7:45 AM Jul 9, 1996
SEARCHING FOR THE RIGHT FORUM
Penang, Jul 9 (Martin Khor) -- The increasing global concern about the adverse environmental effects of trade has catalysed intense interest in finding ways to discuss and resolve trade and environment issues. This interest has intensified after the World Trade Organisation (WTO) has set up a Committee on Trade and Environment (CTE) to look into the issue. It has sparked intense debate, among governments and non-governmental organizations, about the roles and areas of authority among the different international institutions. A logical and proper choice to coordinate the whole issue would be the United Nations and its agencies, especially the Commission on Sustainable Development, the UN Conference on Trade and Development (UNCTAD) and the UN Environment Programme (UNEP). This is because the UN has experience and expertise on both the developmental and environmental strands of the issue. Being a universal and open organisation, the UN is also more representative of the views and interests of its majority, the developing countries. In particular, the concepts of fair sharing of the burdens and benefits of adjustment to environmental sustainability have been accepted in the context of the UN Conference on Environment and Development (UNCED) in Rio 1992. The principle of "common but differentiated responsibility" was the anchor on which UNCED was based. According to this accepted principle, the Northern countries had a greater responsibility to meet the costs of adjustment due to their larger role in environmental degradation as well as their economic capacity to absorb more costs. It recognised that developing countries would still need to grow and develop (sustainably, of course) to meet their people's needs. The North also made a commitment at UNCED to provide adequate financial resources and technology transfer to facilitate the South's transition to sustainable development. Thus, UNCED and its agreements, documents and follow-up institutions (such as the Commission on Sustainable Development, the Biodiversity and Climate Change Conventions, and various other bodies) provide the appropriate contextual and institutional framework for multilateral discussions on trade and sustainable development. In the GATT/WTO, on the other hand the treatment of the environment is still new and evolving. There does not exist the same body of experience and agreement as in the UNCED and post-UNCED process on the North-South sharing of responsibilities, costs and benefits in relation to economics, trade and environment. There is also a bias in the WTO trading system to reward the stronger and more successfully competitive parties and countries, and this includes the activity of trade negotiations which sets the rules. Whilst the old GATT had the principle of "special and differential treatment" in favour of developing countries, even though only on a 'best endeavour' basis, many analysts have concluded that the principle has been eroded through the Uruguay Round. Moreover, it is yet to be seen how the UNCED principle of "common but differentiated responsibility" will be operationalised in the WTO context. In March l994, in a position paper, "The WTO, Trade and the Environment", the Third World Network while welcoming the decision to set up the WTO work programme on trade and environment, cautioned against empowering the WTO to be the agency charged with developing the international framework for determining the relationship between trade and environment. The TWN paper argued that the GATT and the WTO, because of their narrow trade focus, lack the jurisdiction, competence and capacity to be a coordinating agency to handle these complex interlinked issues. Moreover, as the closing phase of the Uruguay Round showed, the GATT's decision-making is dominated by only a few major countries or entities, and a majority of countries have to accept many of the decisions and deals arrived at by these few. Given the reality of this decision-making process in GATT (and in all likelihood, in the future WTO), rules developed in this imbalanced forum would most likely serve to legitimise the use of trade weapons which the North can use. The TWN paper argued against increasing the WTO's scope through introducing concepts such as "trade related environment measures", which would then become the subject of a new GATT/WTO negotiating process. It also opposed proposals, of some Northern governments and NGOs, to get the WTO to deal with a set of new trade and environment concepts, namely processes and production methods (PPMs), internalisation of environmental costs, and eco-dumping. PPMs refer to the process and method by which a product is produced. 'Ecodumping' implies that a country where environmental standards are lower is having an unfair competitive advantage when exporting its goods. 'Internalising external environmental costs' refers to the inclusion in the price of a product of the estimated adverse ecological effects of producing and distributing it. The three concepts are thus inter-related. When discussed in the GATT/WTO context, the implication is that if a country has lower environmental standards in an industry or sector, the cost of that country's product is not internalised and the prices are thus too low (being unfairly subsidised), and that country is practising "eco-dumping." As a result, a second country that is importing from the first would have the right to impose trade penalties, such as levying countervailing duties, on goods exported by the first country. This set of ideas poses complex questions relating to concepts, estimations and practical application, particularly as they relate to the international setting. And within the negotiating context of the WTO, developing countries are likely to find themselves at a disadvantage. These concepts need to be analysed in much greater depth, in an inter-disciplinary way, before being brought into the WTO for discussion, if at all. In the terms of reference of the WTO's CTE, the issues of PPMs and eco-dumping are not directly named as such. However, several items on the work agenda have a strong relationship to PPMs, which could thus be brought into the WTO discussions. Hence, the links between trade and environment should be viewed comprehensively, in a multi-dimensional way, taking full account of the interests of weaker countries as well as communities, especially in the South. Trade and environment should be examined in the broader context of sustainable development, taking the development needs of the South into account, and making use of equity as a central operational principle. Attention should be given not only to differences in environmental standards at present, but also the historical and past processes and inequities. The concepts of cost internalisation, ecodumping and processes and production methods should be discussed outside the WTO negotiating context, in more open and democratic fora. A central role should be given to UNCED institutions and principles in discussions on trade and environment, as well as to other UN agencies such as UNCTAD and UNEP. General discussions on trade and environment issues should be held in the UN framework. Arising from such discussions, the role of the WTO and the trading system can be determined and assigned in the light of their specific areas of competence and in the context of the principles derived. Meanwhile, as the issue is already on the agenda of the WTO, governments and groups in the South should put time and resources in studying and negotiating the many aspects of trade, environment and sustainable development, so that the South's perspective is strongly represented. The South should not lose out in the negotiations by default. (This is the third and last in a series. The first two appeared in SUNS #3794 and #3795)