RESTRICTED  
WORLD TRADE  WT/CTE/M/16  
 19 December 1997  
ORGANIZATION  
 (97-5567)  
 
Committee on Trade and Environment  
 
 
 REPORT OF THE MEETING HELD ON 24 -25 NOVEMBER 1997  
 
 Note by the Secretariat  
 
 
1. The Committee on Trade and Environment (CTE) met on 24 -25 November 1997 under the 
chairmanship of Ambassador Björn Ekblom of Finland.  The agenda contained in WT O/AIR/718 was 
adopted.  
 
 
Item 9   The work programme envisaged in the Decision on Trade in Servi ces and the  
 Environment  
 
2. The representative of the United States  presented his delegation's paper (WT/CTE/W/70) on how 
trade liberalization in the services sector could yield environmental benefits.  Improved access to 
environm entally -friendly technologies would be beneficial for both trade and the environment.  Work was 
currently underway in international fora on services trade liberalization.  The paper described 
environmental services, such as waste handling and facility oper ations, and implementation and installation 
of new or existing systems for environmental cleanup.  Given that in solving environmental problems, a 
package of environmental goods and services tended to be designed, it was difficult to separate goods from 
services.  Estimates of the size of the environmental services industry ranged from US$420 billion to 
US$600 billion by 2010.  The key barrier to expansion of work had been that industry was responsive 
rather than proactive to environmental issues, and growt h and demand for environmental services had been 
tied to government regulations.  Recently there had been a shift away from regulations and standards as the 
main instruments for environmental policy to economic instruments, which placed a premium on 
innova tion.  New instruments were also being used in the private sector, such as the ISO 14000 
environmental management standards, that encouraged innovation.  With private sector innovation, 
traditional barriers to trade would be less relevant.  Improved market  access increased the availability of 
services while lowering their costs.  Competition also increased the availability of services and encouraged 
innovation;  liberalization in this sector encouraged technology flows which could help especially 
developing  countries build domestic capacity to better achieve their environmental goals.  The 
representative from the Global Environment Facility (GEF) had identified the lack of knowledge about the 
availability of environmental goods and services as an important i mpediment to technology transfer.  Trade 
liberalization of environmental services as well as their associated goods would yield both environmental 
and economic benefits.  
 
3. The representative of India  said the Ministerial Decision mandated the CTE to discuss the 
relationship between trade in services and the environment, including sustainable development.  
Environmental services should be addressed in the context of defining which services were covered  in the 
WTO and use the UN classification system.  Input from the Trade in Services Division should be obtained.  
It would be difficult to address the focus of the US paper on trade liberalization of environmental services 
unless it were determined how exi sting WTO provisions dealt with this area.  Discussions on this issue 
should be conducted in the context of sustainable development.  
 
4. The representative of the European Communities  said his delegation supported trade liberalizati on 
in environmental services.  The Decision on Trade and Services and the Environment called on the CTE 
to examine the relationship between trade in services and the environment, including the issue of sustainable WT/CTE/M/16  
Page 2 
 
development.  The CTE had devoted insuffic ient attention to this Item, which did not correspond to the 
increasing economic significance of services trade and given the potential for "win -win" situations in which 
trade liberalization would yield direct environmental benefits.  By increasing competi tion amongst 
suppliers, more open markets would contribute to reducing the cost of environmental services.  Users 
would have a broader choice of and access to environmental services.  Increased services trade would be a 
vehicle for the transfer of environm entally -sound technologies and would enhance domestic capabilities in 
recipient countries.  It would be useful for the Secretariat to prepare a paper compiling information on 
trade in environmental services in several areas, such as environmental auditing and consulting, and services 
for the management and disposal of non -hazardous and hazardous wastes.  This issue could be discussed 
under either Item 6 or 9.  
 
5. The representative of Japan  said the US approach to environmental servi ces which referred to a 
package of environmental solutions incorporating products and services was relevant.  Liberalization of 
environmental services had been highlighted by not only the OECD but APEC.  The relation between 
services and the environment sh ould be further examined, even though, given their intangible nature, data 
was insufficient.  It would be more feasible to examine environmental goods in parallel with environmental 
services.  Work on this Item should examine, for example, the tourism and transport sectors.  Although 
there was an overlap between goods and services, these areas basically fell under different WTO disciplines.  
There were also relevant GATS Articles other than Article XIV.  As trade in services was an evolving issue 
and work h ad been in other fora, WT/CTE/W/9 should be updated.  
 
6. The representative of Argentina  said it was timely to include the issue raised in the US paper.  He 
asked if this issue fell under Item 9 or 6, particularly regarding the envi ronmental benefits of removing trade 
distortions.  Discussion under Item 9 had focused on the Decision on Trade in Services and the 
Environment, which mandated the CTE to consider whether it was necessary to modify Article  XIV of the 
GATS.  It would be dif ficult to progress in this regard without progress on examining Article XX under 
Item 1.  There was no point in having an indepth discussion of services trade until an analysis of goods 
trade had been undertaken.  He suggested discussing the paper further under the Market Access Cluster 
of Items, which offered an opportunity to analyze the "win -win" situations which may result from liberalizing 
services trade along with the other sectors referred to under Item 6.   
 
7. The representa tive of Egypt  said his delegation would reflect on the US paper.  An analysis of 
environmental goods and services should be viewed from the perspective of sustainable development and 
should be dealt with in conformity with the provisions of the WTO Agreements.  
 
8. The representative of the United States  said the suggestion to focus on the sustainable development 
aspects of the issue was useful.  The US paper highlighted the role liberalization could play in development 
by increasing the access of  developing countries to environmentally -friendly technologies that could help 
avoid many of the mistakes in the development process of developed countries.  This issue could be 
discussed under either Item 6 or 9.   
 
9. The represen tative of Norway  said, with regard to trade in services and the environment, the CTE 
should clarify whether GATS Article XIV was sufficient or whether there was a need to include 
environmental concerns in other GATS Articles.  Norway preferred a combinatio n of the two alternatives, 
whereby environmental concerns would be integrated in Article XIV and other relevant parts of the GATS 
as had been done for goods, which was in accordance with the CTE's horizontal mandate.  When discussing 
the relationship betwe en trade in services and the environment, the transport and tourism sectors should be 
examined.  It was clearly documented that activities in these two sectors could be environmentally -
damaging.  The Secretariat should update WT/CTE/W/9, including referenc e to relevant ongoing work in 
other international fora.  Much work had been undertaken on transport and the environment, for example 
in the OECD and ECE.  There could also be a section addressing services, upon which to base the 
evaluation of whether Artic le XIV was sufficient.  Concerning the integration of environmental concerns in 
other parts of the GATS, the work of the Council for Trade in Services on subsidies and domestic 
regulations had not come very far.  It should be ensured that the GATS Working Parties took account of 
environmental considerations.           WT/CTE/M/16  
         Page 3 
 
 
10. The representative of Mexico  thanked the US for presenting a paper on environmental services, 
on which her delegation would comment at a further meeting.  Discussion under It em 9 had indicated there 
was no clear distinction between services trade and goods trade, particularly concerning an analysis of the 
environmental effects.  Services were intangible and thus did not create environmental damage per se .  
Environmental damage  was connected to the goods linked with the supply of a service.  As there was an 
overlap between services and goods, it had been generally agreed that it would not be possible to discuss 
services trade in isolation.  The mandate in the Decision on Trade i n Services and the Environment 
restricted the discussion to examining whether any modifications were necessary to Article XIV of the 
GATS.  The US paper encompassed market access and an analysis of the environmental benefits resulting 
from the removal of t rade restrictions and distortions to services trade.  Mexico suggested work on this issue 
be based on the approach under Item 6.  Nevertheless, it was necessary to have a clear picture of the 
approach the CTE should give to this discussion before identifyi ng specific sectors of services to analyze.  
 
11. The representative of Switzerland  thanked the US for the paper on environmental services.  It 
would be useful to update WT/CTE/W/9, including current work in other international fora o n the services 
sector, particularly transport and tourism.  
 
12. The representative of Nigeria  said the US paper was a valuable contribution.  The relationship 
between the removal of trade restrictions and distortions and environmenta l benefits was that which was 
being addressed by the US paper.  This market access issue should be discussed under Item 6.  
 
13. The representative of Singapore, on behalf of ASEAN , thanked the US for the paper on services 
trade liber alization.  He shared the concerns concerning selecting specific sectors for discussion, such as 
tourism and transport.  The Secretariat could undertake an analysis after the sectors relevant to the services 
and environment interface had been identified.  It would be useful to update WT/CTE/W/9.  
 
14. The representative of Canada  said a Secretariat background document on other fora's work which 
may have a sectoral focus of relevance to the CTE would be useful to help structure future d iscussion.  
Canada was flexible as to under which Item this issue was discussed.  
 
15. The observer of UNCTAD  said the second session of the UNCTAD Commission on Trade in 
Goods, Services and Commodities had decided to hold expert meet ings on liberalization of environmental 
services and tourism in 1998.  
 
16. It was agreed  that the Secretariat would prepare an update of WT/CTE/W/9.  
 
 
Item 10  Input to the relevant bodies in respect of appropriate arrangements for relations with  
 intergovernmental and non -governmental organizations referred to in Article V of the  
 WTO  
 
17. The representative of Canada  said this was an im portant issue for the WTO, particularly for the 
CTE given the range of civil society interests in trade and environment -related discussions.  There was also 
a direct relevance to standards -related issues as discussed in the TBT Committee.  The CTE had move d 
to address these interests and the need for outreach.  The May NGO Symposium, organized by the 
Secretariat, and the September MEA Secretariat session had enriched Members' appreciation of 
perspectives and developments outside the WTO, as well as encourag ing greater understanding among civil 
society and the MEA Secretariats of WTO Members' views.  In this regard, Canada welcomed the NGO 
Symposium planned for March 1998.  Given that this Symposium was under Secretariat auspices, the 
Secretariat should have a free hand in its organizing, taking into account the experience with the May 1997 
Symposium, and should include the full spectrum of civil society, i.e. environmental, developmental and 
business organizations.  
 WT/CTE/M/16  
Page 4 
 
18. Canada looked fo rward to briefing sessions by MEA Secretariats to increase trade negotiators' 
awareness of developments in environmental negotiations.  Fewer MEA Secretariats should be invited to 
allow for an in depth discussion and to reinforce domestic policy coordinati on.  The CTE had 
demonstrated leadership in transparency through the Trade and Environment Bulletin , which provided a 
timely account of CTE discussions.  As there was flexibility for WTO Bodies to deviate from the General 
Council's policy on derestriction,  Canada proposed that agendas for CTE meetings be issued as derestricted.  
For civil society to provide input at the national level, it needed to know what the CTE would discuss and 
when.  While the Bulletin  provided this information, it was preferable to provide the agendas directly.  The 
CTE should consider case -by-case derestriction of Secretariat documents to allow a more informed debate 
on issues under discussion.  Canada had a general policy to issue its CTE contributions as derestricted after 
they ha d been widely consulted in Canada and encouraged other Members to do so to provide civil society 
with a greater awareness of how policy proposals on trade and environment were developed.   
 
