Session XI- Eco-labeling: Trade Opportunities and Challenges

Organized by the Consumer's Choice Council

The session entitled "Eco-labeling: Trade Opportunities and Challenges", moderated by The Hon. Sergio Marchi, Ambassador and Permanent Representative of Canada to the WTO was organized to inform the debate on eco-labeling and third party certification programs for developing and developed countries.

Panelists and Viewpoints

Raquel Breda dos Santos, Office of International Affairs, Ministry of the Environment, Brazil

Ms. Breda spoke of the Brazilian experience as one of the leading countries in the development of forest certification programs. Brazil adopted an independent voluntary certification of forest management in response to increasing awareness about the importance of forest protection and demand for forest products produced in a sustainable manner. As of June 2003, 30 forests had been certified, totaling 1,280,000 ha, and including one indigenous area. Ms. Breda spoke of two initiatives: the Brazilian Council for Forest Management and CERFLOR (led by INMETRO), which operates within the national standardization system. CERFLOR is focused on forest plantations and its strength lies in its affiliation with the national standards organization and to international organizations, including the International Accreditation Forum. The Brazilian Council initiative, though it is independent of national and international organizations, has a strong emphasis on stakeholders' participation in the debate and a higher level of standards than CERFLOR. Brazil encourages other countries to adopt similar certification systems, however it considers it unacceptable that a certification program be used as a trade barrier.

Hon. Dr. Godfried K. Siaw, Asuogyaman District Assembly, Ghana

Dr. Siaw spoke about the case of Volta River Estates, Limited (VREL), a producer of Fair Trade Bananas in Ghana. VREL took advantage of Fair Trade as a niche market for its banana exports when it was on the verge of bankruptcy in 1996. It produces exports mainly for the EU and it is the only producer of Fair Trade bananas in Africa. VREL was able to survive harsh conditions of the EU quota regime thanks to the guaranteed minimum price for bananas sold as Fair Trade, which takes into account the costs of production. It was certified by Fair-trade Labeling Organizations International (FLO), which enables it to use a Fair Trade label for marketing. VREL adheres to high social standards such as union rights, minimum labor conditions, health and safety codes, and high environmental standards including protection of natural areas, prevention of erosion and water pollution, controlled and reduced use of pesticides and chemical fertilizers and optimization of recycling. Recently, VREL launched a 60-hectare organic banana pilot project, which has been very successful. Because access to credit is one of the biggest problems facing agricultural producers in Ghana, VREL is grateful for funding it received from Agrofair and the Dutch government for this project. For further information see a case study on this project by the Natural Resources and Ethical Trading Programme, University of Greenwich's Natural Resources Institute .

Jorge Larson Guerra, Biologist, National University of Mexico

Mr. Larson Guerra spoke about "labels that tell stories," focusing on the importance of in situ conservation of biodiversity through sustainable rural development, which can be achieved with the help of eco-labeling. Larson emphasized that minimum multilateral standards are necessary to simplify the labeling process. Without the information and education provided by common standards, Larson believes it will be mayhem for everyone involved, including regulators, verifiers, producers and consumers. The application of the principles of basic trademark law to eco-labels can help shape the debate: an eco-label should identify the producer, inform and not deceive the consumer.

There is much debate on the validity of first-party regulation (or self-regulation) by the producer itself to promote positive environmental aspects of its products compared to third-party regulation by an independent body. Larson thinks that self-regulation is an important and viable option in developing countries; he cited examples of scotch whiskey and bottled water, where companies make the effort to build a reputation based on quality. His research has found a correlation between the quality of a product, the amount of information on a label and the consumer's willingness to pay. Though many in developing countries see eco-labeling as a non-technical barrier to trade because it is often linked to environmental agreements, it can actually help promote trade because labeling can offer a means of marketing a particular competitive advantage. We have seen the rise of mandatory basic labeling in India, Brazil, Mexico and Central Europe, and recently there has been a great deal of expansion in the use of geographical indicators in eco-labeling. Law enforcement of mandatory eco-labeling should be a priority in developing countries to ensure that claims made by labels are legitimate and credible.

Chad Dobson, Director, Consumers Choice Council (USA)

Mr. Dobson said that many consumers in the US make their purchasing decisions in about 5 seconds, and most don't read labels carefully. In order for a label to change purchasing patterns, it must be easy to read, clear and give a good reason for changing the status quo. Then, on behalf of Prof. Xia Qing, Director of the Secretariat of China's Certification Committee for Environmental Product Labeling, he discussed the development of China's environmental labeling program that had two specific goals: to enhance public awareness of environmental issues and encourage public participation, and to promote market competitiveness of Chinese production in green products. The Chinese program is based on Germany's Blue Angel program, and Japan's Eco-Mark Program. China's priorities include: compliance with international environmental agreements, renewable and recyclable products, regional environmental quality, quality of life, human health protection and enhancing resource efficiency. Since its accession into the WTO, China has been working towards standardization on environmental labeling. China does not believe that environmental labeling should be compulsory because environmental protection can be achieved through voluntary labeling, market regulation and economic means. The debate on the issue of labeling for process and production methods (PPMs) remains open.

Further Comments by Panelists and Delegates

During the question period, a representative from Canada raised the issue of how to establish common standards. A member of the International Standards Organization reminded the audience that the WTO specifically states that ISO standards should be applied wherever possible.

In response to questions about the implications for developing countries, Ms. Breda responded that there is a growing awareness of environmental factors that is fueling increased demand in developing countries for environmentally friendly products. She emphasized that specificities should be developed locally by each country. Dr. Siaw added that the export markets in the EU created the demand for organic and export-quality bananas (which have different characteristics from bananas produced for local markets).

Ambassador Marchi posed the question of who are the "consumers" or "constituencies" that advocates of eco-labeling should be targeting, considering that it may be regulators (supply side) or it may be raising awareness among consumers to make purchasing decisions based on information on eco-labels (demand side).