EARTH SUMMIT: ENVIRONMENT, TRADE AND SUSTAINABLE DEVELOPMENT.

May 27, 1992

EARTH SUMMIT: ENVIRONMENT, TRADE AND SUSTAINABLE DEVELOPMENT.

GENEVA, MAY 25 (TWN/CHAKRAVARTHI RAGHAVAN) -- When the Heads of State and Governments of the world meet at Rio next month at the "Earth Summit", an issue they ought to confront, but will probably duck, are the consequences of two contrary initiatives launched by their governments in the mid-80’s.

In 1986, the Contracting Parties to the General Agreement on Tariffs and Trade launched at Punta del Este the Uruguay Round of Multilateral Trade Negotiations, the eighth in the series of trade negotiations under GATT auspices.

Next year, at the UN General Assembly, these same governments, and others not members of GATT, joined to give a call for "sustainable and environmentally sound development" - a response to the report of the World Commission on Environment and Development (WCED).

Though less than a full endorsement of the WCED report, the Assembly action led two years later to the decision to convene the UN Conference on Environment and Development and set in motion the preparatory process with the participation of the largest ever representatives of governments and non-governmental organisations.

The preparatory process, which has been on schedule, is to culminate 3-14 June at Rio de Janeiro in the Earth Summit, the largest ever such gathering with the participation of over 120 Heads of Government and States.

Originally set to conclude in 1990, the Uruguay Round negotiations missed not only that deadline but many more, and faces a still uncertain future, despite the recent agreement within the European Community to reform its common agricultural policy to bring it a little more into line with the market forces.

On Monday (speaking at St. Gallen in Switzerland) GATT Director-General Arthur Dunkel warned that the latest end-1992 deadline for concluding the Round and that "given the multilateral nature of the negotiations and the stakes involved for each of the 108 participants, a U.S.-EC understanding on agriculture or any other subject, cannot by itself be enough", he said.

The UNCED Summit will thus precede the end of the Uruguay Round, but whether it will remain a mere costly spectacle and extravaganza and allow business as usual thereafter or will start a new process for-individual and collective change in behaviour and influence various on-going intergovernmental processes including the Uruguay Round remains to be seen.

For, seldom have governments initiated two processes with such basic contradictions as the "liberalisation" drives under the Uruguay Round and the drive to change course for "sustainable development".

Though ostensibly negotiations for trade liberalisation, the Uruguay Round encompasses areas of economic activity that have no direct relationship to the traditional meaning of international trade, namely exchange of goods across borders, but covers large sectors like services, investiments, intellectual property privileges, hitherto within sovereign domain of countries.

Together they deal with the entire systems of production, distribution, consumption, culture and other activities, and are aimed at reducing the role of the state and creating a global laissez faire to expand the "freedom" of private operators.

The contradiction between the two processes go far beyond normal trade as an interface among nations and relate to the issues of services, to trade-related intellectual property issues, to investment rules and the permissible levels of state intervention in these and a variety of sectors of economic activity.

Services cover a wide range of activities like tourism and advertising and would be a key area needing State regulations and controls rather than liberalisation, if the world is to be really serious about changing economic behaviour, as UNCED Secretary-General Maurice Strong has been repeatedly saying.

The global monopoly to be created by patents and other intellectual property rights, particularly in some of the new areas like biotechnology, genetics etc would have some far-reaching and mostly adverse effects on the sustainability of agriculture in the developing world, particularly among marginalised farmers.

The gene patenting, which would enable patenting of gene characteristics, the global monopoly protection for processes and products in this area, would bring Third World agriculture, animal husbandry and rural development firmly under the grip of the TNCS, and marginalise the poor in the South even more - particularly because the elites in the South are linked to the transnational system in exploiting their own peoples.

The initiative for the Uruguay Round, and using the "trade" interface of countries with the outside world to change, not just the international economic relations but the organisation of the world economy, came from the TNCs and governments in their home bases, notably that of the United States pushing their interests.