19. The representative of the United States  said the NGO Symposiums provided an important avenue 
for an exchange of views between Members and civil society.  While this was a useful tool, the CTE could 
find further innovative ways to draw on the knowledge in civil society and ensure that they had a n 
understanding of the CTE's work.  Access to documentation was an important means of ensuring 
transparency;  further work should be done on this issue.  He supported Canada's suggestion to derestrict 
the CTE's agendas and make working documents available promptly.  If Members were to effectively 
coordinate at the national level, this would necessarily involve the sharing of documents to take into account 
the views of civil society.   
 
20. The representative of Nigeria  supported Canad a's proposal to pursue a more liberal policy with 
respect to derestricting Secretariat documentation as early as possible.  
 
21. The representative of Singapore, on behalf of ASEAN , asked whether the NGO Symposium would 
conflict with the General Council's Decision on relations with NGOs.  Any derestriction of CTE documents 
should follow WTO procedures.  The Trade and Environment Bulletin  was useful in understanding CTE 
discussions.  Although recognizing the circumstances surrounding WT /CTE/W/67, it should be discussed 
prior to being derestricting to give a balanced picture of Members' views.  
 
22. The representative of India  said to convey the right message to civil society, the Trade and 
Environment Division and t he Information Division should coordinate to involve the media in the NGO 
Symposium.  MEA Secretariats should not be excluded from participating in CTE meetings.  The CTE's 
agenda would not be of use for civil society without the accompanying documentation .  As derestriction 
was covered in the 1996 CTE Report, further innovations were not necessary.  India had a systemic 
approach to derestriction of WTO documentation whereby WT/CTE/W/67 should be derestricted along 
with the report of the meeting at which it  was discussed.  
 
23. The representative of Norway  said Canada had raised some important issues with respect to 
ensuring that civil society was kept informed of the CTE's work, which would enhance the discussion at the 
national level.  Canada's proposal was in accordance with the General Council's procedu res on 
derestriction.  CTE agendas could be made available to the public in some form.  
 
24. The representative of Australia  said the Secretariat should be given a free hand in organizing the 
NGO Symposium, which should involve the fu ll spectrum of civil society.  Fewer MEA Secretariats should 
be invited to speak, but this would not preclude a full range of MEAs participating.  After having had a 
general review of the issues it was now appropriate to move to indepth discussions.  This approach should 
be reflected in the Symposium and in the CTE's discussions next year.  In order for those discussions and 
for Members' input to the CTE to be most useful, NGOs should have access to and knowledge of what was 
being discussed.  Australia supp orted Canada's proposal to derestrict the CTE's agenda to increase NGOs 
awareness of the issues under discussion and contribute to the formulation of Members' positions at the 
national level.  As early derestriction of Secretariat documents would encourage  the exchange between 
NGOs and the CTE, WT/CTE/W/67 should be derestricted.   
          WT/CTE/M/16  
         Page 5 
 
25. The representative of Brazil  welcomed input from civil society in the CTE's work.  Regarding the 
derestriction of CTE documents, particularly those wh ich had not yet been discussed in the CTE, as there 
were General Council procedures for derestriction of WTO documents, it would not be advisable if ad hoc  
procedures were adopted in different WTO Bodies.  Given the governmental status of the WTO, 
consulti ng with civil society could be undertaken at the national level according to national procedures.  
Brazil supported the Secretariat's initiative to hold an NGO Symposium in March 1998, which constituted 
an exercise of relevance to interact with civil socie ty.   
 
26. The representative of Poland  said transparency of CTE work should be fostered through NGO 
and MEA seminars around the time of CTE meetings.  WTO procedures on derestriction should be 
followed.  It was not useful for CTE ag endas to be derestricted without the accompanying documentation.  
 
27. The representative of Argentina  said the NGO Symposium should be organized by the Secretariat 
to offer an opportunity for civil society to express its views on CTE  work;  Members could also express 
their views and obtain the views of NGOs.  It would be useful if documents were derestricted to give a 
complete picture of CTE work.  He supported Australia's proposal to derestrict WT/CTE/W/67, which 
tackled a complex su bject that the CTE had only briefly dealt with this year.  Derestricting this document 
was an exceptional case in order to provide balance to the already derestricted Secretariat documentation 
prepared this year on other Items.  
 
28. The representative of Japan  said the NGO Symposium in May 1997 had been useful and should 
be repeated.  Although the organization of symposia would be left to the Secretariat, Members would 
benefit from more time to interact with NGOs in future symposia.  It was important to learn from the 
valuable input of NGOs who had been working on issues related to trade and environment for many years.  
Relevant MEA Secretariats should be invited to each CTE meeting to increase the information exchange 
between the CTE and MEAs.  Japan supported overall Canada's proposals for derestriction.  
Transparency of CTE activities should be enhanced.  Derestricting CTE documents should also be 
considered on a case -by-case basis, keeping in mind the General Council procedures.  
 
29. The representative of the European Communities  said Article V.2 of the WTO Agreement gave 
the General Council the mandate to "make appropriate arrangements for the consultation and cooperation 
with NGOs concerned with matters rel ated to those of the WTO".  On 18 July 1996, the General Council 
had approved Decisions on guidelines for the relations of WTO Bodies with NGOs, relations with 
International Governmental Organizations (IGOs), and derestriction of WTO documentation.  These 
Decisions had recognized the role that international organizations could play in facilitating the flow of WTO 
information and had set out steps Members and the Secretariat should take to increase transparency.  The 
NGO Decision noted that NGOs could contri bute to the richness and accuracy of public debate on WTO 
issues and had called for greater transparency, in particular the timely derestriction of documents.  The 
Decision had also called for the Secretariat to increase interaction with NGOs.  In accordan ce with the 
General Council Decisions and CTE Members' call for cooperation with international organizations, the 
CTE had furthered cooperation with organizations relevant to its work.  IGOs with a specific interest in the 
CTE's work had participated as ob servers on an ad hoc  basis.  Following the General Council Decision, 
fourteen IGOs had been granted full observer status in the CTE.  Over seventy NGOs had participated in 
the May 1997 Symposium.  At the CTE's September meeting, Secretariats of MEAs and fi nancial 
mechanisms had participated in an information session.  
 
30. The NGO Symposium in May 1997 had been a useful exercise at which constructive and valuable 
information exchanges had taken place.  The information session with MEA s and financial mechanisms in 
September had also provided an opportunity to increase a mutual understanding between the Secretariats 
of MEAs and the WTO;  provided MEA Secretariats with information about issues of possible relevance 
to their development;  and provided the CTE with a chance to compare MEA approaches to trade issues.  
As the EC had always called for greater cooperation between the CTE and NGOs and IGOs, it welcomed 
the steps taken by the Secretariat and the ongoing process of exchanging infor mation and views.  NGOs 
and IGOs could be sources of expertise and publicity which would be of benefit to the CTE's work.  The 
NGO Symposium the Secretariat was organizing in March  1998 should have a broad agenda and include WT/CTE/M/16  
Page 6 
 
representatives from associatio ns for environmental services and technologies and agriculture.  Bearing in 
mind the important contribution which NGOs could make to the CTE's discussions, the EC underlined the 
importance of an adequate level of transparency to facilitate their input.  Th e 1996 CTE Report had 
stressed the role that Members should play to increase transparency vis-à-vis NGOs and had urged Members 
to derestrict the documents produced in the first two years of the CTE's work and promptly derestrict future 
documents.  
 
31. As transparency and information flow were best facilitated at the national level, the CTE's 
encouragement for coordination between national trade experts, NGOs and IGOs and prompt derestriction 
of CTE documents would benefit all parties.   The EC requested the three non -papers which it had 
submitted to the CTE in 1996 on Items 1 and 5, 3(b) and 6 be derestricted.  The CTE should reflect on 
ways to enhance transparency and accessibility of the CTE.  The EC supported Canada's suggestion that  
Members should be encouraged to derestrict written submission promptly.  Early derestriction of 
WT/CTE/W/67 should be considered after Members had discussed it indepth and included an 
examination of environmental services in the sectoral analysis under It em 6.   
 
32. The representative of Hungary  supported the involvement of civil society in the CTE and the 
prompt derestriction of Secretariat documents on a case -by-case basis, including WT/CTE/W/67.  
 
33. The re presentative of Egypt  supported Canada's suggestion to enhance and encourage the 
participation of civil society in NGO symposia.  Documents should be considered for derestriction after 
having been discussed in the CTE and in view of the General Council pro cedures.  
 
34. The representative of the United States  said the arguments put forward indicated it was important 
to maintain the intergovernmental character of the WTO.  Although Members were encouraged to 
coordinate with civil societ y at the national level, procedures were being suggested which could interfere with 
Members' ability to coordinate domestically.  Some countries had official advisory committees through 
which to coordinate.  More work in this regard was needed.  Whilst som e Members had argued that 
documents should be derestricted along with the report of the meeting at which they were discussed, it would 
be better to derestrict documents, then derestrict the report of the meeting at which they were discussed so 
Members coul d have a fuller domestic discussion.  The US appreciated the EC's derestriction of its papers.  
As the CTE's 1996 Report had encouraged Members that had submitted papers to agree to their 
derestriction, the Secretariat consult with those Members to ensure transparency.  
 
