99-1343  MORE PRESS RELEASE 
PRESS/TE/028 
31 March 1999 
 WTO COMMITTEE ON TRADE AND ENVIRONMENT ADDRESSES ITEMS RELATED 
TO MARKET ACCESS, INCLUDING ENVIRONMENTAL ASSESSMENTS, 
ECO-LABELLING, AND THE ENVIRONMENTAL BENEFITS OF 
TRADE LIBERALIZATION IN AGRICULTURE, ENERGY 
FISHERIES, FORESTRY AND LEATHER 
 
  
The Committee on Trade and Environment (CTE) met on 18-19 February 1999 under the 
chairmanship of Ambassador Chak Mun See, Singapore's Ambassador to the WTO.  The CTE 
addressed items on its work programme related to the theme of market access.  Members made 
statements on environmental assessments of trade ag reements, eco-labelling and certification, and the 
environmental benefits of removing tr ade restrictions and distortions.   
With respect to eco-labelling, Brazil contribut ed a new paper on its certification programmes 
for leather and forestry products.  For discussion at this meeting, the Secretariat also prepared a new 
paper on technical barriers to the market access of developing countries. 
Under the item dealing with market access and the environmental benefits of trade 
liberalization, Members continued the sectoral discussi ons of agriculture, energy, fisheries, forestry 
and leather.  New Zealand and Zimbabwe presented new papers on this item in general.  Concerning 
the agricultural sector, Norway, Japan, and Brazil contributed national experience papers.  A new 
paper on agricultural export subsidies, cosponsored by 14 countries, was also discussed.  With respect 
to the fisheries sector, Iceland contributed a ne w paper on its fisheries management system.   
UNEP informed the CTE of its renewed mandate  to address trade and environment issues, 
which had been agreed at the recent session of the Governing Council of UNEP. 
Observer status in the CTE was exte nded to the South Pacific Forum. 
A detailed report of the February meeting of the CTE follows.  Papers referenced in this Bulletin are 
available upon request to the Trade and Environmen t Division of the WTO Secretariat or can be 
accessed through the WTO web site at <<www.wto.org>>. 
 
 The CTE´s next meeting will be held on 28 -29 June 1999 under the new chairmanship of 
Ambassador Major, Hungary’s Amba ssador to the WTO.  The June meeting will address the items on 
the CTE’s work programme related to the linkag es between the multilateral environment and trade 
  
TRADE AND ENVIRO NMENT BULLETIN PRESS/TE/028 
Page 2/3 
 
  MORE  
agendas, and include an Information Session with MEA Secretariats. 
MARKET ACCESS CLUSTER 
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 
 
The EC, Canada and the US referred to the u sefulness of environmental assessments of trade 
agreements.  The EC said that it had commissioned  a study by external experts to analyze the 
environmental impacts of trade measures and agreements.  In preparation for the 3
rd WTO Ministerial 
Conference in November 1999, the EC had also announced that it would undertake a sustainable 
impact assessment of the proposed round.  
Canada solicited views on the possibility of co mbining efforts to undertake an environmental 
review of the next WTO negotiati ons.  As Canada was required to perform a national environmental 
review for these negotiations, as were others, it may be more efficient to work together.  It would also 
be important to review MEAs from a trade perspectiv e, Canada said.  In this respect, domestic policy 
coordination between trade or economic ministri es and environment ministries was important.   
The US and Canada recalled their assessments  of the Uruguay Round which were available 
from the WTO Secretariat.  The US suggested th at Governments that carried out assessments could 
make them available to share experiences in prepar ation for the next round.  The EC and another 
Member said that sustainability would need to be defined at the national level within each Member's 
national economic and social contexts. 
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 
 
Brazil introduced a new paper
1 on the development of its voluntary environmental 
certification programmes for leather and forestry products.  In presenting this national experience 
paper, Brazil was following the recommendati on in paragraph 185 of the CTE's 1996 Report2 on the 
importance of adhering to the WTO Agreement on Technical Barriers to Trade (TBT).  
Members welcomed Brazil’s contribution of its national experience with certification.  The 
US said that the challenge to Brazil was to ensure  the credibility of such programmes.  The EC and 
the US welcomed further information from Braz il concerning stakeholder participation as the 
programmes were developed.  Canada noted that Br azil's description of its forest certification scheme 
reflected the principles set out by the Intergovernmental Panel on Forests.  
For discussion at this meeting, the Secretariat had also prepared a new paper on technical 
barriers to the market access of developing countri es.  Many Members, including Argentina, Canada, 
Colombia, Hong Kong, China, Korea, Norway and Uruguay said that that although the Secretariat's 
paper cited recent studies which concluded that envi ronmental requirements need not restrict market 
access, this issue may become more significant.  Colombia recalled that its national experience paper 
on the effects of eco-labelling on its flower sector a nd Canada’s paper on forestry highlighted some of 
                                                      
