RESTRICTEDWORLD TRADE
ORGANIZATIONWT/CTE/M/26
30 March 2001
(01-1941)
Committee on Trade and Environment
REPORT OF THE MEETING HELD ON 13-14 FEBRUARY 2001
Note by the Secretariat
1. The Committee on Trade and Environment (CTE) met on 13-14 February 2001 under the
Chairship of Ambassador Yolande Biké.  The agenda in WTO/AIR/1474 was adopted.
Schedule of meetings
2. The CTE will hold an Information Session with Multilateral Environmental Agreements at its
meeting on 27-28 June 2001.  It was agreed to invite the Secretariats of the Convention on
International Trade in Endangered Species of Wild Flora and Fauna, the Basel Convention onTransboundary Movements of Hazardous Wastes and Their Disposal, the Montreal Protocol on
Substances that Deplete the Ozone Layer, the C onvention on Biological Diversity, the UN Framework
Convention on Climate Change, and UNEP Chemicals (on the PIC and POPs Conventions).  The
Chair noted that, due to the keen interest in these Sessions, it might be necessary to extend the June
meeting by half a day in order to allow sufficient time for discussion.
3. In view of the preparations for the 4
th WTO Ministerial Conference in Qatar, it was agreed to
change the date of the final meeting this year to 3-4 October.
4. An updated list of documents circulated in the CTE is contained in WT/CTE/INF/3.
Observer status for intergovernmental organizations
5. Pending discussion in the General Council on observer status for intergovernmental
organizations, it was agreed to postpone discussion of the requests from OPEC, the League of Arab
States, and the Gulf Organization for Industrial Consulting.
Item 7: The issue of exports of domestically prohibited goods
6. The representative of Egypt said the importance of the UN Consolidated List of Products
Whose Consumption and/or Sale have been Bann ed, Withdrawn, Severely Restricted or Not
Approved by Governments (the "Consolidated List"), set out in WT/CTE/W/161, was its wide-
ranging coverage of pharmaceuticals, agricultural, industrial and consumer products as well as theregulatory actions of Governments.  At previous meetings, Egypt had raised a concern of developing
countries, mainly in Sub-Saharan Africa, regarding soap and cosmetics containing mercury
manufactured in Europe and marketed in developing countries.  WT/CTE/W/161 showed that
mercury and cosmetics were classified separately in the UN List.  The UN List enabled countries to
match listed products with imports and helped national authorities to take actions ranging from thereview of licensing provisions, laws and regulations to the enforcement of new laws and regulations.
All concerned countries recognized the importance of the UN List and its annual issuance.  Egypt thus
urged the UN Secretariat to prepare the seventh issue of the List in due time, in view of its importance
to developing countries faced with DPG imports, which endangered public health and lives.  Egypt
supported posting the UN List on the Internet for easier access by regulatory bodies.  Capacitybuilding and technical assistance were essential in order to enhance the ability of developing andWT/CTE/M/26
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least-developed countries to deal with DPGs.  Egypt welcomed the copies of the UN List made
available in the WTO and requested the Secretariat to coordinate with the UN to make available
issues one to four and the forthcoming issue.
7. The representative of India supported Egypt.  India observed that the UN List did not specify
whether products were being exported despite domestic restrictions, which was an important lacuna.
The UN Secretariat had cautioned that decisions taken by a few Governments on a specific product
might not be representative, particularly in view of differing risk-benefit considerations.  Thus, it
would depend on the circumstances in a given society whether a product were harmful.  A developing
importing country needed to know the conditions of domestic use of a product so that it could conduct
independent risk-benefit analysis based on its domestic circumstances.  Applying the principle of
common but differentiated responsibility, developed countries should inform the importing country of
their risk-benefit analysis and their regulations of DPG exports.
8. The representative of Argentina highlighted the importance of WT/CTE/W/161 to the DPG
debate, a topic which related to Bovine Spongiform Encephalopathy (BSE).  In 1988, the
United Kingdom had prohibited the use of bonemeal for stockbreeding.  In 1996, the United Kingdom
prohibited the export of bonemeal.  Thus, the UK had exported bonemeal world-wide for eight years.
The World Health Organization had stated recently that this practice might have spread BSE tocountries where no risk existed before.  Fortunately, this was not the case of Argentina, which had
never used bonemeal for stockbreeding.  The CTE should analyse this case in which a product had
been prohibited domestically, but had been exported with huge consequences.  The WTO contribution
should include an analysis of this issue, and what should be done to avoid its repetition.
9. The representative of Canada felt that the reference to the Cartagena Protocol on Biosafety in
WT/CTE/W/161 was misleading.  The implication that the Protocol dealt with dangerous products
was mistaken.  Of the existing MEAs, several dealt with products that were deemed to be dangerous
at the national level;  for example, the prior info rmed consent (PIC) procedure for certain hazardous
chemicals in international trade, i.e. the Rotterda m Convention, listed substances that were prohibited
or whose uses were severely restricted.  Risk analysis at the national and international levels hadshown that those substances were extremely noxious and that their uses should be discouraged.  These
substances had been placed by consensus on the PIC list.  The draft international legally-binding
instrument on persistent organic pollutants (P OPs), the draft Stockholm Convention, dealt with
substances, industrial chemicals and pesticides deemed to have negative environmental impacts.
However, in the case of the Cartagena Protocol, the situation was different.  Products developed
through biotechnology were not deemed, a priori, to be environmentally hazardous;  they were new
products which for that reason had yet to be assessed for their environmental impacts.  There was nopresumption that biotechnology produc ts were dangerous.  In Canada, these products were subject to
risk assessment, as with any new product, to determine whether they presented an environmental risk.
10. The representative of the European Communities felt it would be useful for the Secretariat to
facilitate wider knowledge of the UN List, which could also be made available on the Internet.  The
EC suggested that the Secretariat liaise with the UN to signal that the CTE had discussed this List andfelt it was useful and should be more broadly available.  This was an example of where Members
could contribute to coherence between intergovernmental organizations.
11. The Chair recalled the importance of this topic, particularly for developing and least-
developed countries and suggested inviting the UN Secretariat to the 27-28 June 2001 meeting to
provide further information on the UN Consolidated Li st.  The Chair also drew attention to the first
Continental Conference for Africa on prevention and environmentally sound management of
hazardous wastes, Morocco, 8-12 January 2001, the report of which had been circulated to
CTE Members by the Basel Convention Secretariat.  Recalling the paper submitted by Bangladesh,
WT/CTE/W/141, the Chair said Members should con tinue to provide information on their national
experience with DPGs.WT/CTE/M/26
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12. The CTE agreed with the proposal to invite the UN Secretariat for the next CTE meeting.
Item 8: The relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property 
Rights
11. The representative of Peru presented Peru's national experience paper on traditional
knowledge and access to genetic resources in WT/CTE/W/176.  Given its geographical setting, Peru
was among the ten countries with the most extensive biodiversity in the world, also known as "mega-
diverse countries", because of their range of eco-systems, species, genetic resources and indigenous
cultures with valuable knowledge.  To preserve this wealth of genetic resources, there had been a joint
effort between the Government, production sectors a nd civil society to implement policies designed to
improve the quality of life of the Peruvian people and to use the vast genetic resources in a sustainablemanner.  The process of integrating environmental considerations in the policy-making process at the
national, regional and international levels began through the promulgation of legislation and
participation in international bodies.  Recently, Peru had adopted a new approach to the adoption and
sustainable use of biodiversity, genetic resources and traditional knowledge and had emphasized the
global approach to this subject.  Peru's national strategy elaborated in 1994 had the objective:  (a) toconserve the biodiversity of the essential eco-systems, species, genes and ecological processes on
which the survival of species depends;  (b) to promote fair and equitable sharing of the benefits
arising out of the use of biodiversity;  (c) to  promote education, the building of human and
institutional resource capacity, information exchange, scientific research, and technology transfer;
and (d) to promote Peru's economic development based on sustainable use of biodiversity andparticipation by the private sector.
12. The main legal tools that had been established in Peru in the 1990's were listed in
WT/CTE/W/176, including the Environmental Code;  the National Strategy and the Law on the
Conservation and Sustainable Use of Biological Diversity;  the Law on National Protected Areas;  and
the proposed Protection Regime for the Collective Knowledge of Indigenous Peoples and Regulationof Access to Genetic Resources.  With respect to the latter, Peru had established a sui generis  system
recognizing the right of indigenous peoples to deci de how their traditional knowledge should be used
through prior informed consent.  A fund for indigenous peoples had been established from products
developed on the basis of traditional knowledge.  The Regulation on Access to Genetic Resources set
out several requirements and provided for the establishment of a fund for the conservation and
development of genetic resources.
13. Peru's paper also referred to regional inst ruments, such as the Andean Community Common
System for Access to Genetic Resources.  Efforts at the international level were important, such as
Agenda 21  and the Convention on Biological Diversity (CBD), which should be accompanied by an
international regulatory framework to give effect to the intellectual property rights of local and
indigenous communities and to regulate access to genetic resource.  International recognition of
traditional knowledge would give those possessing it the legal possibility of asserting their rightsoutside their own countries, and would result in economic benefits.  It would also curtail
misappropriation and unauthorised exploitation of knowledge and provide alternatives at the
international level to take account of the protection of new plant varieties in Article 27.3(b) of the
TRIPs Agreement, as well as the obligation in the CBD to respect, preserve and maintain the
knowledge, innovations and practices of indigenous and local communities.  Peru requested that itspaper, WT/CTE/W/176, be circulated in the TRIPs Council.
14. The representative of Brazil presented Brazil's paper, WT/CTE/W/186, also circulated in the
TRIPS Council, on the checklist of issues under the review of Article 27.3(b) of the
TRIPs Agreement.  On "technical issues relating to patent protection under Article 27.3(b)", Brazil
felt Article 27.3(b) should preserve Members' flexibility to exclude patentability of plants andanimals, but considered that clarification was necessary to establish a precise definition of terms such
as "micro-organism" in order to determine the scope of patentability of Article 27.3(b), as the use ofWT/CTE/M/26
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that term had different meanings, according to whether it was used in a scientific, legal or market
context.  On "technical issues relating to sui generis  protection of plant varieties", Article 27.3(b)
should also preserve Members' flexibility to decide on the most effective sui generis systems for plant
variety protection.  International instruments, su ch as UPOV (1978 and 1991), FAO and the CBD, as
well as national systems, were useful references for sui generis plant variety protection systems.
15. Brazil ascribed particular importance to "the relationship to conservation and sustainable use
of genetic material."  Brazil  felt the TRIPs Agreement and the CBD should be mutually supportive
and should ensure sustainable use of genetic resources.  To avoid conflicts in the implementation of
both Agreements, Brazil proposed to amend Article 27.3(b) to include the requirements of:  (a) the
identification of the source of the genetic material;  (b) the related traditional knowledge used to
obtain that material;  (c) evidence of fair and equitable benefit sharing;  and (d) evidence of prior
informed consent from the Government or the in digenous community for exploitation of the subject
matter of the patent.  An interpretative note to Article 27.3(b) should also be made to clarify that
discoveries or naturally occurring material were excluded from patentability.
16. On "the relationship with the concepts of traditional knowledge and farmers' rights," Brazil
said protection of traditional knowledge should be  seen from two complementary perspectives.  On
the one hand, the review of Article 27.3(b) should ensure that traditional knowledge was not patentedwithout due regard to the principles of prior info rmed consent and fair and equitable benefit sharing.
On the other, Brazil was open to discuss adequate multilateral ways of protecting traditional
knowledge.  In view of its link  with development, the review of Article 27.3(b) was an adequate
occasion to discuss sui generis protection systems.  Thus, synergies between the TRIPs Council and
other fora, such as the CBD, WIPO, FAO and UNCTAD were necessary.  The CTE had a role to playin discussions on traditional knowledge to ensure clarity between TRIPs and CBD provisions.  At the
24-25 October CTE meeting, several Members had pointed out certain inconsistencies in the position
of others with respect to the lack of desire to clarify GATT Article XX concerning the WTO-MEA
relationship, while desiring to clarify TRIPs Article 27.3(b) concerning the TRIPs-CBD relationship.
Brazil noted that this position was understandable in that GATT dealt with trade in goods, whereas theTRIPs Agreement dealt with intellectual property rights.  Moreover, Article 27.3(b) was under review
and amendments may be necessary to clarify certain provisions.
17. Brazil appreciated Peru's contribution and felt that Peru's experience with biodiversity and
traditional knowledge protection was a model for others.  The involvement of all sectors of society,
including local communities in economic activities was important.  In establishing the proposed
legislation, the concept of equitable benefit sharing and the protection of traditional knowledge had
been fully taken into account by Peru.  Brazil was also pursuing programmes to combine sustainabledevelopment, traditional knowledge protection and equitable benefit sharing.  In June 2000,
legislation had entered into force to regulate access to genetic resources, protection of and access to
associated traditional knowledge, benefit sharing, access to, and transfer of technology for its
conservation and use.  Brazil encouraged others to present their national experience.
18. The observer of the World Intellectual Property Organization made a statement, circulated in
WT/CTE/W/182-IP/C/W/242, on its activities on intellectual property, biodiversity and traditional
knowledge and the new WIPO Intergovernmental Committee on Intellectual Property and Genetic
Resources, Traditional Knowledge and Folklore, the first meeting of which was on 30 April-3 May.
19. The representative of Thailand welcomed Peru's contribution, which illustrated its efforts to
implement a national strategy for protecting genetic resources, while taking into consideration socio-
economic and environmental factors.  This systematic approach was an example for countries with
biodiversity and genetic resources, which was the case for many developing countries. Peru's effort
proved that a sui generis system was effective and could promote intellectual property rights and
sustainable genetic resource use, as well as protect traditional knowledge and ensure equitable benefit
sharing.  Thailand supported a harmonized system for protection of intellectual property thatWT/CTE/M/26
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conformed to the CBD's objectives, and was committed to equitable access to genetic resources and
benefit sharing, including farmers' rights, as recognized by the ongoing negotiations in the
International Undertaking on Plant Genetic Resources (IUPGR).  This would ensure benefits were
shared by all parties, and that genetic resources were used in a sustainable manner.
20. In 1999, Thailand had enacted the Traditional Medical Promotion and Protection Act and the
Plant Varieties Protection Act, which complied with effective international plant protection systems
and equitable benefit sharing, including protection of farmers' rights and indigenous knowledge.
Thailand's new Constitution, enacted in 1997, supported the rights of traditional communities to
conserve their customs, local knowledge, arts and culture.  These communities also had the legal right
to participate in the management, preservation and exploitation of natural resources.  While the
TRIPs Agreement did not recognize the concept of fair and equitable benefit sharing for holders of
traditional knowledge and genetic resources, Article 27.3(b) should remain unchanged.  States wouldthus retain the sovereign right to protect new plant varieties through patents, effective sui generis
systems, or a combination of the two.  To ensure all parties benefited, Thailand supported
Article 27.3(b) that required new plant varieties to conserve traditional knowledge, the innovations
and practices of indigenous and local communities, as in the CBD, and farmers' rights, as in the
IUPGR.
21. The representative of the European Communities said this was an Item on which debate had
been richest recently.  This was an interdisciplinary issue where the need for progress in the WTO
was clear.  The EC welcomed Peru and Brazil's papers, and noted Peru's inclusive legislative process.
The EC clarified that it was open to tackling all the TRIPs-related issues of interest to developing
countries, including those in the TRIPs review and any others Members may wish to see in a broadnegotiations.  The EC was a demandeur  for some issues, particularly geographical indications, an
issue not alien to environmental management.  As Brazil, the EC saw a link between this issue and
MEAs.  The EC welcomed the recognition of the TRIPs-CBD linkage, and supported understanding
why some MEAs had an impact on trade and how to make that linkage positive.
22. The EC agreed with Brazil that the fact that many Members were just beginning to consider
the need for national legislation for traditional know ledge did not mean that international action was
not yet needed.  International availability of data on traditional knowledge was essential and could be
the most cost-effective area for immediate action.  Cases had arisen concerning patents that had been
given and then, after becoming controversial, rescinded, such as turmeric and neem.  These patents
had been granted due to the absence in patent offices of data on prior traditional knowledge in other
countries.  Although favouring international action,  the EC noted that individual countries were free
to develop protection systems and establish appropriate mechanisms.  The EC supported this process,including national legislation to control access to genetic resources.  The EC raised the point of
proportionality and the international impact of legislation, about which the CTE had expertise.  It was
important that when drafting legislation, laws not be cumbersome.  The EC recalled that the CBD set
out that access should be available on mutually agreed terms.  That meant an end to biopiracy, but
also that laws should strike a balance between sustainable exploitation of traditional knowledge andgenetic resources.  The EC thus had difficulties with Brazil's proposed conditions on granting patents.
For example, it was difficult to provide evidence of fair and equitable division of assets or prior
informed consent when countries did not have a legislative framework to enable companies and
holders of traditional knowledge or genetic resources to certify that this was the case.  Thus,
international action was timely, which was an issue for the agenda of a broad negotiating process.
23. The representative of India said this issue was important for India.  India referred to the
communication from the CBD asking the WTO to acknowledge the relevant provisions of the
TRIPs Agreement.  Noting previous references to coherence between intergovernmental
organizations, India appealed to Members to ac cept the request from the CBD, an organization to
which most WTO Members were signatories, for observer status in the TRIPs Council.WT/CTE/M/26
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24. India welcomed Peru's national biodiversity legislation, which included the principle of fair
and equitable benefit sharing arising out of the use of traditional knowledge and genetic resources, as
well as prior informed consent.  The TRIPs- CBD relationship should be explored further.
International recognition of traditional knowledge would give those possessing it the legal possibility
of asserting their rights outside their own jurisdiction or country.  In the majority of circumstances,the holders of traditional knowledge did not have the means to benefit from it, nor protect it from
misappropriation.  The linkages between trade and environment which should be furthered to
harmonize the CBD and the TRIPs Agreement included:  (i) that there should be international
recognition of sui generis  systems developed at the national level on access and benefit sharing for
biological resources and traditional knowledge, including a requirement that patent applications
disclose the source of origin of biological material or traditional knowledge used in an invention;  and
(ii) that environmentally sound technologies and pr oducts should be made available to developing
countries on fair and most favourable terms by operationalizing the relevant TRIPs provisions.