35. The representative of Australia  said, although it was desirable to derestrict documents after they 
had been discussed, the circumstance relating to the finalization of WT/CTE/67 was an argument for its 
prompt deres triction.  This was a Secretariat background document to assist the discussions and its status 
was similar to that of submissions by Members which could be requested be derestricted.  
 
36. The representative of Canada  supported the de restriction of WT/CTE/W/67 and asked the 
Chairman to include the issue of derestricting the CTE's agendas in his consultations.  
 
37. The representative of Korea  said the NGO Symposium with civil society had enhanced a mutual 
understa nding of the issues.  If this arrangement were regularized, a more focused approach was necessary.  
In organizing future symposia, the Secretariat could use the CTE's thematic approach.  Secretariat working 
documents should be derestricted along with the r eport of the meeting at which they had been discussed to 
give a balanced view of the proceedings.  
 
38. The representative of Mexico  said she would not comment on the NGO Symposium as this would 
be organized under the auspices of the General Council, not the CTE.  Mexico said derestriction in the 
WTO to date had been carried out in a horizontal manner, not on an ad hoc  basis.  However, derestriction 
of certain documents could be considered under special circumstances.  WT/CTE/W/67 dese rved special 
treatment as this document was to have been completed in early 1997.  Mexico supported its derestriction 
to have a balance in the documentation available for the NGO Symposium.  
          WT/CTE/M/16  
         Page 7 
 
39. The representative of Switzerland  said considerable progress had been made by the CTE to 
enhance transparency of its work, such as contained in the Trade and Environment Bulletin .  The 
information session with MEA Secretariats and the NGO Symposium had allowed a valuable exchange of 
views.  Sw itzerland was looking forward to the NGO Symposium in March 1998.  Concerning the 
derestriction of WT/CTE/W/67, the Secretariat had recalled that the procedures set out by the General 
Council for derestriction allowed for the CTE to advance derestriction o n an ad hoc  basis.  However, it 
would not be advisable to have special procedures for derestricting documents in the CTE.  
 
40. The representative of Morocco  said the organization of symposia and the derestriction of WTO 
documents should be taken up by the General Council.  Morocco supported the derestriction of 
WT/CTE/W/67 along with the report of the meeting at which it was discussed.  
 
41. The Chairman  said he would consult with Members on the proposals which had been put forward 
on derestriction.  
 
 
Other Items  
 
Items 1 & 5The relationship between the provisions of the multilateral trading system and trade measures 
for environmental purposes, including those pursuant to multilateral environmental 
agreements ;  and  
 
The relationship between the dispute settlement mechanisms in the multilateral trading system and those 
found in MEAs  
 
42. The represent ative of Brazil  said her delegation shared the opinion of those who envisioned 
multilateral negotiations as the best road to follow to address global environmental problems.  It was within 
MEAs that solutions should be sought.  MEAs were composed of a seve ral provisions, some of which were 
market -oriented and were called "trade measures";  others were cooperative measures providing the means 
for an MEA's full implementation.  These were referred to as "positive measures".  To focus only on trade 
measures wo uld distort the picture and only partially address the issue of the relationship between trade and 
environment.  Trade measures were part of a set of rules and belonged to a certain line of reasoning;  they 
may not be fully understood if singled out of con text.  Brazil agreed with the argument raised by some 
Members that to understand the nature of trade measures, one may need not only to balance them against 
positive measures, but also to raise questions about the necessity, effectiveness and proportionali ty of such 
trade measures.   
 
43. On the WTO's legal scope, Brazil supported the view that Article XX and the DSU were able to 
deal with trade -related environmental disputes;  WT/CTE/W/53 gave examples of this capability.  So far 
no panel had been formed because of a dispute over a trade measure multilaterally -agreed in an MEA and 
all the disputes brought before the DSB had resulted from unilateral actions allegedly aimed at 
environmental concerns.  If a trade measure were necessary t o address environmental problems, it should 
be multilaterally -agreed;  if multilaterally -agreed, the trade measure in question would hardly be challenged 
before the WTO.  For example, no Party or non -party in the case of MEAs that had agreed to impose 
trade bans on some goods, wastes or chemical substances had yet questioned their necessity.  Any trade 
problems resulting from these measures were being worked out within the legal scope of the relevant MEA.  
Unless a specific trade -related environmental measu re were a disguised trade restriction, it should find 
multilateral support.  If a multilateral consensus were not achieved, the CTE would be faced with an 
exceptional case, and exceptions were to be dealt with under Article  XX.  These comments responded to  
questions raised by some Members at the September meeting.  Brazil expressed its appreciation for 
UNCTAD's "Expert Meeting on Positive Measures to Promote Sustainable Development, particularly in 
meeting the objectives of MEAs".  Brazil felt this meeting had been profitable and welcomed the follow -up.  
The CTE would gain from exploring complementarities of work within the UN framework.  
 
 WT/CTE/M/16  
Page 8 
 
Item 6The effect of environmental measures on market access, especially in relation to developing countries, 
in particul ar to the least developed among them, and environmental benefits of removing 
trade restrictions and distortions  
 
44. The representative of Nigeria  said WT/CTE/W/67 included a balanced survey of the literature and 
presentation of diff erent perspectives.  The sector approach pursued was comprehensive, listing the trade 
distortions which were prevalent in each sector and the environmental benefits associated with their removal.  
The CTE's 1996 Report said trade liberalization was not the  primary cause of environmental degradation;  
trade measures were not the first best option to address environmental problems.  The concepts of market 
failures and environmental externalities had been raised in the CTE when looking at the manner in which 
environmental benefits could be incorporated.  Paragraph 8 noted the absence of comprehensive valuation 
techniques to measure environmental benefits, an area to which the CTE should devote more time.  
Evaluation techniques involved value judgements and were  based on assumptions which should be 
examined.  In this respect, WT/CTE/W/72 had initiated work by compiling literature on environmental 
valuation.  The general conclusions which were made in paragraph  12 should emphasize even more the 
fundamental importa nce of poverty reduction in addressing environmental concerns.  Clarification could 
be made as to whether the reference to poverty alleviation through trade expansion included enhancing 
market access.  
 
45. The representative of Austr alia said WT/CTE/W/67 provided a basis for further CTE work on the 
environmental effects of trade restrictions and distortions and the potential benefits of reforming these 
distortions.  The analysis suggested that trade liberalization presented both chall enges and opportunities for 
improved environmental protection.  In countries where subsidies and market access barriers had 
stimulated high levels of resource use and wasteful production processes, reform of these trade distorting 
measures offered opportun ities for environmental improvement.  However, it should not be assumed that 
environmental improvement would flow automatically from trade liberalization.  Trade policy reform 
could help correct policy failures that had complicated the achievement of good environmental 
management.  Governments should ensure that appropriate policies were in place to take advantage of the 
opportunities presented by trade liberalization.  The opportunities for improved environmental 
management created by trade liberalization would often be associated with shifts in the location of 
production.  It would be counterproductive if governments tried to prevent these shifts in production, 
including by using environment concerns to justify maintaining high levels of support.  
 
46. Many studies on agricultural trade suggested that support directly linked to levels of input use or 
production may have large effects on the amount of resources used and the pollution and waste generated.  
The evidence suggested that mos t support was still conditional either on input use or output levels, although 
there was growing acceptance of the need to reform these types of support.  Alternative policies, however, 
may still have the effect of maintaining current high production level s.  Although these policies may be 
justified on the basis that they would be more environmentally -friendly than support directly linked to input 
use or output levels, if they kept in place production structures involving unnecessarily high and inefficient 
resource use and waste generation, then they still could have adverse environmental effects.  By blocking 
proper adjustment of production structures, these policies may provide disincentives to the adoption of 
technologies that could reduce resource use or  employ material and energy inputs more efficiently.  In 
particular, while some subsidies may be justified on the basis that they helped protect environmental benefits 
during the transition to a more liberalized trading environment, analysis of these claim s was needed.  Other 
types of appropriately targeted and designed environmental policies may be more effective than subsidies in 
securing environmental benefits.  As WT/CTE/W/67 set out in relation to the fisheries sector, much of the 
impact of subsidies w ould depend on how they were administered and monitored.  The paper noted the 
evidence that in some cases subsidies for vessel buy -backs may have succeeded in retiring old boats only to 
have these replaced by new ones.  
 
47. In additi on to presenting opportunities, trade liberalization also presented challenges to the 
achievement of effective environmental outcomes.  In the agriculture sector, trade liberalization should 
promote shifts in production to countries where agriculture tende d to rely less heavily on farm chemicals 
and where livestock stocking densities tended to be lower.  Expanded production in these countries could          WT/CTE/M/16  
         Page 9 
 
pose new environmental challenges and highlight the importance of good policy frameworks to ensure 
environment ally-sensitive lands and areas of biodiversity value were protected.  Similarly, reductions in tariff 
escalation and other access barriers could facilitate shifts in the location of processing and value -adding 
activities in a range of sectors.  While offer ing important opportunities to diversify economic structures and 
improve export returns, such shifts in production could also introduce new environmental challenges in the 
form of production activities that may be chemical intensive and generate waste stre ams.  Adequate policy 
frameworks and improved infrastructure to cater to new production processes and waste streams would be 
important factors in ensuring these environmental challenges were addressed.  More open trading regimes 
in general may also have a significant role in facilitating the transfer and adoption of technologies that would 
both minimise waste generation and improve overall waste management.  Information presented in 
WT/CTE/W/67 pointed to the fact that significant subsidies were provided in  the agriculture and fisheries 
sectors and in relation to energy which may have major environmental impacts.  These subsidies provided 
a focus for the CTE's work under Item  6.  Such subsidies may have a range of environmental effects 
through the encouragem ent of higher energy use and energy -inefficient production methods, overcapacity 
in fishing fleets, excessive use of chemical and mechanical inputs and irrigation water in agricultural practices, 
as well as over -intensive cropping and livestock systems.  T he potential environmental effects could be 
significant, as the agriculture, fisheries and energy sectors, and sectors using energy inputs, used large 
volumes of resources and generated large amounts of waste and pollution.  
 
