Supplementary memorandum from Friends
of the Earth
1. MEAS, GATS
AND WTO REGULATION
A Committee member raised the question about
the differences between the "regulation" under multilateral
environmental agreements (MEAs) (and other social agreements)
and "regulation" under the World Trade Organisation
(WTO) including initiatives such as the General Agreement on Trade
in Services (GATS).
Friends of the Earth believes that the analysis
of these differences should be from the standpoint of wanting
to secure sustainable development using the best mix of policy
mechanisms possible. The brief points below therefore attempt
to point out how in general the differences are likely to impact
on a Government's ability to deliver sustainable development (this
does not imply that we consider all measures under MEAs, for example,
are "good" or all under the WTO are "bad").
MEAs have tended to take a particular sustainable
development "problem" (for example in the case of the
Kyoto Protocol, climate change) and seek to address it with a
mixture of policy mechanisms (quality standards, labelling, quotas,
trading, information provision, funding). The WTO agreements on
the other hand can be characterised as applying an a priori preferred
mechanism progressively to new sectors or areas of economic activity
(in this case, the removal of "trade barriers" in the
forms of regulations, quotas, incentives, standards, labelling
etc). The problem with the latter approach is that it may directly
conflict with the means needed to implement the former at both
and international and national level, for example, by ruling out
the use of precautionary standards, forms of public procurement,
or some compulsory consumer labels. This conflict is exacerbated
by the "lock in" nature of the WTO commitments in the
absence of a means to assess and reverse any negative impacts
on sustainable development policy making.
A particular case in point is the GATS; it reaches
further into domestic policy making than any other agreement.
It has, for example, potential impacts on local government regulation
that affect services and gives WTO dispute panels the role of
final arbiter over what constitutes "legitimate", "necessary"
or "burdensome" government intervention. This will mean,
that future consideration of the best mix of policy tools to address
a national or local sustainable development problem will be constrained
by GATS considerations, with the judgement on the appropriateness
of this left to a WTO mechanism rather than local democratic decision
makers. A report for the World Tourism Organisation on the GATS,
for example acknowledges this and recommends that countries "proceed
with caution in making further liberalisation commitments and
seek to maintain their policy space to support the uptake of sustainable
tourism standards in the future" (quoted in World Development
Movement. November 2002. "Serving up the Nation—a guide
to the UK's commitments under the WTO General Agreement in Trade
in Services and their implications").
At a broader level, such liberalised trade policy
is not proven to be conducive to sustainable development at home
or abroad; not least because of the lack of comprehensive impact
assessment of previous or proposed trade rounds. There is a growing
body of evidence that such policies are linked to growing inequalities,
environmental degradation and volatile and poor economic performance
(See references in our evidence).
The WTO agreements have a comparatively stronger
enforcement mechanism in the form of a dispute panel of trade
law experts (with no remit and little knowledge of wider sustainable
development) and the use of economic sanctions. This means they
are less accountable (in the case of the former) and use of sanctions
is weighted towards those with economic might whose wielding of
sanctions can have a huge impact on smaller economies. These factors
can combine so that the WTO has a "chilling" effect
on the development of sustainable development polices at a international
and national level—where even the potential for conflict
with WTO "law" may rule out the use of a policy mechanism.
It is not simply the case that the WTO represents
de-regulation while the UN is offering regulation. Indeed the
WTO could be represented as a re-regulation process offering a
different form of regulation in favour of a certain set of interests—TNCs
(trans-national companies) and other beneficiaries of economic
globalisation for example. For example, in the case of GATS the
European Commission has already conceded that the GATS is "first
and foremost an instrument for the benefit of business" (EC.
(2000), Opening World Markets for Services, Towards GATS 2000.p17
http://gats-info.eu.int/gats-info/g2000.pl?NEWS=bbb.).
2. BUSINESS AT
JOHANNESBURG
An additional question was raised about the
approach taken by business lobby groups such as the BASD at Johannesburg.
Friends of the Earth do not object to business being at such Summits
nor to business taking positions. We do however, challenge the
notion that business presence was neutral or positive. We base
the comments below on their press conferences, media interviews
and positions outlines on the BASD, ICC and WBCSD websites.
Misrepresentation—the BASD consistently
and publicly equated the issue of accountability entirely and
exclusively with "reporting". Lord Holme, for example,
spoke publicly about this on many occasions. While disclosure
and transparency is one small part of the accountability agenda,
our evidence explains that there are many other more substantial
parts of the issue such as means of redress, obligations towards
international agreements, practices and above all rights of affected
communities. We continue to believe the misrepresentation of the
accountability agenda was a deliberate attempt by the BASD to
minimise and dismiss the issue.
Bad practices—the BASD promoted the idea
that business was part of the solution. However, business had
no prescription to offer for bad business practices. Business
lobby groups traditionally move at the speed of the slowest which
meant the lobby groups were not able to distinguish between the
progressive and regressive elements of the business community.
Public positions taken: In press conferences
and interviews around the Summit and from the floor of the UN
in preparatory meetings the BASD clearly indicated it did not
support international accountability rules. Yet the BASD has also
claimed it did not lobby at the Summit.
Lack of rigour—business promoted the idea
of partnerships and highlighted specific initiatives. However,
business did not attempt to make any distinction between good
and bad initiatives. Furthermore Friends of the Earth does not
believe all claims of social responsibility by corporations are
greenwash. But we are fully aware that some corporations are more
sincere than others and that there is no "quality control"
over CSR claims. The business case made at Johannesburg made no
attempt to evaluate whether the claims made were genuine, there
was no evaluation of whether voluntary initiatives actually work
or not and no sense that business welcomed scrutiny of CSR claims.
Not listening: Business consistently used its
opportunities to attack any critics of the performance of corporations
since Johannesburg. Lord Holme for example, regularly accused
anyone criticising business performance of being variously "Marxists",
"communists", "anti-capitalists" or motivated
by objectives such as fundraising. We believe this kind of rhetoric
demonstrated business has not heard the mainstream concerns of
civil society about bad business practices—voiced principally
from the Global South and campaigned on by many groups such as
Friends of the Earth International. This underlines the role of
government in leading the response and taking action on those
concerns rather than leaving this up to business and its lobby
groups.
3. DEVELOPMENT
INTERESTS
Business organisations have presented FOEI's
proposals on international corporate accountability as fringe
and a "northern NGO" preoccupation. The government has
also claimed the new trade round initiated at Doha is a "development"
round—principally in the interests of the developing countries.
A couple of months after the WSSD, a set of
developing countries proposed international regulation of TNCs
as part of the discussions on the need for the proposed new investment
agreement under the WTO. This is an indication that the corporate
accountability issue is considered a significant and meaningful
issue by the developing World. Indeed the paper specifically references
the WSSD Plan of Implementation paragraph 45.ter. Clearly those
governments consider international rules to control multinationals
an essential aspect of just development. This shows the UK's rhetoric
about its proposals on trade being in the interest of the developing
world have not taken account of what the South is actually calling
for (See annex).
January 2003
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