25. In the TRIPs Council, India had supported Brazil's paper, WT/CTE/W/186, which raised
important issues for developing countries.  Brazil was correct in noting that the review of
Article 27.3(b) of the TRIPs Agreement raised several issues with respect to obligations undertaken
by Members in other agreements, such as the CBD.  Brazil was also correct in raising the linkbetween Article 27.3(b) and development issues, which should be explored further in the CTE and the
TRIPs Council.  India agreed that Article 27.3(b) s hould preserve Members' flexibility to exclude
patentability of plants and animals, and that there should be a more precise definition of terms such as
"micro-organisms" to determine the scope of patentability in Article 27.3(b).  India also agreed that
Article 27.3(b) provided for sui generis  systems of protection enabling countries to devise systems
that best suited their needs.  India supported retaining this flexibility;  there should not be
prejudgement of what sui generis  should be in terms of its relationship with UPOV.  Brazil was
correct in referring to need to implement the TRIPs Agreement and the CBD in a mutually supportive
way.  India thus supported Brazil's proposal to am end Article 27.3(b) to require the identification of:
(i) the source of genetic materials;  (ii) the related traditional knowledge used to obtain that material;(iii) evidence of fair and equitable benefit sharing;  and (iv) evidence of prior informed consent from
the Government or indigenous communities.  India hoped that developed countries would respond to
these concerns.  India felt WIPO had contributed usefully to the discussions.  India would be
concerned if it were to be suggested that WIPO was the only forum in which to discuss biodiversity
and traditional knowledge issues.  Given that these issues impinged on important aspects of the
TRIPs Agreement, this discussion should be undertaken first and foremost in the WTO.
26. The representative of Japan welcomed Peru's contribution, which provided a useful input,
particularly when discussing the way the CBD should be implemented.  The fact that Peru's proposed
legislation for the Protection of Collective Knowledge of Indigenous People had three main
objectives:  (a) to ensure that the Peruvian State and indigenous peoples received fair compensation
for the use and commercial exploitation of their resources;  (b) to promote national and foreign private
investment, as well as scientific research;  and (c) to prevent the irrational exploitation of resources.These objectives were a guiding principle to be applied in devising ways to protect biodiversity and
sustainable use of genetic resources.  However, Japan had concerns about Peru's regime.  Peru noted
that a fund had been created for the development of indigenous peoples, which would receive 0.5 per
cent of the sales resulting from the marketing of products developed on the basis of traditional
knowledge. According to the proposed regulation, among the minimum conditions for access projectswas a commitment to pay the national authority 5 per cent of the value of the transaction agreed
between the resource provider and the applicant.  Japan felt it was controversial to oblige applicants to
pay royalties and impose a rigid rule on benefit sharing when traditional knowledge had not yet been
well defined as an intellectual property right.  It would be necessary to discuss this issue further.
27. Article 22 of the CBD stipulated that the provisions of the CBD should not affect the rights
and obligations of any parties deriving from existing agreements.  If legislation to implement the CBD
were inconsistent with other international agreements, or unnecessarily hampered access to propertyWT/CTE/M/26
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rights by other parties, Japan doubted that it would benefit that country, and supposed that it might not
contribute to conservation and sustainable use of biodiversity.  The CBD should constructively
discuss this issue. Peru expressed the view that an international regulatory framework and
implementation measures were needed to give effect to the CBD's principles.  Japan felt attention
should be paid to discussions in those international organizations with the relevant expertise.  InWIPO, the Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional
Knowledge and Folklore had been established and its examination would start in May 2001.  In the
FAO, discussion was ongoing on whether the Inte rnational Undertaking on Plant Genetic Resources
was in harmony with the CBD. On Peru's legislation, Japan noted that economic benefits accruing
from genetic resources varied depending on the commercial efforts applied;  hence, uniform rules
should not be imposed in order to ensure balanced benefit sharing between resource providers and
users.  Rather, this issue should be dealt with case-by-case according to the principle of mutualapproval.  Rigid rules on benefit sharing might hamper access to genetic resources.
28. The representative of Norway welcomed Peru's initiatives to ensure Peruvian cultural and
biological diversity.  Norway was aware of the vast importance of Peru's biodiversity, and was
encouraged to learn about the Andean regional cooperation for environmental protection and
sustainable resource development.  WIPO had also  contributed to the CTE discussions.  Norway
agreed with India that this discussion demonstrated the WTO-MEA linkage, as well as the relevance
of discussion on the WTO-MEA relationship.  Practical discussion under this Item demonstrated the
impact of an MEA on a WTO Agreement and vice versa , which helped to clarify the WTO-MEA
relationship.  Norway considered the TRIPs Agreement and the CBD should be mutually supportive.
Members should be aware of the principles unde r both sets of treaties when implementing both
agreements.  Article 16.5 of the CBD contained obligations for Parties to ensure compatibility
between the CBD and other agreements, including the TRIPs Agreement.  The TRIPs Agreement
provided minimum standard provisions.  Whilst the CBD and the TRIPs Agreement had different
areas of application, the implementation of one had a bearing on the other.  Both instruments should
be interpreted in a sufficiently flexible manner fo r Members to enact non-conflicting measures for the
implementation of both.  Biotechnology was one of the most promising and important areas of
research and development.  An important part of  this new area was patentability of plants and
animals, micro-organisms and microbiological processes.  These issues raised fundamental ethical,
social and environmental questions pertaining to sustainable development, access to and transfer of
resources, and benefit sharing.  Norway recognized developing country concerns on this subject.
29. According to the CBD, States had sovereign ri ghts over their genetic resources, and the
authority to demand prior informed consent before transferring resources.  The TRIPs Agreement didnot make prior informed consent a prerequisite for achieving patent protection;  it did not touch on
this subject.  During a new round of WTO negotiat ions, Norway would support the introduction in the
TRIPs Agreement of an obligation to disclose the origin of genetic resources when applying for a
patent.  Norway supported incentives to create national regulations to protect sovereign rights over
domestic resources.  However, countries should prov ide sufficient flexibility to permit access to plant
genetic resources for food and agricultural products.  The ongoing FAO negotiations should allow for
an open exchange of these resources in order to  provide for food security.  Technical assistance
should be provided to help developing countries with the drafting, if requested.
30. Biodiversity conservation and sustainable development was the CBD's primary objective.  It
was claimed that developing countries would not give priority to conservation or development if
patenting of their genetic resources were carried out by developed country industries.  To reduce the
potential for this to occur, there should be fair and equitable sharing of the results of patents.  Benefit
sharing systems must be established, taking account of the interests of providers and users of genetic
resources.  Benefit sharing was not specifically recognized in the TRIPs Agreement.  A benefit
sharing system should be part of the national le gislation implementing the CBD, which should also
include a provision on prior informed consent.  Traditional knowledge was valuable for developing
countries.  Patents on genetic resources may limit the use of the material and knowledge involved.WT/CTE/M/26
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The TRIPs Agreement was silent here.  Members were free to legislate, for example on farmers'
rights, to protect traditional knowledge.  Norway supported work to secure developing country rights
in this area.  The TRIPs Agreement recognized sui generis  systems for plant variety protection.  A
national sui generis  system could include farmers' rights and traditional knowledge on plants.
31. The representative of Cuba welcomed Peru a nd Brazil's submissions.  Cuba supported work
to apply Agenda 21  and the CBD, as well as the establishment of a framework regime in this area as
recommended by the UNCTAD Expert Meeting.  Cuba supported prior informed consent procedures,
such as those set out in Peru's paper.  Cuba also supported the conclusions in paragraphs 42-48 of
Brazil's paper.  Cuba supported giving observer status to the CBD in the TRIPs Council.
32. The representative of Chile thanked Peru for its paper.  One of the characteristics of
traditional knowledge and genetic resources was that they did not recognize political boundaries and
were developed in areas in which more than one country might be involved.  Chile asked how Peru'sproposal foresaw possible cross-boundary conflict s between indigenous peoples;  what was the
mechanism for decision-making by indigenous communities to agree on the exploitation of a given
resource;  what was the duration of traditional knowledge protection;  and, what type of tax system
was suggested with respect to the distribution of royalty benefits?
33. The representative of Colombia thanked Peru, Brazil and WIPO for their contributions.
Colombia was the second largest biodiverse country and, like Peru, felt protection of traditional
knowledge and access to genetic resources was esse ntial.  In the Andean Community, laws had been
established to ensure protection of traditional knowledge.  On applying Agenda 21  and the CBD,
Colombia felt an international regulatory framework and implementing measures should be
established to ensure protection of traditional knowledge.
34. The representative of Guatemala welcomed Pe ru's submission.  Guatemala asked for Chile's
questions and Peru's responses to be circulated.  Guatemala welcomed Brazil's contribution, on which
it would comment at a later stage.  Guatemala inquired as to WIPO technical assistance in this area.
35. The representative of Venezuela welcomed Peru, Brazil and WIPO's contributions.
Venezuela had also been developing laws to apply the Andean legislation on protection of traditional
knowledge, and had encountered difficulties with its domestic implementation.  Venezuela
highlighted the importance for developing countries of ensuring protection of traditional knowledge
and the right to regulate access to biodiversity.  The Andean Community met regularly to follow up
on implementation and to ensure that legislation would not be an access barrier to genetic resources.
In seeking to protect these resources, countries should be flexible, taking account of difficulties that
might be encountered, such as with the private sector, research institutes and indigenous peoples.
This should not, however, be an obstacle to Andean countries' right to protect their genetic resources.
Venezuela agreed with Brazil on the need to modify Article 27.3(b) to take into account traditional
knowledge and access to genetic resources.  Venezuela welcomed Norway's recognition of the
importance of traditional knowledge, and that international provisions must be flexible.
36. The representative of the United States thanked Peru for its informative paper, which was
helpful to delegations in understanding Peru’s perspective on the protection and sustainable use of
biodiversity, genetic resources and traditional knowledge.  The United States recommended that
discussions concerning the TRIPS Agreement and the CBD take place in the TRIPS Council, the body
with IPR expertise.  In view of the questions raised by some delegations as to whether non-traditional
intellectual property issues raised in the contex t of the CBD were relevant to the TRIPS Council
reviews, the United States welcomed the creation of the WIPO Intergovernmental Committee onIntellectual Property and Genetic Resources, Traditional Knowledge and Folklore.  The United States
also welcomed WIPO’s paper and recommended that substantive discussions on the issues originally
raised in the CBD take place in the WIPO Intergovernmental Committee.  The United States thanked
Brazil for its paper, on which the United States would comment at a later stage.  The United StatesWT/CTE/M/26
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noted its belief that the TRIPS Agreement and the CBD, to the extent that they are related, are
compatible.
37. The representative of Costa Rica welcomed Peru and Brazil’s papers.  Peru's experience
paralleled that in Costa Rica.  Costa Rica would comment on Brazil’s paper at a later stage.
38. The representative of the Côte d'Ivoire thanked Peru and Brazil for their papers, although
these papers were not yet available in French.  In Côte d'Ivoire, issues of natural resources were
intimately related to traditional knowledge.  India's comments on the difficulties met by developing
countries in protecting traditional knowledge were welcome.
39. The representative of Switzerland welcomed Peru and Brazil’s papers.  Switzerland asked
how Peru intended to implement the proposed regime on access to genetic resources and protection of
traditional knowledge.  Switzerland also asked Pe ru to explain the "intangible components" in the
Andean system for access to genetic resources, and how this new tool fitted with theTRIPs Agreement.  Switzerland welcomed WIPO's statement and the WIPO Intergovernmental
Committee established to clarify the role of IPRs and genetic resources, traditional knowledge and
folklore.  As there was no point in dealing with  traditional knowledge twice, Switzerland suggested
tackling this issue only in the WIPO In tergovernmental Committee, not in the WTO.
40. The representative of Kenya welcomed the statements of Brazil, Peru and India, which
supported the African Group's proposal in the TRIPs Council.  Kenya underscored the CBD
objectives of conservation, sustainable use, and benefit sharing of genetic resources in relation to the
TRIPs Agreement.  In the context of food security, both the CBD and the TRIPs Agreement had a role
to play.  Both agreements, in addition to serving as control mechanisms, should ensure sustainable
management of genetic resources.  Kenya looked forward to work in UNCTAD and WIPO.
41. The representative of India expressed his delegation's appreciation for Norway's comments
and hoped other developed countries would show similar flexibility.
42. The representative of Peru thanked Members for their comments and questions on his
delegation's paper.  Peru felt it was necessary to improve the legal instruments for the protection of
traditional knowledge and access to genetic resources.  Peru's experience was not only a nationalexperience, but a regional one.  As noted by the EC, better information was needed on traditional
knowledge in order to protect it.  Peru's legislative proposal in paragraphs 15-18 of WT/CTE/W/176
was being commented on in the domestic context.  Peru took note of Japan's concern regarding the
Fund for the Development of Indigenous Peoples.  Peru also took note of Chile's concerns on
resolving potential disputes across boundaries in connection with indigenous peoples’ property rights,
as well as on the duration of the proposed protection.  Peru noted that the proposed tax system was
sui generis, recognizing indigenous peoples' ownership and associated rights over their traditional
knowledge, as well as their right to decide how it should be used.  This was related to a voluntary
register and the possibility of direct licenses and contracts with indigenous peoples.  The Andean
Community was preparing a regional biodiversity strategy, which would touch on this aspect.  Peru
would continue to consult on the proposed legislation at the national, regional and international levels.
43. The representative of Brazil said WIPO had a relevant role to promote discussions on the
protection of traditional knowledge and the relationship between intellectual property, genetic
resources and folklore.  As such, Brazil welcomed the creation of the WIPO Intergovernmental
Committee.  Brazil will participate actively in that forum, especially to add momentum to synergies
between the WTO and WIPO in these areas.  Br azil endorsed India's comment that WIPO was one,
but not the only forum to discuss traditional knowledge.  UNCTAD was another organization thatcould contribute to the debate.  The WTO was at the core of this discussion, particularly given the
review of Article 27.3(b), as well as the comprehensive CTE discussions.WT/CTE/M/26
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44. Brazil said that Norway has shown an open minded position in the CTE and the TRIPs
Council.  Brazil encouraged Norway to circulate in the CTE the paper it had presented on the review
of Article 27.3(b) in the TRIPs Council.  The EC had made interesting remarks on the need for
international action on genetic resources and traditional knowledge.  Brazil appreciated the
constructive approach of the EC.  Brazil was not against biotechnology, but against biopiracy.  As acountry rich in genetic resources, it made sense that Brazil was interested in encouraging
biotechnology and benefitting from it.  Hence, the relevance of benefit sharing.  Brazil had suggested
in the TRIPs Council that an outcome of the revi ew of Article 27.3(b) should be its amendment to
include, for example, the requirement of the identi fication of the genetic material when filing for a
patent, the associated traditional knowledge, evid ence of benefit sharing schemes, and prior informed
consent.  Agreeing with the EC that national le gislation should not be cumbersome, Brazil said its
proposed requirements would not be more cumberso me than existing patent filing requirements.
Brazil’s proposed requirements already constituted the practice of bilateral contracts between
companies and traditional communities.  These requirements should be included in Article 27.3(b) to
ensure they could be easily enforced and to prov ide a predictable environment for access to genetic
resources and traditional knowledge protection.  These requirements would be important to promote
biotechnology in a balanced and sustainable manner.  Brazil did not fully understand Japan's concernon Peru’s requirement to ensure that patent hold ers should pay royalties to traditional communities in
Peru.  Since it was not far fetched to pay royalties to patent holders, traditional communities should
benefit from their significant role in providing access to their genetic material.
45. The observer of WIPO said that WIPO had an extensive technical assistance programme,
including assistance, advice and information on intellectual property and traditional knowledge and
genetic resources, including Article 27.3(b).  WIPO also provided legal advice on draft laws,
including intellectual property laws to protect traditional knowledge, or sui generis  laws.  WIPO
invited Governments to request assistance in this respect.
46. The observer of UNCTAD reported on the UNCTAD Expert Meeting on Systems and
National Experiences for Protecting Traditional Knowledge (TK), Innovations and Practices in
Geneva, 30 October to 1 November 2000, with participation from Governments, intergovernmental
organizations, indigenous and local communities,  NGOs, industry a nd academic institutions.  Over
200 experts from 80 countries had participated.  The experts had addressed the objectives of, and
means of achieving traditional knowledge protection systems and means of achieving those ends,
including prior informed consent, access and bene fit sharing, strengthening customary law, IPR
instruments, sui generis  systems, documenting traditional knowledge;  as well as measures to
encourage TK-based innovations and the development of TK-derived products.  The Expert Meetinghad been planned in consultation with WIPO, CBD, FAO, WHO, WTO and others.  The outcome had
been circulated in the TRIPs Council in IP/C/W/230, and was available at
www.unctad.org/trade_env/index.htm.
47. The CTE took note of the letter from the Convention on Biological Diversity informing the
relevant WTO bodies of Decision V/26 taken by the CBD Parties in May 2000.  This Decision invited
the WTO "to acknowledge the relevant provisions of the CBD, and to take into account the fact that
the provisions of the TRIPS Agreement and the CBD are inter-related and to further explore this inter-
relationship."  It was decided that the Secretariat would respond by sending the most recent
Secretariat papers.WT/CTE/M/26
Page 11
MARKET ACCESS
Item 2: the relationship between environmental policies relevant to trade and environmental
measures with significant trade effects and the provisions of the multilateral trading system
48. The observer of UNEP said UNEP had been developing methodologies for the environmental
assessment of trade liberalization since 1998.  UNEP had commissioned country projects to assess the
environmental effects of trade policies, and a group of international experts were helping UNEP to
draft a Reference Manual for the Integrated Assessment of Trade-Related Policies .  The term
"integrated" referred to the linkages between the environmental, economic and social effects of trade-
related policies and required an examination of the linkages between these different effects.  A second
round of country projects was under way involving Argentina (fisheries), China (cotton), Ecuador
(bananas), Nigeria (cocoa and rubber), Senegal (fisheries) and Tanzania (forestry).  Experience gainedfrom these assessments was being used in the development of the Reference Manual , which would
provide options for countries to select assessm ent methodologies, according to their needs and
conditions.  Experts from the national institutions conducting the projects were also members of the
group of international experts set up to review the Reference Manual .
49. Among the lessons learnt from these assessment projects were:  (i) assessment methodologies
would always have to be adapted to local conditions, needs and priorities;  (ii) there was no substitute
for "learning by doing", both for capacity building and development of the assessment tool;  (iii) an
open, transparent and informed multistakeholder assessment process, allowing for sharing of
perspectives, expertise and experience, was crucial to accurate assessment and for acceptance of
policies in response to assessment;  and (iv) capacity building was the key to strengtheningdeveloping countries' ability to use the assessment tool to maximize the net development benefits of
trade policies.  It was clear from the country projects that there was no lack of commitment to
environmental protection in those countries, but that what was needed was strengthened capacity to
conduct assessments and develop effective policy packages.  The country projects and Reference
Manual  would be discussed at a Ministerial Meeting in Berlin on 20-22 March, co-hosted by the
German Federal Environment Ministry and UNEP.  This meeting would address the work of UNEP
and others on assessment and explore how to build WTO-MEA synergies.  Environment and trade
Ministers would examine how to enhance policy coherence between trade, environment and
development at the national and international levels.  UNEP introduced the research institutions in
Argentina and Senegal, which it had commissioned to assess to undertake case-study assessments.