1WT/CTE/W/108. 
2WT/CTE/1. PRESS/TE/028 
Page 4  
  MORE the difficulties that can arise in this regard.
3  The CTE would benefit from empirical evidence of 
sectors in which barriers to market  access had been experienced. 
Several Members, including Brazil, the US and Canada, emphasized the importance of the 
TBT Agreement, which suggested that labels be developed in a transparent and non-discriminatory 
manner.  There is general agreement in the CTE that if possible voluntary eco-labelling should not 
impede market access.  Uruguay said that Members s hould be assisted to prepare TBT notifications of 
environment-related regulations, as this would in crease awareness and lessen their trade impact.   
Norway suggested that "rules of the road" for eco-labelling be considered in the WTO 
drawing on work in other international organizations , particularly UNEP and ISO.  Norway and Korea 
said that eco-labelling should be developed based on these multilaterally agreed rules.  Argentina 
proposed that the CTE draw up a checklist of step s to ensure that the use of eco-labels was 
non-discriminatory;  this checklist should include:  ex ante  transparency during their development;  
equivalency of standards;  and special and differentiated treatment  for developing countries.  In 
addition to technical assistance, developing count ries should be given longer periods to phase-in 
standards in order to adapt to emerging environmental requirements.   
The TBT Agreement requires that positive cons ideration is given to the acceptance of 
equivalency of technical regulati ons (Article 2.7), however ther e is no similar requirement for 
voluntary standards in the TBT Code of Good Practi ce for the Preparation, Adoption and Application 
of Standards.  In this respect, New Zealand suggest ed that equivalency of st andards be developed to 
facilitate trade and avoid the difficulties that nati onal standards can have on exporters.  New Zealand 
welcomed Members' views on its paper to the TBT Committee.4  Canada said that it would address 
equivalency for certification and sustainable forest management in the TBT Committee.  The EC said 
that equivalency was the most ambitious wa y to resolve problems in this regard. 
 
Life cycle considerations were being used to manage environmental impacts and non-product-
related process and production methods (PPMs). Noting that these were already the basis for 
voluntary eco-labelling and certification, Canada sugg ested that WTO rules be strengthened to take 
into account such developments.  The US and others looked forward to hearing Canada's views in this 
respect. 
The EC said that environmental standards were not different from other standards.  It would 
be useful to identify if the environmental objectiv e of standards created problems different to those 
created by standards in general, to which the TBT Agreement was designed to respond.  
Proportionality was crucial with respect to mandatory standards;  there may be a higher, but not 
necessarily disproportionate impact of sta ndards on developing countries and SMEs.  
Japan said that developed countries should pr ovide technical assistance to developing 
countries on eco-labelling.  The US noted the bene fits to health, safety and the environment of 
standards in the country which maintained them and also to exporting country producers which met 
them; including a cleaner domestic environment, safe r domestic food supply, technology transfer and 
greater marketability of products in third markets.  
The EC, Argentina, Korea and others welcom ed the new ISO eco-labelling standards.  
Hong Kong, China, ASEAN and others said that deve loping country participation in international 
standardization was inadequate;  the development of  ISO 14000 was a case in point.  In this respect, 
Egypt said that it was important to:  (a) allow devel oping countries to participate in standards setting;  
(b) provide developing countries with technical assi stance to improve environmental performance;  
                                                      
3WT/CTE/W/76-G/TBT/W/60 and WT/CTE/W/81-G/TBT/W/61. 
4G/TBT/W/88.   PRESS/TE/028 
Page 5 
 
  MORE and (c) increase harmonization and mutual recognition of eco-labels while ensuring that one country's 
standards were not imposed on an other to obtain recognition.  
Item 4  The provisions of the multilateral trading system with respect to the 
transparency of trade measures used for environmental purposes relating to 
products, including standards and tec hnical regulations, packaging, labelling 
and recycling 
As agreed by the CTE in March 1998, a WTO Environmental Database collating trade-related 
environmental notifications is prepared annually by th e Secretariat.  At this meeting, the CTE agreed 
on the glossary of search words to up-date this database for 1998.5 
Item 6 The effect of environmental measures on market access, especially in relation to 
developing countries, in particular to  the least developed among them, and 
environmental benefits of removing trade restrictions and distortions 
 The CTE continued its sectoral discussion under this item based on Members’ national 
experience in order to further the analysis of the e nvironmental benefits of removing trade restrictions 
and distortions.6  Members made general comments on item 6 and then analysed the agriculture, 
energy, fisheries, forestry and leather sectors. 
 