As some of the negotiators from the North, and GATT officials, conceded much later, the Uruguay Round is intended to reduce the role of governments and expand the "space" of the TNCs and provide them with level playing fields.

But the Round will not provide for level playing fields for Third World enterprises -whether in cost of capital or technology on the global infrastructures of trade.

Through the 1980’s, according to the UNDP's 1992 Human Development Report, the real interest rates for industrial countries was four percent while that for the Third World was 17%. This last alone, according to HDR, accounted for 120 billion of the one trillion dollar debt, 120 billion was the real cost of this interest rate differential in addition to a reverse debt-related financial transfer, which reached 50 billion in 1989.

As for technology, the Uruguay Round TRIPs agreement is for stricter protection, not for the "liberalisation" objective of the Round, and aimed at ensuring global monopolies without any global countervailing instruments for exploitation of intellectual property rights for the benefits of the society - one of the basic objectives of the current intellectual property regime in WIPO.

As the HDR puts it, "... countries investing heavily in research and development are pressing to increase the protection, in stark contrast to the prevailing economic philosophy of openness and liberalisation. Buying rights to technology is not the answer either, for the prices are shooting up...".

The drive for the establishment of the WCED and its report, the push in the General Assembly for endorsing the concept of "sustainable development" and for convening the UNCED, on the other hand was a response of governments to the rising ecological concerns of the public in the North and the South - and the environment movements.

Many of the environment groups in the South had begun as grass roots movements looking at problems at micro level and soon began to relate them to wider national and global macro-economic policies and have gradually come together with the Eco-development groups in the North in a loose coalition.

The Northern governments at first envisaged essentially an environment focussed meeting, but were forced by the countries of the South to accept an environment and development agenda.

The developing countries, by and large, joined the negotiations reluctantly. But since 1986, under the pressure of the IMF and the World Bank and the structural adjustment policies forced upon them because of the debt crisis, these countries have undertaken unilaterally many of the measures envisaged as the end process of the Round and are now looking for the completion of the Round to gain some small benefits in terms of market access.

But few in the public or the environment groups or the governments related the Uruguay Round liberalisation to the UNCED environment protection and sustainable development or faced up to the contradictions involved in the two processes.

For, the Uruguay Round process in the final analysis involves a reduction in the role of the state and government and its power to intervene in the market and the economy. It is based on the neo-classical philosophy and framework of perfectly competitive markets, in which resources are optimally allocated by the normal operation of market forces, and both buyers and sellers reap economic gains.

However, in real life, there are no perfectly competitive markets and in the imperfect, often cartelised (with government support in the North for export cartels) international markets, without active and constant State intervention it is a zero-sum game, with developing countries so far the losers.

There is by now a large consensus that the present ecological ills of the planet are in fact one of the results of industrial capitalism and the "market" - with its patterns of resource use and creation of wastes, and candles creation of new products and promoting a market for them through advertisements - and that considerable state intervention, regulation and new economic instruments would be needed to change behaviour of enterprises and consumers in order to safeguard the environment and promote sustainable development.

The two processes - the Uruguay Round process and the UNCED process are thus inherently contradictory. Any attempt to reconcile them has so far been in- the UNCED - by yielding Board to the Uruguay Round such as at Prepcom-4 where regulation and control of corporate behaviour has been abandoned.

It was only when the agriculture issue began hooting up in the Round and pressures developed on the ICs to dismantle their barriers to agriculture trade and cut domestic subsidies, that the farm lobbies in the North raised the environment banner in an effort to stem the drive for dismantling protection and ending various subsidies. The way they flagged the ecology issue, and seized upon the contradictions between trade liberalisation and environment protection, resulted in the environment/trade issue being seen essentially in this light.

Well into the Uruguay Round, few in the Eco-development movements were even aware of the full implications of the Round. It was only in l990, when it was thought the Round was about to be concluded that Eco-development groups began to become aware of the issues and began to try to distinguish between the protectionist slogans and basic ecological issues - but not too successfully.

