Presentation on theme: "Understanding Trade and Environment issues"— Presentation transcript:
1 Understanding Trade and Environment issues Alan OxleyAustralian APEC CentreInternational Trade StrategiesMay 2002
2 The presentation The debate The international framework The interface Approaches
3 The Trade and Environment Debate The Doha WTO mandateThe WTO Shrimp Turtle DecisionThe debateThe issues
4 The WTO Doha MandateEnvironment now a mainstream negotiating issue in the WTO - for the first timeAn EU initiative (demand)This give the EU leverageEssential we understand the implications
5 The WTO Shrimp/Turtle Decision WTO Appellate Body ruled that the US may restrict imports of shrimp from four countries because they do not apply conservation policies to protect migratory turtlesThe WTO has approved unilateral trade sanctions to enforce environmental standardsA shock result – WTO does not permit unilateral sanctionsImplications are unclear
6 The debateEU and European environmental groups want new rights to restrict trade to protect the environment.The US wants to right to ban imports unilaterallyMost countries are opposed
7 EU environment goalsTo apply the following environment policies: to use “The precautionary principle” when regulating the environment- to use “whole of life cycle” management to regulate the environment to use ecolabels to certify whole of lifecycle management
8 What does EU want in trade? To use trade sanctions to secure adoption of environment principlesTo exempt use of trade restrictions based on the precautionary principle from scientific challenge.To be able to restrict trade on the basis of the environmental impacts of how products are made or processed.To be able to protect EU agricultural producers from cheap exports on environmental grounds.
9 US interests To protect right to use unilateral sanctions (Under the Clinton Administration) to include environment in trade agreements – NAFTA and Jordan FTA. (not Bush Administration policy, but strong support for linkage among Democrats in the Congress )To protect science based controls on trade.
10 The issues Respect for national sovereignty Effective environment policyEffective trade policyThe balance of benefits
11 The International framework The World Trade OrganizationThe United Nations
12 The WTO The basic activities The WTO Agreements Basic principles of the WTOHow WTO provides economic benefit
13 The Basic activities Create rules to govern trade Reduce barriers to trade
14 The WTO AgreementsBefore 1994 (end of the Uruguay Round) - the GATT - a handful of minor agreementsAfter GATT, GATS, TRIPs - eleven other agreements - a revised disputes system - a new organization
15 Economic principles of GATT Promote exchange of goodsReflect comparative advantage export what you produce best, import what others produce bestGATT prevents discrimination it curbs the powerful
16 GATT establishes rights in international law The WTO rules are enforceableGATT protects the right to exploit comparative advantageGATT protects right to develop
17 WTO and developing countries WTO is the only international system which can increase trade and raise living standards in developing countriesUntil 1994, Industrialized countries denied developing countries their full benefits:- they restricted trade in garment, textiles and agricultureFinal barriers are progressively being reducedConcern that US and EU will seek new rights to restrict trade
18 WTO gives members wide discretion to protect the environment Article XX exemptions are wide - WTO rules can be waived to protect human, animal and plant health and safetySome conditions: - rights are not be abused for economic reasons, - sound science must underpin trade controls
19 The United Nations Creates a mechanism for global security Fosters collaboration on global problemsPromotes and brings into effect global treatiesHosts most environmental treaties
20 Environment in the UNUNCED is the Supreme body - the UN Conference on Environment and Development (UNCED – a special session of the UN General AssemblyUNEP (United Nations Environment Program) a program of ECOSOC - UNEP’s program is limited only to action taken by UN members - key activity is to support several internationalenvironment agreements
21 UNCEDAdopted Agenda 21Endorsed three conventions: - climate change - biodiversity - desertificationAdopted trade and environment principlesEstablished the UN Commission on Sustainable Development to oversee Agenda 21
22 MEA’s supported by the UN -1 CITES (banning trade in endangered speciesBasle (banning trade in hazardous waste)Montreal/Vienna (to protect the Ozone layer)Cartegena Protocol (restricting trade in certain GMOs)
23 MEA’s supported by the UN -2 PIC – convention on prior informed consent on trade in chemicalPOPs – convention banning trade in persistent organic pollutantsKyoto Protocol - limiting greenhouse gases ALL BUT KYOTO HAVE TRADE PROVISIONS
24 Convention banning trade in endangered species Lists species endangered and at riskObliges parties not to trade in the products covered with non-parties [Trade bans conflict with WTO]
25 Basel Convention banning trade in hazardous materials Defines certain products as hazardousObliges parties to prohibit exports in those products unless the exporting government is satisfied that environmental management in the importing country is satisfactoryOblige parties to ban trade with non-partiesA Protocol obliges parties to ban imports from OECD countries [Trade bans conflict with WTO]
26 Vienna Convention/Montreal Protocol on Chlorofluorocarbons Bans production and consumption of designated chemicals deemed harmful to the Ozone LayerRequires parties to ban trade with non-parties [Trade bans conflict with WTO]
27 Cartegena ProtocolEstablishes global notification point for advice on release of Living Modified Organisms (LMOs)Obliges some exporters to secure prior consent to importers to tradePermits parties to ban imports of LMOsObliges parties to trade with non-parties on terms comparable to trade with parties [Trade bans conflict with WTO]
28 Agreement on Prior informed consent Obliges parties to secure consent of importers before exporting designated chemical products [No conflict with WTO]
29 Convention banning Persistent Organic Pollutants (Rotterdam) Bans listed chemicalsObliges parties not to export prohibited products to non-parties [Trade bans conflict with WTO]
30 Comparing Cartegena and WTO import regimes Restrictions are to contribute to obviating adverse effects on biodiversity *Legal right to impose restrictions without scientific justification **Exporter have right to request review of import controls - no recourse to independent arbitrationSPSRestrictions are to protect human, animal and plant life and healthRestrictions based on- international standards,or - science and risk assessmentExporters have right to contest controls in WTO disputes systems - non-complying measures must be removed
31 Conflict and confusion WTO does not permit discrimination in trade or use of trade sanctionsSeveral MEAs create discrimination and use trade sanctionsCountries oppose one thing in the WTO and support it in the UN
32 The interface MEAs and the WTO The precautionary principle Ecolabelling
33 MEAs and the WTOThe debate is about what should be done in the WTO – amend it permit trade sanctions in MEAs? - this is what the EU wants from the Doha Round NOTE: Why is this question only asked about WTO rules?
