8:07 AM Jul 8, 1996

DEALING FAIRLY WITH TRADE AND ECOLOGY

Penang, Jul 8 (Martin Khor) -- The growing debate on the trade and environment issue tends to be a divide between those involved in ecology concerns, and those related to business and trade policy.

In general, environmentalists believe that trade has contributed to ecological problems, whilst "free traders" argue instead that trade liberalisation actually helps the environment.

But given the mounting evidence, it is no longer credible to deny that trade and economics have played a major role in resource depletion and in the worldwide dissemination of environmentally- unsound production and consumption patterns.

Once it is admitted that trade and trade liberalisation can have negative effects on the environment, the question arises how these negative environmental effects can and be tackled.

If care is not taken in answering this question properly, there is a real danger that policy choices will be determined by the powerful to shift the burden of adjustment to the weaker parties, countries and sections of society within each country.

The key dilemma is: how can the negative impacts of trade on the environment be identified and recognized and actions taken to counter or rectify these in a fair manner, so that the products of weaker trading countries are not discriminated against, and that the environment is not misused as a protectionist weapon by the strong against the weak?

In other words, can a framework be devised to deal with the negative environmental effects of trade in a fair and non- discriminatory manner, and in a manner that uses positive discrimination in favour of the weaker countries, so that the Northern countries carry the main share of the burden of adjustment towards more ecological production and trade patterns?

The rationale for such an approach is based on the fact that -- accounting as it does for four-fifths of global consumption, resource use and pollution -- the North has been and is mainly responsible for global environmental problems.

It has also been the main beneficiary of past and present trade, and has the "cushion" of higher incomes to absorb adjustments.

The South, many of whose countries are impoverished, cannot afford to bear more burdens, especially since it is already enduring heavy debt repayments and difficult conditionalities through structural adjustment programmes.

But the way discussions on trade and environment are being conducted, there is a danger that the burden of adjustment could again fall mainly on the South through trade.

Most discussions of trade and environment tend to focus on the impacts of the production and trade of Third World commodities, such as tropical wood and minerals.

It is true that the extraction of Third World natural resources have had, and continues to have, devastating environmental impacts. Measures need indeed be taken to reduce these negative impacts, and even to reduce the volume and rate of extraction, production and trade. However, this must be done in a way that does not have negative social impacts on the people, and especially poor communities in the South.

For example, a framework could be developed for a new genre of North-South commodity agreements aimed at promoting sustainable development.

The South could agree to produce and to export less physical quantities of wood, minerals and agricultural products, but be paid significantly higher prices for these commodities, taking into account the social and ecological values in these products.

Supply of the products can thus be rationalised and reduced, whilst at the same time, high enough prices are guaranteed. Under such schemes, the South may produce less (and thus reduce resource depletion) but without suffering economically.

The attainment of higher commodity prices within an agreement to control and even reduce output is one way towards fairer and more ecological trade.

This, however, is only one part of the answer. Whilst it is necessary to deal with the environmental impact of Third World commodities, it is even more important to look at the production and trade of Northern products, including industrial products, which also have negative and sometimes devastating impacts on the environment.

Thus, any measures to deal with the trade in tropical timber has also to focus on the trade in timber from temperate and boreal forests. The environmental impacts of the timber trade as a whole should be countered, as there is a great need to conserve all forests.

But this exercise must look at all timbers and forests, not only the tropical varieties.

On the other hand, it is incorrect to take the position that there need be no concerns about trade in timber, since it cannot be denied that logging and timber production and trade is a major contributory factor to forest loss, land and water degradation, and erosion of biodiversity.

But when one examines commodity trade, one has thus to look at all trade and not exclusively at Southern commodities. Even more important, the exercise should not be confined only to raw materials, but must extend to the environmental impacts of industrial products and technologies.

For instance, it is not enough to be concerned about timber and minerals, but also about the impact of production, use and trading of motor vehicles. As is well known, private cars are inefficient as a means of transport, compared with public transport, or even use of bicycles.

Private cars use up immense quantities of raw materials and energy, take up valuable land space, are major polluter contributing to the Greenhouse Effect and global warming. One should therefore be concerned with and curb the production, use and trade in motorcars as much or even more than about the environmental effects of trade in wood and minerals.

The same argument also applies to other industrial products, especially those whose production involves or results in toxic substances, high pollution and in hazardous wastes.

What is required, in other words, is an objective study of and approach to all products, services and processes, exported by both North and South, and the establishment of a framework for taking measures on this whole range of products in a fair and equitable manner.

The fear of many people in the South is that Northern governments (and also some NGOs) may take the lead in defining what constitutes environmentally harmful trade, and this definition may, wittingly or otherwise, be biased against products exported by the South.

If such a definition is used, the fear is that there will be arrangements for adjustments to world trade in a manner that is to the advantage of the powerful countries, and thus most of the burden of adjustment will fall onto the South once again, as was done when tackling the international debt crisis.

(This is the second of a series on trade/environment nexus)