CAUTIOUS MOVES TOWARDS GATT INVOLVEMENT ON ENVIRONMENT.

May 28, 1991

CAUTIOUS MOVES TOWARDS GATT INVOLVEMENT ON ENVIRONMENT.

GENEVA, MAY 25 (CHAKRAVARTHI RAGHAVAN) – Structured discussions in the GATT Council this week on Environment/Trade linkage issues are not expected to result in any quick decisions on bringing the Environment issue on to the GATT agenda but could open the way for a more cautious approach to the issue in the future.

GATT sources gave this assessment after last week's further round of informal consultations among GATT contracting parties conducted by the Chairman of the CPs, Amb. Rubens Ricupero with the participation of, and interventions and views from, a very large number of countries and groups of countries.

The Council discussions, on the basis of a structured agenda suggested by Ricupero, and expected to occupy a day or more, is set for May 29 and 30. Thereafter, further consultations are expected to continue to enable decisions to be taken in terms of GATT's contribution to the on-going preparatory process for the 1992 UN Conference on Environment and Sustainable Development, as also possible future involvement of GATT on some of these issues.

Thursday's consultations again brought to the fore a North-South divides on the issue, even though some from the South (like Yugoslavia) appeared to support the North view.

On the one side of this divide are the EFTA countries supported by EC, U.S. and Canada and by the former socialists and new marketers of Central and Eastern Europe pushing to reconvene a virtually moribund GATT Working Party on Environment, set up in 1971, and vest it with a wide mandate to look into environment and trade policy issues and harmonise policies of countries.

On the other side are a wide group of Third World countries with positions ranging from extreme caution to outright opposition to what they see as another move to use the non-transparent GATT processes for erecting new protectionist barriers to their exports.

While they see the need for GATT to take account of any global consensus on national and international policies and measures for Environment and Sustainable development, they are cool to moves to set the GATT processes in motion ahead of any such consensus, to harmonise and set rules on Environment and Trade Policy norms of countries - for ensuring "competition" and providing "level playing fields" for transnationalising world production and trade.

At Thursday's consultations Austria, as the Chair of the EFTA countries, according to participants, spoke in somewhat overbearing tones, of the "patience and flexibility" shown by these countries so far, about the limitations of a debate in the Council (because of time and lack of expertise of participants), need for a working group where experts could participate and the "right" of the EFTA countries to reactivate the 1971 working group.

Thailand reportedly read out the text of a letter addressed by Malaysia, on behalf of the Asian Group to Ricupero, against the GATT Council being "rushed into adopting definitive decisions regarding environment within GATT".

Preparations for the UNCED, the Asian countries noted, were in progress and "a great deal of scientific and technical uncertainties" still prevailed and it was essential to follow a step by step approach in addressing these issues in the GATT Council.

These steps, the Asian said, should be "transparent" so as to serve the "balanced interests" of all parties both within UNCED and the GATT and it would be "undesirable" if parties were to pursue uncoordinated and contradictory views in these or other fora on the same questions.

Hence the Council debate should be concluded with a decision requesting the GATT secretariat to prepare "a factural paper" an the subject to be submitted to the Council for assessment and evaluation and then the Council could decide how to deal with the paper in relation to the UNCED 1991 preparatory process.

The secretariat's paper, the Asian said, should be only for purpose of providing background factual information and should not attempt any assessment of the broad question of effects of environmental policies and measures on international trade.

The elements of such a paper, the Asian said, should include the historical background and circumstances leading to the establishment of the 1971 Working Party and its specific mandate; background information on any other GATT work on environmental issues; on how existing-international instruments on environment protection (such as the Vienna and Basel conventions) affect GATT principles; and list trade measures taken by countries for environmental protection and environmental measures with trade implications.

On the Asian view time was not opportune for the reconvening of the working party, Austria reportedly said that they needed no decision of the Council on this and the GATT secretariat had only to send out an aerogramme convening the working party.

Uruguay reportedly said that while no one challenged the right of any one to re-convene the working party, it had to be borne in mind that the working party was set up under different circumstances and its mandate and membership did not meet the present demands. Supporting the Asian call for a secretariat note, Uruguay reportedly said such a note should also provide information on how the trade issue was being handled by the preparatory committee. A Council debate would enable everyone to understand what the issues were before they went into a. working party.