General comments  
 
Australia presented a new paper7 on the potential for trade reforms to offer opportunities for 
"win-win-win" outcomes that contribute to devel opment and social equity objectives as well as trade 
and environmental improvements.  The potential for such outcomes was highlighted by the magnitude 
of subsidization.  Estimates of the subsidies to fi ve key sectors, energy, transport, water, agriculture 
and fisheries ranged from US$ 870 to 1,000 billion.   Australia's paper focused on agriculture and 
fisheries as these sectors had high levels of market distortions and the associated environmental impacts were of interest.  Australia's paper also id entified a range of other sectors where tariff peaks 
and tariff escalation remained significant problems and which should also be a priority for trade 
reform.  Australia proposed that the trade reforms in  its paper form part of the recommendations to the 
3
rd Ministerial Conference. 
To put on record some of Africa’s concerns, Zimbabwe contributed a new paper8 containing 
the statement of its Minister of Mines, Envir onment and Tourism at the WTO Regional Seminar on 
Trade and Environment for Sub-Saharan Africa in Harare, 8-10 February 1999.  For Africa, the 
challenge was to strike a balan ce between trade liberalization, environmental protection and poverty 
alleviation.  African governments had adopted struct ural economic reforms, at great social costs, 
which emphasized the pursuit of export led-growth to facilitate their integration into the global 
economic system.  Yet, these reforms, carried out at the behest of multilateral financial institutions with the support of Africa's development partners, co uld only achieve the desired results if they were 
buttressed by enhanced mark et access for African exports.  Zimbabwe was concerned about the use of 
trade distorting measures, such as tariff peaks and tariff escalation, export subsidies and unilateral 
measures, that targeted products of export interest  to developing countries, particularly in Africa.  
  
                                                      
5The Environmental Database for 1997 is contained in WT/CTE/W/77. 
6See the Secretariat's document WT/CTE/W/67 and Trade and Environment Bulletins No. 23 and 27 . 
7WT/CTE/W/105, which develops the themes set out in Australia´s 1996 paper, WT/CTE/W/36.   
8WT/CTE/W/110. PRESS/TE/028 
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  MORE Comments on Australia’s paper 
Argentina, ASEAN, Canada, Hong Kong, China,  Morocco, New Zealand, the US and Uganda 
were among the delegations which supported Australia's paper and agreed that the WTO's major 
contribution was to identify and eliminate existi ng trade barriers which led to environmental and 
developmental problems.  The advantages of eliminating these trade barriers rested on the contribution of trade liberalization to better resour ce allocation.  Reducing tariffs also would allow 
developing countries to more actively participate in  the expanding trade in further processed products. 
Morocco, Uganda, ASEAN, Canada, Argentina a nd others welcomed the inclusion of the 
development dimension in Austra lia’s paper, which recognized the link between poverty and the 
environment;  the more economic resources developing countries had to devote to poverty alleviation, 
the greater the WTO's contribution to environmental protection.  Korea said that as stages of 
economic development and policy priorities were  not homogeneous among developing countries, it 
could not be assumed that liberalization w ould have positive environmental effects. 
Japan appreciated Australia's paper, which encompassed the possib ility of measures to 
enhance the environmental benefits from agriculture .  Japan was concerned that the paper did not 
properly address varying natural conditions, nor an alyse sufficiently the long term environmental 
effects associated with production shifts in th e agricultural sector.  Japan was concerned about 
Australia’s reference that removing distorting polic ies was generally more effective.  There were 
cases in which environmental measures should be used , regardless of their efficiency, if appropriate 
alternative measures were not available.   
Norway and Japan felt that a certain degree of production linked domestic support was 
necessary to the extent that multifunctionality was provided jointly with agricultural production.  A 
combination of policy measures including appropria te re-coupled support was crucial to maintain 
agricultural multifunctionality.  Norway agreed with Australia's paper that some subsidies may be 
justified on efficiency or equity grounds to addr ess market failures, reward  positive externalities or 
meet social objectives, an aspect which was described in Norway's paper.  In recognizing the need for 
targeting agricultural policy measures as far as po ssible to minimize trade distortions and avoid 
possible inconsistencies among measures, Norway  cautioned against restricting the scope and 
flexibility of environmental policy measures. 
The key implication that the EC drew from Aust ralia’s analysis was that there were not any 
black and white solutions.  Agricultural multifunctiona lity illustrated how a change in trade policy can 
have positive and negative effects depe nding on the perspective.  To ensure that the full benefits of 
liberalization, which were not automatic, were captured, the EC was undertaking a broad impact 
assessment of the next phase of WTO liberalization. 
Japan, Switzerland, Korea, Turkey, Norway and the EC said that although a sectoral analysis 
under this item was useful, complex linkages existe d, such as between agricultural production and the 
environment.  It was difficult to establish the s ources of positive and negative environmental effects 
and make cross-sectoral conclusions.  Thus, the C TE should maintain a balanced, holistic approach to 
the discussions.  Turkey said that the CTE should expand the sectors examined. 
Comments on Zimbabwe’s paper 
Members welcomed Zimbabwe’s submission.  Several Members, including Uganda, ASEAN, 
and Morocco appreciated Zimbabwe’s focus on the c oncerns of developing countries.  The US, the 
EC, New Zealand, Canada, and othe rs welcomed the greater particip ation of developing countries in 
the CTE, in the preparation of the 3
rd Ministerial Conference, and in the High Level Symposia in PRESS/TE/028 
Page 7 
 
