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Environment Summary

Concern for the environment is built into the mandate of the World Trade Organization, though there is disagreement about the nature of this commitment. In the Agreement Establishing the World Trade Organization, members unanimously recognized that trade policy should be used to raise standards of living, ensure full employment and economic growth, and seek 'the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development.'

The WTO's environmental mandate has become the subject of intense debate due to disagreement about the impact of international trade rules on the environment. Some argue that the World Trade Organization's strict trade rules have contributed to a general decline in global environmental health, while others counter that trade liberalization can play an important role in the sustainable management of natural resources.

One of the most contentious sources of disagreement is over how environmental agreements or measures should be treated for trade purposes. Several high-profile cases concerning import bans based on environmental reasons have been struck down by the WTO. Advocates for trade liberalization argue that such decisions are justified, that environmental concerns should be controlled through measures other than trade such as eco-labelling. Developing countries are concerned about some sectors where environmental concerns are mere pretexts for protectionism. Environmentalists, for their part, are concerned that the WTO has not done enough to incorporate environmental protection into its mandate.

Committee on Trade and Environment

Work on trade and environment at the WTO takes place in the Committee on Trade and Environment (CTE), which is responsible for covering the intersection of the environment services, goods and intellectual property. Paragraph 31 of the Doha Ministerial Declaration instructed the CTE to focus particular attention on market access for developing nations, intellectual property, and labeling. [1]The WTO allows exceptions from its rules for environmental concerns provided that these policies are implemented without discrimination and must not be a disguised restriction on international trade. [2]

WTO decisions on trade and the environment have the potential to come into conflict with non-WTO international environmental agreements or multilateral environmental agreements (MEAs). [3] Thus far no action affecting trade and taken under an international environmental agreement has been challenged in the GATT-WTO system. [4] The CTE believes that work through these MEAs can be a more effective way of dealing with environmental issues than the WTO dispute settlement mechanism. [5] However, disagreements may arise between WTO members who are not all party to the same MEA.

Committee on Trade and Environment Special Sessions

Paragraph 31 of the Doha Ministerial Declaration called for negotiations to define the relationship between WTO rules and trade obligations of MEAs, a procedure for regular exchange of information between MEAs and the WTO, and liberalization of trade in environmental goods and services. [6] These three issues are being addressed by special sessions of the CTE. In April 2004, the special session of the CTE considered an EC submission calling for close cooperation between MEAs and the WTO and proposing that the two should be recognized as equal bodies of international law. [7] Little progress was made on this issue because many countries, and developing countries in particular, felt that the question was beyond the mandate of the CTE.

This special session also continued a discussion of a proposal originally submitted in July 2003 by the United States calling for tariff reductions on two lists of environmental goods: a core list of goods that are universally agreed-upon as environmental and a complementary list of proposed environmental goods. Much of the debate is centered on the definition of 'environmental goods' which are generally understood to be goods or services that are beneficial for the environment or provide environmental protection; some examples are air-pollution control, recycling, incineration, and measuring and monitoring equipment. [8] Brazil, Mexico and Malaysia and China felt that the lists reflected a bias towards goods exported by developed countries, and other developing countries asked for additional special and differential treatment to be included in the proposal. [9]

Developing countries and environmental regulations

Developing countries often have trouble implementing regulations devised by developed countries because the standards are too strict, change too quickly, and are not always clearly supported by scientific evidence. The general cost of implementation is also a major barrier. Enforcement of these standards is feeble among developing countries because they are short of funding, have inadequate infrastructure and lack a stake in the process because they are standard-takers instead of standard-makers. For environmental regulation to be fair and effective, developing countries must stake a claim in the standard-setting process. Developing countries can secure aid come from developed countries via capacity building and technical assistance, and they can use innovative ways to secure funding for standard setting from actors who have a stake in the outcome of regulations. [10] The additional burden of standard setting would be far outweighed by the benefits from shaping future WTO environmental regulation that takes into account the needs and concerns of developing countries.

Last updated May 2004

[1] Paragraph 31
[2] Frequently asked questions on trade and environment
[3] New issues: the environment
[4] New issues: the environment
[5] New issues: the environment
[6] BRIDGES Weekly Trade News Digest, ICTSD, 22 July 2004.
[7] BRIDGES Weekly Trade News Digest, ICTSD, 22 July 2004.
[8] Environmental Goods: A comparison of the APEC and OECD lists, OECD, 29 April 2003.
[9] BRIDGES Weekly Trade News Diges, ICTSD, 22 July 2004.
[10] WTO Public Symposium 2003: Session II- Environmental Regulation, GTN.