6:38 AM Dec 5, 1994
ECO-LABELLING AND EFPS NEED MORE ANALYSIS
Geneva 4 Dec (Chakravarthi Raghavan) --Eco-labelling and promotion of environment-friendly products (EFPs) to take advantage of public concerns over environment could generate market opportunities, but could also create barriers to trade, and the whole complex of issues need more analysis before conclusions can be drawn. This was one of the conclusions of experts from 71 countries and 23 intergovernmental and non-governmental organizations at a week-long meeting of the UNCTAD Ad Hoc Working Group on Trade, Environment and Development. The meeting was chaired by Amb. Antti Hynninen of Finland and ended with a Chairman's summary on Friday. The discussions at this first session of the group focused on the twin issues of market opportunities for environment-friendly products and eco-labelling and was aided by the UNCTAD secretariat's documents, which received praise for its 'high-quality', and presentations by the GATT, UNEP, OECD and the ISO (International Standards Organization) on their ongoing work in these areas. Environmental concerns among the public and policies addressing them might generate new market opportunities, but could also create a barrier to trade, the summary said. The group noted that it was difficult to identify and define EFPs -- given that no product is absolutely environment-friendly. It was hence necessary to ensure that environmental claims are credible, take account of consumer interests and support fair competition. Many products such as pharmaceuticals, beverages and food products were excluded from eco-labelling, because of several quality standards that operate in this area, and which also incorporate environmental characteristics. Verifying the environmental claims of other products could include suppliers' declarations -- Type II labelling, according to the ISO -- on which codification work is under way. The group agreed that more work was needed to specify ways and means by which credibility of environmental claims could be substantiated. It was necessary to develop criteria for identifying EFPs. Environmental claims, it was pointed out at the meeting, were often marketing instruments similar to other forms of advertisements. Technical assistance would be needed to establish mechanisms for certifying or substantiating such claims and to facilitate export of EFPs from developing countries. Endorsement of such promotional measures by environmental or consumer groups and third-party certification by national or international standardizing bodies could also be useful. On the question of eco-labelling, where present practices are geared to reducing environmental impact of a product throughout its life cycle (cradle to grave concept), such labels were seen as likely to have adverse trade and competitive effects. Some delegations also cautioned against the proliferation of eco-labelling schemes and felt an analysis of costs and benefits of such schemes in terms of trade, environment and development effects would be useful. Several developing country participants highlighted the very high costs involved in complying with eco-criteria, particularly for small-scale producers. While developing countries may be at more of a disadvantage, other trading partners too could feel the negative effects. Eco-criteria based on environmental and technological conditions in the importing country might imply significant costs for foreign producers and might also be environmentally less appropriate in the context of the local conditions in the foreign country of production. Discussions brought out the unclear relationship between eco-labelling and Technical Barriers to Trade (TBT) agreement. GATT secretariat reported that the issue is being pursued in the WTO, where the issue of government involvement in such schemes may be a relevant factor. Several delegations said that the implications of the TBT agreement extended beyond transparency questions and included important substantive elements such as equivalency, mutual recognition, dispute settlement and technical assistance. The life-cycle analysis in eco-labelling was also seen by several delegations as raising several conceptual and practical difficulties, according to the Chairman's summary. The use of process-related criteria in eco-labelling schemes came in for some detailed discussions. Specific process-related criteria, it was argued, might not be as effective or relevant in terms of the environmental protection in the exporting countries as in the importing country. Such criteria involved differences in assimilative capacity and importance of the development dimension. The use of process-related criteria could also raise issues of extra-territorial application of environmental priorities of the importing country. Where process-related criteria addressed local environmental problems, many delegations felt that differing criteria across countries could be allowed. While some stressed that information on process-related criteria was necessary to establish the credibility of the schemes in the eyes of consumers, others pointed out that eco-labelling based on specific process-related criteria used in the importing country might not provide the consumer with the relevant information on environmental effects in the producing country. Improved transparency in eco-labelling was identified as an important first step towards mitigating adverse trade effects of such schemes. On the transparency question, a distinction was drawn between active and passive transparency. The latter would involve provision of information by eco-labelling authorities when requested by trading partners while the former would require automatic notification to all parties. There was also a difference between ex-post and ex-ante transparency. For trade purposes, the ex-ante transparency was seen as especially important. The transparency provisions and requirements in the GATT and the WTO's TBT agreements -- publication, notification, right to comment, and obligation to take comments into account -- were viewed as useful in case of eco-labelling. But where imports account for a significant share of domestic market for products or product groups, the transparency provisions would need to go further. Participation of interested parties, specially foreign producers and importers, was considered essential in the determination of eco-criteria and demarcation of product categories. While mutual recognition of eco-labels was seen as a desirable objective to render trade and environment interests compatible, this was seen as a complex issue needing more analytical work. In some respects, mutual recognition in the context of eco-labelling would be conceptually different from that defined in the TBT agreement. The Group agreed that the concept should be examined closely. There were frequent references to the option of the eco-labelling programme of the importing country awarding its own eco-label to products meeting the process-related criteria of the exporting country and the use and disposal criteria of the importing country. In this regard, the life-cycle analysis for eco-labelling could be split into 'cradle to export border' and 'import border to grave'. While mutual recognition could benefit countries which already have national eco-labelling programmes, in other cases the concept of "equivalencies" was seen as more useful. Establishing such equivalence would take account of comparable environmental objectives, different ways of achieving them, and differences in environmental and developmental conditions across countries. There was considerable emphasis at the meeting on the need for increased technical assistance in this area, with focus on technical assistance to help developing countries to set up their own eco-labelling programmes and improve their certification procedures. UNCTAD's work in this entire area of ecolabelling was seen to be of high value, particularly on the trade and development aspects, and UNCTAD was encouraged to continue its sectoral studies in collaboration with researchers and experts in the developing countries.