48. Further work was necessary to improve an understanding of the relationship between subsidization, 
production, trade and environmental impacts.  WT/CTE/W/67 referred to the environmental impacts of 
mining and metals production, and the potential contribution of  subsidy removal to improved 
environmental outcomes.  The paper suggested that a case -by-case assessment of this potential was required 
and, given the general complexity of these relationships, this approach would be required for all sectors.  
The linkage between subsidy reduction and environmental benefit was greater in some sectors than in 
others.  In addition to subsidy issues, tariff escalation, high tariffs and other access barriers deserved 
consideration.  WT/CTE/W/67 highlighted that high tariffs and  tariff escalation may continue to be a 
significant issue in several sectors, including those which raised environmental issues or could be significant 
in helping commodity -exporters diversify their economies.  
 
49. An issue which may warrant more detailed examination was the interaction between the structure 
of economic activity, trade liberalization and sustainable development.  Improvements in market access 
opportunities may have a role to play in helping countries  promote economic structures that were more 
conducive to sustainable development.  A key issue was the need to promote patterns of economic growth 
that would effectively contribute to poverty reduction given the close relationship between poverty and 
envir onmental degradation in many countries.  Patterns of economic growth should be encouraged that 
would deliver environmental benefits.  Although these were issues much broader than trade reform, there 
was a role for the CTE to examine the scope for trade ref orm to facilitate changes in the structure of 
economic activity central to the achievement of sustainable development.  
 
50. The representative of Japan  welcomed the analysis contained in WT/CTE/W/67, which was a 
valuable contribution  to work on Item 6.  Japan had some general remarks on the document;  more 
detailed comments would be submitted after it had been fully examined.  Regarding the introduction, Japan 
did not have any intention to object to a sectoral discussion of the enviro nmental benefits of removing trade 
restrictions and distortions to pursue the possibility of "win -win" situations.  However, a comprehensive 
analysis should be undertaken on both the positive and negative environmental effects of trade liberalization.  
The sectoral analysis in WT/CTE/W/67 was divided in three sections;  this structure could fail to deal 
sufficiently with the possible negative environmental effects of removing trade restrictions or trade 
liberalization.  In this respect, another section shou ld be added in each sector which dealt with the negative 
environmental effects.  There was a common understanding in the CTE that efficient resource allocation 
would be enhanced if market mechanisms adequately valued environmental externalities.  There wer e 
positive and negative environmental externalities, such as in cases where agricultural activities supported 
biodiversity and the conservation of land and landscape.  These positive environmental externalities should 
also be clearly mentioned in the docum ent (especially in paragraph 4) and an examination should be carried WT/CTE/M/16  
Page 10 
 
out on methods of capturing environmental externalities.  Paragraph 12 should also refer to the negative 
environmental effects of removing trade restrictions or trade liberalization.   
 
51. In the agricultural section, references related to environmental benefits of trade liberalization were 
not balanced by references to negative effects.  An OECD report, The Environmental Effects of Reforming 
Agricultural Policies , dealt with positive environmental externalities, such as biodiversity, scenic landscape 
resulting from supporting agricultural activities and suggested that reforming agricultural policies might have 
negative environmental effects.  The positive and negati ve effects in this report should be referred to in a 
balanced manner.  Analysis of negative environmental effects of shifting production resulting from trade 
liberalization was also necessary in the document.  Empirical studies had not shown clearly if pos itive effects 
surpassed negative effects, and therefore balanced references should be made.  It was inappropriate to 
include in paragraphs 27 -30 subsidies or regulations including those notified under WTO Agreements in 
the section on "trade restrictions an d distortions".  The forestry section should consider social, economic 
and cultural factors which were related to the issues as had been identified in Agenda 21 .  A comprehensive 
analysis of all these factors was necessary for the discussion.  Paragraph 12  of the document stated and if 
adverse production and consumption externalities were adequately integrated into decisionmaking 
processes, trade and environmental objectives were mutually supportive.  Trade liberalization might have 
negative environmental e ffects as the assumption could not fully be met.  In quoting the analysis by the 
OECD, ITTO, and IPF, the document should cover the negative effects and conditions under which 
positive effects might arise.  
 
52. The representative of Argentina  said WT/CTE/W/67 dealt with a complex subject in a balanced 
manner.  Trade liberalization was not a guarantee of greater environmental protection, particularly if due 
to trade distortive policies the price of traded goods did not reflect the real  cost of their production.  Before 
considering the possibility of adding new instruments, such as subsidies and trade restrictions, it was essential 
to eliminate existing measures which distorted prices.  As WT/CTE/W/67 noted, prices determined the 
decisio ns of investors, producers and consumers.  For commodities such distortions had particularly severe 
environmental effects since they were natural resource intensive products.  Any distortion in their price was 
directly transmitted throughout the rest of th e production process.  Moreover, as commodities had a 
simpler cost structure than processed products, an incorrect valuation of the exploited natural resource had 
more serious consequences than in the case of processed products.  If the relative scarcity o f factors of 
production was not clear in the price structure, it was difficult to determine a sustainable rate of resource 
use. 
 
53. Existing trade restrictions and distortions that most affected the international price of natural 
resources should be identified and work should focus on their elimination;  this would yield environmental 
benefits.  Production -related subsidies distorted international prices.  In this regard, Principle 16 of 
Agenda 21  noted that in order to be able to im plement sustainable production policies it was necessary for 
prices to reflect full production costs.  The internalization of environmental costs in the cost of production 
was important to have a sense of direction for the discussion and in order to implem ent environmental 
policies.  Nevertheless, environmental costs could not be internalized on the basis of prices which were 
distorted by export subsidies.  The first step to internalize environmental costs rested with the countries 
causing the market distor tions and not adequately reflecting private production costs.  For example, 
production -related subsidies generated the following negative environmental effects:  (a) local effects 
through the promotion of intensive production practices which exceeded the s ustainable resource 
absorption and reproduction capacity;  and (b) general effects on producers which did not benefit from 
subsidies, but were affected by distorted prices and, as a result, were forced either to overexploit their own 
natural resources to g ain a short term return or to leave the market.  
 
54. The agricultural section in WT/CTE/W/67 was balanced.  However, paragraph 42 referred to the 
fact that a possible effect of agricultural liberalization in developing countries woul d be a shift from food to 
export crops.  Specialization in export crops was related to distorted incentives which went beyond 
agricultural trade.  To gain foreign currency to fulfil their international commitments, many developing 
countries had oriented pr oduction towards exports to international markets.  Even if excessive 
specialization could have negative environmental effects, it was contradictory to identify a causal link between          WT/CTE/M/16  
         Page 11 
 
excessive specialization, the difference between domestic and internation al agricultural prices and 
agricultural trade liberalization.  Trade liberalization in general aimed to bring domestic prices in line with 
international prices.  As agricultural trade was liberalized, the gap between domestic and international prices 
will be reduced and therefore the eventual specialization of producers will increasingly affect the competitive 
benefits of certain producers and be based on natural and competitive advantages.  The forestry section 
had not given sufficient attention to the lin k between rural poverty and deforestation.  Consumption of 
wood in developing countries was mainly linked to the use of wood for fuel.  The 1997 FAO State of the 
World Forests  cited fuelwood as the main source of domestic energy for two fifths of the world , was growing 
by 1.2 per cent per year.  About ninety per cent of the world's fuelwood was produced and used in 
developing countries, particularly African countries.  The European Forest Institute estimated that 
fuelwood demand was inversely proportional t o income growth.  Rural poverty entailed that forests were 
used to produce wood for basic needs.   
55. The representative of Norway  said WT/CTE/W/67 established a solid base for further discussions 
and should be revised according to Members' comments.  The conclusion that environmental benefits 
would result from trade liberalization was based on specific preconditions, such as that an efficient national 
environmental policy was in place, and that market prices captured the effects of environmentally -damaging 
activities;  such preconditions were not always fulfilled.  Thus, although there were no automatic 
environmental benefits of trade liberalization, it could yield environmental benefits.  This was an 
observation, and it was up to Me mbers to take steps so that environmental benefits materialized.  Norway 
noted that WT/CTE/W/67 included a section on environmental benefits for each sector, which discussed 
negative and positive environmental effects of trade liberalization.  More nuanced  language in paragraph 3 
of WT/CTE/W/67 was necessary as to whether trade instruments were the first -best policy for addressing 
environmental problems.  In some cases, trade measures were required to achieve an environmental 
objective, normally as a part o f a package of instruments.  Beyond this, trade measures were rarely the 
primary or best instrument for achieving environmental objectives.  The statement in paragraph 6 that there 
was wide agreement concerning the close linkage between poverty and environ mental degradation was too 
general.  Debate since the early 1990s had shown that environmental degradation had many causes, in some 
cases poverty was an important factor, in others unsustainable patterns of consumption and production were 
the underlying re ason.  Norway endorsed the basic premise in paragraph 12 that to make trade and 
environmental objectives mutually supportive, adverse externalities must be integrated into decision making 
processes.  Although environmental benefits would ensue from agricul tural trade liberalization, the possible 
negative effects and the multifunctional role of agriculture should be noted as set out in paragraph 40.  It 
should also be recognized that there were country -specific and socio -economic conditions as set out in the  
1996 CTE Report.  Norway would provide written comments on the agricultural section reflecting positive 
and negative environmental effects of agriculture trade reform.  
 
56. The energy section was balanced, describing various environ mental effects of energy production 
and consumption, and the restrictions and distortions that existed in this sector, such as subsidies which led 
to high levels of pollution.  Existing government interventions in the energy sector, such as subsidies, taxe s 
and other non -price measures, had led to a composition and level of energy consumption that was far from 
optimal from an environmental or economic point of view.  Whilst studies had shown that removing or 
reducing energy subsidies, or restructuring exist ing taxes on fossil fuel energy carriers resulted in economic 
and environmental gains, some properly designed subsidies could contribute to sustainable development.  
In addition to the issues raised in the document, Norway emphasized the need for electrici ty market reform 
at the domestic and international level;  there was a trend to introduce competition in domestic and regional 
electricity markets, an issue which was under discussion in UN fora.  The Nordic countries had developed 
an integrated electricit y market, which had economic and environmental benefits for the efficient use of 
resources and investments;  in order to achieve these benefits, environmental policies had been adjusted.  
   
