took sufficient account of environmental considerations
in all areas of negotiation. Striking a balance between environmental
and other trade policy considerations is a matter of political
judgement. We do not believe that there is a risk of the EU's
environmental voice not being properly heard during the course
of negotiations.
(f) 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 focused
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.
14. Agreeing negotiations aimed at greater clarity
of the relationship between trade provisions within MEAs and WTO
rules was one of the UK's and EU's objectives at Seattle. It continues
to be one of our key objectives for a new round of negotiations.
It would be wrong, however, to imply that MEAs should be negotiated
without regard for trade implications. We do not believe this
is currently the case and would not want it to be. Developing
countries have real concerns about the scope for eco-protectionism
that might arise from a clarification of the relationship between
MEAs and WTO rules. In defining such a clarification we will seek
to secure adequate safeguards in order to prevent measures taken
under MEAs being used for protectionist purposes. Overall, the
Government's policy is designed to strengthen the multilateral
approach to solving global environmental problems. There is far
greater potential for protectionist actions arising from unilateral
measures.
Investment
(g) We remain unconvinced of the need for multilateral
rules for investment and wary of the risks that were identified
for us during our inquiry into the OECD multilateral agreement
on investment (MAI). Witnesses from NGOs pointed to the network
of existing bilateral treaties and also the UN Commission on Trade
and Development's conclusion that there was no discernible link
between levels of liberalisation and investment flows.
15. The Government believes that an open and transparent
international framework of rules governing foreign investment
would benefit developing countries in particular, and also the
world economy, as well as British investors. The WTO is by far
the best international forum for developing such rules on a global
basis. Bilateral treaties, with their varied standards and limited
scope, are only a partial solution and bring few development benefits.
Liberalisation by itself will not necessarily increase flows;
many other factors are relevant. A recognised, credible and stable
climate for investment is crucial. A multilateral framework for
investment, grounded in the principles of non-discrimination and
transparency, could establish a more stable climate for investment
for domestic and foreign investors alike without undermining the
right of countries to regulate, including for the purposes of
environmental protection, in line with the same principles.
Appraisal
(h) We are concerned that once again environmental
considerations have not been integrated into the development of
'mainstream' policy proposals but left to a later stage in terms
of both preparatory analysis and strategy development.
16. See response to recommendation (e). Environmental
considerations have certainly been a major factor in the Government's
trade policy proposals since May 1997. Indeed, one of the key
arguments for a comprehensive round has been from the start that
we would be much more likely to achieve our objectives on the
environment as part of a comprehensive negotiation.
17. There are a number of formal and informal assessments
of the impacts of trade measures from governments, NGOs, academics
and others, as well as debate on the impacts of WTO agreements
within the relevant WTO Committees. Civil society clearly has
an important role to play in contributing to the debate on this
issue. The outcomes of such studies and assessments are taken
into account in developing UK and EU approaches to trade negotiations.
In an ideal world, we would want complete information about the
environmental impacts of both previous and future trade measures.
However, given resource limitations, incomplete information and
the high degree of complexity and uncertainty involved, we do
not believe that this is, or will ever be, fully achievable.
18. The EU's Sustainability Impact Assessment (SIA)
is an important step forward in ensuring that the EU is able to
reflect fully sustainable development considerations in it approach
to trade negotiations. The work, so far, has included a preliminary
assessment of the EU's proposed new trade measures, involving
consultations with civil society and in time to inform developments
at Seattle; and a thorough review of the findings and methodologies
of previous studies. Together with our European partners, we will
look to learn from this work in taking forward the SIA and our
approach to future trade negotiations.
(i) We believe that new negotiations should do
more that try to take note of lessons from the previous round.
It seems axiomatic that the impacts of the last set of agreements
should be informing the negotiations of the next. This is unlikely
to be accomplished by individual WTO members acting in a piecemeal
way, but needs some explicit agreement within the Organisation,
as well as inclusion in any Declaration intended to shape negotiations.
19. See response to (h). We agree with the Committee
on the importance of using previous trade agreements to inform
negotiations for future ones, and indeed this was the case for
our approach to Seattle. We do not, however, believe that delaying
the benefits of trade liberalisation and WTO reform is justified
on the grounds that further assessments of previous agreements
are necessary. Both processes can be pursued in parallel. Environmental
assessments of proposed agreements, such as the SIA which the
Government and EU are committed to, clearly need to take into
account the effect of trade agreements already in place. Regarding
the role of the WTO, we do not believe that it would be possible
to reach explicit agreement for the Organisation to conduct additional
environmental appraisals or assessments given the opposition from
a number of WTO members. However, we expect the WTO Committee
on Trade and Environment to provide a forum for discussing environmental
assessments conducted by WTO Members and others.
Openness and coordination
(j) We urge the Government to press, through the
EU, for continued efforts by the WTO and its members to engage
with other international institutions and civil society in the
debate over the best way to improve the multilateral trading system's
contribution to sustainable development. One proposal we have
heard of merit is for there to be a parliamentary assembly associated
with the Organisation as there is with a number of other multilateral
institutions such as NATO, the OSCE and the Council of Europe.
With respect to engagement with other international bodies, we
regard the establishment of coordination mechanisms between the
WTO and other global economic, development and environmental institutions
to be a priority.
20. See paragraph 3. We agree strongly with the Committee
on the need for improved engagement with civil society, and improved
coordination between the WTO and other international institutions.
As at Seattle, we will continue to press for measures to achieve
these objectives. The Government supports greater openness in
WTO procedures, including timely and more routine release of WTO
working documents and consideration of ways to improve transparency
in the Dispute Settlement process. We recognise that a large part
of the responsibility for transparency on trade matters rests
with national governments. The UK, for its part, is committed
to consulting with civil society on issues on the multilateral
trade agenda. As part of this commitment, the UK Government included
three non-governmental representatives as part of its delegation
to Seattle. Daily briefings by UK Ministers were held with, and
were commended by, accredited UK NGOs at Seattle. The Government
shares the Committee's concern for improved coherence and coordination
between the WTO and other international organisations, and has
argued for some time that greater cooperation was needed between
the WTO and the United Nations Environmental Programme (UNEP).
An important step in this direction was taken on the eve of Seattle
with a public exchange of letters between the WTO's Director-
General and UNEP's Executive Director. The UK Government also
strongly supports the new agreement in Seattle on coherence between
the WTO, IMF and World Bank.
(k) In terms of parliamentary oversight we welcomed
the Government's commitment to providing the House with ministerial
statements before and after the Seattle summit but there was no
commitment to even the possibility of a full debate [to give]
the House a chance to express its opinion. In the case of the
OECD MAI the Government said that it had never ruled out the possibility
of a debate in the House "had the right circumstances arisen".
We would like to hear the criteria for the 'right circumstances'
in relation to the Millennium Round. We regret that the House
has been asked to approve the Government's proposals for Seattle,
on the back of taking note of the European Commission's position,
without a full debate in the Chamber and in advance of the promised
ministerial statement.
21. The Government attaches great importance to keeping
Parliament fully informed of developments on multilateral trade
negotiations. The Committee will be aware that a full debate was
held in the House on 9 December 1999, immediately following the
Seattle conference.
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