  MORE March 1999.  The EC, Uganda and others referred  to the value of the WTO Regional Seminars on 
Trade and Environment in contributing to the awareness of the issues raised in this area.9   
As set out in Zimbabwe and Australia’s papers, several Members said that under this item the 
CTE should examine ways in which to increase ma rket access.  New environmental requirements, 
which eroded market access, particularly for developing countries, should be examined on a horizontal basis in the context of existing discip lines, such as the TBT and SPS Agreements.  The EC 
noted the tension referred to in Zimbabwe’s paper on the legitimacy of national environmental health 
and safety goals and the concerns expressed, particularly by developing countries, that these goals will be used as an excuse for protectionism.  This tension had emerged in the discussion on eco-labelling.  The EC considered Zimbabwe’s co ncerns to be the key to moving the trade and 
environment debate forward.  This year repr esented a window of opportunity to build confidence 
among WTO Members as to the possibility to clarify the ways in which legitimate goals could be 
pursued without exacerbating the conc erns over covert protectionism.  
Agriculture 
Norway introduced a new paper
10, which identified the environm ental benefits provided by 
Norway’s agricultural sector and the correlation be tween the extent of e nvironmental degradation 
from agricultural production and applied levels of agricultural support.  Although preliminary, 
Norway’s analysis did not indicate that the shift in production from high to low support countries, which would likely result from further trade libera lization, would lead to an overall reduction in 
environmental degradation.   
Japan introduced a new paper
11, which set out that appropriate agricultural production had to 
be maintained to enhance the envi ronmental benefits of agriculture, such as preventing soil erosion, 
landslides and flooding, conserving water resources,  preserving biodiversity, maintaining landscape 
and providing recreational space.  Multifunctiona lity of agriculture depended on each country's 
natural and social conditions;  appropriate polic ies for multifunctionality would vary based on these 
conditions and agricultu ral production methods. 
Uruguay introduced a new paper,12 cosponsored by Argentina, Australia, Brazil, Canada, 
Chile, Colombia, Indonesia, Malaysia, New Zeala nd, Paraguay, the Philippines, Thailand, the 
United States and Uruguay, which set out that the CTE should analyse the environmental benefits of 
eliminating trade restrictions and distortions, partic ularly in the case of export subsidies. This paper 
(hereafter “the export subsidies paper”) illustrate d the negative impact of export subsidies on the 
trading opportunities of countries.  These subsidi es depressed international prices, increased market 
volatility and undermined agricultural production a nd rural incomes in developing countries.  
Moreover, production surpluses due to these subsidies did not serve any environmental objective.  
Thus, eliminating export subsidies should be a prio rity for the WTO in the forthcoming negotiations, 
as it would make a significant contribution to sustainable development.  
Brazil introduced a new paper13 on the environmental benefits of trade liberalization in Brazil.  
Better market access for agricultural commodities had increased agricultural income, which was the 
main means for investment in research and deve lopment of environmentally sound technologies and 
practices.  Brazil noted that the multifunctional ch aracter of agriculture, an issue under discussion in 
the WTO Agriculture Committee, must not be used to justify the use of subsidies.  On the contrary, it 
                                                      
