5:36 AM Aug 4, 1993

EXPERTS "DON'T REALLY KNOW" ....

Canberra 3 August (TWN/Martin Khor) -- Does trade liberalisation help or harm the environment?

A conference of senior government officials, academics and non-government activists on international trade, investment and the environment held here last week grappled with this issue, and came up with the answer: "we don't really know."

Research on this area is still new, and methodologies are still being set up to ask the right questions. But one thing is certain: trade and environment is fast emerging as a major (and could even be the key) issue on the international economic agenda.

And while some research appears to be going on in the North and the institutions run and controlled by it -- by some in an objective way, and others in trying to find an intellectual basis for environment/trade protection arguments -- there is not much of it in the South, particularly among official circles and their academic advisers all dominated by neo-liberal doctrines.

The three-day Canberra meeting, called the Fenner Conference, was organized by the Australian Academy of Science and Griffith University. It saw a fascinating exchange, and often clash, of opinions and perspectives between trade and environment bureaucrats, law and economic academics, representatives of various business sectors, and environment and development NGOs.

The Australian Trade Minister Peter Cook presented what was perhaps the dominant establishment view, that an open trading system is the basis for environmental protection.

Protectionism, in his view, was a barrier to a cleaner environment and gave the examples of the heavily protected German coal industry which produces high-pollutant brown coal preventing the introduction of clean coal technologies, and the high tariffs on processed tropical timber which encouraged greater deforestation through the export of low-tariff raw logs.

Commenting on the role of GATT in environmental protection, Cook said despite its bad press GATT does not prevent the implementation of environment policies or measures. It has also not interfered in the development of international and regional environmental treaties.

GATT does not set standards in any field, including labour, human rights, health or population issues, he said.

"What the GATT does require is non-discrimination in any trade measures which are used to enforce environmental or other types of standards," he said.

"Countries routinely enforce all sorts of health, safety and quality regulations on products. The principles of international trade are not directed at saying whether these standards are adequate or otherwise, unless one country's exports are treated differently from the domestic equivalent or from other countries' exports, without legitimate reasons.

"Not only is this an obligation. It is also a right and we have the contractual security in GATT that our exports will not be subject to protectionist discrimination whether justification is sought on environmental or other grounds."

Cook said a most difficult issue is whether one county should be allowed to impose restrictions on imports based on environmental damage or pollution caused during their production, with the damage caused to the environment of the exporting (not the importing) country.

This is a murky area and one open to abuse and also raises questions of sovereign rights.

"The question is whether trade restrictions are an effective and equitable means to try to influence the environmental policies of other countries. I would argue that imposing economic costs on a trading partner is not a good basis for exerting such influence."

Cook suggested that it was better to analyze and directly deal with the environmental problem at source, through multilateral environmental agreements. This would allow the real problems to be focussed on and technical and financial aid and education could be used. Within environmental agreements, a trade sanction could be agreed on as an effective enforcement mechanism, but this should be used as a last resort.

Several other senior trade officials responsible for Australia's GATT policies reiterated Cook's concern that the principle of non-discrimination be primary in dealing with the trade and environment issue. However that still left the question open as to whether trade liberalisation contributes to global environmental problems.

Many of the environmental NGO participants were of the view that economic growth fuelled by growth had accelerated resource depletion and pollution.

"With the current production structure being so environmentally destructive, if you accelerate trade and thus increase production within this structure, then it is only logical to conclude that you also accelerate environmental degradation," was one of the comments from the floor.

Questioned on their views about the link between trade liberalisation and the environment, two high-level officials of the Trade and the Environment Ministries said they simply did not know the answer at this stage.

An OECD expert, Candice Stevens, principal administrator at the OECD's Environment Directorate, had earlier also made it clear that there were no answers yet.

Stevens said there were many people who viewed liberalisation as being good for the environment, whilst environmentalists throught it was bad for the environment. "We don't really know who's right," she said.

Stevens added there was a need to review trade agreements for their environmental effects, but no one knew how to do these reviews. Environmental impact assessments had been done on projects such as dams but there was no experience on making assessments on policies.

The OECD has, however, worked out an analytical framework to study how trade affects the environment, which had received Ministerial approval. This framework identifies four types of effects:

* The effects of products and services: there would be negative effects if trade in products or services harm the environment (for example, the trade in toxic waste) and positive effects if trade encourages transfer of goods and technology benefitting the environment;

* The scale effects, or the impact on the level of production or growth promoted by trade: for example, there could be negative effects if growth of trade increases pollution, such as when lorry transport expanded between European countries when the European Community lifted border restraints;

* Structural effects, or when trade liberalisation affects the structure of production: for example, would the removal of subsidies or tariffs for wood products have positive or negative environmental effects, or would liberalisation of the fishery trade lead to overfishing? Is there an environmental reason to halt or slow down trade liberalisation until environmental laws are in place?

* Regulatory effects, or how trade agreements affect the ability of countries to maintain their environmental policies and standards: for example, the effect Nafta or Gatt may have.

Stevens said the OECD was now in the process of further developing the methodology based on the above framework and embarking on research into case studies to obtain the empirical base for more conclusive results. "Current conclusions are based on anecdotes, but there are no good reviews on the overall effects of trade on the environment."

A number of NGO participants raised the issue of the effects of the global intellectual property regime sought to be created under the Uruguay Round and its negative impact on environment and development of the South.

The questions raised by them related to the way intellectual property rights, and the uniform norms and standards are being defined by Northern governments and sought to be imposed on South countries through the Uruguay Round negotiations.

This TRIPs regime, they said, was both protectionist and detrimental to the environment.

The global norms and standards in intellectual property and establishment of import monopolies for rights holders, without any obligation to work the patents in the territories of the countries, they said, would prevent the development of local technological capability in the South, be a barrier to the transfer and adoption of environmentally sound technology.

The proposed Trips regime, they said, would also facilitate the patenting of lifeforms and this would have negative effects on biodiversity conservation.

It was clear from the answers of the bureaucrats present that there had not been any serious study done on the relation between intellectual property rights as in the TRIPs negotiations of the Uruguay Round, and the environment.

When pressed by NGO participants to include environmental concerns in the Uruguay Round negotiations, the trade bureaucrats replied that the present Round had already gone on far too long and should be completed quickly, including with the establishment of a Multilateral Trade Organisation (MTO).

The issue of trade and environment could then be one of the key areas for negotiation in a new Round under the MTO, they argued.