Examination of Witnesses (Questions 70-79)
MR ANDREW
HOPE, MR
IAIN MACVAY
AND MR
IAN EMSLEY
11 JULY 2006
Q70 Chairman: Good morning, it is nice
to see you here this morning; could I ask you, as I asked the
previous witnesses, to give us a brief outline or introduction
of your perspective of how international trade impacts on the
environment?
Mr Hope: Certainly, I am very
happy to do that. Briefly, by way of introduction, my name is
Andrew Hope, I am director of the International Chamber of Commerce
here in the UK; I have two colleagues with me from business who
head up our trade and investment policy group and our environment
and energy group. ICC, the International Chamber of Commerce,
is the world business organisation, the body that speaks on behalf
of business at fora such as the United Nations, the WTO, the WHO
et cetera et cetera, founded in 1919 by a group of leading international
business people who came from the perspective that international
trade and investment is a positive force. Their original title,
the Merchants of Peace, reflects the beliefs that underpinned
the original organisation, and then beyond that we have consistently,
throughout the life of the organisation, advocated the benefits
of international trade and investment as a force for raising the
standard of living, for wider consumer choice and for lifting
many millions of people from poverty. We have membership in some
130 countries around the world, and in 90 of those there are national
offices like our UK office that act as the link between the international
organisation in Paris and stakeholders in this country. On the
specific issue, ICC firmly believes that there is no inherent
conflict between preserving the earth's environment and fostering
economic growth. We believe that international trade and investment,
as I have said, has done a huge amount to raise the standard of
living of people around the world in the last 60 years in particular
and has lifted many, many millions of people from poverty. We
see a successful and ambitious Doha round as the best way to build
on that achievement and to ensure that there are further increases
in the standard of living of people around the world and that
more are lifted from poverty. That is reflected and that position
is shared in such things as the Gleneagles statement from last
year, the Africa Commission report and, indeed, the DTI's own
stated trade policy. The wealth that is created by that process
has been and can continue to be used to improve environmental
standards; we have been seeing that in the developed world and
there is the potential, with the additional wealth created, that
that can continue to be the case in the developing world. Of course
there are exceptions, there are cases where economic activity
clearly damages the environment and there are transitional issues
as economies grow and develop and how they adjust to those processes,
but we do believe that the wealth created has the potential to
develop the investment in clean technologies, in new technologies
that enable economic growth and environmental sustainability to
go hand in hand. Turning to the WTO, the WTO's original mandate
had sustainable development as its core objective, and that is
recognised in the way that it works and in the rulings that it
issues in terms of ensuring that its rulings take into account
the impact of any multilateral environmental agreements that are
in place. So the WTO must and do work in tandem with other international
agreements, the multilateral environment agreements, the Kyoto
Protocol, the Montreal Protocol et cetera, and it has been a specific
and important component of the Doha agenda that we should push
forward understanding of how those two systems work effectively
together to deliver sustainable development. ICC continues to
support that process of dialogue and the development of other
parallel, multilateral environmental agreements where there is
a need and where that should be done. Perhaps as we come back
in discussions on the WTO we can have a clearer understanding
of the complexity of the debate that is going on at the present
time, and the very likely prospect of failure in this round is
an indication that the more you complicate the process by making
too many things happen in one place, the less the prospect that
you will succeed, and therefore it is better that the trade negotiations
are trade negotiations in the context of sustainable development
and that the very important environmental issues are addressed
through separate and discrete negotiations. The previous session
touched on the issue of environmental goods which is also a part
of the Doha negotiations. There are challenges in the definition
of environmental goods, unquestionably, and in the ideal world
with open markets there would not be a need for special status
for those goods, but in the interim it is the view of ICC that
there is significant potential from this channel that should be
pursued further.
Chairman: Can I just bring in Martin
and follow up with some specific questions.
Q71 Mr Caton: You have made the point
very strongly that you do not see any inherent conflict between
enhancing trade and the objective of sustainability, but is there
ever any tension between your aims of economic freedom for business
based on self-regulation and responsible business and your acknowledgement
that environmental regulation is required?