50. The Research Institute from Argentina, Centro  de Estudios Ambientales (CEDEA), presented
the UNEP case study on the environmental impacts of trade liberalization in the Argentine fisheries
sector, considering environmental and socio-economic impacts.  The UNEP Global Environmental
Outlook 2000  classified the exploitation of Argentine fisheries as the fastest growing in the world, an
effect of trade liberalization.  The application of structural adjustment policies in Argentina in the
1990s had had strong impacts on the economic structure of the country.  The positive impacts caused
by structural changes (such as price stabilization and fixed foreign exchange rates) had createdconditions that encouraged growth in the fisheries sector.  This growth had been accompanied by the
opening up of trade for Argentine fisheries products in foreign markets and diminishing resources in
oceans in developed countries’ jurisdiction.  Thus, there had been an increase in fisheries production
and exports;  improvement and growth of fishing fleets and technological innovation;  and transfer of
fleet overcapacity from some countries to Argentina, which had benefitted from subsidies.Exploitation of fisheries resources had been minor in Argentina until the economy had been opened,
following which exploitation had taken place at unprecedented rates, with fisheries representing one
of Argentina's most dynamic economic sectors and the world's fastest growing fishery.  Value added
had grown steadily, with exports rising by 478 per cent from 1985 to 1995.  Exports had even
surpassed, for some years, trade in traditional agricultural products.WT/CTE/M/26
Page 12
51. A strong international dimension was present in current fisheries patterns, represented not
only by growth in trade and reliance on foreign ma rkets by the harvesting sector (with 10 per cent of
fishery products consumed domestically and 90 per cent  exported), but also due to the globalization of
capital.  Following a side agreement with the EU, fishing capacity had greatly increased from 1990 to
1995.  Increasing and unregulated trade had impacted negatively on resources, such as degradation offisheries biomass, nearing collapse for some spec ies;  variations in fishing effort;  ecological
degradation;  increased costs for fisheries regulati on and control;  increased fiscal costs and subsidies;
increased corruption;  non-diversification of catches (about three species made up ninety per cent of
the catch);  and fleet overcapitalization.  Socio-economic impacts were increasing unemployment and
a worsening of labour conditions.  Social conflict had been another negative impact that had risen in
periods of fisheries scarcities.  A quantifiable economic cost-benefit analysis indicated that the policy
situation of the 1990s (i.e uncontrolled fishing and lack of adequate economic instruments) hadimplied a net direct cost of about US$500 million for the most exploited species.  If a similar analysis
were used for a hypothetical situation of maximum su stainable yield, this policy could have had a net
benefit of about US$5.1 billion.  Economic instruments for sustainable management can be used to
benefit from fisheries trade, while maintaining natural capital, developing the industry and generating
employment, such as changes in the sector’s productive and economic structure (adding value to theresource);  re-dimensioning fishing fleets;  and implementing tradeable quotas.  Other management
measures included technological adaptations in fishing gear, overhauling command and control
mechanisms, and effectively applying sustainable management.
52.  The Research Institute from Senegal, E NDA Tiers Monde, presen ted the UNEP case study
on the environmental impact of trade liberalization in  the fisheries sector in Senegal.  The Senegalese
economy had depended heavily on phosphates and groundnuts.  Since the drought years and the
resulting agricultural crisis, fishing had become the primary economic sector.  As an essential
component of rural development, fishing was a multipurpose activity strongly integrated in the
Senegalese socio-economy.  Fishing played a strategic role in ensuring sustained economic growth by
contributing to a reduction in the balance of payments deficit (accounting for one-third of the value ofexports) and an increase in employment (fisheries employed about 15 per cent of the work force).
Small-scale processing and fish trade played an important role in the economy, especially in terms of
food security, with 75 per cent of animal protein consumption supplied by fish.  The objectives of the
project were to analyse the factors that had favoured the rapid growth of fisheries exports, to assess
the socio-economic and environmental impacts of export strategies and to develop a framework for
sustainable fisheries management.  In order to protect fish stocks and optimise their value, Senegal
had established fisheries legislation in 1976, 1987 and 1998 to define usage rights and standards.
53. Measures had been taken to encourage export-led growth as part of structural adjustment.
External demand had increased as a result of a 50 per cent devaluation of the Senegalese currency due
to structural adjustment.  The fisheries agreements since the beginning of the 1980's, particularly the
EU Agreement, also had played a role in increa sing exports two-fold from 1980 to 1990.  The new
Lomé Agreement would phase out Africa, Caribbean and Pacific (ACP) country trade advantages.Also, the process of tariff reduction in the WTO was expected to further erode ACP country trade
preferences.  The Lomé Convention contained fisheries provisions, and provided technical and
financial assistance to improve knowledge of fisheries in ACP countries to increase the contribution
of fishing to development through increasing catches, processing and exports.  EU support
encouraged sustainable fisheries management and promoted development of small-scale fishing.  TheSenegalese fisheries sector had faced serious disequilibria in resource exploitation and market supply,
as well as a shift in the catch of individual species.  Coastal demersal (deep-lying fish) stocks with
high market value, and mainly exported, were over-exploited and risked facing local market supply
shortages.  There also had been a reduction in pelagic (surface fish) stocks, mainly consumed locally,
which threatened food security.  In view of the many purposes served by the Senegalese fishery,solutions should take into account socio-economic and environmental factors.  Policies to enhance
fisheries sustainability included resource management systems;  making general support measures to
the sector more specific;  enforcing fisheries regulations and quotas;  and developing port and storageWT/CTE/M/26
Page 13
infrastructures to add value to exports.  This st udy would be reviewed and policy conclusions drawn
at the national level, including participation from fishing communities.
54. The representative of Japan stated his delegation's concern about the possible negative effects
of trade liberalization on fisheries sustainability.  The Argentine and Senegalese case studies showed
that, under certain circumstances, trade promotion could have a negative impact, compromising foodsecurity and fisheries sustainability.  Fisheries depletion in the Argentine case had been caused by
subsidies and trade promotion.  The Senegalese case illustrated the negative impact of trade on
fisheries sustainability.  Trade promotion should be considered with fisheries management in mind.
Care should be taken to liberalization trade in the absence of sustainable fisheries management
regimes as it could provide economic incentives to increase fishing effort.
55. The representative of India asked for clarification of the cost-benefit analysis undertaken in
the Argentine study.
56. The Research Institute from Argentina said th at, although it was not possible to determine
whether subsidies were the cause or effect of mismanagement, they could exacerbate the situation and
lead to overfishing.  Subsidies were one of the integral policy failures, along with command and
control problems.  At a practical level, it was difficult to differentiate where one policy instrument
stopped and the other started.  The figure of US$500 million, refered to in the study, was the result ofa standard cost-benefit analysis.  The biomass of hake in Argentina was on the verge of collapse and
would require time to recover, if appropriate management systems were in place.
57. The Research Institute of Senegal said the purpose of the case studies was to enable countries
to place trade policies in a comprehensive framework and to increase understanding of their impacts.
Various factors had led to the current situation in the Senegalese fisheries.  It was not so much whatwas exported, but how a country exported.  During the process of trade liberalization, consideration
should be given to putting in place a framework in which export-led growth could be sustained.
58. The representative of Canada presented Canada's paper, WT/CTE/W/183, which outlined a
process for conducting strategic environmental assessm ents of trade negotiations in keeping with the
1999 Federal Government Cabinet Directive on the Environmental Assessment of Policy Plans andProgramme Proposals.  The overarching goal of these assessments was to integrate environmental
considerations in decision-making from the earliest stages, on an ongoing basis.  Environmental
assessments contributed to more open decision-making with the Federal Government by engaging
representatives from other levels of Government, the public, the private sector and NGOs;  they
addressed public concerns by demonstrating how environmental factors were being considered during
trade negotiations.  Environmental assessments could also improve policy coherence at the national
level by providing decision-makers with the mean s to integrate environmental considerations into
trade policy at an early stage.  These assessments were largely focused on the Canadian environment.
Ideally environmental issues should be examined in  a global context.  However, in view of limited
data, sovereignty issues and practicalities, the focus would be on assessing the likely environmental
impacts of trade negotiations in relation to Canada.  Although the proposed framework called for
national assessment, transboundary, regional and global environmental impacts would be consideredif they impacted directly on the Canadian environment.  Canada urged Members undertaking
environmental assessments to exchange informa tion on these assessments in the CTE, including
criteria and indicators used and possible environmental impacts.  The Secretariat note on
environmental assessments, WT/CTE/W/171, could be updated as the situation developed.
59. The representative of the European Communities presented his delegation's paper on the
precautionary principle, WT/CTE/W/181-G/SPS/GEN/225-G/TBT/W/154, which contained the
Resolution adopted at the European Council meeting in Nice in December 2000.  This was a response
by member States to the Commission's Communicat ion on how to implement precaution in an optimal
manner, which had been circulated in the CTE and the SPS and TBT Committees.  This documentWT/CTE/M/26
Page 14
laid out principles on the way to approach precaution in implementing legislation within the EC.  The
Council had adopted a science-based approach, whereby science must be involved in risk assessment
and in the definition of risk management.  There was a commitment to a transparent process at all
stages, including the earliest possible consultation of European and other interested parties, as well as
civil society.  Proportionality was emphasized taking into account the short and long term risks.  TheCouncil undertook that measures should not be appl ied so as to result in arbitrary or unwarranted
discrimination and that least-trade restrictive measures should be selected where possible.  This was
an important aspect of implementing precaution.  The EC was also committed to consistency and  to
coherence from one decision to another and to a cost-benefit examination of action and inaction.
Decisions in accordance with precaution should be reviewed in the light of developments in scientific
knowledge.  Hence, recognition of the need for co ntinued monitoring and research.  These principles,
which represented a new set of obligations for the legislatures and executive in the EC, were alsoworth studying in the CTE, as they were a strong statement of how precaution and open trade
principles could be mutually supportive.  With ever-wider application of precaution, it was in the
collective interest to reflect on those principles and to consider whether there was room in the WTO
for greater clarity on a shared set of principles for on applying precaution.  The Resolution set out the
principles that the EC was committed to applying.  The EC hoped this would reassure its tradingpartners that precaution was not an excuse for protectionism, and that it would guide dialogue towards
the application of similar open trade principles where precaution was needed.
60. The EC also drew attention to an informal  discussion paper that addressed the issue of
sustainable trade, The Non-Trade Impacts of Trade Policy – Asking Questions, Seeking Sustainable
Development , a contribution from the Commission's Directorate-General for Trade to internal debate
within the EC, about the link between issues on th e agenda of the WTO and sustainable development
including the agenda of the World Summit for Sustainable Development in 2002, available at
www.cc.cec.8082/com/trade/index_en.htm.  The EC was in terested in reactions to this paper, which
addressed cross-cutting issues relevant to CTE work.
61. The representative of the Czech Republic welcomed UNEP activities and cooperation with
the WTO on environmental assessment, as well as the Ministerial Meeting co-hosted by UNEP and
the German Federal Ministry of the Environment in Berlin on 20-22 March 2001.  The
Czech Republic presented a recent study initiated by the Ministry of Environment in 1999 on Impacts
of Trade Policy and International Trade Agreements  on Environment, and on the Contrary Impacts of
Environmental Policy and Environmental Agreements on International Trade .  This study was
intended to serve as preparation for a new round of multilateral trade negotiations at the 3rd WTO
Ministerial Conference in December 1999.  The study included environmental assessment of tradeliberalization in agriculture, energy and environmental services, and used the OECD Methodologies
for Environmental and Trade Reviews  (1994), and Methodologies for Assessing the Environmental
Effects of Trade Liberalization Agreements  (2000):  it was available at www.env.cz.
62. The agricultural sector had been selected as a priority for assessment, given that agriculture
was part of the built-in WTO negotiations, and of importance for the Czech Republic's preparation foraccession to the European Union.  The agro-environmental situation in the Czech Republic had been
analysed.  Since 1989, the ratio of gross agricultural output in terms of GDP had decreased
from 7 to 2 per cent by 1997.  Through restitution, privatization and transformations, a transition from
collective to private ownership had occurred.  Agricultural support also had decreased significantly
from an average of 54 per cent in 1989-1991 to only 17 per cent in 1999.  The main environmentaleffects of agriculture were:  consumption of fertilisers, pesticides, water and its quality.  The ratio of
agricultural greenhouse gases (GHGs) in total emissions, which was approximately 3.4 per cent in
1993 had decreased by 30 per cent.  The Czech landscape had been shaped by agricultural and forest
activities for about 1,000 years.  Collectivization of farms in the 1950's with destruction of balks
between the fields of small farmers and the subsequent sharp increase in the size of fields ofagricultural cooperatives had had a negative impact on biodiversity, so that currently 45 per cent of
the higher plant species was endangered, 35 per cent of mammal species, 57 per cent  of bird species,WT/CTE/M/26
Page 15
28 per cent of fish species and 100 per cent of reptile species.  Genetically modified (GM) organisms
and GM crops had also been a controversial issue in the Czech Republic.   Due to measures taken in
1991 on cattle feed, there had not been any problems with bovine meat and BSE.
63. Agricultural covered 54 per cent of land, of which 72 per cent was arable land.
Contamination of land had its origin in industrial activities (extraction of raw materials, thermalpower stations, metallurgy, etc.).  The main source of risk from these substances was their high
content in the air (90 per cent pollution of lead, 70 per cent of mercury and 60 per cent of cadmium).
Fertilisers were a source of 32 per cent of pollution by cadmium and of 40 per cent of chromium.
There were various kinds of supports for agriculture;  for example the Ministry of the Environment
provided positive subsidies in the form of soft loans for environment protection programmes, and the
Ministry for Regional Development had programmes for village restoration.
64. The energy sector had been selected given its environmental impacts.  During the socialist era
it was the most polluting sector in the Czech economy.  Electricity production was mainly based on
brown coal combustion in power stations.  Since then, efforts had been dedicated to the equipment of
power stations with modern combustion and cleani ng techniques and de-sulphurization units.  Thus,
from 1985 to 1999, emissions of SO
2 had decreased by 86 per cent, emissions of NO x by more than
80 per cent, and suspended particulate matter by 92 per cent.  The ratio of nuclear power in electricityproduction would increase after completion of the Temelin plant from a current 20 to 40 per cent.
Thus, the Czech Republic would have no problems meeting its Kyoto Protocol commitment to
decrease GHGs by 8 per cent in 2010, compared with 1990 levels.  On 1 January 2001, new acts on
energy and management of energy had come into for ce, increasing energy efficiency and decreasing a
relatively high energy demand per production unit.  The Czech Government had also endorsed a StateProgramme on Energy Conservation and Use of Renewable Sources in 2001.
65. The Czech Republic supported the liberalization of trade in environmental services.  Four
types of methods for providing environmental services were specified in the GATS.  At an early
stage, the Czech Republic had recognized the importance of pollution clean-up and environmental
protection.  Ecological NGOs had already been politic ally active during the soci alist era.  With the
restructuring of Czech industry, there had been a growth of smaller enterprises focused on
environmental goods and services.  The current WTO Services Classification List was inadequate for
"environmental services".  Due to absence of statistics on environmental services the study used, for
an approximation of the volume, information, such  as on "Environment Market", and environmental
services in waste management.  The Czech Republic exported environmental services in production
know-how.  Approximately CZK1 billion had been obtained from the export of environmental goods
and services to 21 countries.  The main objective of Czech providers was to penetrate the markets ofEuropean post-communist countries, Russia and, eventually China, Indonesia and Thailand.  With the
implementation of environmental accounting, the Czech Republic would have more precise data on
this sector.  It was hoped to improve the classification of environmental goods and services, perhaps
based on the proposals of the EC, the US and others in the GATS Council.
66. The representative of Australia said the precautionary principle had been raised in the
SPS Committee and the CTE.  When considering this subject, it was necessary to realize that the
precautionary principle was related to a range of broader policies and approaches underpinned by the
need to be cautious in situations of incomplete or  preliminary scientific information.  Australia raised
this broader idea of caution in the hope of bringing clarity to a difficult and abstract debate.  This
debate was not just about a monolithic principle, but about a generic issue of caution in situationswhere scientific evidence was inconclusive and significant risks were involved.  On the
European Council Resolution, Australia noted that it contained references to, and recognition of,
WTO rules that took into account the precautionary principle, and agreed that these rules could
accommodate reasonable use of precaution.  The Resolution referred to the need to avoid disguised,
arbitrary and unwarranted trade discrimination.  Australia agreed, and stressed that these conceptswere reminiscent of WTO language and were crucial to WTO predictability and transparency.  ThisWT/CTE/M/26
Page 16
view on the precautionary principle and WTO rules also held for other decision-making based more
broadly on caution, which also should be subject to the caveats on discrimination.  The Resolution
contained references to science, demonstrating the importance of incorporating scientific information
in decision-making where uncertainty was significant enough to raise concerns.  Australia supported
this, science must underpin decision-making to the maximum extent possible.  Australia agreed thatother factors would be involved, included economic ones.
67. Several examples of situations existed where science had raised concerns albeit without
consensus on serious public policy issues, and this had not been properly integrated in decision-
making, with consequent serious harm.  Proper handling of science was crucial.  Australia also refered
to the EC Resolution's mention of "case-by-case" and the specific features of a situation where
precaution may be relevant, a key element in the debate where the focus had often been on the generic
idea of the precautionary principle and its status in international law.  The key issue facinggovernments was the application of precaution, which would vary according to circumstances.  This
focus had to be primary, given the increasing complexity of human technology and its environmental
interactions.  Given these complexities, Australia agreed that the WTO be involved in helping to
explain issues related to its expertise.  WTO disciplines not only provided scope for precautionary
decision-making where trade and environment intersected, but placed limits on possibleover-extension or abuse of precaution.  This balance should be maintained.  Australia queried the
reference in paragraph 25 of the Resolution to a possible need for the WTO to "more fully" account
for precaution.  Australia also asked how this Resolution would feed into other areas of EC decision-
making, where uncertainty in scientific evidence relevant to public policy gave cause for concern.