9For information on the WTO Regional Seminars s ee Trade and Environment Bulletin  No. 26. 
10WT/CTE/W/100. 
11WT/CTE/W/107, which had been introduced informally at the CTE´s 26-27 October 1998 meeting. 
12WT/CTE/W/106. 
13WT/CTE/W/109. PRESS/TE/028 
Page 8  
  MORE was the non-trade elements of agricu lture that justified liberalization as a tool to promote sustainable 
development as set out in Agenda 21 .  
Members welcomed the contribution of th ese new papers on the agricultural sector.  
Comments on Norway’s paper 
Korea agreed with Norway’s paper that prices should reflect all costs and benefits and that 
appropriate valuation of public goods was essen tial to analyse the environmental effects of 
agriculture.  Korea supported the global approach in  Norway’s paper, which found that pesticide 
restrictions in high support countries were more st ringent and enforcement capacity more developed.  
Norway had proven that high support countries had generally reduced nitrogen and phosphate 
fertilizer use in comparison with low support countri es, and that agricultural expansion, most probably 
in low support countries as a result of trade liberalizat ion, may have a negative impact on biodiversity.  
Higher environmental protection was not necessar ily linked to low agricultural support.   
Japan said that Norway's paper supported Japan ’s argument that agricultural landscape and 
biodiversity preservation were public  goods provided by agriculture.  Japan noted the need for a 
long-term assessment of the environmental impacts of agricultural production shifts caused by trade 
liberalization, including the effect of changes in land use in importing and exporting countries.  
Non-trade concerns should be appropriately re flected in the process of agricultural reform. 
Argentina, ASEAN, Canada, and New Zealand ag reed with the statement in Norway’s paper 
that market forces alone could not lead to optimal resource allocation if prices did not reflect private 
and social costs of production.  Argentina’s paper
14 had argued that in order to remedy market 
failures, policy failures that prevented prices from reflecting private costs of production should be removed.  Argentina said that this represented a first step upon which environmental policies can be 
based in order to internalize environmental costs and benefits.   
Several Members commented on Norway's use of  direct payments to agricultural producers 
coupled to production, which encouraged overproduc tion that could lead to trade distorting export 
subsidies and to more intensive input use in th e production process.  This increased environmental 
degradation.  For example, Norway’s paper argued th at agricultural activity could contribute to soil 
erosion and poor water quality.  To address this production pattern, the US said it provided incentives 
to farmers to adopt more envir onmentally friendly practices.   
New Zealand, Argentina and Canada agreed that focused resource management policies, 
which need not be trade distorting, should be adopted to maximize the provision of public goods.  
Canada said that in countries where the public  paid producers for the positive environmental 
externalities of agriculture, this payment should be  decoupled from production and linked directly to 
the desired benefit.  If the retention of stone fen ces in agricultural landscape were desired, it would be 
more efficient to pay a farmer to maintain them  than to subsidize the food the farmer produced.  
While the US also believed that targeted agricultu ral policies were the best method to ensure the 
implementation of improved envir onmental practices, there was a di stinction to be drawn between 
generic coupled support and conservation progra mmes which while utilising a direct payment 
mechanism delivered bona fide  environmental amenities.  
Several Members noted that the Agreement on Agriculture permitted a certain level of 
support coupled to agricultural production if it did no t exceed 5 per cent of the value of production for 
developed countries and 10 per cent for developing  countries.  The Agriculture Agreement also 
recognized Members' right to introduce Green Box policies for a range of non-trade objectives, including environmental protection.   
                                                      
