Jun 3, 1991

GATT DEBATE SHOWS "SOME CONVERGENCE", BUT...

GENEVA, 30 MAY (CHAKRAVARTHI RAGHAVAN) – The GATT Council ended Thursday a substantive debate on Trade and Environment issues with what its Chairman called "some consensus, convergence of views and better understanding" among Contracting Parties but with lot more of consultations needed to define a GATT role and any action.

The Chairman of the GATT Contracting Parties, Amb. Rubens Ricupero of Brazil, is to hold further consultations on the various ideas and proposals for further action, including for the resurrection of a 1971 GATT Working Party with an expanded mandate, the Asian and Uruguay requests for factual GATT Secretariat papers.

A clear consensus that appeared to emerge from the discussion was the view that the first priority for GATT should be the successful conclusion of the Uruguay Round and that environment issues should not be allowed to distract from this imperative.

But it was also brought out that some of the issues in the Round, including on subsidies, intellectual property rights etc, had environment and development implications.

The debate came out of a request from the EFTA countries for "resurrection" of a 1972 Working Party, with an expanded mandate, to discuss environment and trade policy issues and try to harmonise them and suggest guidelines.

The request, supported by the countries of Europe and U.S. and Canada, and by the "new marketers" of central and east Europe, has met with varying levels of resistance from the Third World.

The discussions elicited two proposals: an Asian proposal for a factual GATT secretariat paper on "Trade and Environment", with the Council then deciding how to deal with it in relation to the UNCED process; and a proposal from Uruguay for another paper on the trade aspects of the UNCED preparatory process.

The Council discussions on the relationship between trade policies and environment policies, regardless of the many procedural and institutional questions yet to be resolved, showed CPs seeing them as very wide and extremely complex, with more or less mirror-image viewpoints on both sides of the debate.

While environment-based trade policy measures could be perfectly reasonable, they could also be abused and there was a danger of environment protectionism, several noted.

The discussions did not elicit any support for "any large scale rewriting of GATT to cope with new environmental preoccupations". GATT, it was felt, was sensitive to the needs of-governments taking measures for environment protection. The general exception provisions of GATT in Art XX, enabling measures to be taken to protect human and animal health or safeguard natural resources as also the Tokyo Round Agreement on Technical Barriers to Trade (or the so-called Standards Code) were cited as examples.

The Uruguay Round itself was seen as addressing some environment-related issues in the negotiations on subsidies, agriculture, the standards code. GATT itself, it was noted, was seized of the issue of trade in domestically prohibited and hazardous goods through a working party, and in the work of its panels.

Some delegations drew from this the conclusion that very little more needed to be done in GATT and that it was perfectly equipped to deal with foreseeable problems of environment and where it was not, the GATT dispute settlement mechanisms could.

Others however argued that the environment question had raised new issues and a more comprehensive GATT exercise was needed.

A number of delegations raised the issue of "extraterritoriality" involved in efforts of governments to impose their own environment standards on others through trade measures.

Another question debated was the issue of "process" standards: trade policy actions against imports from countries using processes with lower standards than those required from domestic producers and the issue of "so-called free riders" - countries benefiting from use of lower environment standards.

A number of speakers, including several from the Industrial World, challenged the concepts underlying these. But some of their remarks left the room open at some future stage to bring in the issue in terms of competitivity of industries.

A related question was over use of processes or products such as those with CFCs resulting in damage to the Ozone layer and rights and obligations arising out of multilateral agreements accepted by a very large number of countries.

The relationship of trade and environment to development and sustainable development was also brought up by several participants from the Third World, with several countries emphasising the view that the environment question really related to the problem of profligacy and over consumption in the ICs, in the past and now.

A number of related issues that came up were: restriction of imports from the Third World countries which were unable to meet stringent environment standards set or achievable by the ICs; need for trade diversification by the Third World to enhance development; better land use; and transfer to the Third World of more efficient and less environmentally damaging technologies.

Another general view that seemed to emerge was the need to take environment protection measures that were least trade restrictive, the concept of "proportionality" in taking environment measures, and the view that trade policy was probably the least effective way of dealing with protection of environment.

In summing up the discussions, GATT Council Chairman Lars Anell of Sweden that no one in the Council favoured GATT becoming involved in setting norms and standards in this area or in harmonising environment standards.

The discussions had showed some convergence of views and created better understanding-but no firm guidelines had emerged and there was need for a lot more of work.

There also seemed to be a consensus that GATT was not silent on environment and that a number of GATT principles - the MFN principle, the principle of "national treatment" for imported products, use of least trade-restrictive measures for protection of environment, the GATT - requirement of transparency in trade policy and administration were relevant to the environment issue.

No one wanted GATT to become involved in the efforts to harmonise or set international standards oh environment.

However there were also views that in a number of areas where GATT was silent or did not provide all answers. And while GATT dispute settlement mechanism could deal with disputes, there was also the need to avoid disputes. Another area to be further explored in consultations was the relationship of GATT to multilateral instruments for environment protection.