68. The representative of Brazil asked whether Canada would consider the environmental impact
assessment within its own borders or elsewhere.  On the EC Resolution on the precautionary
principle, Brazil felt that in the light of scientific uncertainty, countries took measures based on
precaution.  In Brazil, the environmental impact of genetically modified organisms was being
analysed, involving several sectors of society.  Given that science was lacking, this was a good
example of the application of precaution.  Thus, pr ecaution was not to be disregarded, although Brazil
would question whether precaution could be considered to be a principle.  Brazil saw no need to
further integrate precaution in the WTO.  Indeed, th e preamble to the EC Resolution affirmed that the
WTO contained provisions that took precaution into account, such as Article XX, Article 5.7 of the
SPS Agreement, and, implicitly, Article 2.2 of the TBT Agreement.  Brazil questioned the need to
further integrate this principle in the WTO or to establish guidelines to clarify the applications of
precaution.  On the proposal to better integrate precaution, the EC had not provided a definition of the
principle.  Although Brazil did not disagree with the EC on resorting to minority opinions, what werethese opinions and when would they be taken into account?  Brazil questioned who would set the
desired level of protection set out in the EC Re solution, and on which scientific knowledge would a
review of precautionary actions be based?  There had not been sufficient clarification of issues in the
EC Resolution for acceptance of the EC’s proposed clarification.
69. The representative of Norway welcomed the EC communication on the precautionary
principle.  In general, Norway shared the EC's view on the precautionary principle, but wished to
make comments on its application.  Practical adaptation of the precautionary principle should be
developed in relation to specific international instruments and according to sectoral specific risk
assessment.  Differences in the description of this principle could be seen in international agreements,
such as the Biodiversity Convention, the Cartagena Protocol on Biosafety, as well as in Article 5.7 ofthe SPS Agreement and Codex Alimentarius work.  This principle had to be adjusted to the context in
which it was applied.  Norway agreed with the EC that the application of the precautionary principle
should be seen as part of risk management, not as a component of scientific risk assessment.  As the
EC pointed out, the precautionary principle should not be confused with the element of caution that
scientists applied in their assessment of scientific data.  Decision on what constituted an acceptablelevel of risk, as well as choices relating to measures, were ultimately political and should depend on
the sector in question and on which international rules, standards and guidelines were applicable.WT/CTE/M/26
Page 17
70. The principles proposed for application applied to all risk management measures, not just
those based on precaution.  Since the basic premise was a situation of scientific uncertainty, it
followed that there were corresponding uncertainties with regard to the effects/benefits  of any
measure.  The proposed guidelines could be seen as one of several relevant elements as to how
decision makers should handle political decisions in the light of the inherent uncertainty connectedwith the use of the precautionary principle.  On proportionality, Norway agreed with the EC that
precautionary-based measures must be proportional to the desired level of protection against a risk.
Long term and short term risks, as well as risks associated with cumulative effects, should be taken
into account.  However, uncertainties might also apply to the link between cause and effect.  Facing
such uncertainties, responsible Governments should be  allowed to "err on the safe side".  On cost-
benefit analysis, comparison of the costs and benefits was needed to ensure cost-effectiveness and to
avoid unnecessary trade restrictions.  Analysis should include all costs and benefits, not letting theunderlying uncertainty bias the analysis in favour of excluding factors to which it might be difficult to
assign economic values.  However, a complete  cost-benefit analysis of action or non-action  might  not
be possible, due to uncertainties that would necessarily be present in a case where the precautionary
principle was to be applied, methodological pr oblems in calculating costs and benefits, etc.
71. Norway welcomed Canada's paper, which shed light on issues that Norway was currently
addressing in undertaking environmental assessment.  Norway attached importance to environmental
and sustainability assessment and to the information contained in WT/CTE/W/171, which could be
updated to include analysis from other countries and organizations.  Following an inter-ministerial
process, in 1999 it had been decided to undertake environmental assessments of trade liberalization in
areas of importance to Norway.  The reviews would assess environmental implications of further trade
liberalization and developments of the multilateral trading system in transport services (road, rail, air
and shipping), and fish and fish products.  Regulatory issues were also being addressed.  Studies on
agriculture and environment were also being compiled.  It had been agreed that these sectoral studies
should apply the 1994 OECD methodology for en vironmental reviews of trade policies and
agreements and the OECD Environmental Indicators.  Thereby, environmental impacts would beassessed via scale, structural, and product effects.  It had also been agreed that the purpose of these
ex ante  reviews was to improve the basis for decisions related to WTO negotiations and to contribute
to integrating environmental concerns  into the multilateral trade system.  Environmental impacts
should be made visible to increase support for taking into account environmental considerations in
trade negotiations.  Norway's Bureau of Statistics  had also carried out an ex post  macro study to assess
the effects on air pollution and waste generation of trade liberalization in the 1990s.
72. Sectoral Ministries were responsible for sectoral assessments, and the Ministries of
Environment and Foreign Affairs for the macro study, with external research institutes carrying out
the work.  The sectoral reviews and the macro study would be subject to broad consultations with
business, trade and environmental organizations to ensure an open discussion contributing to national
transparency.  As environmental reviews were relatively new, Norway's research institutes had faced
challenges in conducting these studies.  Valuable work had been done by international organizations,such as the OECD, UNEP and the World Bank, as well as NGOs, such as WWF, and national
research institutes.  Norway supported efforts to  develop a methodologies for environmental reviews.
73. The representative of India said Brazil had raised important questions on the EC Resolution
on the precautionary principle.  The principle of precaution in the Rio Declaration  was linked to
scientific assessment, but also to irreversible envi ronmental damage and cost-benefit analysis.  Thus,
India's understanding of the precautionary principle was that there had to be a set of carefully defined
circumstances, in which there was no other option as the environmental damage was irreversible.
India was interested in exploring the aspect of irreversibility.
74. On environmental assessments, India emphasized that such assessments was undertaken at the
national level.  The premise should be to encourage trade liberalization through international policy,in order to reap the economic dividends that would help developing countries devote more financialWT/CTE/M/26
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resources to environmental protection.  India agreed that where it was established that trade
liberalization could result in transboundary environmental impacts, these impacts should be addressed
through multilateral cooperation.  India said the weight attached to the factors that were relevant for
environmental impact assessment might vary between countries. Local environmental and
developmental priorities would also vary between countries, as well as the environmental absorptive
capacity and the economic relevance of specific sectors.  Thus, India recognized there were
limitations to developing a "one size fits all" multilateral approach to assessments.  Nevertheless,
India appreciated Members sharing their national experiences with environmental assessment.
75. The United States noted that the substance of the European Council resolution on the
“precautionary principle” was similar to that in the communications submitted previously by the EC
to the CTE and to other WTO committees.  The United  Stated noted that it shares some of the EU’s
views on precaution.  Both the United States and the EU strive for the highest level of consumerprotection and exercise precaution in their efforts to achieve this goal.  The United States agreed on
the need for non-discriminatory, science-based application of precaution to protect people and the
environment.  The United States agreed on the need to ensure that decision-making on precaution was
transparent and inclusive.  The United States also agreed that precaution is reflected in WTO rules -
the SPS Agreement.  However, like Brazil, the United States did not agree that there was a“precautionary principle” recognized as customary international law.  Like Brazil, the United States
was puzzled by the Council resolution’s failure to define the “precautionary principle” and by the
resolution’s proposal for criteria on the application of this non-defined “principle.”  The United States
noted that it has learned through its extensive  use of precaution, dating back to 1906 with respect to
food safety, that the use of precaution is context-specific – that it is used in different ways in differentcontexts, e.g., food safety, environment, and fisheries.  Thus, the United States felt it was impossible
to conclude that a so-called “precautionary principle” exists in customary international law.
76. The US thanked Canada and the Secretariat for their papers on environmental assessment.
The US looked forward to other countries presenting their national experiences, and welcomed
discussion on this important area.
77. The representative of Mexico said it was important to have national experiences available on
environmental assessment.  Mexico inquired as to what would happen if the results of environmental
assessments were negative.  For example, if Canada found that the domestic environmental impact of
tariff reductions would be negative, would Canada no longer negotiate this tariff reduction?  If a
country made an environmental assessment on a product that had been negotiated in the
Uruguay Round, and determined that trade concessions had had a negative impact on the
environment, would Canada be willing to accept the withdrawal of concessions granted by thatcountry at a time when the environmental impacts ha d not been known.  Justification for withdrawing
the concessions would be that it had caused environmental harm.  The possibility existed under
Article XXVIII for financial compensation in this respect.  Mexico had concerns about this aspect.
78. The EC had affirmed that the precautionary principle was already WTO-compatible, but
required clarification.  Mexico asked what should be clarified and why;  and whether existing WTO
provisions would prevent the EC from applying the precautionary principle?  This principle applied
when there was insufficient scientific basis for a decision, which was problematic as decisions could
be taken for protectionist purposes.  A Member was free to apply the precautionary principle under
WTO provisions and, if this resulted in a violation of the rights of other Members, appropriate
financial compensation should be paid.
79. The representative of Malaysia said environmental assessment of trade was a complex area
and methodologies were under review, and would differ based on the circumstances in each country.
Canada, Argentina and Senegal's presentations had used different approaches to environmental
assessment;  the UNEP studies in Argentina and Senegal examined various criteria, including
economic criteria, whereas Canada's national experience focused on environmental impact.  NationalWT/CTE/M/26
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assessments would have different criteria and given that circumstances differ in each country, these
reviews were more appropriately undertaken nationally, not multilaterally.  Malaysia welcomed the
sharing of national experiences.
80. Malaysia agreed with Mexico’s comments on the EC Resolution on the precautionary
principle.  The WTO had a clear position on the application of precautionary measures.  The SPS andTBT Agreements supported a science-based approach based on adequate risk analysis, and measures
that were not more trade restrictive than necessary.  While precaution may be recognized as an
international environmental principle, in the trad e context this principle should be integrated in
accordance with trade-related provisions and considerations.  Malaysia agreed that the WTO already
accommodated reasonable use of precaution and that there was no reasonable alternative to a science-
based approach, which would give certainty and predictability to this area of decision making.
81. The representative of Argentina recalled that the assessment of the environmental benefits
resulting from the removal of trade restrictions and distortions fell under Item 6.  As the objective of
the WTO was trade liberalization, Argentina considered that the WTO’s contribution should be the
assessment of the environmental consequences of the existing trade restrictions and distortions. This
assessment should not be carried on the basis of national trade policies, but by analysing sectorial
trade restrictions and distortions, such as agricultural subsidies.  It was necessary to assess theenvironmental effects of existing trade distortions to provide a basis on which to examine possible
impacts of liberalization.  Although national case studies were interesting, Argentina was sceptical as
to the objectivity of these assessments, for it was unlikely that countries would criticize their own
trade policies.  For example, a country would hardly admit that its sugar policy had negative
environmental impacts on specific national habitats or that what it fed its cattle had had a negativeeffect on consumer health.  Nevertheless, environmental assessment would help at the national level.
82. Argentina supported India, Brazil and Mexico with respect to the EC Resolution on the
precautionary principle.  There were elements in Article 5.7 of the SPS Agreement that would permit
the application of the precautionary measures, yet one did not appear in the EC Resolution, namely
the provisional nature of measures based on insufficient scientific evidence.  Measures based onprecaution should be put in place provisionally, for a reasonable period of time, and be reviewed
based on science.  Scientific evidence was the ability to link two events without ambiguity;  science
might find an unambiguous cause and effect relationship, but it could not affirm that two events were
never related.  For science to prove the non-existence of such a relationship, a time limit for scientific
research should be established.  This was why the provisional nature of precautionary measures was
crucial, where scientific evidence was lacking.  Argentina would continue to study the EC Resolution,
but it did not agree that a principle of precaution existed in international law.
83. The representative of Japan made preliminary comments on the EC Resolution on the
precautionary principle.  The Resolution did not clearly specify that trade restrictive measures had to
be WTO consistent.  Since the conception of the precautionary principle, the definition and the
relationship between risk assessment and management were not clear.  Discussions by experts in
UNEP and CODEX should be monitored to determin e how best to handle this issue in the WTO.
84. The representative of Switzerland said application of the precautionary principle was
important to Swiss policymaking.  Switzerland's federal law relating to environmental protection
explicitly required in Article 1.2 the adoption of a precautionary approach.  The EC's analysis of the
precautionary principle and its relationship with the WTO was important, particularly the clear
statement that precaution was relevant for risk management, not for risk assessment.  Theprecautionary principle should not be confused with caution scientists applied in assessing data.
While caution was part of scientific approaches, precaution was relevant only once a scientific
evaluation had been completed and if, at that stage, uncertainty was still attached to the results.  Thus,
a science-based assessment was prerequisite for applying the precautionary principle.  Switzerland
shared the EC’s view that the precautionary principle should never serve to justify protectionism, andWT/CTE/M/26
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that transparency was required in the decision-making process.  The EC Resolution had contributed to
the WTO discussion in terms of responding to misunderstandings of this principle.
85. The representative of Canada said that the Canadian environmental assessment would review
how trade-induced economic change was affecting the national environment.  Canada emphasized that
its approach to these assessments was "learning by doing."  Environmental assessment was a non-binding tool for decision-makers to increase coherence through self assessment.  There would also be
scope for mitigation options outside a trade agreement.  If environmental degradation valued in
economic terms were greater than expected economic benefits of liberalization, there would be a case
to reassess how to proceed, particularly in the long term if the production base were being degraded.
86. Canada viewed precaution as a pervasive element of health and environmental policies.
Canada had a domestic process under way to operationalize the concept and application of precaution,
including guiding principles such as sound science and transparency.
87. The representative of the European Comm unities felt the CTE was progressing in the
discussion on precaution.  Concerns were disappearing as it was realized that countries were using a
precautionary approach in similar ways.  Although the EC was confident that the precautionary
principle would be recognized as part of international law, this was not a problem at this stage.  On
India's comment on whether precaution was only relevant when the consequences were irreversible,the EC felt that if it were necessary to find a monolithic definition, this issue should be addressed.
Irreversibility was set out in the Rio Declaration , but not explicitly in other contexts.  The EC
Resolution addressed the short and long term effects, with irreversibility at one extreme of a
continuum.  The EC gave the example of ozone la yer depletion and the Montreal Protocol, where
countries had taken precautionary action as it was feared that the consequences of inaction might beirreversible.  The shrinking of the ozone hole illustrated that if countries acted soon enough, even the
most egregious environmental damage could be reversed.
88. The distinction between risk identification, assessment and management was complex.  Risk
identification might be if, according to scientific knowledge, A were taken, B might follow, but B was
not a positive outcome.  Risk assessment addr essed the likelihood of B following A. Given the
assessment of this likelihood, risk management dete rmined how to manage the situation so as to
reduce or eliminate the likelihood of B resulting from A.  Precaution did not come into the
identification or assessment of risk.  When managing risk, however, the fact that an assessment would
be less than completely certain had to lead to  the application of the precautionary approach.
Therefore, it was difficult to determine with ultimate certainty the likelihood of B following A.
Minority scientific opinion referred to opinions of scientists in good standing with given expertise.
Political institutions would determine the level of protection through the democratic process, takinginto account the level of risk the society was willing to bear.  The EC agreed that this was a case-by-
case issue, but questioned whether the fact that precaution was applied in that manner meant that it
would not be possible to make general rules.  In many fields, good governance principles or
administrative practices were applied case by case.
89. The EC asked whether Members could subscribe to the principles in paragraphs 7 to 22 of the
European Council Resolution, in WT/CTE/W/181, and whether the invocation of precaution was
acceptable under Article 2.2 of the TBT Agreement?  At this stage, it was important to address these
operational issues.  Clarification of what was meant by precaution was in process.  Reference to
compensation would in effect nullify the concept of precaution only if compensation were paid, as if it
were a departure from a country's WTO rights and obligations.  This proposition was a prioriincompatible with the EC interpretation of the WT O Agreement.  The EC agreed with Argentina that
science could not prove a negative and that science presented less and less certainty.  Even with a
sound scientific basis, ambiguity could not be avoided and provisional measures based on precaution
were needed.  From a trade perspective, there were two objectives in discussing precaution:  to ensure
that a wide ranging approach to precaution did not create unjustified trade obstacles;  and to ensureWT/CTE/M/26
Page 21
the WTO accommodated precaution.  It was necessary to clarify the precautionary principle,
particularly in the European context, where ther e were suspicions that the WTO might undermine this
principle.  Thus, there was a strong political motivation for clarification.  If the responses to the
above-mentioned questions were affirmative, work could be concluded succinctly.
90. The observer of UNCTAD presented an overview of the UNEP-UNCTAD Capacity Building
Task Force on Trade, Environment and Development (CBTF) activities.  The CBTF aimed to help
developing countries and countries with economies in transition to address trade-environment-
development issues at the national level, and to part icipate effectively at the international level.  The
CBTF had been launched in March 2000.  To date, contributions had been received for the first year
of activities from Germany, Norway and the United Kingdom.  Contributions were being sought to
support CBTF activities in 2001.  A call for proposals from Governments and national research
institutions for CBTF activities had been circulated, with over 25 countries responding and 40 projectsproposed.  Evaluation of these proposals had been completed and seven projects were currently under
way, including:  (i) in Indonesia on Economic Instruments for the Management of Natural and
Environmental Resources;  (ii) in Lebanon on Trade Liberalization and the Environment;  (iii) in
E1 Salvador on the Recycling of Wastes;  (iv) on a national basis in Cuba and Vietnam, and on a
regional basis in Africa for African LDCs, delivery of the CBTF TrainForTrade programme on trade,environment and development;  and (v) in Mexico a policy dialogue in March 2001 to discuss
regional perspectives, with additional financing from Canada and the Ford Foundation.  The CBTF
was currently unable to support other projects, but as additional funds were contributed, the scale and
scope of CBTF implementation would increase.  A new CBTF call for proposals had been issued
on 31 January 2001;  information was available at www.unep-unctad.org/cbtf.
Item 3(b): the relationship between the provisions of the multilateral trading system and
requirements for environmental purposes relating to products, including standards
and technical regulations, packaging, labelling and recycling
91. The Chairman of the Nordic Technical Working Group on Fisheries Eco-Labelling Criteria
(Iceland) presented the report of the Working Group to the Nordic Council of Ministers entitled An
Arrangement for the Voluntary Certification of Products of Sustainable Fishing , 21 June 2000
(available http://fisk.norden/fisk/sk/kriterier.pdf).  The Unilever-WWF establishment of the Marine
Stewardship Council in 1996 had promoted discussion of fisheries eco-labelling.  The Nordic Council
of Ministers had felt it important to ensure that fisheries management was the responsibility of
Governments for practical purposes.  Establishing eco-labelling called for a dialogue in which
Governments had an organizing role;  roles in eco-labelling should be separate and carried out byindependent actors.  On the scope of criteria, labelling was voluntary and should not be a condition for
market access;  it must be possible to verify that criteria had been fulfilled.  It had been decided to
focus on harvest sustainability, i.e. how fisheries management avoided overfishing and negative eco-
system effects.  Overfishing was the primary issue in discussions of fisheries eco-labelling in Europe.