14WT/CTE/W/97, See Trade and Environment Bulletin  No. 27. PRESS/TE/028 
Page 9 
 
  MORE Argentina, New Zealand, ASEAN and others said that the environment and the concept of 
agricultural multifunctionality should not be used as an excuse to maintain trade distortions.  
Argentina noted that although developing countries ha d had to cope with an economic crisis that had 
depressed commodity prices, Norway had dumped 32,33 5.4 tonnes of subsidized agricultural exports 
on the international market in 1997.  This practice should be tested against Norway’s statement that 
only if prices reflected all costs of production coul d markets lead to optimal resource allocation.  
Hungary noted that Norway's paper dealt with the negative environmental effects related to a 
possible increase in transport wh en trade in agricultural goods was liberalized.  Although this 
argument also held for industrial goods, there had not been any objections to liberalization on these 
grounds.  Different treatment of liberalization in these two categories of goods was not justified.   
Australia, Canada, New Zealand and ASEAN agre ed with Norway that its data should be 
treated with caution and cited examples of data that  differed with that used in Norway’s paper.  
Comments on Japan’s paper 
Korea, Japan and Norway shared many concerns raised in Japan’s paper.  The value of flood 
control provided by Korean rice paddies was over US $ 10 billion, which exceeded the value of total 
rice production.  Japan’s analysis on this point refl ected the realities in Korea.  The CTE should not 
overlook the relationship between increasing migrati on from rural to urban areas due to decreased 
agricultural activities, and the effects of the current economic turmoil in countries like Korea.  It could 
be assumed that expedited agricultural liberali zation would exacerbate social problems, as any 
possible dislocation in this sector would have adverse effects on Korea’s social fabric.  Korea stressed the importance of a comprehensive analysis of the effects of agricultural liberalization in order to 
determine the impact on food prices, food security and social stability. 
Norway agreed with Japan’s paper that the re lation between the environment and agricultural 
trade liberalization was complex.  Varying natura l conditions and production methods should be taken 
into account when considering appropriate measures to  maintain the environmental benefits that were 
produced jointly with agriculture.  In expanding the scope of the discussions, aspects of agricultural 
multifunctionality, which provided environmen tal benefits, should be emphasized.   
Argentina commented that most of Japan's ri ce production took place in low lands.  As paddy 
fields located in low lands had a low flood preventing function, it was not possible to justify production support subsidies on the gro unds of this "multifunctional" c over.  Argentina and Australia 
did not see how Japan could argue that trade liberal ization could lead to concentrated production in 
agricultural exporting countries.  This was not th e case for developing countries.  When developed 
countries subsidized domestic pr oduction and accumulated vast surpluses, which were then dumped 
on the international market, this concentrated pr oduction.  Australia said that reductions in the 
quantity of agricultural production in high support countries could be complemented by targeted 
environmental policies to directly obtain the bene fits that Japan associated with rice paddies.   
The US said that many countries had experience with programmes to c onserve water and soil 
and to address agricultural multifunctionality in a way th at only minimally distorted trade.  Australia 
said that Japan’s analysis went against the genera l view in the CTE about the complexity of the 
linkages between agricultural trade, production and the environment, and the interaction of these 
factors with environmental policymaking.  
Comments on the export subsidies paper 
Several Members commented on the effects of agricultural export subsidies.  ASEAN said 
that export subsidies in high support countries served to force developed countries to intensify their 
extractive production, which had a greater environm ental impact.  Thus, the adverse environmental PRESS/TE/028 
Page 10  
  MORE impact of the practices encouraged by trade dist ortions affected efficient non-subsidizing developing 
country producers.  New Zealand, Australia, and Argentina said that there were no environmental 
benefits associated with the provision of export subs idies.  Such policies used substantial amounts of 
money, which could otherwise be channelled to public  priorities, including environmental protection.  
In short, export subsidies, mainly used by certain developed countries, impeded the ability of efficient 
producers in other parts of the world to pursue sustainable development.   
Bolivia, Brazil, ASEAN, Panama and Zimbabwe recalled that Agenda 21  recognized that an 
open, equitable, secure, non-discriminating and pred ictable multilateral trading system was a benefit 
to all trading partners.  Subscribing to this idea, many developing countries had liberalized 
agricultural trade, and anchored their agricultural policies on the b asis of comparative advantage, 
notwithstanding the structural imbalances in this sector between developed a nd developing countries.  
If these imbalances were not eliminated, but exacerbate d by the continued use of export subsidies in 
developed countries, linking trade and environment woul d be to the detriment of poor countries.  It 
was also noted that the elimination of export su bsidies was desirable fro m a trade perspective, 
irrespective of the environmental rational.   
Argentina, New Zealand, the US and others sai d that eliminating agricultural export subsidies 
should be a priority for the WTO in the forthcom ing negotiations.  The CT E should deliver a clear 
recommendation in preparation for the 3
rd Ministerial Conference:  remove export subsidies for the 
sake of trade and the environment. 
New Zealand asked how development assistance goals could be pursued effectively by 
developed countries when trade policies undermined the developmental potential of aid recipients.  
New Zealand referred to the statement of Maurice Strong regarding the cont ribution of eliminating 
subsidies to the implementation of Agenda 21 , and that empirical studies had concluded that 
consumers and taxpayers would gain more fro m subsidy removal than farmers would lose. 
Egypt supported most of the arguments for eliminating agricultural subsidies given the 
possible environmental benefits.  However, agricultural surplus provided net food importing 
developing countries with a means to satisfy thei r food security with the little purchasing power they 
had and bearing in mind the inadequate implem entation of the WTO Decision on Net Food Importing 
Developing Countries.  Australia said that even  net food importing countries had domestic producers 
that were affected by lower prices even if they were  not exporting.  Egypt's c oncerns in this regard 
appeared to relate to food security, an issue that  was primarily about poverty.  Australia was a major 
supplier of wheat to Egypt presumably as its wheat was available at a fair price;  of relevance was that Australia did not have export subsidies.   
Japan, the EC and Turkey felt that the CTE should not focus only on the trade distortions of 
certain agricultural policies, such as export subsidi es, but should consider their overall effects and 
objectives taking into account agricultural multifunc tionality.  Although the export subsidies paper 
raised points of relevance to the upcoming agricu ltural negotiations, Hungary, the EC and Switzerland 
said that the analysis should have included ot her measures which also had negative environmental 
effects, such as export credits and certain expor t-related activities of state trading enterprises. 
Comments on Brazil’s paper  
Several Members supported the conclusion in Brazi l’s paper that agricultural subsidies had a 
negative effect on reducing rural poverty and that a shift to new production methods, which took into 
account agronomic, social, economic and ecological  aspects were more conducive to sustainable 
development.  An important point made by Brazil was that an increase in agricultural income was 
directly linked to the introduction of sustainable agricultural management.  Increases in income would 
enable, through appropriate domestic environmental policies, the mutual supportiveness of environmental protection and trade liberalization. PRESS/TE/028 
Page 11 
 