57. Removing distortions in the energy sect or must also include the coal industry, as coal was the more 
polluting energy source.  This was a complicated issue and many countries, especially developing countries, 
were dependent on coal as an energy source and coal mining was a source of employment.  Thus, 
introducing price reforms and other environmentally and economically sound measures in the energy sector 
must be seen in a longer term perspective.  Until present, government interventions tended to favour the 
use coal at the expense of other energy  sources.  In the OECD, oil carried a CO 2 tax of about US$60 per WT/CTE/M/16  
Page 12 
 
tonne, whereas coal taxes were non -existent.  Coal production was also subsidised in some OECD 
countries.  It could be argued that the existing tax structure on energy in the OECD was not fai r from a 
trade point of view as energy carriers, to a large extent, were substitutable.  Subsidy removal in itself would 
not necessarily lead to environmental improvements.  If gas subsidies were removed, other things being 
equal, the consequence could be an increased use of coal or oil.  Thus, price reforms should take into 
account environmental externalities of competing energy sources and subsidy removal and tax restructuring 
should go together.   
 
58. Reference was made to the mos t important factor to achieve sustainable fisheries, namely the 
application of national and international resource management regulations, in  WT/CTE/W/67.  
Resource management was, however, outside the WTO's scope.  A distinction should be made between 
overexploited and efficiently managed stocks when discussing the environmental impact of trade 
liberalization.  This distinction was made in OECD studies which tended to conclude that it was likely that 
trade liberalization would only have a small impact in the fisheries sector, and that environmental effects 
were more likely to result from national or international resource management strategies.  Although 
WT/CTE/W/67 referred to traditional instruments such as tariff and non -tariff barriers (quotas, embargo es, 
license requirements, and sanitary standards) affecting trade in fish products, their possible environmental 
impact as a result of trade liberalization had not been analyzed.  Subsidies were dealt with more thoroughly.  
Some subsidies also had the pote ntial to contribute to sustainable fisheries.  The description of the world's 
fish stocks in the document was not based on current data and should take into account that the development 
of certain stocks underwent cyclical movements;  some depleted stocks had recovered quickly.  To 
establish whether there were generally any environmental benefits from removing trade restrictions and 
distortions, it would be necessary to examine the positive and negative effects, as had been done 
appropriately in WT/CTE/W/67 . 
 
59. The representative of the Czech Republic  appreciated WT/CTE/WT/67, especially the energy 
section.  Energy was a major polluting factor in the Czech Republic.  Despite a decline in energy 
consumption due to the reduction in production and industry restructuralization after 1989, the demand for 
energy and electricity was increasing.  The Czech energy market had been affected by various forms of 
government intervention.  As the Czech Republic had a high energy consumption ratio per unit of 
production, it would have to increase the efficiency of ener gy use, introduce new energy -saving technologies, 
and promote the use of renewable energies.  The Czech Ministry of Industry and Trade was working on a 
new energy policy with the aim of introducing new environmentally -friendly energy taxes after the 
identi fication and removal of distorting energy subsidies.  With the help of Danish experts, the Czech 
Republic would also evaluate the possibility of introducing ecological tax reform.  To enter the EU, the 
Czech Republic would have to comply with requirements in both energy and agriculture.  WT/CTE/W/67 
and OECD studies would help the Czechs to determine priorities in environmental protection and to 
address problems in the energy, chemical and agricultural sectors.  
 
60. The representative  of Korea  said WT/CTE/W/67 represented a valuable analysis of the issues.  
However, both positive and negative environmental effects of trade liberalization should be dealt with in a 
balanced manner.  WT/CTE/W/67 did not provide sufficient empirical eviden ce for illustrating the full 
environmental impact of trade liberalization.  As the CTE was engaged in an educational process, the 
analysis should be backed up by concrete examples as well as theoretically.  Given the dearth of information 
on the environmen tal effects of trade liberalization, difficulties in compiling relevant information were 
understandable.  Members' contributions of country -specific experiences would help fill the gaps.  The 
section on agriculture in WT/CTE/W/67 cited Anderson and Tyers' scenario under which declining 
agricultural production in densely populated countries would reduce environmental degradation.  
However, Korea had a different view on this point, which did not come from analysis or theory, but from 
its national experience.  Korea had implemented a "Green Belt" policy which designated certain farmland 
and forestry zones and prohibited their development.  Whenever there was an economic slow -down, 
pressure was exerted to lift the ban on development in Green Belt areas.  Records  showed that farmland 
and forest zones formerly protected by the Green Belt Law had been converted into industrial zones or 
residential areas.  Drawing from this experience, it may be concluded that agricultural decline resulting from 
agricultural trade li beralization in small, densely populated countries such as Korea may increase the chance          WT/CTE/M/16  
         Page 13 
 
that farmlands would be converted into less environmentally -friendly areas.  A recent study by the Korea 
Institute indicated that rice paddies in Asia played an import ant role in flood control and soil conservation 
by holding rainwater during the summer when most of the heavy rains occurred.  Without rice paddies, 
additional dams would have to be built to prevent flooding.  These dams had a negative impact on the 
ecosys tem, climate change, and destroyed wildlife habitats.  
 
61. In recent decades, increasing numbers of farmers deserting their farmlands had contributed to the 
rapid pace of urbanization in Korea;  urbanization, particularly in developi ng countries, had brought about 
socio -economic and environmental problems.  At the beginning of the next century, more than 60 per cent 
of mega -cities with a population of at least 10 million inhabitants would be located in developing countries.  
Rapid urb anization without sufficient infrastructures for waste management, water resources and housing 
was causing environmental distress.  The May 1996 Habitat Conference, which aimed to improve the 
environment for city dwellers, had addressed ways to mitigate th e worsening urban environment.  A holistic 
approach should be taken to address the environmental problems in order to act in all parts of society.  If 
agricultural trade liberalization contributed to the acceleration of urbanization and aggravated environm ental 
degradation in urban areas, the question was what were the environmental benefits of liberalization.  Effects 
of agricultural trade liberalization should be seen from a wider perspective, taking into account far -reaching 
implications, and focusing on  the impact on sustainable development in general.   
 
62. The representative of Brazil  said WT/CTE/W/67 was well balanced and promoted a better 
understanding of the role of market instruments in different sectors.  The sectorial anal ysis contained 
important information for the CTE's ongoing work.  The task of identifying the sectorial effects of trade 
liberalization was complex and establishing the relationship between these effects and the related 
environmental benefits was even more  complex.  There was one unmistakable conclusion to be drawn 
from this paper:  for the most part, the removal of trade restrictions and distortions led to environmental 
benefits.  These effects were not always immediate or direct, and may be dependant on n ational or 
multinational regulations.  Nevertheless, trade liberalization caused a chain of results which would 
eventually lead to higher levels of environmental protection.  By increasing the exchanges of goods, trade 
liberalization stimulated production,  generated productivity, increased income, accelerated technological 
changes and opened new and profitable possibilities for the generation, acquisition and application of 
environmentally sound technologies.  Although the removal of trade restrictions was not in itself a guarantee 
of improved environmental quality, from the point of view of growing economies, trade liberalization was 
the pre -condition to beginning the process of sustainable development, particularly considering the 
globalization of the worl d economy.  The "win -win" situation Brazil was searching for in the CTE could be 
achieved in a discussion of the relationship between trade and environment, but the economic elements had 
necessarily to precede the institutional framework.  
 
63. According to WT/CTE/W/67, the positive relationship between trade liberalization and the 
environment may enhance competition and generate more efficient factor -use and consumption patterns;  
reduce poverty by expanding trade;  encourage sust ainable rate of natural resource exploitation;  and 
increase the availability of environmental -related goods and services.  According to OECD studies, 
subsidies and price support initiatives in the agriculture sector had provided farmers with a disincentiv e to 
rotate crops.  By concentrating their cultivations in the subsidized crop, farmers practised monoculture, one 
of the main causes of soil erosion and the overuse of fertilizers and pesticides.  If this line of reasoning were 
inverted and the issue exam ined from the perspective of the farmer who did not receive the subsidy, the 
result was equally negative to the environment and to the economy as a whole.  Given distorted international 
prices generated by subsidies, farmers had few alternatives;  either o verexploit the resources to increase 
immediate earnings or leave the market.  In either case, the results may be the growth of rural poverty (and 
its consequences for deforestation), a decrease in environmental protection, the perpetuation of poverty, 
and an increase in rural and urban marginality.  Less subsidies would probably generate higher prices for 
agriculture outputs in developing countries.  As incomes increased, farmers would invest in soil irrigation 
and conservation.  Some Members had argued tha t without "flanking support" liberalization might induce 
detrimental environmental effects in the agriculture sector, such as land abandonment.  Whilst this may be 
correct, it was not the case in developing countries where agriculture was not explored to i ts potential as 
prices were distorted and production was not adequately rewarded.  Some Members had also argued that WT/CTE/M/16  
Page 14 
 
well-designed environmental subsidies may have an important role to play in promoting sustainable 
agriculture and forestry.  Although from a national or regional point of view this statement may be correct, 
the negative effects of certain policies in other countries, such as their implications on market access 
opportunities, could not be disregarded.   
64. In the energy  sector, scientists and economists had pointed out that the removal of subsidies may 
bring energy prices in line with marginal benefits.  There would be an incentive for the development of 
clean technologies and for reliance on renewable energy sources.  I n this respect, the results of the Climate 
Change Convention's Kyoto Conference should be awaited in order to have a better idea of the willingness 
of some countries to contribute to solving environmental problems.  In this respect, Brazil welcomed an 
upda te of the results of Kyoto.  It was argued that the removal of subsidies in the fisheries sector could lead 
to a contraction of capital, a reduction of overfishing by limiting overcapacity, a decrease in the participation 
of inefficient producers, and the phasing -out of old and environmentally -damaging equipment.  Subsidies 
removal would then stimulate the use of environmentally -sustainable management systems.  This reasoning 
could be applied to all sectors of an economy, especially in developing countries.   With a more balanced 
competitive atmosphere, structural transformations could be achieved, diversification of exports could be 
attained and a shift to higher value -added goods facilitated.  Environment benefits may thus ensue from the 
growth effect of tr ade liberalization.  Tariff escalation was another distortive practice which negatively 
affected sectors such as fisheries, forestry, clothing and leather by inducing inefficiencies in importing and 
exporting countries.  By distorting prices, tariff escala tion had a double negative environmental effect:  it 
exported the environmental problems to less -developed countries and helped to perpetuate inefficiency by 
impeding investments in new technologies.  This problem could be identified in the leather and for estry 
sectors, where tariffs escalated from raw materials to finished products.  In the fishery sector, inefficiencies 
were linked to the volume of processed fish vis-à-vis the exploitation of unprocessed fish.   
 