Food security, health and quality aspects had not been included in the Working Group's mandate asthey were the prime responsibility of Governments.  The report did not address fish processing and
other land-based processes as these aspects should be uniformly dealt with for all food products.  The
management process was included, from scientific advice to identification of total allowable catch and
governmental controls.  It was felt that criteria should be based on the precautionary approach to
fisheries management, as defined in the FAO Code of Conduct for Responsible Fisheries anddeveloped for the North Atlantic by the Internat ional Commission for the Exploration of the Seas.
92. A first category of fisheries eco-labelling criteria was related to fisheries management.  As set
out in the FAO, there should be a fisheries management plan in place based on regular scientific
advice on the state of fish stocks and recommendations for sustainable exploitation, including pre-
agreement management measures that came into force immediately when precautionary referencepoints had been reached.  A variety of manage ment measures could be considered, including
reductions in TAC, reductions in effort, and fleet reductions.  Efficient monitoring and controlWT/CTE/M/26
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mechanisms must be in place.  Another category of effects related to the eco-system, based on the
FAO Code of Conduct.  To avoid negative eco-system  effects, the following criteria were proposed:
not to use destructive fishing practices, such as explosives;  to minimize discards of fish, crustaceans
and molluscs by using best available technology;  and putting in place eco-system plans.
93. Eco-labelling provided fishing communities with  market incentives to support responsible
fisheries management;  eco-labelling was an opportunity to market exports at a higher price.
Governments had an incentive to operate fisheries management practices and improve markets for
fisheries products.  The FAO had an incentive to work on a precautionary approach to fisheries
management.  The Nordic eco-labelling proposal was appropriate for the Northern Atlantic and was
not necessarily applicable to other regions.  Thus, comparable work should be done separately in other
regions.  The Nordic Working Group considered it important to have an open international discussion
on this issue, to avoid a private monopoly on eco-labe lling, proliferation of labels leading to consumer
confusion, as well as avoiding technical trade barriers, and expensive verification processes.
94. The representative of Iceland said, on behalf of  the Nordic Council of Ministers, that his
delegation presented the report and proposal of the Nordic Technical Working Group on Fisheries
Eco-Labelling Criteria as a way forward for fisheries eco-labelling.  This applied to the scope of eco-
labelling;  the role of various players, including Governments;  transparency;  the voluntary nature ofeco-labelling;  the need for scientific advice;  and the need for verifiable criteria.  The global
application of these premises required parallel development of criteria applicable to other regions, in
particular developing countries.  Iceland considered it desirable to reach shared basic criteria for eco-
labels for products from sustainable fisheries.  Iceland referred to WT/CTE/W/150, which
underscored the concern over proliferation of eco-labels and the need for shared eco-labelling criteria.Shared criteria were necessary to ensure that eco-labelled seafood products did not evolve into trade
barriers;  to avoid consumer confusion;  and to reduce the possibility of private labels gaining
monopolies.  Shared criteria for fisheries eco-labelling should be discussed in international fora, such
as the CTE and FAO.  The WTO was the competent forum to address the trade aspects.  Private
fisheries eco-labelling had already been established in Europe in response to market forces.  Eco-labels could be regarded as a threat or an opportunity;  it was important to ensure equal opportunity,
especially for developing countries, to benefit from new market trends for fish products, and to give
consumers verifiable information on the sustainable use of living marine resources.
95. The representative of Japan thanked Iceland and the Secretariat for their papers, and stressed
the importance of sustainable fisheries.  Eco-labelling could contribute to this objective if based on a
scientific and objective approach.  Since the concept of fisheries eco-labelling was related to fisheries
management, as set out in the Nordic report, Japan felt scientific and objective criteria for establishingeco-labels should be discussed in the FAO.  The FAO had held a technical consultation on fisheries
eco-labelling, and had planned a second one in 2000.  However, at the FAO Sub-Committee on Fish
Trade, in Bremen in February 2000, developing countries had been against the idea, resulting in a
suspension of the consultations.  There appear ed to be a misunderstanding among developing
countries to the effect that fisheries eco-labelling might become mandatory once the FAO hadestablished criteria.  However, this was not the case as there were many eco-labels in the world,
mostly private ones.  Failing the development of objective and scientific criteria, subjective private
labelling schemes would proliferate, and fish-exporting developing countries would likely suffer
most.  Thus, Japan asked developing countries which scenario would be better, i.e. no objective
criteria and more subjective eco-labels, or the development of objective criteria?  This subject wouldbe raised at the FAO Committee on Fisheries in March 2001.
96. Fisheries eco-labelling was related to sustainable fisheries use, but had trade implications.
Consideration should be given to implementation of the relevant provisions of the TBT Agreement.
While this issue should be handled by the FAO, Japan also welcomed discussion and the presentation
of case studies in the CTE to contribute to FAO work.  This would also diversify fisheries discussionsin the CTE, which had narrowly focused on subsidies.  For future discussion, Iceland could explainWT/CTE/M/26
Page 23
how their proposed criteria could be applied to individual species in the Northeast Atlantic.  As the
Nordic report recognized, eco-labelling criteria should vary depending on the area and species.  Thus,
flexibility should be allowed to reflect conditions in different areas, as well as different biological
characteristics of species.  Consideration should also be given to how to operate the scheme.
97. The representative of New Zealand said that, in developing its fisheries eco-labelling scheme,
Iceland had noted the need to take into account that conditions considered appropriate in the Nordic
region should not automatically be applied to products from other regions.  This highlighted the
concept of equivalency, discussed in the CTE and the TBT Committee, whereby consideration could
be given to recognizing as equivalent other countries' schemes.  New Zealand asked whether this
concept had been explored in relation to Nordic schemes and whether any approaches from other
regions had been studied to determine if equivalency could be advanced.  Many national and regional
schemes could be overly prescriptive if they did not take into account conditions in different regions.
98. The representative of India made preliminary comments on the Nordic proposal on fisheries
eco-labelling criteria, which were specific to a particular region.  It might be better if this task were
performed by an international organization with representation from various regions in order to have a
comprehensive programme.  Possible trade effects of fisheries eco-labelling were worth exploring,
particularly for developing countries.  It would be advisable to consider FAO results, and equivalenceof standards.  The principles set out in the scheme should be non-discrimination, without unnecessary
trade obstacles.  Although India br oadly agreed that eco-labelling of marine capture fisheries might
help in developing more sustainable practices, it was not correct to suggest that these criteria were
relatively simple and could be implemented without delay.  Taking into account the complexity of
fisheries resources and different economic interests, it might not be possible to implement the criteriawithout delay, as in India’s case.  Development aspects, including trade concerns, should be
addressed.
99. The representative of Thailand said that, as a major fisheries exporter, her delegation was
concerned about the proposed Nordic eco-labelling criteria, and would have to study the proposal.
Any measures considered should be consistent with  WTO rules, such as those in the TBT Agreement.
100. The representative of Malaysia thanked Iceland for its presentation on the Nordic approach to
fisheries eco-labelling, whereby schemes would be based on open international discussions, be
voluntary, and guided by Governments, avoiding proliferation of labels and expensive verification
processes.  Malaysia asked how the international consultations would be coordinated with FAO and
other parties, such as exporting countries.  This would be important if the process were to be
transparent and non-discriminatory.  In the studies cited in WT/CTE/W/150, reference had been made
to the experience of some countries on the multiplicity of labels, which had tended to lead toconsumer confusion and increased costs to the industry.  A properly run eco-labelling scheme, based
on consultations with relevant international bodies and taking into account developing country
interests, would more appropriately serve to ensure these programmes were transparent and non-
discriminatory.
101. The representative of Venezuela appreciated Iceland's presentation on the Nordic fisheries
eco-labelling criteria.  Venezuela echoed the concerns expressed by India, Thailand and Malaysia.
Venezuela’s experience with fisheries eco-labelling had been frustrating, especially with tuna exports
to North America.  Venezuela felt that, althoug h voluntary, these schemes had become a trade-
distorting instrument that constituted a market access barrier.  Venezuela was open to discussing this
issue, but was concerned about the possible negative market access impacts.
102. The representative of Korea said that, as Korea attached importance to sustainable fisheries
resources, Korea appreciated the Nordic initiative to develop voluntary eco-labelling criteria.  This
initiative should address each country's individual situation.  In principle, Korea supported eco-
labelling as it was expected to promote sustainable fisheries management and ensure consumers' rightWT/CTE/M/26
Page 24
to information on the environmental aspects of fish products.  However, implementation of eco-
labelling schemes should take into account differences between countries and regional circumstances,
preferences and priorities, particularly in developing countries.  Given differences in the fisheries
industry and culinary cultures, rapid introduction of eco-labelling might adversely affect its
effectiveness, which was based on it being voluntary and objective.  It would be desirable first toimplement an eco-labelling scheme in certain countries and regions before it were expanded to others.
103. The representative of Mexico shared Venezuela's views on eco-labelling, particularly on
dolphin-safe tuna labels.  Clearly, even a voluntary label permitted pressure to be brought to bear on
the marketing of certain products unless they contained a given label.  The legitimacy of these
voluntary labels was a concern at the practical level and gave rise to concerns about market access
barriers.  The criteria devising these labels did not necessarily reflect the different situation in
exporting countries and might condition market access.
104. The representative of the European Communities supported Mexico's comment with respect
to the relationship between eco-labels and trade in the real world.  If a market were big enough and if
consumers cared enough about labels, then however volu ntary the label, the ability to affix that label
to a given product would become a condition for selling that product in a given market.  Thus, it was
necessary to clarify how to develop labelling criter ia and to move towards an inclusive approach to
eco-labelling.  This was an issue of real world importance, although not necessarily a legal issue.  The
CTE should reflect on a practical approach to eco-labelling.  The EC felt this was an area where
clarification was necessary with respect to negotiation of the definitions of regulations and standards
in the TBT Agreement.  There was a convenient myth that the drafting history clearly showed that
production and processing methods ( PPMs) were excluded.  In the first sentence of the definitions of
regulations and standards, this might be the case.  However, the second sentence indicated otherwise.
Part of the reason the EC was concerned about addres sing this issue was that it would be necessary to
reopen the myth that the PPM issue had been settled.  The EC was not confident that, if eco-labelling
were addressed in coming negotiations, it would be possible to settle the PPM issue.  There were
potentially dangerous grey areas in the labelling debate.  Whether or not these were resolved, therewere other practical issues regarding the legitimacy of domestic decision-making processes, in which
progress could be made that would be beneficial for global trade.
105. The representative of Indonesia said that, as a major fish exporter, his delegation echoed the
concerns expressed about eco-labelling.  Indonesia recognized that eco-labelling was a tool to
promote sustainable fisheries management and provide consumer information.  Although eco-labels
were voluntary, they could become market access barriers.  Indonesia was open to discussing this
issue and felt eco-labels should be WTO-compatible.
106. The representative of Iceland thanked Members for their comments on the Nordic fisheries
proposal, which emphasized the need to develop shared, basic criteria, such as the use of scientific
and verifiable premises.  Iceland clarified that the proposal in the Nordic Working Group's report was
not yet an eco-labelling scheme.  Iceland had not yet started international consultations.  Iceland
looked forward to discussing this issue at the FAO Fisheries Committee in March 2001.  On theapplicability of the criteria in other countries and regions, the Nordic discussions had stressed the
need for international guidelines for criteria deve lopment that would be equivalent.  While the types
of criteria that could realistically be applied would differ based on the region, there were similar
aspects.  Thus, coordination across regions would be useful.  At this stage, work was needed to
develop applicable criteria.  In presenting this report, the intention of the Nordic countries was toinform others of their work underway in this field.WT/CTE/M/26
Page 25
Item 4: The provisions of the multilateral trading sy stem with respect to the transparency of trade
measures used for environmental purposes and environmental measures and requirements
which have significant trade effects
107. The Secretariat was updating the Environmental Database for 2000, which contained the
environment-related notifications to the WTO.  Me mbers were invited to provide the Secretariat with
suggestions on the search words used in its compilation.
Item 6: The effect of environmental measures on ma rket access, especially in relation to developing
countries, in particular to the least developed among them, and environmental benefits of
removing trade restrictions and distortions
108. The representative of India presented his delegation's paper, WT/CTE/W/177, which analysed
the effects of environmental measures on developing countries' market access.  Compared with
developed countries, the impact of environmental measures on developing countries' market access
was much more acute and adverse, particularly for small and medium-sized enterprises (SMEs), in
terms of availability of information and compliance costs.  While acknowledging that positive trading
opportunities might be generated by environmental considerations, SMEs lacked the resources, skilland technology required to exploit these market niches.  While India favoured harmonization of
environmental standards as opposed to a proliferation of standards, developing countries had widely
differing environmental standards in accordance with their national priorities, which rendered
harmonization difficult and inadvisable compared to mutual recognition and equivalence.  The paper
included examples from India, the Philippines and South Africa in various sectors, in order toillustrate the market access challenges faced by developing countries.  With respect to non-product
related production and processing methods (PPMs), an issue to which the EC had referred, there were
market access barriers in labelling based on life cycle approaches.  As noted by Mexico under Item 3,
these measures, though voluntary, affected market access.  India suggested a pragmatic way forward
in the paper to mitigate market access impacts of environmental requirements, including measures by
developing countries, such as enhanced domestic coordination and increased domestic dissemination
of environmental requirements.  India emphasized technology transfer, capacity building and
technical assistance, as well as investment in domestic infrastructure.  Participation of developing
countries in the process of multilateral standard setting should be increased.  Developed countries
should promote developing country participation before environmental measures were put in place.
109. The representative of Norway welcomed India's paper, which cited practical examples of the
effects of standards on market access, and suggested concrete steps forward.  These examples showed
that environmental requirements might appear to be non tariff trade barriers. However, there was
domestic political pressure from the public to ensure health and safety.  It had been easier to deal with
tariff barriers, which could be gradually eliminated.  In terms of how best to address environmental
requirements, Norway felt India had put forward constructive suggestions, such as increased
developing country participation in standardizati on processes.  The Integrated Framework could also
be used to mainstream capacity building and technical assistance to enable developing countries to
respond to environment-related challenges that impacted on trade.  There were practical problems that
should be addressed.  Norway appreciated India's efforts on Mode four in the services negotiations.
110. The representative of the European Communities welcomed India's constructive contribution,
which stressed the opportunities for developing countries in export markets where environmental
needs were being addressed in the market-place.  There could be practical obstacles for developing
country exporters.  The EC suggested that it was not as important whether the requirements in export
markets were PPM or product-related requirements, but that it would be necessary to change what
was being produced.  Standards setting processes should be inclusive so that representatives of
exporting manufacturers in developing countries were involved at an early stage, and should reducethe multiplicity of requirements.  Business an d NGOs were ho lding a multistakeholder dialogue onWT/CTE/M/26
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the development of a European Sustainable Trade Center to provide information on potential
standards and minimize capacity-related obstacles.
111. The representative of Argentina supported India's paper, which highlighted the relationship
between poverty and environmental protection.  When Governments adopted environmental policies,
a choice was being made between postponing short-term gains to invest in sustainability and allowingproducers to achieve greater short-term profit without full consideration of the environmental effects.
Different options open to developing countries concerning environmental protection entailed
significant compliance costs, a point illustrated in India's paper.  Argentina had always emphasized
that rural poverty was one of the main causes of environmental degradation, particularly in
agriculture.  While environmental measures might be taken in good faith in a developed country,
given differences in income levels, that same measure might have negative impacts on both income
and the environment in developing countries.
112. The representative of Malaysia welcomed India's paper, which stressed the effects of
environmental requirements on developing country market access.  Malaysia said that charges and
taxes could be easier to comply with than requirem ents related to technical standards and regulations,
as well as recycling.  As set out in India's paper, these requirements imposed prohibitive compliance
costs, difficulties in assessing technology, and might not be the least-trade restrictive manner ofachieving environmental objectives.  SMEs were at a particular disadvantage in adapting to the
proliferation of requirements in exporting markets, including HACCP, certification and testing.
Malaysia referred to the potential EC ban on the use of hazardous substances in electronic and
electrical equipment, which called for substitutes for certain hazardous materials in the production of
this equipment.  These substitutes might not be available for developing country SMEs, or might becostly and favour larger or local companies with the requisite technology.  Where there were
alternative ways to protect the environment, Malaysia felt the least-trade restrictive should be
favoured.  Malaysia's experience with shrimp export requirements had shown that the alternative to
non-compliance with a particular standard usually resulted in loss of export markets.  India's paper
was forward looking and included practical proposals.  Malaysia stressed the importance of priorconsultations with affected parties, longer phase-in periods for developing countries, and positive
measures to mitigate the negative impacts of environmental requirements.
113. The representative of the Philippines thanked India for its contribution, which highlighted the
challenges faced by developing countries in balancing the demands of trade liberalization, which was
not an end in itself, and sustainable development, which was the overriding objective.  India rightly
pointed out the difficulty faced by semiconductor manufacturers in the Philippines in adapting to
ISO 14001 certification requirements.  This was an example of developing countries' vulnerability toenvironmental measures, i.e. the costs of compliance with international environmental standards.  The
Philippines' efforts to comply with its international treaty obligation under the Basel Convention
might be forcing both intermediate and end-users of used-lead acid batteries to source their feedstock
from domestic sources.  However, the ban on imports of used-lead acid batteries could not be
regarded as solely affecting the trade of countries from which the Philippines would otherwise havesourced the batteries;  it also affected sustainable development in the Philippines.  While the
Convention’s objectives were intended to reduce environmental wastes, limited technological choices
and inadequate access to environmentally friendly raw materials might result in smaller, informal
recyclers in the Philippines, acting against the spirit of the agreement.  This was so especially as there
was no corresponding domestic regulatory policy or legislation in place.  The Philippines emphasizedthat its domestic Clean Air Act was a serious effort to reduce pollution.  However, its requirements,
including the ban on incinerators, were non-discriminatory and applied equally to foreign and
domestic investors.  Whereas it might affect tr ade in incinerators, this was an issue which
demonstrated that not everything which affected trade was necessarily a trade issue.  Philippine law
prohibited the manufacture, importation, distribution and/or sale of laundry and industrial detergentscontaining hard surfactants, and encouraged the use of natural oleo-chemicals, including plant-based
natural oils, such as palm, palm kernel, sunflower, rapeseed and coconut.  Thus, India's paperWT/CTE/M/26
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provided justification for the distinction between petroleum-based detergents, which were not
considered biodegradable, and natural oleo-chemical-based detergents, which were.