  MORE Panama, Uganda, ASEAN, and Argentina were among the delegations which expressed their 
appreciation for Brazil’s paper on the relationship between poverty, developm ent and environment.  
Discussion on non-trade concerns should include poverty alleviation, which was a legitimate concern.  
Canada and others supported Brazil’s central argum ent that non-trade concerns in the agricultural 
sector should not be used to justify trade restrictions and distortions. 
The US agreed with Brazil’s paper that trade liberalization did not automatically lead to 
environmental protection, but was a step in the right direction.  In this respect, several Members noted 
that to ensure trade and environment were mutua lly supportive, trade liberalization should always be 
accompanied by sound environmental policies.   
Bolivia supported Brazil’s paper and noted the importance of environmental issues in Bolivia, 
as illustrated by the fact that it had been among the first developing countries to set up a Ministry for 
Sustainable Development and Environment following Agenda 21 . 
Japan appreciated that Brazil’s paper r ecognized the need to address agricultural 
multifunctionality and noted that the level of agricultural support was not relevant to the 
environmental performance of agriculture.  The paper illustrated that Brazil was addressing 
conservation tillage and non-tillage in soya cu ltivation through environmentally sustainable 
agricultural methods.  It was incorrect for Brazil  to argue that all agricultural subsidies were 
environmentally harmful;  there were environm entally well-targeted subsidies, including those 
inducing crop rotation or conservation tillage.  
Norway said that Brazil’s conclusion that nega tive externalities could occur in high and low 
support countries supported Norway's findings.  Brazi l's paper highlighted trade liberalization and 
economic development as a means to economic rehabilitation and sustai nable development.  
However, the linkages between trade liberalization,  economic development, environmental benefits 
and sustainable resource use were more complex than suggested by Brazil.   
The EC said that the relationship between agri cultural activity and environmental protection 
was a subject where the understanding of the glob al community had evolved rapidly in the past 
twenty years.  By the end of the Uruguay Round,  there had been some commitments to reduce support 
and protection that were firmly based on recognition of the need to protect the environment.  The EC 
noted that existing WTO commitments were being re visited to reduce domestic support, and increase 
market access and export competition, including export credits as well as export subsidies.   
Energy 
Turkey recalled that an area of potential envi ronmental impact was the energy sector, which 
had direct environmental effects and indirect effects th rough its use in other sectors.  Internalization of 
environmental externalities in this sector was crucial to put in place environm entally sound policies.  
Fiscal incentives, such as taxes and charges should be restructured to promote such policies.  Turkey 
appreciated efforts to develop alternative and re newable energy sources, which would reduce climate 
change and environmental degradation caused by polluting energy sources. 
Fisheries  
Iceland introduced a new paper15 on its fisheries management system.  The success of 
Iceland’s fisheries management system resulted fro m the fact that it was not only based on rigid 
ecological requirements, but on economic efficiency;  the system was market-driven and free from government subsidies.  Iceland’s experience indicated  that it was difficult for any country to maintain 
sustainable fisheries management regime in a world market characterized by overcapacity.  
                                                      