India noted that a very short period of consultations by Ricupero had produced a tangible result of a Council debate and the outcome should not be prejudged. The debate would enable all CPs to have a clearer view of the issues and the further work, if any, that was required.

Environment was a very new subject and even experts did not seem to know very much on how the issue of environment and sustainable development was to be handled. While anyone had the right to seek the reconvening of the working party, its mandate was very limited and could not be used to discuss the issues sought by some of the sponsors. Any attempt to force a decision would prove counter-productive and could be a disservice to the issue of environment, which could not be considered purely in trade context.

The European Community reportedly argued that the environment issue was a matter for the GATT and the working party should be convened even if the mandate might not be 100 percent satisfactory. The mandate could be expanded in the light of developments of the last 20 years to discuss effects of trade on environment and how environment might be used for trade protection.

Chile reportedly questioned the view that the working party could be resurrected to discuss the various issues. It had been set up in different circumstances, had never met, and had no validity now. Without a proper understanding of what was involved, and the Council debate could provide this, it was difficult to accept an open-ended process. "We don't like surprises", Chile added.

The U.S. reported welcomed the EFTA initiative, arguing that the working party "existed" since it had not been terminated and hence could be reactivated. Time was of the essence and "GATT should stay ahead of the crowd", in the U.S. view.

The GATT dispute settlement process was not the most effective way of dealing with conflicts between environment and trade policy nor was the Council, because of the level at which it met and its lack of expertise, the proper forum for discussing the issue.

GATT, the Austrian had said earlier, was falling behind in considering environment issues and thus losing credibility.

This view was also echoed reportedly by the EC and U.S. among others and brought a sharp rebuke from Argentina that GATT’s credibility would not depend on the setting up or otherwise of the working group but on more fundamental issues including whether the Industrialised Countries were willing to undertake structural adjustment programmes and have the political will to do this.

The Argentine delegate reportedly noted in this regard that through their highly protected and subsidised agriculture, OECD countries were using a considerable amount of fertilisers, pesticides and other chemicals, which were harming the environment. The harming of the environment through these would not be taken care of by setting up of a working group but by addressing them in the Uruguay Round and seek constructive solutions.

India also reportedly rejected the Austrian view that the working party could meet and have some discussion and then come back to the Council on how their mandate should be expanded and changed. Any working party was established by the council with specific mandates, and the process could not reversed and would create a bad precedent for the future.

Mexico and Colombia echoed the Argentine view that the Uruguay Round was the first priority. Colombia also said that while it recognised the importance of the issue, there were many questions that remained to be clarified and the working party, with its extremely limited mandate, was not the right forum.

Hungary supported the reactivation of the working party and updating its mandate but stressed that the issue should not be pursued in a way that might affect the Uruguay Round priorities.

Hong Kong, supporting the Indian views and positions, said the working party was not a suitable forum for wide-ranging discussions and alternative mechanism might be necessary. The form and the substance were interlinked. There was need for a cautious and prudent approach to see the direction in which GATT could go.

Japan agreed that the issue was important and needed to be pursued urgently but it was not clear what the GATT could do. A full debate to analyse the problems was needed and agreed with the Asian on a step by step approach.

Tanzania agreed that the working party was not suitable nor could it be asked to come up with ideas for an extension of its mandate. GATT practices and procedures could not be changed like this. Trade was a function and means of development and there was a need to avoid contradictions between the GATT and UNCED processes.

In summing up the discussions, Ricupero reportedly recalled the mandate of the 1971 working party and the remarks of the GATT Director-General at that time to the effect that the mandate was "very limited" and that it was a "stand-by mechanism for a case-by-case" study of problems. The mandate of the working party was limited to examining "upon request, any specific matters relevant to the trade policy aspects of measures to control pollution and protect human environment".

Earlier, Austria had suggested that the mandate would enable measures to protect human environment to be discussed, a view that was rejected by India which noted that it was not control (of) pollution "or" protection of human environment, but "and".

Ricupero suggested that perhaps shortly after the Council meeting and debate, they could hold further consultations.

The kind of discussions (sought by EFTA countries) would not be covered by the mandate. After the Council debate, he added, they could consider "what, if anything, needs to be done".