65. Environmental e xternalities were a global problem which could not be exported to other regions as 
an excuse to reach a solution in one country.  The solution to environmental problems had to be balanced 
against the present and future and viewed beyond regional interests.   If Members were searching for a "win -
win" relationship between trade and environment, and not using the environment as an excuse for disguised 
trade restrictions, that special balance would have to be found.  Brazil would coordinate at the national level  
to promote a discussion of WT/CTE/W/67.  
 
66. The representative of the European Communities , noting the importance of Item 6, said further 
work should consolidate the CTE's role as a forum for constructive discussions.  The EC welco med the 
detailed analysis and structure of WT/CTE/W/67, and would give substantive comments after having 
examined it.  It would also be necessary to include an analysis of trade in environmental services for 
discussion under either Item 6 or 9.  For its wo rk to be credible and intellectually consistent, the CTE 
should take into account the positive and negative environmental effects of trade liberalization.  
 
67. The representative of Switzerland  said WT/CTE/W/67 was a solid analysis o f one of the elements 
under Item 6.  The elimination of trade distortions did not necessarily result in automatic environmental 
benefits.  If environmental benefits were to ensue it was essential for domestic environmental protection 
policies to be impleme nted at the same time.  The objective of such policies should be the internalization 
of environmental costs.  The importance of the environmental benefits which could result from eliminating 
trade distortions was difficult to quantify.  In certain sectors,  such as coal, the elimination of certain forms 
of trade restrictions could have obvious environmental benefits, but in other sectors, the long term 
consequences in the changes in certain practices on the environment were difficult to determine.  All trade  
restrictive measures did not necessarily have negative environmental effects.  Depending on their objectives 
and the manner in which they were implemented, certain forms of support could have environmental 
benefits.  Switzerland would return to this docum ent at a future meeting.  
 
68. The representative of Malaysia, on behalf of ASEAN , said WT/CTE/W/67 was useful a useful 
document which ASEAN would comment on at a future meeting.  Export controls on unprocessed logs, 
referred to in pa ragraphs 119 and 129, were levied to meet developmental and sustainable developmental 
objectives.  These taxes had helped to reduce the rate of deforestation.  Eliminating tariff escalation on 
value -added forestry products maintained by several Members wou ld enhance sustainable forest          WT/CTE/M/16  
         Page 15 
 
management along with other conservation measures in developing countries.  Paragraph 121 referred to 
certification of sustainable forest management and labelling of forest products which were complimentary 
to forest managemen t policies.  Certification and labelling were not complimentary to forest management 
policies, as referred to in paragraph 121, as what was important was the formulation and implementation of 
sound management policies, such as reforestation, silviculture a nd methods of harvesting.  Labelling and/or 
certification were not a compulsory component of sound forest management.  However, if the market 
determined that labelling or certification through the use of any scheme, not only the ISO series, became 
the prer equisite through market driven demand, it would then become an issue for discussion.  Paragraph 
122 referred to studies suggesting that the demand for certified or labelled forest products was small and 
concentrated in a narrow market segment.  He sought c larification as to whether all developing countries 
were effectively involved in the formulation of ISO 14001.  If not, these standards could not be considered 
to have fulfilled the TBT provisions, particularly Article 12.  In analysing paragraph 124, pove rty should 
not be excluded and the existence of shifting cultivators, both these aspects should be addressed if Members 
wanted to address the felling of trees for subsistence cropping or fuelwood.  Technical and financial 
assistance was necessary in resolv ing this issue.  Referring to paragraph 124, he said many studies had 
illustrated that oil palm and rubber plantations contributed positively to the environment.  
 
69. The representative of Canada  said WT/CTE/W/67 contributed to broad ening the sectoral focus 
under Item 6.  Canada would circulate the document at a national level to obtain input from industry and 
other interested parties.  Canada proposed to examine the document sector -by-sector to facilitate a focused 
discussion.  Canad a would comment on the forestry sector, which was an example of a sector in which 
environmental issues had been confronted and creative policy responses developed.   
 
70. The representative of India  supported Canada's suggestion to h ave a structured sectoral discussion 
based on WT/CTE/W/67.  Reference to poverty alleviation in paragraphs 6 and 12 was significant given 
the CTE's mandate to examine this issue from the perspective of sustainable development.  Trade 
instruments were not t he first -best policy for addressing environmental problems.  In the agricultural 
section, India had doubts about applying the proposition in paragraph 37 as it was questionable whether 
population growth always declined as income rose.  The size of farm hol dings, especially for small farmers, 
was important in the context of discussions on paragraph 45.  On the energy section, it was prudent to await 
the outcome of the Kyoto Conference of the Climate Change Convention before dealing with issues such 
as those covered in footnote 64.  Although India would deal with the textiles and leather sections later, an 
important reference was the UNCTAD study on SMEs, cited in footnote 188.  Attention should also be 
directed to fibres other than cotton, such as jute, wool,  and silk.  A more detailed discussion of synthetic 
fibres based on petroleum would be welcome.  He said the CTE's mandate was clear that the analysis 
should examine environmental benefits.  
 
71. The representative of the United State s sought the Chairman's clarification concerning several 
suggestions to revise the document.  At this stage, it was up to Members to provide input.  Concerning 
WT/CTE/W/67, trade had an important role to play in achieving environmental objectives;  at the same 
time, in the absence of environmental policies, the environmental benefits of trade liberalization would not 
be achieved.  It was important to distinguish between income growth effects, which was a necessary but not 
sufficient condition for achieving environmental objectives, and direct effects through the process of trade 
liberalization, which would need to be examined by sector and product.  Determining environmental 
impacts was a complex issue to examine, particularly as Members were not environment al experts.  There 
had been a lot of analysis in the primary goods sector and a case had been made that distortions in this area 
interfered with environmental cost internalization and led to inefficiencies which acted at cross purposes to 
achieving environ mental objectives.  Assertions had been put forward by some Members that some of these 
distortions yielded environmental benefits.  However, if the analysis were extended further to examine the 
effects these distortions had on third countries, the environm ental effect may be negative.  Moving up the 
product chain from primary products to manufactured goods, the analysis became more complicated, which 
should be reflected in the analysis.  This was not to say that trade liberalization in the manufactured sect or 
was any less important than that in the primary goods sector.  The task was to examine whether sectoral 
trade liberalization could yield "win -win" benefits from an environmental perspective.   
 WT/CTE/M/16  
Page 16 
 
72. The Chairman  said WT/CTE/W/67 wa s a background paper and not a document to be negotiated;  
the Secretariat did not have any intention at this stage to revise the document.  
 
73. The representative of Egypt  said WT/CTE/W/67 was a useful presentation of the issues.  
Although removing a trade restriction or distortion was an important pre -condition for improving 
environmental quality, its removal was not in itself a guarantee of improved environmental quality.  Egypt 
emphasized the importance of the balance between envi ronmental benefits of trade liberalization and the 
effects of the restrictions still in place which affected the ability of developing countries to make use of the 
benefits from trade liberalization.  Further work should focus on the needs of small and med ium size 
enterprises, the relation between poverty reduction and the achievement of environmental objectives, and 
transfer of environmentally -sound technology.  
 
74. The representative of Mexico  said WT/CTE/W/67 was a good basis for t he CTE's discussion.  It 
was premature to consider revising a document which Members were only beginning to analyze and which 
was not a negotiated document.  As to an extension of its contents, the approach taken in the document 
was appropriate and was in keeping with the CTE's mandate under Item 6.   
 
75. The representative of Cuba  said WT/CTE/W/67 would enrich future discussion and would be 
analyzed by the Cuban Interagency Commission.  The Spanish translation of the document should  be 
made available as soon as possible.  
 
76. The representative of Japan  said, with regard to the CTE's mandate on Item 6, an analytical 
examination to determine the environmental benefits of the removal of trade restrictions and dis tortions 
should also deal with the negative effects in a balanced manner.  
  
77. The representative of the United States  commented on India's paper (WT/CTE/W/66), which 
proposed changes to the TRIPS Agreement based on concerns about possible loss of market access resulting 
from environmental standards requiring use of particular patented products established under MEAs or b y 
national laws.  Although admitting that such an event had never occurred, India argued that, absent the easy 
access and low prices it recommended, developing countries could not safeguard their existing market 
access.  India recommended that developing c ountries' existing market access be preserved by limiting or 
eliminating the patent rights of inventors of patented technology and products important to the environment.  
The US was perplexed as to why India had suggested that the paper dealt with market a ccess;  India believed 
that if a WTO Member lost export opportunities because its products did not meet the standards in export 
markets, a notion of market access required that the exporting party be provided the technology to develop 
an alternative produc t to export.  The US was at a loss as to how adding the words market access to a call 
for technology transfer made this a market access issue.  India's proposals would increase competition for 
patented technology and products important to the environment, and result in stagnation in other markets.  
 
78. India presumed a serious problem existed in relation to the global use and availability of patented 
environmentally -sound technologies and products (EST&Ps) due to the standards for pat ent protection in 
the TRIPS Agreement.  Experience in countries with strong patent protection, including countries that had 
recently brought their laws up to the standards in the TRIPS Agreement had revealed no problem with the 
dissemination of patented te chnologies or patented products.  Patent protection was one of many factors 
that influenced transborder transfers of patented technology and trade in patented goods.  A country's 
foreign investment climate (including weak patent protection), import laws an d regulations, marketing 
approval procedures, and market conditions affected directly the transfer of EST&Ps, whether patented or 
not;  India failed to mention these factors in describing the hypothetical problem of lack of access to 
patented EST&Ps, discu ssing only its recommendations to weaken or nullify the standards for patent 
protection in the TRIPS Agreement.  
 