114. The representative of Egypt said India's paper touched on developing country concerns
regarding practical market access obstacles, as well as defining a way forward that emphasized
technical assistance, technology transfer and capacity building for standards setting.  India drewattention to compliance costs of SME, of particular relevance to developing countries.  Malaysia
highlighted the EC Directive on electronic and electrical equipment, an issue which Egypt had raised
in the TBT Committee.  It would be necessary to consult on the suggestions set out in India's paper.
115. The representative of Brazil said India's paper highlighted common concerns for developing
countries about market access impediments arising from environmental measures.  Even voluntary
eco-labelling had market access effects for developing country exports.  Brazil had faced difficulties
with timber exports.  The challenge was to avoid that trade opportunities turned into trade barriers.  InBrazil, civil society was also active in eco-labelling.  Brazil agreed with India on the importance of
standards setting, which should be inclusive, transparent, and accessible for developing countries.
116. The representative of Venezuela said India's paper reflected developing country concerns.
Through its practical examples set, it was possible to appreciate the actual market access impacts of
environmental measures, particularly for developing country exports.  As Venezuela had noted oneco-labelling, these concerns should be kept in mind when seeking solutions.  Venezuela supported
India's suggestions on how to find a cooperative solution to these concerns.  Venezuela was
committed to environmental protection, but its exports had faced environment-related market access
barriers that did not take into account the specific conditions of Venezuela.
117. The representative of the United States welcomed India’s suggestions for transparency and
inclusiveness in the process used by countries to develop their environmental measures.  The
United States noted the attention given to “win-win” opportunities in India’s paper, whereby it was
for “governments and industry to take advantage of the competitiveness of their products, particularly
environmentally friendly products to increase their shares in environmentally conscious markets.”  In
trade and environment debates, it was important to focus on the opportunities for a confluence ofinterests, as opposed to a divergence of interests between environmental protection and trade
liberalization and the potential for conflict.  Focusing on “win-wins” permitted a discussion in a less
negative atmosphere and pointed the way forward for concrete initiatives or “deliverables” that could
clearly demonstrate areas in which governments could advance the interests of environmental and
commercial constituencies at the same time.
118. The representative of Cuba welcomed India's paper, which presented relevant examples on
the market access difficulties encountered by developing country exports as a result of environment-
related measures.  Studies in Cuba had identified exports in which this type of concern had arisen,
such as honey and lobsters.  Amongst the solutions proposed by India, Cuba noted the need for
technical assistance and special and differential treatment.
119. The representative of Kenya said India's paper set out the concerns of developing countries
regarding environmental measures in developed countries.  There were cases where product standards
in developed countries had not been met for exports from those countries.  This was a contradiction.
Kenya called for special and differential treatment, and flexibility so that developing countries could
be integrated in the multilateral trading system.
120. The representative of Switzerland welcomed India's paper as a constructive starting point for
the discussions.  Developing countries could benefit from environmental standards resulting from an
increasing environmental awareness in developed countries and new markets for environmentally
friendly products, such as organic coffee, tea, and tropical fruits.  Although environmental standards
might cause adjustment problems, market opportunities would also be created.WT/CTE/M/26
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121. The representative of Chile said developing countries could take advantage of comparative
advantages in exporting their products to environmentally conscious markets.  Chile shared India's
suggestions on the way forward regarding transparency.  Chile added that cooperation with trading
partners was important with respect to solving envi ronmental problems with exports, including in the
framework of trade agreements, such as with Canada.  Chile asked for India's comments on usingcooperation to resolve difficulties that may arise in this area.
122. The representative of Mexico felt India's paper contained useful examples of the vulnerability
of developing countries with respect to the negative market access effects of environmental measures
on their exports.  Difficulties frequently faced by developing countries in adjusting to the increasingly
numerous environmental requirements in their export markets.  India also set out ways in which to
move the discussions and to increase the potential of developing countries to adjust to environmental
requirements.  Mexico noted that the cooperative approach set out in India's proposals wereconstructive and would increase the possibility of  "win-win" opportunities.  The imposition of trade
measures to accelerate environmental objectives were counter-productive;  impeding developing
country market access may only reduce the financial resources available for environmental protection
and for meeting the established environmental requirements in export markets.  For example, progress
of Mexican tuna fishers towards dolphin conservation had taken longer to achieve due to a lack ofappropriate financial resources to put towards this goal.  Transparent and comprehensive policies
were necessary to attain solutions through cooperation, including sufficient phase-in periods for
developing country implementation and adapta tion of environment-related requirements.
123. The representative of Indonesia supported the premise of India paper that market access
effects of environmental measures should be viewed from the broader, balanced perspective of
sustainable development to achieve "win-win" opportunities.  If the focus were solely on
environmental protection at the expense of economic development, developing country market access
may suffer at the expense of the environment.  Indonesia noted the importance of environmental
requirements, yet felt caution was necessary;  it was difficult to accept that these standards should
necessarily result in non-tariff trade barriers, which would impose conditionality on developingcountry market access that would not take into account their situations.  Environmental requirements
should be complemented by positive measures for technical cooperation, technology transfer and
capacity building.  Developing countries would thus improve their capacity to meet market
requirements and enhance their awareness of environmental factors in trade.
124. The representative of Thailand supported India's suggestions for prior consultation with
developing countries during the development of environmental standards. On the EC multistakeholder
dialogue with the private sector and NGOs, Thailand asked if developing country stakeholders wouldbe included?
125. The representative of Peru shared the importa nce of the issues outlined in India's paper.
Environmental standards could represent trade obstacles, including those in multilateral
environmental agreements.  There were procedures to establish a scientific basis for the development
of standards, even if voluntary.  For voluntary eco-labelling, however, clarity was lacking in the TBTprovisions and their scientific basis required further examination.  Voluntary standards could have a
greater impact than other standards and could result in non-tariff trade barriers.  There should be
greater developing country participation in the standards making process to take into account their
interests and have sufficient time to adapt to thes e standards.  Peru inquired as to which other
conditions India felt should be required in the standards making process to ensure that developingcountry interests were represented and their exports not marginalized.
126. The representative of India thanked delegations for their support of India’s paper.  Chile's
comment on cooperation was an important addition, building on India's references to multilateral
initiatives.  On Peru's comment, India's paper cited concrete examples of market access difficulties
faced by developing countries and suggested a way forward.  As such, the CTE should clarify theWT/CTE/M/26
Page 29
range of environmental requirements in the main export markets for sectors of importance to
developing country exports, such as agriculture, textiles, tropical products and primary commodities.
India suggested that developed countries provide illustrations of the process in which environmental
measures were developed, including multistakeholder dialogues with consumers.  This would enable
developing countries to understand the process and suggest ways to improve existing lacunae intransparency and participation.  This would help the CTE move to a practical understanding of the
situation of developing countries vis-à-vis  the market access effects of environmental measures.
Agriculture
127. The representative of Argentina referred to his delegation's paper to the
Agriculture Committee, G/AG/NG/W/88, on the legitimate non-trade concerns to be taken into
account in the agriculture negotiations:  rural poverty, unemployment and environmental degradation.Argentina would also submit this paper to the CTE.  Argentina raised a matter related to health and
phytosanitary measures with environmental cons equences, bovine spongiform encephalopathy (BSE).
This problem related to intensive stock breeding, which had given rise to high tariffs, price support
and subsidies offered to meat production in the EC.  The root of the problem had been recognized to
be the encouragement by the EC of the use of bonem eal for cattle feed.  Argentina drew attention to
consequences of price distorting practices on health, rural development and the environment.  The
health consequences for the EC were familiar;  the consequences for importers of EC animal feed
were being evaluated by the World Health Organization.  The consequences for developing countries
that competed with EC-subsidized exports were also crucial.  The EC Common Agricultural Policy
had given rise to enormous excessive production of meat, which was exported at subsidized prices.This unfair competition resulted in rural poverty, unemployment and reduced food security.
Energy
128. The representative of the European Communities presented his delegation's paper on
environmentally harmful and trade distorting measures and policies in energy markets,
WT/CTE/W/185, which built on the Secretariat's note in WT/CTE/W/67.  The latter set out that there
was an array of measures that had trade and environmental distorting effects.  Based on recent
developments, the EC suggested that work on the energy sector be updated, including work in the
OECD and the International Energy Agency.  This update should follow the same structure as
WT/CTE/W/67, taking into account the specificity of  energy and the fact that it was an intermediary
good, as well as examining energy trade, particular ly the relationship between the environmental and
electricity trade liberalization.  The update could usefully include the issue of environment andclimate change effects of current policies and measures as compared to possible changes in policies to
be undertaken, including trade in greenhouse gas emissions, and the possible trade distorting effects
of starting trade (emissions rights) with different principles and countries.  The importance of energy
matters for trade and the environment necessitated an update of WT/CTE/W/67 and further attention
to this sector on a regular basis.
129. The observer of UNEP informed the CTE that UNEP and the International Energy Agency
(IEA) had jointly organized a series of four regional workshops on the potential contribution of
energy subsidy reform to sustainable development.  These workshops aimed to improve the
understanding of social, economic and environmental effects of energy subsidy reform.  Three
workshops had already been conducted, each involving 40-50 energy experts who discussed casestudies, focussing on each of four regions:  (i) the Paris Workshop, 6-7 November 2000, focussed on
OECD countries and European countries with economies in transition;  (ii) energy subsidies in
African countries had been addressed during the Durban Workshop, 15-16 December 2000;  (iii)
energy subsidies in Asia had been examined in Bangkok, 16-17 January 2001;  and (iv) the last
workshop would be in Santiago, 27-28 March 2001, emphasizing the Latin American region andincluding a concluding session to consolidate the outputs of the four workshops.WT/CTE/M/26
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130. Preliminary recommendations from these workshops were:  (i) traditional energy subsidies
often created disincentives for investing in energy efficiency and renewable energy;  and (ii) subsidies
often failed to achieve their underlying objectives, such as socio-economic development and energy
security.  Nevertheless, energy subsidies could be beneficial under certain conditions, for example,
subsidies to R&D and to infant industries if they were eliminated as soon as the technology or theindustry became competitive.  Social concerns, as well as insufficient access to energy, was more
pressing in developing countries, and there was a need to focus on the social component of sustainable
development in subsidy design.  Reform, instead of removal of energy subsidies, was generally
required, and should be part of overall energy policy reform.  There was a need for more accurate
definition and measurement of energy subsidies, and for more analytical work on the environmental,
social and economic impacts of energy subsidies and their reform.  Policy-makers should explore the
benefits of subsidy reform for sustainable developmen t, taking into account the specific circumstances
of each country.  There was a need for education and awareness raising amongst citizens.  There
should be a greater focus on renewable energy t echnology, which could be an efficient and
competitive alternative to traditional sources, especially in rural areas.  UNEP-IEA would submit a
synthesis report on these workshops to CSD9 in April 2001, and organize a side-event on energy.
131. The representative of Mexico asked whether it would be useful to factually update all the
sectors set out in WT/CTE/W/67.
132. The representative of Venezuela noted that energy issues related to the Kyoto Protocol were
complex and she would consult with her capital on the EC's proposals in this respect.
133. It was agreed that the Secretariat would update the energy section in WT/CTE/W/67 based on
available reports and research.
Fisheries
134. The observer of the FAO informed the CTE of FAO meetings related to fisheries and
aquaculture, including the second meeting of FAO and non-FAO regional bodies,
20-21 February 2001;  the second technical consultation on Illegal, Unreported and UnregulatedFishing, 22-23 February 2001;  and the 24
th Session of the Committee on Fisheries, 26 February-
2 March.  Information was available at www.fa.org/fi.  The FAO had been providing information to
the CTE since October 1999 on its implementation of the FAO work plan on fisheries subsidies.  In
2000, FAO had studied the effects of subsidies on trade in fish and fish products;  and the effects on
sustainability of wild fish stocks, as well as reviewed the concepts of fisheries subsidies.  This work
had been reviewed by the FAO Expert Consultation on Economic Incentives and Responsible
Fisheries, in Rome, on 28 November - 1 Decemb er 2000, which had included experts from Africa,
Asia, Latin America, Europe, North America, Oceania and the WTO.
135. The Expert Consultation had focused on:  (i) the definition of subsidies and how best to
divide them into categories;  (ii) the impact of subsidies on fisheries resources sustainability; and,  (iii)
the impact of subsidies on trade in fish and fish products.  The consultation had adopted a report for
consideration by the 24th Session of the FAO Committee on Fisheries.  The experts had discussed an
operational definition of "subsidy" for the purpose of analysing the effects on resource sustainability
and trade.  Four sets of subsidies had been defined.  Set 1 was "Government financial transfers that
reduce costs and/or increase revenues of producers in the short term".  Sets 2, 3 and 4 expanded this
concept.  Set 2 subsidies were:  "any Government intervention, regardless of whether they involve
financial transfers, that reduce cost and/or increase revenues of producers in the short term".  Set 3expanded Set 2 by adding: "the short-term benefits to producers that result from the absence or lack of
intervention by governments to correct distortions (imperfections) in production and markets that can
potentially affect fisheries resources and trade".  Set 4 was "all government actions, including the
absence of correcting interventions, that could potentially affect, positively or negatively, the benefitsWT/CTE/M/26
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of firms active in the fishery sector;  also in the long run."  The experts recommended that these sets
of subsidies be referred to in future analyses.
136. The experts had classified subsidies according to their effects on the firm.  The experts found
the empirical knowledge of the impacts of subsidies on trade and fisheries resource sustainability to
be weak.  However, there was general agreement that the impact on fisheries resources sustainabilitywas critically dependent on the effectiveness of fisheries management, being least where fishing effort
was fully controlled.  Building on available data and analytical methods, as well as familiarity with
the estimates of the magnitude of subsidies, the experts identified priorities for research on the
impacts of subsidies.  To facilitate this analysis, it was agreed that it was not essential to use the same
categories when studying resource impacts as trade impacts.  Concerning the impact on fishery
resources, priority for future study was assigned to "capital expansion", "tax waivers and deferrals"
and "price support".  Regarding the impact on trade,  priority was given to actions that "reduce the
relative price of inputs", "reduce fishing effort," and to "management and regulatory actions".  The
experts also discussed the methods best suited to carry out these studies.
137. While the exact nature and magnitude of impacts were not known for most categories of
subsidies, following the Consultation there was a relatively good understanding of the magnitude of
various sets of subsidies, and of the mechanisms by which subsidies affected costs and revenues.However, there was only limited empirical knowledge of the magnitude and exact nature of the
impact of subsidy-induced, modified, behaviour of firms on trade, resources and development.  The
Consultation had concluded that methods were availa ble for empirical studies of the effects;  the
question was where to start, who to involve, and wh at form studies should take.  This Consultation, by
defining sets of subsidies, had produced a useful tool to facilitate analysis of subsidy impacts and toclarify the policy debate.  The new issue of the State of World Fisheries and Aquaculture
(SOFIA 2001) would be presented to the 24
th Session of the Committee of Fisheries.
138. The observer of the OECD reported on the ongoi ng OECD study on market liberalization, the
mandate of which was to explore world and regional fish trade flows, issues and problems, including
an analysis of how fisheries trade and production were likely to be affected by reductions in presenttariff levels and changes in non-tariff barriers.  The study also would explore the effects of changes in
restrictions on investment, access to services, fisheries subsidies, and other relevant factors.  The
OECD Committee for Fisheries, on 5-7 March 2001, would review progress on four main areas for
this study:  (i) more transparency had been added to the inventories of measures as additional
information had become available;  (ii) the work included a preliminary assessment of the measures
currently in place;  (iii) the Committee for Fisheries will address a conceptual framework developed
to analyse how, and under which circumstances, measures affected trade and resource sustainability;and (iv) an analytical framework had been developed to identify priorities for future study.
139. The observer of UNEP said the aim of the UNEP Workshop on Fisheries Subsidies
on 12 February 2001 was to build understanding and consensus on fisheries policy reform in order to
contribute to sustainable fisheries management.  Over 120 participants from governments,
international organizations, expe rts and NGOs had participated.  The Chairman's summary was
circulated as WT/CTE/W/187, and could be accessed along with the other papers prepared for the
meeting at www.unep.ch/etu.  The key outputs from the Workshop and options for moving forward
were set out in paragraphs 6-9 of the Chairman ’s summary.  UNEP would inform Members of the
follow-up activities.  UNEP acknowledged New Zeal and's financial support for the workshop, which
had increased the participation of fisheries experts from developing countries.
140. The representative of New Zealand thanked FAO, OECD and UNEP for the reports on their
work in the fisheries area.  CTE discussions on fisheries issues, particularly subsidies, had contributed
significantly to enhancing international awareness of the trade and sustainable development problems
associated with government financial transfers in the fisheries sector and had encouraged a greater
interest in international organizations in this area.  Much of the work carried out to date on the adverseWT/CTE/M/26
Page 32
impacts of fisheries subsidies had focused primarily on resource sustainability.  Available evidence
showed conclusively that fisheries subsidies play ed an important part in promoting excess efforts,
overfishing and adverse conservation and management outcomes.  Fisheries subsidies were a problem
not only for resource sustainability, but also in terms of their trade effects and sustainable
development.  Given the WTO context of the di scussions, New Zealand emphasized the importance
of ensuring that the significant trade dimensions of the issue were understood and addressed.  As
pointed out in New Zealand's paper, WT/CTE/W/134, the level of fisheries subsidies remained high
and represented as much as 30 per cent of the value of landed catch in key developed exporters.
These transfers had significant trade distorting effects that inhibited sustainable development,
particularly of exporting developing and least-developed countries.  The analysis thus far underlined
the important role of the WTO in promoting solutions to the trade and sustainable development
problems associated with fisheries subsidies.  Accordingly, the CTE should keep this issue in its focusso that Members were better able to consider concrete actions aimed at effectively addressing these
adverse effects of fisheries subsidies.  Fisheries subsidy reform would represent the most concrete
"win-win-win" for trade, environment and developmen t identified to date in the CTE.  Given the
WTO expertise in the area of trade rules and subsidies, it had a valuable contribution to make.
141. The WTO should be kept fully involved in any work that other fora were pursuing on the
trade dimension of fisheries subsidies.  Some of the concerns expressed in the WTO had not been
adequately reflected in some of the work in relevant fora.  New Zealand welcomed FAO work on
fisheries subsidies, but noted that the FAO Expert  Consultation's report included a general comment
on their goal in studying the trade dimensions:  "The experts assumed that the FAO Committee on
Fisheries was interested primarily in the state of knowledge regarding the extent to which producers ina particular country were able to improve their position relative to competing industries in other
countries as a result of subsidies whether through increased exports or the displacement of imports."