Mr Hope: Sorry, could you repeat
that?
Q72 Mr Caton: It may well be that
you think generally that both can go hand in hand, but are there
circumstances where there is a tension between the freedom of
business and the rights of self-regulation and the need for environmental
regulation?
Mr Hope: As for trade and environmental
regulation it is for governments to provide the overall framework
within which the business community operates, and increasingly
it is the requirement that those frameworks are provided through
multilateral agreements rather than through national agreements,
so ICC is a strong supporter of the rules-based multilateral system
and the same issues transfer to environmental issues.
Q73 Mr Caton: That leads me onto
another question. What if governments fail to provide those rules,
say companies are working in a country with inadequate environment
protection legislation; can businesses ensure that they work in
an environmentally responsible way?
Mr Hope: Yes. Evidence clearly
demonstrates now that where you have a multinational operation
operating in a country that has less established practice of high
environmental standards they are adopting international standards,
they are adopting the same standards that they would apply in
any operation in the world. The consequence of that is to raise
understanding of those standards and the potential that they are
applied elsewhere; the challenge, we believe, is less that multinationals
are applying lower standards, but that national companies are
doing so.
Q74 Mr Caton: There is much made
of the "chilling" effect, by which countries are discouraged
to implement environmental regulations out of a fear that business
might move elsewhere. In your view, how much of a problem is that
really?
Mr Hope: Again, in terms of multinational
business our belief is that the businesses that apply standards
consistently around the world are serving the purpose of raising
environmental standards in countries in which they operate. The
consequent sharing of good practice and the general improvement
in technology, we believe, is a positive force and has been a
positive force.
Q75 Mr Caton: There was an example
given by our previous witnesses where certification of biofuels
looks like it may well be watered down because of the chilling
effect in negotiations. Do you see that as a problem?
Mr Hope: I am not familiar with
that specific case and I do not know if either of my colleagues
are, but I did notice that the previous speaker was careful to
use the term the perception of WTO requirements rather than the
actual WTO requirements, and I think that is important.
Q76 Mr Vaizey: You said in your opening
statement that there would be a challenge in defining environmental
goods and some people have gone as far as to suggest that not
only is it a challenge to define environmental goods, but it could
actually end up being counterproductive because you could inadvertently
identify something as environmental goods which has some detrimental
impact. I just wondered what you thought about that and whether
the potential counter productiveness means that the challenge
is not worth pursuing?
Mr Hope: One of the many problems
that have flowed from the very slow progress and difficult nature
of the negotiations thus far is that many of the issues that should
have been addressed have not been addressed and the classification
of environmental goods is one of those. Our overall view would
be that in striving for perfection one can often miss a very good
solution and it just seems to us that it is common sense that
it would be possible to identify a long list of environmental
goods that would have significant benefits. Addressing too much
focus to perfection in that, or to designing classifications that
would enable you to know what a good was before you had identified
the good, if you see what I mean, is counterproductive. We should
just get on and identify—
Q77 Mr Vaizey: Can you give me an
example of something you can get on and identify?
Mr MacVay: The list approach which
is being discussed right now and is not making much progress is
horribly complex and running into tremendous difficulties because
of the problems of agreeing principles. The list approach is good
so that we have principles which are linked to the list, but then
secondly there is what should be on the list. It would be foolish
of us to give examples of specific products which negotiators
will be fighting over.
Q78 Mr Vaizey: Is there not a product
that sits in the middle of the Venn diagram, principles and specifics,
that would clearly meet both criteria?
Mr MacVay: That has been suggested
to negotiators.
Q79 Mr Vaizey: Right. In terms of
an argument between principles and specifics is there perhaps
an alternative approach which would be instead of trying to identify
environmental goods you simply try and identify the environmental
impact of all goods and then once you have done that, that influences
the trade negotiations?
Mr MacVay: There has been discussion
of that sort of approach in fact and proposals have come along,
but the problem there is one of legal certainty and this is also
a problem by way of using the list approach, but that kind of
approach opens a huge case for lawyers essentially to play which
is not helpful for the process.
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