79. Requiring the use of a particular EST or P, whether patented or not, in an MEA or in national law 
was unlikely and c ould be counterproductive as they would freeze environmental protection at the level of 
that technology or product and would eliminate any incentive to create improved EST&Ps.  Performance -
based environmental standards, particularly when coupled with stron g patent protection, encouraged          WT/CTE/M/16  
         Page 17 
 
competition in the development of technology and products that met or exceeded those standards and 
improved the variety of technologies and products.  Competition ensured businesses, including in 
developing countries, had ac cess on an equal footing to many products at reasonable prices.  
 
80. India recommended that "flexibility" be added to the provisions of Article 31 regarding compulsory 
licensing, citing in particular Article 31(b) which required effo rts be made to obtain authorization from the 
patentee on reasonable commercial terms and condition;  31(g) which required any compulsory license be 
terminated if and when the circumstances that led to its grant ceased;  31(h) which required a patentee be 
paid "adequate remuneration" for the license, taking into account the economic value of the authorization;  
and 31(l) which limited the grant of a dependent patent compulsory license to dependent patents claiming 
"an important technical advance of considera ble economic significance" in relation to the invention claimed 
in the dominant patent, and limited assignment of the license.  India described these provisions as 
"cumbersome" and asserted they "may prove hurdles in the quick and effective transfer"of EST &Ps.  India 
sought, through the CTE, to nullify the requirements of these provisions of Article 31, thereby destroying 
the careful balance of patent rights and exceptions agreed in the Uruguay Round.  Article 31 permitted 
countries to grant compulsory lice nses conditioned on compliance with provisions consistent with honest 
commercial practice.   
 
81. India recommended that, if this careful balance of patent rights and exceptions could not be altered 
as India proposed, the CTE should consider reducing patent terms protecting EST&Ps to "a much shorter 
term" to allow "free access" to them.  India described this as a "win -win" situation that would safeguard the 
interest in generating EST&Ps, while allowing for their "wide dissemination".  Reducing patent terms for 
certain kinds of inventions would result in a reduction of investment in research and development in that 
field because returns on investment would be greater in other fields.  Reducing environment -related 
research and developmen t would result in a corresponding reduction in EST&Ps.  
 
82. India stated that, if neither of its recommendations were accepted, developing countries could 
simply revoke or cancel patents to enable their businesses to produce and use EST&Ps "as are essential to 
safeguard or improve the environment, at least under standards set by an MEA or by another country's 
national legislation, even if adherence to those standards were voluntary".  India said the TRIPS Agreement 
did not prohibi t revocation or cancellation of patents as long as a country tried compulsory licensing first, as 
specified in Article 5(A) of the Paris Convention for the Protection of Industrial Property, incorporated by 
reference in Article 2.1 of the TRIPS Agreement.  Such an interpretation would nullify the obligations of 
Section 5 of Part II of the TRIPS Agreement, and would allow any country that found any granted patent 
or group of patents inconvenient to revoke or cancel patents.  Article 5(A) of the Paris Convent ion 
authorized the grant of compulsory licenses, and forfeiture of a patent if compulsory licensing failed only to 
prevent abuse of exclusive rights.  It did not authorize the grant of compulsory license by a government as 
an abuse of exclusive rights.  
 
83. The TRIPS Agreement did not contain a provision on revocation of patents as none was necessary.  
A Member could revoke a patent only if the invention claimed was found not to meet the standards of 
patentability established in Artic le 27.1, i.e., that the invention was new, involved an inventive step, and was 
capable of industrial application.  Even when a patent was revoked for failing to meet the standards of 
patentability, judicial review of this decision must be available (Articl e 32).  The limitations on patent rights 
permissible under the TRIPS Agreement were set out in Articles 27.2 and 27.3, as well as Articles 30 and 
31.  India's proposals concerned only "copiable" patented EST&Ps.  To ensure easy access and low prices 
for pa tented EST&Ps, India recommended adding to the TRIPS Agreement:  "The owners of the EST&P 
shall sell these technologies and products at fair and most favourable terms and conditions, upon demand, 
to any interested party which has an obligation to adopt the se under national law of another country or under 
international law".  Other governments or international organizations were to subsidize businesses that 
suffered losses from this requirement.  India's interpretation of "fair and most favourable" meant at below 
or better market rates, which was an interpretation India had tried to have included in several MEAs.  
India's chances of success were no greater in the CTE, particularly as India had yet to provide evidence of a 
true problem.  
 WT/CTE/M/16  
Page 18 
 
84. The representative of India  said his delegation would appreciate receiving the text of the US 
statement.  Discussion of WT/CTE/W/67 showed that many kinds of trade measures had market access 
impacts, especially on products of interest to developing co untries.  Restrictions on technology transfer were 
one such trade measure, which were relevant in the CTE's discussion of the impact of such restrictive trade 
measures on the transfer of EST&Ps, especially those which were multilaterally agreed for dissemi nation 
and use for the objective of global environmental protection.  In keeping with the general discussion on 
issues covered by the Market Access Cluster, India had raised some of their concerns in this context.  India's 
paper set out three situations re quiring an examination of the ability of WTO provisions, including the 
TRIPS and TBT Agreements, relating to transfer of technology, especially for market access in terms of 
reconciling the objectives of environmental protection with IP protection.  India was committed to the 
TRIPS Agreement, as all Members had accepted it as part of the Uruguay Round's single undertaking.  
Given the technological advances since the TRIPS provisions had been drafted, Members owed it to 
themselves and to civil society to ack nowledge these changes.  The US statement on Item 9 called on 
Members to liberalise trade in environmental goods and services.  It would be equally consistent to 
approach the issues raised in India's paper from the same perspective.  
 
85. India attached importance, in terms of ensuring market access, to technology transfer, especially 
when such technology was in mandatory domestic environmental standards, measures in developed country 
markets, or in multilaterally agreed environmental standards or measures affecting imports into developed 
country markets.  The first triennial review of the TBT Agreement revealed the complete lack of 
information and implementation of existing WTO obligations in this respect in favour of developing 
countr ies.  Instead of facilitating environmental protection, restrictions on technology transfer led to market 
access barriers and created obstacles to environmental protection in many developing countries.  Among 
the objectives of Article 7 of the TRIPS Agreem ent was " the transfer and dissemination of technology, to 
the mutual advantage of producers and users of technological knowledge in a manner conducive to social 
and economic welfare".  This provision did not indicate how to ensure such welfare, especially  in cases 
where technology was mandated to be used by an MEA.  TRIPS provisions allowed private rights holders 
limited periods of restrictions on such dissemination.  In this respect, he quoted paragraph 5 of 
WT/CTE/W/22:  "in cases where technology cannot  be easily copied.  Then  its protection by IPRs will 
mean that the authorization of the IPR owner has to be obtained to use it when in the absence of such 
protection it could be used without such authorization.  If a voluntary transfer of such technologie s is not 
forthcoming on reasonable terms within a reasonable period, they could be acquired under compulsory 
licensing, subject to the provisions of Article 31 of the TRIPS Agreement.  An important point to bear in 
mind is that if technologies cannot be ea sily copied (there are a large number of such technologies), the 
cooperation of the technology supplier becomes essential for transferring technologies.  In such cases, even 
compulsory licensing will not result in technology transfer unless the cooperation  of the technology supplier 
is obtained".  Such restrictions would occur no matter how liberal the foreign investment regime was of the 
country concerned.  
 
86. India felt that in the three specific cases outlined in their paper, the  CTE should reconcile the 
TRIPS Agreement with agreed global environmental objectives in order to address the fact that the private 
rights referred to in the TRIPS Agreement were restrictions on trade and competition which inhibited easy 
access to EST&Ps, especially given the volumes required for mandatory global consumption under relevant 
MEAs.  The aim was to reconcile the objectives of environmental protection with IP protection, including 
the provisions in the TRIPS Agreement.  India did not seek to reo pen the question of whether these 
restrictions were TRIPS -compatible, but to address three specific situations to determine whether and how 
the TRIPS Agreement facilitated EST&P development, access and transfer.  India's paper advocated more 
than just addr essing this issue in terms of the TRIPS Agreement;  India sought to address this issue in 
relation to other relevant WTO provisions as well.  As a developing country, India was of the view that such 
transfers should be on "fair and most favourable terms", since India had not contributed to the global 
environmental catastrophe caused by industrialisation, which was starkly documented by environmentalists.  
India's argument for equity should be seen from a historical context;  India was at a less prosperous s tage 
of economic development.  No TRIPS provision fully addressed the question of encouraging the global 
use of proprietary EST&Ps, at least where they were mandated to be used under an MEA as defined under 
Item 1.            WT/CTE/M/16  
         Page 19 
 
 
87. The US had asked India to cite practical experience to substantiate their concern.  He referred to 
India's experience under the Montreal Protocol.  As of 1986, developed countries were consuming 
1.3 million tonnes of ozone depleting substances annually.  Demand for t hese substances in India and 
China was projected to reach 500,000 tonnes in 2010.  Today, while developed countries had managed to 
phase -out consumption of these substances, developing countries had also managed to maintain, and not 
increase, their consump tion.  In order to achieve the Protocol's objectives, India needed to convert to ESTs 
and ensure the costs of non -ozone depleting substances were not higher than those of ozone depleting 
substances which the Protocol sought to replace.  India's experience in acquiring mandated technology 
under the Protocol was that such technology came with the equipment, requiring the developing country to 
possess the necessary resources to buy equipment at a price which included the cost of producing the 
equipment and the  technology behind it which has been patented, rather than procuring the technology 
itself.  The Protocol's fairly strong provisions on technology transfer had been inadequate, especially 
regarding technology transfer for manufacturing medical inhalers whi ch did not use CFCs.  Enormous 
resources had been devoted to developing this new and patented technology;  India agreed that the 
innovators deserved compensation, but this should not involve closing production facilities in developing 
countries, or cause p atients in developing countries to pay higher prices.  Due to technological progress, 
new technologies will replace existing ones.  The cost of subsequent technological conversions under the 
Protocol will again have to be borne by developing countries.  Th anks to the Information Technology 
Revolution, knowledge of new ESTs had been disseminated to developing country markets, while trade -
related restrictions on their manufacture and use remained.  This was the problem India felt the CTE could 
usefully take a s a case study under this Item, since it directly related to market access and sustainable 
development.  India would respond to the US intervention made at this meeting when this Item was next 
addressed.  
 
