WTO Public Symposium 2003: Session II- Environmental Regulation

WTO Organized Session

While the WTO has always championed sustainable development, it had never directly addressed the impact of international trade on the environment. As emerging multilateral environmental agreements (MEAs) come into conflict with WTO rules and commitments, some WTO members have demanded that the trade and environment linkage be added to the negotiation agenda. After heightened debate on WTO’s responsibility toward environmental regulation, members have agreed to launch negotiations on environmental issues. Specifically, these negotiations will attempt to define the relationship between the multilateral environment agreements and WTO rules, decide on the interaction between WTO committees and MEA secretariats, and liberalize trade in environmental goods and services.

When the main demandeurs (EU, Japan, Norway, and Switzerland) successfully pushed environment issues onto the WTO agenda, a majority of other members protested. Most developing countries were concerned that adding the environment to the agenda would distract from other development issues such as agriculture and TRIPS. Their struggle now is to ensure that an agreement on environment issues will not hamper their development or provide countries with tools for protectionism, i.e. overly stringent standards or onerous labeling requirements. At the public symposium, the panelists representing the UN’s capacity building efforts in developing countries addressed current MEAs and WTO-recognized standards in the context of the obstacles facing developing countries. They discussed the importance of giving developing countries greater ownership over standard-setting so that they can ensure any environmental regulation takes into account their unique products, capacities, and development needs.

Visit BRIDGES Trade News Briefing Series on Trade and the Environment for a mid-way point evaluation of environmental issues in the Doha Development Round.

Panelists and Viewpoints

Veena Jha, Coordinator, UNCTAD Program, New Delhi

Developing countries often find themselves on the receiving end of environmental regulations. They have trouble implementing the standards devised by developed countries because the standards are too strict, they change too quickly, they are not always clearly supported by scientific evidence, and they do not take into account the needs of developing countries. Moreover, because environmental regulations are costly, they can jeopardize the gains from trade that developing countries rely on.

Some of the factors that prevent developing countries from enforcing these standards include: poor information management, inadequate infrastructure, lack of funds, and a defensive attitude because they are ‘standard-takers,’ not ‘makers.’ These structural weaknesses need to be addressed before developing countries can embrace environmental regulation fully. Particularly, the cost of regulation is a major barrier. This obstacle can be overcome with better, longer, and more-thorough capacity building and technical assistance. However, that goal will require more consistent aid. One UNCTAD proposal to help developing countries take a more active role in environmental regulation is to involve producers and consumers from both developing and developed country to make sure standards reflect needs on all sides. Ms. Jha is currently working on a project in India to strengthen capacity for trade and environment policy coordination through seminars and workshops that will bring many stakeholders together.

Ritu Kumar, Environmental Economist Consultant to the Commonwealth Science Council, UK and Director of the TERI-Europe office in London

For environmental regulation to be fair and effective, developing countries must take control of the standard setting process. As long as the developed countries control the process of international standard setting, the developing world will view environmental regulation with distrust. More importantly, developed countries may not have a full understanding of the products from the south, or the capacity of developing countries to regulate. Furthermore, for standards to be meaningful, they cannot just be unilaterally decided by one agent, even within a developing country. They must come out of a dialogue between raw material suppliers, refined good producers, and consumers. She has implemented this model in India as part of TERI-Europe, a group whose primary role is to develop and implement collaborative programs between European and Indian partners in energy, environment and sustainable development .

Further Comments by Panelists and Delegates

Eco-Labeling

Delegations from various developing countries volunteered to share their diverse experiences with environmental regulation. One highlighted success of eco-labeling in China and challenged the panelists’ pessimism that labeling could be too costly and discriminatory for developing countries. Ms. Jha responded that while the labeling experience was positive in China, it had failed miserably in Korea, Singapore, India, and Canada.

‘Burden’ of Standard-Setting

Other delegations asked how developing countries will be able to shoulder the burden of creating standards when they barely have the resources to implement those in place. Both panelists emphasized that while there would be some burden, the value of having a stake in the standards set far exceeded the extra work that a leadership position would call for. Both recommended more innovative approaches to capacity building and more consistent funding as a way of coping with the ‘burden’ of standard-making.

Funding Standard-Setting

On the subject of funding, Veena Jha mentioned after the meeting that one model that had been effective in India involved bringing the government in as an investor in the standard setting process. By getting the Indian government to add funds to those accumulated by UNCTAD and international lending sources, the government had a stake in the outcome of the process. Thus, the government took charge of inviting representatives from appropriate industries to a forum to discuss environmental regulation. Out of this forum, the attendees came up with various proposals which they submitted to the government for approval. Because the government felt a responsibility toward the effort, it could use its credibility and clout to get perfect attendance at the forum.

Why should developing countries come up with standards?

Ritu Kumar stressed the importance of involving developing countries in standard setting by citing asymmetry of cost burden and nonsensical standards that result from regulation imposed by developed countries. She insisted that the cost of regulation must be evenly borne along the chain of production. Also, those that know the most about the production of a good should have a say in how the good is to be regulated.

Evaluation of Capacity Building Efforts

In response to a question on how capacity building projects are evaluated, Veena Jha explained that the benchmark for success in her work with UNCTAD was to stimulate dialogue between domestic raw material suppliers, and refined good producers (both multinational corporations and domestic firms). In a more in depth conversation with both Ms. Jha and Ms. Kumar, evaluation came up again as a central issue in their work with the UN. Both claimed to be constantly concerned that their projects are as effective as possible. However, they remarked that the third-party evaluation that the UN employs is not always consistent and more could be done to ensure strict monitoring. They agreed that when they are evaluated frequently, their projects are more likely to stay on track and deliver high quality results.