34 The precautionary principle Employ “no risk” strategies to protect the environment rather than managed risk strategies Why? So political judgements can be made in favour of environmental argumentsImpact on trade? Compare the terms of decision-making in the WTO with the Cartegena Protocol
35 Article XX of the GATTSubject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:((b) (b) necessary to protect human, animal or plant life or health;
36 The Objective of the Cartegena Protocol (Article 1) lays down the criteria for taking decisions to restrict imports:“to contribute to ensuring an adequate level of protection in the field of the safe transfer, handling and use of living modified organisms resulting from biotechnology that may have adverse effects on the conservation and sustainable use biological diversity, taking into account risks to human health and specifically focussing on transboundary movements”
37 EcolabellingThe Ecolabel certifies that products meet “whole of lifecycle” environmental impactsThe product must be made in a way that meets every environmental standard set in the importing economy.If not, its imports is banned. The importer sets the standard
38 What are the positions of industrialised economies on these issues?
39 IssueUnilateral measures to protect the environmentEUOpposedUSNot opposed: defends own measures vigorouslyCanadaSwitzerlandAustraliaNew Zealand
40 IssueLegitimize discriminatory trade measures in MEAsEUWants WTO rules “Clarified”to protect measures from challengeUSOpposed: existing provisions in WTO sufficientCanadaGenerally opposed, favours “clarification”SwitzerlandGenerally supports legitimizationAustraliaOpposed, WTO rules adequateNew ZealandLimited support
41 IssueRestrict trade on product and processing grounds (ppms)EUWants WTO rules “clarified”to allow whole of life cycle regulationUSCanadaWant issue examined.SwitzerlandSame position as EUAustraliaOpposedNew Zealand
42 Enacting the Precautionary Principle IssueEnacting the Precautionary PrincipleEU*Favours WTO applying version favoured by EU and in CartagenaUSOpposed: support SPS science based measuresCanadaSame as USSwitzerlandAustraliaNew Zealand* Position qualified after Doha
43 IssueEcolabellingEULegitimize labels verifying compliance with whole of lifecycle managementUSSupports transparency, opposes whole of life cycle ecolabellingCanadaSupports voluntary whole of life cycle ecolabellingSwitzerlandWants clarification of WTO rulesAustraliaNew Zealand
44 IssueSubsidies with environmental impactsEUExamine trade distorting subsidies in energyUSEliminate fishing subsidies, allow subsidies to address environment issuesCanadaAddress distorting impact in fisheries and forestsSwitzerlandWants clarification of WTO rulesAustraliaEliminate export subsidiesNew ZealandEliminate export & fish subsidies
45 IssueEnvironmental impact assessments of trade agreementsEUUSSupportCanadaSwitzerlandAustraliaNew Zealand
47 Most of the MEA’s breach UNCED principles The trade and environment principles adopted at UNCED urged - respect for national sovereignty - avoidance of use of trade sanctions - members of the UN to enter collaborative international agreements to provide global solutions instead of using trade coercion
48 Studies show poor environmental value of the trade measures in MEAs UNCTAD and the OECD have both made studies of the environmental value of the trade measures in the MEAs and assessed it as lowMany private studies show trade measures are generally ineffective to protect the environment
49 Review the issueThe problem? – conflicting rules The source? - new rules in MEAs Are they desirable rules? If the rules are not desirable, why change the WTO?
50 The new rules in the MEAs Use trade coercion to secure objectivesAllow trade to be restricted according to how a product is made or handled (PPM)NOTE: it is not the norm in international treaties to impose conditions on non-parties
51 Who wants the new rules. The EU The UNEP Secretariat Who doesn’t Who wants the new rules? The EU The UNEP Secretariat Who doesn’t? UNCED – trade and environment principlesUNCTAD – assessment of MEAsOECD – assessment of MEAsMost members of the WTO
52 What is wrong with the new rules? 1 Trade coercion is the rule of the jungle2 Restricting trade by how a product is made: - undermines the capacity of the WTO to provide benefits forces first world environment standards on everyone3. Why not use instead purpose-made conventions where countries adopt common measures into national law?
54 The basic, global problem Lack of common understandingLack of effective communicationWeak policy processes
55 Methodical approaches are required What is the environmental problem?What is the best way to address it?Does trade impede the solution?What trade controls currently exist?Is the problem a “trade and environment” problem?
56 The issue is no longer just conflict between WTO and MEA provisions The issue is restoring respect for national sovereignty and ruling out trade coercion in both the WTO and the UN environmental fora.The Problem is not in the WTO it is poor environment policy in the UN.This problem cannot be fixed by trade officials alone
57 Action to solve the problem Clear positions are required by governments on each of the following issues: - sovereignty- discrimination- coercion - leverage- precautionary principle- production & process methods/ecolabelling- sound principles in trade policy - sound principles in environment policyThe fundamental principles of good international governance need to be restated
58 Action to solve the problem Specific outcomes must be secured: 1. Achieve domestic coherence on trade and environment policies 2. Re-align environment work in the UN with fundamental UN principles - cease including ineffective and inappropriate provisions in environment agreements 3. Protect fundamental provisions in the WTO