Nov 6, 1992

ASEAN ASSAIL AUSTRIAN ECO-LABELLING LAWS

Geneva 4 Nov (TWN) -- Austria's regulations requiring mandatory labelling of tropical timber and timber products and creating a special quality mark for timber and timber products from 'sustainable forest management' was assailed in the GATT Council Wednesday by the ASEAN countries, supported by other developing countries.

The Austrian defence on 'environment' grounds received some muted support from the EC which saw the issue as a difficult and complex one needing technical and other studies and consideration, as well as other industrialized countries (who find in this a cheap way to satisfy their domestic environment lobbies) and what a participant called 'thundering silence' from the US.

The US already has taken some unilateral steps under pressure from the Congress. The developing countries fear that the Clinton administration whose vice-President Albert Gore has, as senator had already tried to push for use of trade sanctions for protection of 'tropical rain forests' and to enforce environment protection measures in the developing world, would go further along the line.

However, the ASEAN in bringing up the issue before the GATT Council had not called for any actions or remedies from the Council, but merely sought the views of other contracting parties -- even though their complaint had underlined that the Austrian move was discriminatory and violated GATT articles I (most- favored-nation treatment) and III (national treatment between domestic and equivalent imported goods).

The violations, without showing any actual trade damage, would be GATT illegal and a GATT panel could have ruled in their favor.

But the ASEAN at least now have not sought such a remedy.

The Austrians told the Council that the 'technical' issues raised by the ASEAN complaint should be handled in the Tokyo Round and GATT committees on technical standards and labelling, while the wider generic environment/trade issues should be considered in the newly created GATT body - Environment and International Trade Measures working group.

Austria also said it was despatching a high-level mission to the ASEAN to explain the law and the position and the ASEAN fears would be groundless.

The ASEAN countries had already brought the Austrian legislation, enacted 26 June and brought into force on 1 September, before the GATT Tokyo Round Committee on technical barriers to trade, where they got no clear response from Austria or relief.

The Asean communication said that the mandatory labelling of tropical timber applied to all products placed on the market, which was defined to include production, processing, storage, packing, marking, offering for sale, selling, transporting, advertising, importing and exporting of timber and timber products. The only exception was when there was a guarantee that the timber or product would not reach the consumer. All products on the market had to have the label made of tropical timber or containing tropical timber, and any advertisements had also to carry a reference indicating there was a relation to tropical timber.

An additional use of quality mark, purportedly voluntary, 'from sustainable forest management' was intended to prove that the tropical timber or timber products originated from forests fulfilling effective exploitation which was comprehensively defined as having "a system of silviculture that not only ensures sustainability from the point of economy and ecology, but also in terms of diversified exploitation which includes medicaments, oils and resins, taking account of cultivation appropriate to forest type, reforestation on sustainable management criteria and preservation of all functions of the forest ranging from the protective function to preservation of genetic diversity and preservation of living space of indigenous people."

Before such a quality mark could be used, a license had to be obtained from the Federal Minister of Environment who would grant the license only if it was proven that the conditions imposed were met and "the applicant understood to use and place on the market timber exclusively from sustainably-managed forests".

There were penal provisions if the labelling requirements were not met and if the quality mark was used without authorization.

These measures, the ASEAN said, could lead to serious disruption of exports of tropical timber and tropical timber products to Austria. The regulation was discriminatory, unjustifiable and unnecessary obstacle to trade. While the labelling per se was not a trade restriction, since it was selective and confined only to tropical timber and products and related to a legislation for sustainable forest management, it would give negative connotations to tropical timber and products, lead consumers to reject such products.

The Austria law did not provide for such mandatory labelling on other types of wood products imported into the country or produced domestically and thus violated both Art I and III of GATT.

And while the quality mark was not mandatory, it was an unilateral attempt by Austria to decide what constituted 'sustainable-managed' forests when there was still no international consensus on the criteria and determination of *sustainbly-managed forests. It was setting a dangerous precedent and, if left unchecked, might trigger similar actions in other countries and further market restrictions on tropical timber and tropical timber products.

Hector Villaroel of Philippines who spoke for the ASEAN countries said that though ASEAN was raising the issue, they were not the only one affected but many other exporting countries would also suffer from these unilateral and arbitrary measures. In raising the issue, ASEAN was not trying to have a generic debate on environment in the Council. ASEAN was fully engaged in the GATT working group on environment as well in other international fora for multilaterally agreed solutions to environmental problems.

"At the same time," Villaroel said, "we are very conscious of ongoing efforts by environmental lobbies in many countries to exert pressures on their governments to institute measures directed solely on tropical timber and timber products. We fear that the Austrian action could only heighten the efforts of these lobbies and cause further disruption to trade in tropical timber and timber products.

We ask ourselves should the GATT remain silent in the wake of all these moves?"

A number of countries who spoke supported the ASEAN view and underlined that there should be a minimum of international consensus on environmental standards and trade before any country acted.

These included Canada, India, Pakistan,Hong Kong, Brazil, Argentina, Colombia, Chile -- all of whom expressed concern at attempts to take unilateral actions by Austria to set standards.

Canada's Amb. Shannon shared the ASEAN concerns, particularly over the Austrian failure to notify the regulation in advance.

The idea was not acceptable, he said, that government of one country could dictate to others with respect to domestic environment regulations. If this view was allowed to prevail, there would be a series of unilateral rules for environmental reasons with considerable impact on trade.

Canada, later echoed by other participants, referred in particular to the Rio Agenda 21 documents which expressly asked countries to refrain from unilateral actions. The Austrian regulation set a dangerous precedent, he said.

Argentina said other means should be tried to promote sustainable forestry. The Austrian measure was discriminatory in that it hit only tropical timber and not temperate zone timber.

The EC said the issues were complex and needed to be looked into, while Austria said the technical issues should be handled in the Committee on Technical Barriers to Trade, while the generic ones should be dealt with in the working group on environment and trade.

The EC felt that while the point raised by the ASEAN was important, it did not necessarily share the analysis or conclusions of the ASEAN. The EC was against any ad hoc arrangements to consider the issue. It also saw no conflict with the Agenda 21.

India pointed out that in fact the largest deforestation took place because of burying of wood for fuel, and not through trade in timber or timber products. Hong Kong, Brazil, Peru, Colombia, Chile and Cote d'Ivoire all supported the ASEAN view and complaint.

However, Austria claimed that its actions were in line with multilateral efforts to promote sustainable forestry, that it was not a disguised protection since Austria had no 'tropical timber' industry, and was prepared to give "technical help" to developing countries to enable them to comply with its laws.