This indicated that the messages from the WTO debate that the focus should be on the trade distorting
impact of fisheries subsidies had not been fully understood.  There was a need to continue to be
vigilant in any discussions on the trade dimensions.  New Zealand welcomed further updates ofWT/CTE/W/167 on ongoing subsidies related work, and WT/CTE/W/80/Add.1 on notifications under
Article 25 of the SCM Agreement.  The lack of clear information on fisheries subsidies continued to
impede the exploration of reform options.  In addition to seeking to ensure that Members carried out
their notification obligations, New Zealand encouraged Members to cooperate in relevant
international fora to provide the information needed  to advance the empirical analysis in this area.
142. The representative of the Philippines thanked the FAO and the OECD for sharing their recent
work on sustainable fisheries, which contributed to an integrated analysis in the CTE;  and UNEP for
its Fisheries Workshop, which had increased the understanding and facilitated Members' exchange of
views on fisheries subsidies.  While gaps existed on the effects of subsidies, there was sufficient
information available to begin to act.  The main  challenge was not in terms of analysis, but with
respect to the willingness to take the necessary action.  This issue should be dealt with in a
comprehensive, yet effective manner, which did not mean that work needed to be done in a singleorganization;  different issues could be dealt with in the competent bodies.  The Philippines requested
that the update of WT/CTE/W/167 reflect ongoing work in other fora.
143. The representative of Iceland thanked the FAO, OECD and UNEP for their reports, which
illustrated how fisheries subsidies were being seriously considered.  Iceland welcomed the growing
attention this issue was receiving.  In order to resolve this issue, expertise in all the relevantinternational organizations was necessary to advance the conceptual understanding of fisheries
subsidies and to improve empirical knowledge about their practice.  The reports of the FAO and
UNEP confirmed the widespread agreement among experts that fisheries subsidies encouraged
overcapitalization and excessive fishing effort, and hence overfishing.  The reports advanced a
conceptual understanding of the issues and emphasized the need to move beyond abstract or legalisticdefinitions, towards analysing the impacts of subsidies on trade and resource sustainability in the real
world.  It was regrettable that the reports did not offer empirical substantiation of their findings.WT/CTE/M/26
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While contributing to the analysis of fisheries subsidies, the approach in these reports was limited to
resource sustainability and the impact of subsidies on fishing effort. When the analysis was limited to
the implications of subsidies in the domestic  circumstances where they were applied, the conclusion
was bound to be that subsidies were only partially responsible for overfishing, and that the degree of
their impact depended on the context in which they were applied, notably whether and what type offisheries management system was in effect.  This masked the reality as it ignored the more important
issue of the systemic implications of distorted global markets.
144. The bulk of marine-captured fish was destined for export, with the economic return dependant
on the cost of its production and the market conditions where it was sold.  A distorted export market
created an incentive to meet a low return by increasing supply.  Thus, the systemic impact of global
market conditions distorted by fisheries subsidies fuelled domestic pressures to increase harvesting,
even beyond the production capacity of the stocks.  Distorted global market conditions thusundermined sustainable domestic fisheries management and diminished returns to exporting countries.
Their negative impacts emerged in the domestic circumstances, where they were applied, and the
global market due to market distortions.  Only by viewing the issues from the perspective of trade and
resource sustainability was it possible to see the damage caused by, and the benefits of the removal of,
fisheries subsidies to trade, resource sustainability and sustainable development.  These benefits wereparticularly important for those developing countries, which supplied over 50 per cent of fish trade.
This was why this issue should be addressed in the WTO, which had the competence and expertise to
address the issues in the context of the global market.  It was the global market that conditioned the
ability of individual countries to manage their fisheries resources sustainably.  Iceland encouraged
continued WTO work in this area, and also we lcomed continued technical FAO work.  Iceland
welcomed updates of WT/CTE/W/167 and the notifications under Article 25 of the SCM Agreement.
145. The representative of the European Comm unities thanked the FAO and OECD for their
presentations.  The EC thanked UNEP for its Fisheries Workshop and agreed with the Chairman's
conclusions set out in WT/CTE/W/187.  To have a better knowledge of the effects of subsidies, more
information was necessary on their volume and nature, as acknowledged by some participants at theUNEP Workshop.  Given the importance of WTO notifications in this process, the EC joined
New Zealand in appealing to Members to increase their notifications.  The "matrix approach,"
identified at the UNEP Workshop, combining subsid y types with other key factors, such as the
fisheries regime and the state of the stocks, was also useful.  The development dimension had to be
taken into account when assessing subsidies.  The EC  agreed with the Philippines that each forum had
a role to contribute to the discussions, depending on its expertise.  The EC saw a leading role for the
FAO, given its broad membership.
146. The representative of Argentina welcomed the FAO and OECD for their presentations, and
UNEP for the Fisheries Workshop.  Argentina noted its commitment for increased transparency
highlighting that the UNEP-commissioned study came from an NGO (the Centro de Estudios
Ambientales - CEDEA) that was totally independent from the government and the analysis was
critical to the way in which the previous Argentine government had administered resources.Argentina supported New Zealand's comments and also requested updates of WT/CTE/W/167 and the
notifications under the SCM Agreement.  He noted that Argentina was facing a serious subsidies and
management-related problem concerning the over-exploitation of squid just outside
Argentina's 200-mile Exclusive Economic Zone (EEZ) of jurisdiction by distant water fleets.  While
fishing efforts were increasing, catch was diminishing constantly.  If these fleets did not haveproduction incentives in the form of subsidies that ma sked private costs and risks, they would be less
likely to be over-exploiting these squid stocks.  This was a case that could not be solved with better
management in Argentina, as it was occurring outsi de Argentina's EEZ.  It was not possible to justify
economic incentives for fisheries production if these incentives led to over-exploitation of resources,
and aggravated environmental and trade problems.  Fisheries management could not be ignored, butsubsidies were also part of the problem.  As such, the WTO had to be part of the solution and the CTE
should continue its work in this area.WT/CTE/M/26
Page 34
147. The representative of Argentina noted that his Government was not responsible for the
independent, UNEP-sponsored case study on the Argentine fisheries sector.  Argentina noted that the
figures referred to by Japan came from an OECD study.  The study's conclusion was that subsidies
increased resource management problems.  On the distant water fleets operating outside Argentina's
EEZ, he was not willing to identify their nationality at this meeting.  These vessels threatenArgentina's capacity to sustain squid stocks and to use this resource in its EEZ.
148. The representative of the United States thanked UNEP for the comprehensive discussions at
its Fisheries Workshop on how to address fisheries subsidies from a resource sustainability and global
trade perspective.  The United States agreed with the comments by New Zealand, Iceland, the
Philippines and the EC on the need to address the trade dimensions of fisheries subsidies.  The
United States supported continued work in the CTE on fisheries subsidies, particularly for the update
of WT/CTE/W/167 and the subsidies notifications under Article 25 of the SCM Agreement.  TheUnited States noted that while each organization could contribute to the fish subsidies discussion,
given their respective areas of expertise, this work should be coordinated.  The United States
emphasized that the CTE should continue to focus on the elimination of fisheries subsidies, an
initiative that presented an opportunity for a “win-win” outcome.
149. The representative of Mexico welcomed the UNEP Fisheries Workshop, which had increased
Members’ understanding.  Although not much time had elapsed, Mexico supported updating
WT/CTE/W/167, and the notification under the SCM Agreement, which should be descriptive and not
pass judgement on subsidies or their categorization.  Subsidies were a state tool governed by the
SCM Agreement, in which it was stipulated that there were actionable and non-actionable subsidies.
150. The representative of Korea thanked the FAO and the OECD for their work on fisheries
subsidies, and UNEP for its Fisheries Workshop, which had offered an opportunity to enhance
knowledge on this complex issue.  It had been debated for years whether fisheries subsidies affected
resource sustainability and distorted trade.  These debates remained unclear given that some
arguments relied on ungrounded predictions.  Links between subsidies and fisheries sustainability
should be investigated multilaterally and transparently.  A network of international organizationsstudying subsidies should be formed, including th e body specializing in fisheries, the FAO.  The
scope of the discussion should not be restricted to the relationship between sustainability and fisheries
subsidies, but encompass all the factors affecting resource sustainability, including unrestricted
fishing practices such as IUU, open access regimes and the effects of rapid trade liberalization.  Only
then could it be discerned whether subsidies had a negative impact on fisheries sustainability and
whether other factors needed further discussion.  Apart from environmental and economic efficiency,
resultant socio-economic effects of fisheries subsidies should be included.  Rapid industrializationforced the slow-changing fisheries sector into an in ferior situation.  Respect should be given to the
multifunctional purpose of subsidies for food security, conserving the marine environment, preventing
urbanization and countering the high social costs of job re-education.  Korea had always taken a keen
interest in sustainable fisheries programmes, such as the resource richness programme to reduce
fishing vessels, marine ranching, artificial reefs, release of seeds and fingerling;  as well as theHACCP system, enrolment of processing factories, total allowable catches, fishing ground recess
systems based on "fishing ground management law."  Korea encouraged others to share their
experience with sustainable fisheries and build international cooperation.
151. The representative of Chile welcomed the UNEP Fisheries Workshop, and the FAO and
OECD presentations.  Chile rejected the use of instruments, such as subsidies, which impacted
adversely on fisheries sustainability.  Each organization had its field of competence, with the WTO
responsible for trade distorting measures, such as subsidies.  Chile supported updating
WT/CTE7W/167 and the notifications under the SCM Agreement.  Chile asked how
multifunctionality of fisheries supported by subsidies was acceptable for countries such as Chile,
which on one hand may have similar concerns, but on the other, think that those concerns should beaddressed through means that do not distort trade as subsidies do.WT/CTE/M/26
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152. The representative of Japan thanked UNEP, FAO and OECD for their presentations.  The
FAO Expert Consultation's report would be discus sed at the FAO Committee on Fisheries, and would
serve as a basis for further work.  Japan supported FAO's role in advancing work on fisheries
subsidies work from a sustainability perspective.  Japan understood that the report of the FAO Expert
Consultation on fisheries subsidies would be discussed at the upcoming Fisheries Committee meeting,and thus refrained from commenting on it.  Clearly, more work should be done.  Japan felt work on
fisheries subsidies should be continued in the FAO.  Japan was planning to make a proposal on the
holding of a second expert consultation, possibly followed by a government consultation.  Japan
stressed that the OECD fisheries study on the effects of trade liberalization included positive and
negative effects.  Japan was impressed with the two UNEP case studies on the effects of fishery
subsidies on resource sustainability in Argentina and Senegal, which demonstrated that subsidies had
a negative impact on fisheries sustainability when fisheries management was inadequate, whichendorsed Japan’s past assertion.  These case studies illustrated that trade promotion impacted
negatively on sustainability.  This was important given the WTO's trade mandate, which included the
effects of trade as well as subsidies.  If Members focussed only on the subsidies, and ignored the
possible negative effects of trade on sustainability, it would be a biased approach.
153. Japan was puzzled by New Zealand and Iceland's statements.  The initial discussion on
fisheries subsidies had concerned their negative effects on resource sustainability, now the focus was
on trade distortions.  If this were the case, Japan asked why the SCM Agreement could not address the
trade concerns within its mandate.  The SCM Agreement prohibited certain subsidies and provided a
framework within the WTO for addressing actionable subsidies and their trade distorting effects.
Otherwise, the FAO was the appropriate forum in which to discuss sustainable management issues.  Inresponse to Argentina, Japan noted that Japanese squid vessels did not receive subsidies, thus the
problem was a matter of how to share straddling stocks between high seas and coastal fishing nations.
Japan was not aware that squid resources in this area were being depleted, as Argentina asserted.
Japan would like to see the scientific evidence in this respect.  Japan agreed to update
WT/CTE/W/167 and include the recently concluded APEC study, whose conclusion differed from the
old version cited in the Secretariat's paper.
154. The representative of Australia thanked the FAO, OECD and UNEP for their presentations.
Fisheries subsidies would continue to be an active item on the CTE agenda in 2001, building on the
support for further work evident in the lead-up to the Seattle Ministerial Conference.  WTO
discussions were again focusing on a potential new round of negotiations being launched in the near
future, possibly towards the end of 2001.  This provided an opportunity to build support for
negotiations on fisheries subsidies.  Australia supported:  (i) identification of the extent to whichsubsidies were being notified under the SCM Agreement;  (ii) assessment of whether existing WTO
disciplines relating to these subsidies were effective in limiting the impacts of overproduction;  (iii)
assessment of whether additional disciplines were needed to reduce the overall level of support and to
ensure it was provided in less distorting forms and, if considered necessary, what form these
disciplines should take;  and (iv) consideration of the best way the WTO could coordinate its workwith other international organizations.  The Secr etariat should work on fisheries subsidies, in
particular to provide an overview of work to categorize fisheries subsidies, which would assist the
CTE in identifying environmentally harmful and trade distorting subsidies, and assessing how
adequate WTO rules were in disciplining them.
155. The representative of Canada thanked UNEP for a valuable Fisheries Workshop.  Canada
shared Members' concerns on subsidies and their potential to contribute to overcapacity, to cause a
variety of pressures on fish stocks and marine habitat and distort trade.  Overcapacity, overfishing and
other fisheries management issues should be addressed by the FAO.  The FAO International Plan of
Action on the Management of Fishing Capacity aimed to achieve efficient, equitable and transparent
management of fishing capacity.  The Plan of Action took a holistic approach to addressing fishingovercapacity and recommended that the management of fishing capacity should consider all relevant
factors in national and international waters;  one of which was the contribution of subsidies.  MembersWT/CTE/M/26
Page 36
thus should recognize the roles of FAO, OECD , APEC and UNEP in developing guidelines for
managing capacity.  The CTE should not duplicate work already being undertaken in other fora.
There was also a trade dimension to fisheries subsidies and thus the WTO had a role to play in these
discussions.  However, there was a fisheries management component to these discussions, as
recognized by the FAO Plan of Action.
156. On Korea's paper, Canada felt there was value in Members sharing national experiences on
fisheries and the role of subsidies.  All aspects of government financial transfers should be considered,
including their potentially positive role.  Korea provided practical examples of government-funded
programmes that contributed to fish habitat conservation and resource sustainability.  Members should
ensure that such positive contributions were not ignored in CTE discussions.  Canada shared the view
that the potential environmental effects of government financial support to fisheries could not be
isolated from other considerations.  The starting point for the CTE should be how subsidies weredefined.  The SCM Agreement provided the WTO definition of subsidies, which applied to the
fisheries sector.  The SCM Committee should have a role to determine how this definition applied to
fisheries subsidies.  While the CTE had a positive role to play, the elimination of fisheries subsidies
comprized only part of the solution to global overcapacity and overfishing.  The FAO was the forum
best able to take a comprehensive approach to this issue.
157. The representative of Norway thanked FAO, OECD and UNEP for their presentations.
Norway recognized that, in many cases, government transfers to the fisheries sector contributed to
overcapacity, overexploitation and fish stock de pletion.  Fisheries subsidies should be reduced.
However, fisheries subsidies were only one of several elements that might have a negative impact on
sustainable fisheries.  Lack of fisheries management regimes was a key factor, which causedunsustainability and overfishing.  If agreement were to be reached to include fisheries subsidies in
WTO negotiations, these subsidies needed to be identified and categorized.  To progress on removing
environmentally damaging and trade distorting subsidies, concrete steps were needed.  Further
research was needed.  Work in the FAO and the OECD, as well as UNEP, was contributing to
categorizing fisheries subsidies.  The WTO had a central role in this context.  Norway supported theupdating of WT/CTE/W/167 in light of recently completed work, and encouraged cooperation
between the FAO and CTE Secretariats to ensure a sufficient scientific basis for further CTE work.
158. The representative of Argentina noted that his Government was not responsible for the
independent, UNEP-sponsored case study on the Argentine fisheries sector.  Argentina noted that the
figures referred to by Japan came from an OECD study.  The study's conclusion was that subsidies
increased resource management problems.  On the distant water fleets operating outside Argentina's
EEZ, he was not identifying their nationality.  These vessels threaten Argentina's capacity to sustainsquid stocks and to use this resource in its EEZ.
159. The representative of New Zealand clarified that his delegation had never seen this issue as
solely a trade, environment, or development issue.  New Zealand's contribution had been to view
these issues as intersecting.  New Zealand's concern was that as CTE analysis had developed that a
number of Members wished to minimize the trade dimension of the debate and seek comfort in thenotion that it was such a complex sustainability issue that the WTO could not deal with subsidies as
they were only part of the sustainability aspect.  The SCM Agreement applied to the fisheries sector,
but whether its provisions were adequate to address all the issues raised in relation to fisheries
subsidies, trade and broader sustainability concerns was a question that had been raised.  Ongoing
work to examine and categorize different financial transfers in the fisheries sector suggested that werequestions in this regard that remained to be answered.
160. The representative of Iceland supported New Zealand's response to Japan;  Iceland had not
changed its position on this issue.  The elements at stake were trade, resource sustainability and
sustainable development.  Discussion at the UNEP Fisheries Workshop and the CTE raised the issue
of whether it were possible to focus on one of these aspects.  Iceland stressed that the impact ofWT/CTE/M/26
Page 37
resource sustainability could not be isolated from trade;  subsidies had implications domestically and
distorted global markets, which undermined resource sustainability.  Iceland also stressed the critical
role of the WTO in addressing these issues.
161. It was agreed that the Secretariat would update WT/CTE/W/167 to include recently
completed work on fisheries subsidies in relevant international fora.
Non-Ferrous Metals
162. The representative of Chile referred to international initiatives to prepare a plan of action for
the sustainable development of non-ferrous metals, which was supported by the International Copper,
Lead and Zinc Study Groups.  As the largest producer of copper, Chile participated in the
Copper Group along with over 20 countries, as well as producers, consumers, international
organizations and NGOs, to enhance sustainable use in this sector.  Work focused on promoting theproduction, use, recycling and reuse of products, and manufacturing products which were efficient
and environmentally sound.  The initiative sought to find common ground with respect to emerging
quality standards and to prepare for environmental issues in order to avoid that this sector would be
unjustifiably penalized.  The sector had to comply with certain standards that reflected the
characteristics of each country and region.  Investment in policies, technology and human resources tomanage resources sustainably had been made in the non-ferrous metals sector.  Chile hoped that non-
ferrous metals could be given greater attention in the CTE to enhance capacity to deal with
environmental considerations.