15WT/CTE/W/103 and Corr.1.  PRESS/TE/028 
Page 12  
  MORE Overcapacity of the global fishing fleet was the predominant cause of the depletion of fish stocks.  It 
was generally recognized that govern ment subsidies and other market distortions were primary factors 
in causing this overcapacity.  Thus, eliminating go vernment subsidies and other trade distortions 
would facilitate sustainable development in fisheries. 
Members appreciated Iceland's paper, wh ich provided a concrete example of the 
environmental benefits of sustainable management po licies.  Reference was also made to the fisheries 
section of Australia’s paper.
16  New Zealand and the US agreed with Iceland that sustainable policies 
were difficult to maintain in the face of overcapacity  in global fishing fleets.  In this International 
Year of Oceans, New Zealand, Australia and the US called for the elimination of trade distorting 
fisheries subsidies.  Australia and the US said th at the international community should cooperate to 
ensure the sustainable use of global fish stocks.  
Norway and Canada agreed that excess capacity in global fishing fleets was closely linked to 
inadequate management.  Some subsidies, however, may act to reduce fishing fleets and to restoring 
fish stocks.  Canada and others supported these s ubsidies provided that they promoted sustainable 
exploitation of fisheries resources.  Canada also noted the environmental benefits of eliminating 
tariffs and non-tariff measures in this sector.  
Japan was concerned about Iceland’s conclusions  and the neutrality of its data.  Japan and 
Korea said that it was inappropriate to conclude that fisheries subsidies promoted over-fishing and 
that their reduction would lead to the protection of  fish resources.  As poor fisheries management 
caused over-fishing, certain support measures were indi spensable to encourage fi sheries conservation.  
The distinction between different forms of subsidie s should be made and their net impacts analyzed.  
Korea said that empirical studies were needed on fi sheries subsidies and their effects on trade and 
environment as the linkages were unclear.  Given th e uncertainties in identifying the right level of 
capacity to achieve the right level of fishing activity, it was doubtful whether the withdrawal of catch enhancing financial support woul d be an adequate response. 
In response to Korea’s question on the extent to which Iceland’s success was based on its 
fisheries management system or the absence of subsid ies, Iceland and Australia said that these issues 
could not be separated.  As noted in Iceland’s paper, a fisheries management system was a necessary, 
but not sufficient condition for sustainable fisheri es.  While Iceland had set up a rigid fisheries 
management system, there had been a lack of economic  incentive to get the stakeholders to participate 
in building sustainable fisheries.  The incentives to reduce catch and concentrate on its quality, not 
quantity only occurred if the sector  were based on competition.   
Forestry  
Canada said that one of its key objectives was to eliminate tariff escalation in key sectors, 
such as for forest products.  The "zero for zero"  and harmonization initiatives of the Uruguay Round 
were important in allowing companies to exploit th eir comparative advantage without the distortion of 
tariff escalation.  Canada's national experience paper on forestry
17 supported the analysis in Australia's 
paper18 regarding trade diversion caused by tariff escalation.   
                                                      
16WT/CTE/W/105, introduced under “g eneral comments” on item 6. 
17WT/CTE/W/81-G/TBT/W/61. 
18WT/CTE/W/105, introduced under “g eneral comments” under item 6. The elimination of tariff escalation between Canada and the US following the Canada-US 
Free Trade Agreement had resulted in a relative shif t of Canada's comparative advantage to paper 
production, which had resulted in increased economic and environmental efficiency.  Canada called 
for the accelerated elimination of tariff peaks and tariff escalation, particularly on forest products. PRESS/TE/028 
Page 13 
 
    
Leather  
Brazil said that conventional methods of ta nning raw leather had a high environmental 
impact, whereas the production of finished leather products had not been associated with environmental damage, since cleaner technologica l methods had been incorporated.  Strict 
environmental regulations were re quired to prevent pollution in leather production.  Leather producers 
could only comply with environmental legislation if they had sufficient revenues to invest in cleaner 
technologies.  Tariff escalation discouraged leather producers from investing in more environmentally 
sustainable technologies.  Improved market access in  this sector would permit increased production of 
value-added, thereby increasing the potential for inv estment in cleaner technologies.  Other measures 
could also be applied in this sector, such as ta xes on raw leather production, which would be based on 
the Polluter Pays Principle and would create funds for the development of cleaner technologies.
19   
Item 8 The relevant provisions of the Agreement on Trade-Related Aspects of 
Intellectual Property Rights (TRIPS) 
One Member recalled the suggestions at the C TE’s 23-24 July 1998 meeting to look at the 
objectives of the Convention on Biological Diversity and the TRIPS Agreement.  The issue was not 
that there was a conflict between the TRIPS Agreem ent and MEAs, or that one agreement would be 
used to enforce another.  The idea behind the suggestions at the July meeting concerned the intentions 
of the international community to implement these ag reements in a mutually compatible manner.   
Other matters  
UNEP said that based on the renewed mandate from the recent session of its Governing 
Council, UNEP will reinforce its work on trade and e nvironment to:  (a) build coherence within the 
UNEP-Administered Conventions;  (b) develop me thodologies for environmental reviews of trade 
liberalization;  and (c) enhance the capacity of  developing countries to integrate environmental 
consideration in trade policies.  UNEP was draf ting a cooperation agreement between the WTO and 
UNEP Secretariats.  UNEP was also looking forwar d to organizing jointly a meeting between UNEP-
Administered Conventions and the WTO Secretariat on 28 June 1999 and to continuing to participate 
in the WTO Regional Seminars on Trade and Environment.   
Members expressed their appreciation for the excellent guidance provided by 
Ambassador Chak Mun See throughout his Chairman ship of the Committee, and for the substantive 
contribution of Ms. Sabrina Shaw as Secretary. 
 
 
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19See the paper cited by Brazil, WTO (1998), Trade and Tariffs in the Leather Sector , Geneva.