88. The representative of th e United States  said his delegation was reassured about India's commitment 
to the TRIPS Agreement.  The US looked at these issues from the standpoint of a government which was 
committed to the TRIPS Agreement and to multilateral and domestic objectives to achieve cooperative 
environmental protection.  If there were a genuine problem, the US engagement would be different.  The 
TRIPS Agreement was not about restricting technology transfer, but providing incentives to innovators to 
produce technology for the b enefit of all humankind.  
 
 
Item 8The relevant provisions of the Agreement on Trade -Related Aspects of Intellectual Property Rights  
 
89. The representative of the United States  said the ideas expressed in WT/CTE/W/65 had been 
included in India's earlier papers, to which the US had responded at length.  India stated that the TRIPS 
Agreement and the Convention on Biological Diversity (CBD) were intrinsically linked with one anothe r 
and proposed the CTE discuss the provisions of both agreements and suggest ways to reconcile 
contradictions in line with the CBD;  India failed to identify any contradictions.  Despite the statements in 
paragraphs 3 and 4, India ignored that the subject matter covered by each of these agreements differed.  
Discussions concerning the control of access to genetic resources and the sharing benefits resulting from 
their use should focus on national legislation of the source countries governing private or publ ic property, 
contracts, conservation, export controls, etc.  These laws, not intellectual property (IP) laws, governed 
access to genetic resources and the sharing of benefits from their use.  The assertion in paragraph 6 that, 
prior to the CBD, genetic res ources were considered a freely available heritage of humankind was not true.  
A principle of international law and practice was that a sovereign state had jurisdiction over all persons and 
property, including any biological resources.  Article 15.1 of the  CBD reflected this principle.  Access to 
biological resources was governed by the laws of the country in which the resources were located.  It was 
up to that country, if it so chose, to enact laws establishing the conditions under which access to such 
resources would be granted and ensuring benefits resulting from the use of biological resources located in 
its territory were shared.  
 
90. India sought to shift responsibility for keeping track of the use of genetic materials and of 
determining the manner in which benefits would be shared from countries that were the source of genetic WT/CTE/M/16  
Page 20 
 
materials to patentees.  To do so, it distorted the purpose of the TRIPS Agreement by asserting, in 
paragraph 12, that TRIPS was a multilateral approach to  the use of living resources.  This assertion was 
based only on Article 27 of the TRIPS Agreement, which required Members to provide patent protection 
for micro -organisms and non -biological and microbiological processes that met the standards of patentabil ity 
specified in the Article, and to provide patent and/or  sui generis  protection for plant varieties.  India asserted 
that the TRIPS Agreement "failed" to obligate countries to require patent applicants claiming 
biotechnological inventions to identify "th e origin of biological/genetic resources and indigenous/traditional 
knowledge".  If the source of biological/genetic resource was unique, an applicant would have to identify it 
so that a person skilled in the art would be able to carry out the invention.  In the US, indigenous/traditional 
knowledge closely related to an invention had to be identified as prior art if it were known to the applicant.  
If the invention would have been obvious to one skilled in the art in light of the prior art, no patent would 
be granted.  Requiring additional disclosure would increase the costs of research because of the record 
keeping required, thereby reducing research and increasing the costs of products.  
 
91. India's paper asserted that the lack of an  obligation in the TRIPS Agreement that countries require 
"prior informed consent of the country of origin and the knowledge -holder of biological raw material meant 
for usage in a patentable invention" conflicted with the CBD.  Why this was viewed as a con flict was not 
explained;  in fact, no such conflict existed.  India's assertion ignored the propose of the TRIPS 
Agreement, which was to establish minimum levels of IPR protection, not to specify contractual obligations 
governments were to impose regarding  access to genetic materials in other countries' territory.  As the paper 
noted, it was up to the country in which such materials were located, if it so chose, to enact laws establishing 
the conditions under which access to such resources would be granted,  including conditions that ensured 
benefits resulting from the use of biological resources located in its territory were shared appropriately.  
This was true for access to indigenous or traditional knowledge, to the degree that it was not publicly 
availabl e.   
 
92. The suggestion in paragraph 16 that the CTE "examine the pros and cons of evolving a system for 
patenting indigenous knowledge and local, contemporary innovations of traditional folk" reflected a lack of 
understanding of pa tents.  If knowledge were truly "traditional or indigenous," it was in the public domain 
and would not meet the standards of patentability specified in TRIPS Article 27.1.  To the degree 
"traditional folk" developed innovations that met the standards of pa tentability in Article  27.1, these 
innovations would be patentable, assuming their native country had a patent system that provided protection 
for the field of technology of the innovation.  Responsibility for assisting traditional folk to obtain such 
protection primarily rested with their native government.  If the innovation of traditional folk should be a 
design, artistic work, musical composition, industrial design, or undisclosed information, it would be 
protectable in accordance with other forms of IP  for which the TRIPS Agreement provided minimum 
standards, assuming the traditional folks' native country met those standards.  Thus, it should not be 
necessary for the CTE to examine the possibility of protection further.  If any question were to be 
exami ned, it should be the manner in which countries could assist their traditional folk to acquire rights and 
the manner in which these rights could be exploited through investment and licensing.  The US did not 
share India's view as to the implications of Art icle 16.5 of the CBD which called on Parties to cooperate in 
order to ensure IPRs were supportive of, and did not run counter to its objectives.  As this obligation had 
been established in 1993, before the conclusion of the Uruguay Round, CBD Parties had a ccepted it in view 
of their obligations under the CBD.  
 
93. The representative of India  asked for a copy of the US statement.  India had addressed the 
"sovereignty principle" in paragraph 8.  India disagreed with the US on the lack o f any need to identify the 
source of origin, which would clarify the examination of patent applications in the sense of safeguarding the 
origin of biodiversity resources.  As demonstrated by the recent case in the US Patent Office relating to the 
patent fo r turmeric (involving the revocation of the patent once the Indian CSIR had proved the source of 
origin to the USPTO), the issues raised in paragraph 12 should be addressed.  India did not understand 
the US argument on the negotiating history of the TRIPS Agreement in relation to including therein 
obligations assumed by Members who were also CBD Parties.  India's recollection of these negotiations 
indicated the TRIPS Agreement, in large part, had already been drafted before the CBD, and the possibility          WT/CTE/M/16  
         Page 21 
 
of amending the text had been minuscule once incorporated in the Dunkel Draft.  Thus, WTO Members' 
obligations under the CBD may not be addressed in the TRIPS Agreement.   
94. According to the CBD, there was a need for cooperation betwee n the WTO and the CBD under 
Decision III/17 of the third CBD meeting, which related to IPRs, the trade -related aspects of which were 
covered in the WTO.  India's paper on this issue should be seen in this context.  Work on this Item should 
begin by exchang ing information related to Article 16 of the CBD and the laws and regulations available in 
the TRIPS Council under Article 63 of the TRIPS Agreement.  India proposed that, under paragraph 8 of 
the CBD Decision, the objective should be to help develop a com mon appreciation of the relationship 
between IPRs and the relevant provisions of the TRIPS Agreement and the CBD.  India requested that 
the CBD Secretariat be invited to provide information on the progress made on paragraph 3 of Decision 
III/17 in order to  assess how relevant development cooperation programmes had addressed the issue of 
capacity building to achieve the CBD's objectives related to IPRs in accordance with paragraph 8 of the 
Decision.  India supported the examination of any linkages between Ar ticle 15 of the CBD and relevant 
TRIPS Articles;  the US elements complimented India's proposal to exchange information, which was the 
CBD's expectation based on its letter to the WTO dated 11 May 1997.  India looked forward to further 
work on this Item in  1998.  
 
95. The representative of the United States  said, concerning the temporal relationship between the 
TRIPS Agreement and the CBD, where Members had seen problems with elements of the Dunkel text, 
changes had been proposed.  If Members, having just become CBD Parties, had felt there was a conflict 
between the two Agreements, something would have been done.  
 
96. The representative of Malaysia, on behalf of ASEAN , requested a copy of the US and India's 
statem ents. 
 
97. The representative of Canada  encouraged Members to focus on the submission by the CBD 
Secretariat (WT/CTE/W/64), which raised complex issues and requested feed -back.  He suggested the 
Secretariat prepare a factual backgrou nd paper on the trade -related issues raised in the context of climate 
change.  
 
98. The representative of the United States  said it was premature to prepare a paper on climate change 
issues.  
 
 
1997 Report of the CTE  
 
99. The CTE adopted  its 1997 Report (WT/CTE/2), which would be forwarded to the General 
Council at its meeting on 10 December.   
 
100. The representative of the European Communities  welcomed the adoption of the Report, alth ough 
the EC would have wished a more substantial and forward -looking Report.  The representative of Poland  
said future Reports should be more detailed and constructive.  The representative of Egypt  said the Report 
should be consistent with other WTO Commit tee Reports and should specify the number, if not dates, of 
meetings in 1998.  
 
101. The Chairman  said Members had fulfilled the objectives set out for work this year.  The CTE had 
deepened and broadened the analysis of all the Items o n the work programme and advanced the discussions 
in 1997.  Members should be congratulated for their willingness to engage in a meaningful and constructive 
dialogue on all Items on the agenda, building on the positions set out in the 1996 CTE Report.  An 
educational process for everyone concerned in the discussions on trade and environment had been 
advanced, including intergovernmental and non -governmental organizations.  The information session with 
the Secretariats of MEAs and multilateral financial mech anisms at the September meeting had been a 
valuable experience, which could usefully be repeated.  Another form of outreach, which had helped to 
deepen and broaden the CTE's understanding, was the NGO Symposium held in May at the Secretariat's 
initiative w ith a wide array of environmental, developmental, consumer and business NGOs.  The WT/CTE/M/16  
Page 22 
 
Symposium had been a useful exercise which the Secretariat would build on in March  1998, back -to-back 
with the CTE's meeting.  Further details would be available to Members in early 1998.  Informal 
consultations would be held to determine the dates of CTE meetings in 1998.