LINKAGES BETWEEN THE MULTILATERAL ENVIRONMENT AND TRADE AGENDAS
Items 1 and 5: The relationship between the provisions of the multilateral trading system and trade
measures for environmental purposes, including those pursuant to MEAs;  and the
relationship between the dispute settlement  mechanisms in the multilateral trading
system
163. The representative of New Zealand referred to his delegation's submission, WT/CTE/W/162,
which emphasized that the negotiation of MEAs remained an essential mechanism through which to
address environmental objectives.  Trade measures w ould continue to be used in MEAs and, thus, it
was important to enhance understanding of and seek clarity in the relationship between MEAs and
WTO rules.  New Zealand also emphasized that the range of potential conflicts between MEAs and
the WTO should not be exaggerated.  However, there may be a lack of clarity when provisions of an
MEA were unclear as to the action they mandated, even among MEA Parties, or in situations where
MEA Parties were applying trade measures against a non-party.  In the context of these observations,New Zealand proposed, inter alia , the consideration of a consultative mechanism to help clarify the
WTO-MEA relationship.  At its meeting on 24-25 October 2000, Members had expressed interest in
this proposal and sought further information.  New Zealand's submission, WT/CTE/W/180, responded
to this request by elaborating precisely how such a consultative mechanism might operate in practice.
164. New Zealand noted that the consultative mechanism was purely voluntary.  As it was the
process which was important, the mechanism did not seek to prescribe a "one size fits all" solution.
New Zealand acknowledged the important point made by Members at the October meeting that,
depending on the circumstances, there would always be a wide range of possible policy options for
consideration.  A solution that may work in one case may not work in another.  Use of the proposed
voluntary mechanism did not rule out the use of MEA-related trade measures.  New Zealand
recognized that, in certain circumstances, trade m easures could play an important role in delivering
effective and efficient solutions to address environmental problems.  Use of the voluntary mechanism
did not preclude the parties participating in the consultative process from engaging in other actions.WT/CTE/M/26
Page 38
165. New Zealand felt that the use of a voluntary instrument for consultation may:  (i) facilitate an
improved understanding of differing perspectives on particular problems;  (ii) allow for the
identification of a wider range of responses/solutions to a particular situation;  (iii) maximize the
potential for an agreed solution which was satisfactory  to all parties;  (iv) minimize the potential for
conflict between parties on trade and environmental policies, while avoiding inefficient environmentaland economic outcomes;  (v) ensure a substantive engagement by countries to identify first-best
policy solutions;  and, in particular, (vi) enhance transparency, while reducing the potential for
discriminatory or arbitrary measures.
166. The consultative mechanism could assist in a practical manner the attempts to come to terms
with the complexity of this relationship.  New Zealand's proposal should be seen as complementing
other suggestions in the CTE, which were designed to seek clarity in the WTO-MEA relationship.
New Zealand supported continued and substantive information exchanges with MEA Secretariats.New Zealand was also willing to consider a "code  of conduct" for MEA trade measures.  Over the
medium term, MEA negotiators representing countries which were WTO Members should consider
including voluntary consultative mechanisms in new MEAs along the lines proposed by
New Zealand.  In the meantime, New Zealand recommended that WTO Members participating in
existing MEAs might consider using a consultative  mechanism voluntarily to assess whether a trade
measure were the most effective and efficient instrument to address the environmental problem.
167. The representative of India supported New Zealand's approach to a consultative mechanism,
as opposed to the approach preferred by the EC and Switzerland.  India understood that that this
approach:  (i) acknowledged that trade measures were not the best solutions for all environmental
problems, which was India's position;  (ii) did not seek, like other approaches, to automatically widenthe environmental window in GATT Article XX, or to fundamentally change the TBT or
SPS Agreements;  and (iii) emphasized multilateral as opposed to unilateral action, which would
oblige those envisaging a trade measure to discuss better solutions with exporting countries before
resorting to trade measures.  India asked whether it was possible to incorporate the development
dimension in the consultative mechanisms, and to elaborate on positive measures for developingcountries, such as financial assistance, capacity building and technology transfer.  These were the
first-best policy instruments to achieve environmental goals.
168. The representative of Mexico supported New Zealand's views, which stressed that trade
measures were not always adequate to achieve environmental goals.  Mexico gave the example of a
situations in which a developing country could not comply with an MEA provisions for various
reasons.  As a result, this country would be unable to comply with the environmental goal, and would
be punished from a trade perspective, as it would not be able to fully exploit its resources.  Thisscenario was why Mexico objected to including trade measures in MEAs.  Mexico supported
New Zealand's paper because it clearly underscored the situation in which a trade measure was not
necessarily the best solution in all cases.  There were other options that should be considered before
resorting to trade measures.  Mexico had some doubts about New Zealand’s conclusions, particularly
concerning applying the proposed mechanism in new MEAs.  The first-best option would be toinclude all the options and measures referred to by New Zealand directly in the MEA, rather than
creating a voluntary consultative mechanism outside the MEA.  Mexico felt that New Zealand’s
approach should be included in the MEA itself to generate obligations for MEA Parties.
169. Mexico also had concerns about New Zealand’s proposal for the consultative mechanism to
be applied to existing MEAs.  There were two possibilities.  Mexico understood that New Zealandstarted from the premise that the Member applying the trade measure had a right to do so.  Thus, in
the approach of a consultative mechanism, there was already a presumption of non-compliance of the
provisions of an MEA on the part of one of the Parties.  Mexico also referred to the suggestion that,
rather than resorting to a voluntary mechanism, a WTO Member that was not party to an MEA and
that was applying a trade measure should ascertain whether it was in compliance with its WTOobligations.  Mexico stressed that the WTO contained a range of dispute settlement procedures thatWT/CTE/M/26
Page 39
could be used, such as consultations.  Mexico asked where New Zealand’s consultation mechanism
would actually take place, with the framework of the WTO or an MEA. Mexico sought further
clarification of the structure and procedure of the mechanism, and felt that at this stage it would not be
viable to make any recommendations on this matter.
170. The representative of Hong Kong, China said that New Zealand’s approach to a voluntary
consultative approach was headed in the right direction.  Hong Kong, China, however, was uncertain
as to whether this mechanism were pragmatic and could provide the legal certainty sought by some in
this debate.  The success of the proposed mechanism depended on, among others, the willingness of
disputing countries to cooperate.  The fact that countries would likely adopt different policy
instruments given diverse circumstances raised concern about consistency and discrimination.
Hong Kong, China would examine the proposed m echanisms in detail;  Hong Kong, China agreed
with Mexico that certain aspects needed further clarification.
171. The representative of Korea saw the merits of New Zealand’s paper in two aspects. There had
been no conclusion to discussions on the MEA-WTO relationship given Members’ wide differences
of views. First, New Zealand’s proposal provided  a practical way to deal with possible WTO-MEA
conflicts.  Second, New Zealand addressed the concerns of many Members, while accepting the
effectiveness of trade measures in achieving global environmental objectives.  Trade measures wereone possible option envisaged in MEAs and should be the last resort, used only when other options
had been exhausted.  New Zealand’s proposed consultative mechanism provided the process through
which parties could find the most appropriate way to settle a potential dispute.  The CTE should
examine the idea of making the proposed mechanism more binding so that if a party indicated its
intended to resort to the mechanism, the othe r party would have to respond to that request.
172. The representative of Brazil felt that New Zealand’s proposal was a constructive approach to
the issue of WTO-MEA compatibility.  Considering that New Zealand had not proposed amending,
changing or clarifying WTO Agreements, Brazil supported the consultative mechanism as a step
forward.  Brazil expressed certain doubts concerning the operation of the mechanism.  If it were
proposed that the mechanism would operate between MEA Parties, it would not be necessary as most
MEAs already contained mechanisms to deal with trade related measures, e.g. the Basel Convention
and CITES.  The next step should be to examine how MEAs would deal with New Zealand’s
proposed consultative mechanism.  Brazil understood that New Zealand was referring to a situation
involving an MEA Party and a non-party that was applying a trade–related measure that would affect
the MEA Party.  In this situation, New Zealand’s pr oposed mechanism would be useful.  Brazil asked
whether the proposed mechanism would operate on a bilateral level, as suggested by Mexico, or a
multilateral level, which would not be in the MEA itself if an MEA non-party were involved.  Brazilasked for clarification on the operationalization of the proposed mechanism, and expressed concern
about bringing such a mechanism into the WTO.  It might be possible to further discussion of the
proposed mechanism in the CTE Information Sessions.
173. The representative of Malaysia said New Zealand’s proposal merited further discussion.
New Zealand suggested an approach whereby MEA- Parties and non-parties could meet to consider
the range of available options, particularly those m easures consistent with Article XX, to resolve a
potential dispute.  Malaysia agreed with Mexico a nd India, that the first-best measure was seldom a
trade restriction, but a measure which provided incentives and assistance to solve the environmental
problem.  Malaysia agreed that the proposed mechanism might not deliver mutually satisfactory
solutions, and felt that trade measures should not be put in place before trade consultations took place.Countries should await the conclusion of consultations before putting in place a trade measure.
Malaysia asked the extent to which the mechanism worked on a voluntary basis;  whether third
parties, such as interested WTO Members, could be involved;  whether parties would have to agree
that the first-best option need not be a trade measure before consultations began;  whether this would
circumscribe the right to WTO dispute settlement if the outcome were not mutually satisfactory;  andwhether a trade measure would be subject to the requirements of Article XX?WT/CTE/M/26
Page 40
174. The representative of the European Communities said New Zealand’s paper had contributed
constructively to discussions on the WT-MEA relationship.  The idea of a voluntary consultative
mechanism merited consideration.  The EC felt that  the way forward would likely have to be found in
a mixture of elements, as proposed by the EC at the 24-25 October 2000 meeting.  New Zealand’s
proposal contained procedural approaches that could be helpful in tackling environmental problemsmore directly and effectively and in a way that was least-trade distortive, whilst acknowledging that
there would sometimes be a need for trade measures in MEAs.  Although the voluntary nature of a
consultative mechanism could play a useful role in a package of elements, the EC felt that any
package of complementary elements would also need to include some form of accommodation
mechanism in order to deal with the non-party issu e.  The EC recalled the benefits of MEAs, namely
that they were the most effective way of tackling global environmental problems, and that ensuring
support for MEAs helped discourage unilateral action.
175. The representative of the United States expressed the support of her delegation for
New Zealand’s emphasis on the importance of clear dr afting of trade-related provisions in MEAs.
The United States noted that many Parties participating in recent MEA negotiations were WTO
Members and had included trade experts in their delegations.  The United States felt that such
cross-fertilization between trade and environment experts, as well as more clarity in trade-relatedMEA provisions, were valuable suggestions.  On  New Zealand’s proposed consultative mechanism,
the United States wished to raise some key questions before it responded to the substance of the
proposal.  The United States asked what the venue for, and the form of, the proposed mechanism
would be, citing these as aspects that would be crucial to its view of the mechanism.  Specifically, the
United States asked whether the mechanism would be housed in the MEAs, in the WTO, orelsewhere.
176. The representative of Canada said New Zeal and’s paper was constructive.  Canada would
review the recent proposals on the WTO-MEA relationship, and comment further at the June meeting.
177. The representative of Indonesia agreed with New Zealand that trade measures were seldom
the first-best policy to achieve environmental objectives, and that environmental problems often could
not be tackled by trade measures.  It was necessary to determine the root of the environmental
problem and find a way to solve it.  Moreover, trade measures were only one tool used to address
environmental concerns.  Solutions would also differ given a country’s development level.  Thus,
consensus among the parties to a potential dispute as to how best to solve a problem was needed.
Although the possibility of WTO-MEA conflicts was limited, Indonesia felt New Zealand’s proposals
were an interesting tool to achieve greater synergies between trade and environment.
178. The observer of UNEP said that the Chairman’s summary of the UNEP-sponsored meeting on
Enhancing Synergies and Mutual Supportiveness of MEAs and the WTO in Geneva
on 23 October 2000 had been circulated in  WT/CTE/W/184.  As follow-up, UNEP was cooperating
with the WTO and MEAs Secretariats to prepare a paper on compliance and dispute settlement in
MEAs and the WTO, which were vital topics within UNEP and MEAs, as in the WTO.  UNEP also
intended to circulate this joint paper in preparation for its 26 June meeting on this issue.  TheExecutive Secretary of the CBD Secretariat had indicated interest in collaborating with UNEP on an
assessment of the impact on biodiversity of specialization in the agricultural sector.  The
UN Convention to Combat Desertification and CITES had also expressed interest in exploring the use
of environmental assessments to identify possi ble “win-win” opportunities arising from WTO and
MEA implementation.  These possibilities would be explored at the UNEP Ministerial Meetingon 20-22 March.  The potential for enhancing technology transfer by identifying synergies between
the relevant MEAs and the TRIPs Agreement c ould strengthen MEA implementation, and benefit
sustainable development.  This would require explor ation of the technology transfer provisions in the
WTO and MEAs.  It might be worth exploring this issue first in the context of an individual MEA
such as, for example, the Basel Convention, whic h had shown interest in pursuing this matter.
Observer status for MEAs and UNEP in WTO Bodies, including the General Council, theWT/CTE/M/26
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TRIPs  Council and the Agriculture Committee, was vital in order to enhance transparency and
collaboration, particularly on MEA-UNEP-WTO synergies.  Thus, UNEP urged Members to agree to
the pending requests for observer status in the relevant WTO Bodies.  Further UNEP activities would
need to take into account the World Summit on Sustainable Development (WSSD) in Johannesburg in
2002, which would follow up on the implementation of Agenda 21 , adopted at the 1992 UN
Conference on Sustainable Development.  UNEP hope d that efforts to enhance MEA-WTO synergies
would yield analytical policy inputs for the WSSD.
179. The representative of Switzerland appreciated New Zealand's constructive proposals.
Switzerland shared New Zealand’s view that WTO rules contained considerable scope for the use of
trade measures for non-trade objectives, but that there was nevertheless a potential for WTO-MEA
conflicts.  Any conflicts should be addressed through preventive mechanisms, such as:  (a) drafting
trade-related provisions in MEAs clearly and precisely;  (b) developing solid dispute settlementmechanisms in MEAs;  (c) taking into considerat ion consultative mechanisms;  and (d) establishing
informal mechanisms for a broader dialogue on issues related to the WTO-MEA relationship, which
could include the WTO, UNEP and MEA Secretariats , as well as NGOs and industry.  Switzerland
felt consultative mechanisms played an important role in preventing conflicts, specifically in cases
where measures were not explicitly and precisely drafted in MEAs.  In cases where trade measureswere precisely drafted in MEAs, consultations were not of the same relevance.  Switzerland said the
issue of consultative mechanisms, although important, was not the main problem;  what remained
unclear was the WTO-MEA relationship.  Switzerland was convinced, as set out in its submissions,
that it would be useful to clarify this relationship through a mutual supportiveness approach.  Thereby,
the WTO and MEAs would focus on their primary competence and respect each other’s competence.Assessing whether a specific measure were discriminatory or protectionist would fall within WTO
competence, while determining the necessity and proportionality of a measure to achieve an
environmental goal would remain the competence of the MEA.
180. The representative of New Zealand said it would be possible to incorporate development and
other positive measures into the mechanism in response to India and others.  New Zealand’s proposed
mechanism could incorporate a hierarchy of policy options, in which analysis of the first-best option
would deliver the efficient economic and environmental outcome.  On Mexico’s comments,
New Zealand said it was difficult to comment on the idea of including the entirety of policy options in
future MEA negotiations.  The consultative mechanism had been designed to bring parties together to
resolve potential conflicts.  The issue of the venue of the mechanism should be solved pragmatically.
If the conflict were between two MEA Parties, th e MEA would be a logical place in which to open
consultations.  If a non-party were involved, UNEP would be a potential forum.  New Zealand had not
addressed this issue in its paper as it was hoped that it could be elaborated in the discussions.  On the
form and procedures of the mechanism, New Zealand preferred a practical approach, whereby the
parties could establish mutually acceptable terms, as opposed to developing a rigid set of structures
and specific procedures.  On Malaysia’s question, New Zealand said that if a compulsory mechanism
had been proposed, the discussion would have been extremely short.  Thus, New Zealand hadsuggested a voluntary mechanism.  The decision to involve third parties in the consultations should be
left to the mutual agreement of the concerned parties.  The proposed instrument was not intended to
circumscribe WTO legal procedures as it was designed to be a voluntary, consultative mechanism.
Item 10: Appropriate arrangements for relations with intergovernmental and non-governmental
organizations referred to in Article V of the WTO
181. The representative of Canada said that, at th e 24-25 October meeting of the CTE, Canada had
noted its appreciation for the WTO regional seminars on trade and environment and confirmed that
Canada  would  fund the seminar for the Caribbean region later in 2001.  Canada had also suggested
that the CTE consider holding another symposium on trade and environment, along the lines of thesymposia held in 1997, 1998 and 1999.  This suggestion was in keeping with Canada's position on
enhancing WTO transparency.  Canada believed that such events would help to inform the publicWT/CTE/M/26
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about the role of the WTO, and build support for the multilateral trading system.  However, given the
considerable effort that went into organizing such symposia, and the practical constraints on the
Secretariat, particularly in the lead-up to the 4th WTO Ministerial Conference in Qatar, alternative
approaches should be examined as it might not be advisable to hold a symposium in the next few
months.  Canada attached importance to the Secretariat continuing its public outreach efforts so as topromote a constructive dialogue on trade and environment and further understanding of WTO work.
182. The representative of Peru recalled that Peru had hosted a Latin American seminar to increase
understanding of trade and the environment and the WTO in March 2001.
183. The representative of the United States thanked Canada for its proposal, as it followed in the
spirit of past outreach and transparency efforts.
184. The representative of the European Communities called for public outreach in the approach to
the 4th WTO Ministerial Conference in Qatar, the form of which would need to be decided.
Closing remarks by the Chair
185. The Chair noted the importance of Members’ contributions to progressing CTE work and
deepening the analysis.  The Chair encouraged the continued participation of developing countries,
especially from Africa, in the work of the CTE and emphasized the need to look for financialresources to permit such participation, if possible for capital based experts.  It was also necessary to
increase domestic coordination between the various Go vernment Ministries responsible for trade and
environment, particularly in the developing countries.  The Chair also expressed concern about the
management of hazardous wastes, which constitute d an emergency situation in Africa, and which
should be solved as quickly as possible.
186. Members expressed appreciation for the leadership of Ambassador Biké and for the progress
made in the Committee this year.  The Chair’s insight and knowledge had permitted a constructive
discussion and exchange of ideas on the wide range of issues under the CTE mandate.
187. Furthermore, the Chair stated that the communications of delegations had speeded up the
debate on certain aspects of the work programme of particular importance.  These contributions and
communications have been the best way of going into an analysis in greater detail and pushing the
debate forward.  The debate had been a very lively and productive one. The chair concluded by
thanking the Secretariat for its support as well as all delegations for the constructive discussions and
exchanges of ideas.
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