Well into 1990, the GATT ignored the UNCED process - focussing on the Uruguay Round negotiations. It was hoping to conclude the negotiations and sign and seal the agreements before the end of 1990 and thus pre-empt anything that might come out of UNCED.

And the fact that many of the protectionist lobbies in the North had become vocal on the environment issue also persuaded many governments in the South to be wary of the environment argument in trade and worked to keep it out of the Uruguay Round agenda, lest it become another non-tariff barrier against their exports.

The way ostensible ecological reasons are sought to be used to protect the Northern markets - whether over tuna fishing or tropical timber or textiles and leather products - has only strengthened the view of the southern governments.

Having taken considerable unilateral trade liberalisation steps (that favour the foreign TNCs) under pressure from the IMF and the Bank, they have been trying to conclude the Round quickly to get some benefits and don't want UNCED to complicate or block this.

It was only after the collapse of the Brussels ministerial meeting, where the EFTA countries (which had raised the WCED report and the environment/sustainable development issue in all UN fora excepting the GATT) sought to satisfy their domestic environment lobbies by seeking the convening of a GATT committee on environment (set up soon after Stockholm Environment Conference but which had never met in 20 years) that the environment issue came on the GATT agenda.

To date the GATT and the World Bank and the IMF, the high priests and promoters of the business interests, have been trying to persuade the public that "free trade", "free markets" and environment protection are compatible and the three could and should be trusted to deal with them.

While some sound reasoning, in terms of trade policy and the environment/development nexus, ties behind their arguments against creating "level laying fields" in the world in terms of "uniform environment standards and obligations" for all enterprises and production, their espousal of the level playing fields concepts for foreign investors and trade liberalisation and structural adjustment policies have made these arguments suspect. For, there is now a wealth of documentation from critics that the GATT/Fund/Bank policies enforced through conditionalities on the South is increasing poverty and unsustainable development.

The U.S. and other leading ICs, unwilling to bring about changes in life-styles and consumption patterns of their "consumers" that would cut the profits-of their enterprises, have managed to keep these issues out of the UNCED process and agenda in terms of actions, programmes and commitments.

The fear of the likely use of "environment" as a protectionist device and unilateral actions by the leading ICs, have persuaded the developing countries not to raise some of the concerns on trade in the UNCED process or confront issues of intellectual property and the private global monopolies that will be created in the Uruguay Round and its implications for their access to technologies needed for sustainable development.

And unless the Earth Summit results in some major changes, the outcome at Rio and the planned institutional arrangements would leave the IMF, World Bank and the GATT (and the likely Multilateral Trade Organisation that would emerge of the Round) largely in control, and not subject to any democratic decision-making or transparency in their activities.

Even the proposed institutional arrangements for follow-up on the Earth Summit is such that the relationship of the three with ECOSOC and the UN General Assembly will probably remain as tenuous as now.

UNCED for its part, through the preparatory process in 1991, ignored the Uruguay Round and its implications - arguing mainly for early conclusion of the Round and opening up markets of industrial countries for products of the Third World, thus enabling the latter to earn more and be able to promote sustainable development.

Partly, it was at the instance of the developing countries themselves who did not want to give a free hand to what was seen as some "wild-eyed" environmentalists in the North - who were all for keeping the South and its forests green to save the planet, but were not ready to face up to the more fundamental issues of reducing Northern consumption.

During the UNCED preparatory process in 1991, when it was thought that the resumed Uruguay Round negotiations would be concluded before the end of that year, there was considerable effort not to queer the pitch by raising some of these issues.

Some of the Northern ecology groups, who had become aware of these issues, tried to stay away from the IPR issues - feeling it was too late anyway to do anything about changing the likely GATT agreements, but concentrating instead on ways to ensure transfer of environmental sound technologies to the South.

But with the conclusion of the Uruguay Round negotiations delayed until at least the U.S. Presidential elections in November, for heads of governments and states to meet at Rio, deal with technology and finance issues of environment and sustainable development, but not take a position to call for changes in some of the proposed agreements would prove to be an act of escapism.