RESTRICTEDWORLD TRADE
ORGANIZATIONWT/CTE/M/25
12 December 2000
(00-5456)
Committee on Trade and Environment
REPORT OF THE MEETING HE LD ON 24-25 OCTOBER 2000
Note by the Secretariat
1. The Committee on Trade and Environment (CTE) met on 24-25 October 2000 under the
Chairship of Ambassador Yolande Biké.  The agenda in WTO/AIR/1388 was adopted.
Report of the CTE for 2000
2. The CTE adopted the Report on the Committee's work in 2000 (WT/CTE/5) and its work
programme and schedule of meetings in 2001 (See Annex I).  Members were invited to provide
suggestions of multilateral environmental agreements (MEAs) that could participate in the MEA
Information Session on 27 June 2001.  It was agreed to postpone discussion of Items 2, 3, 4, 7 and 8
to the next meeting.
Observer status for intergovernmental organizations
3. It was agreed to postpone to the next meeting the requests for observer status from OPEC
(WT/CTE/COM/6 and Add.1);  the League of Arab States (WT/CTE/COM/5);  and the Gulf
Organization for Industrial Consulting (WT/CTE/COM/7).  The representatives of  Egypt and
Indonesia supported these requests;  Venezuela  and Nigeria  supported the OPEC request.
LINKAGES BETWEEN THE MULTILATERAL ENVIRONMENT AND TRADE AGENDAS
MEA Information Session
4. This meeting included an MEA Information Sess ion to enhance understanding of the linkages
between the multilateral environment and trade agendas.  Opening statements were made by the
Director-General of the WTO (WT/CTE/W/168) and the Executive Director of UNEP(WT/CTE/W/169).  Representatives of the following Secretariats presented papers and responded to
questions from Members on trade-related developments in their agreements:
- The Convention on the International Trade in Endangered Species of Wild Fauna and Flora
(WT/CTE/W/165);
- The Basel Convention on the Control of Tran sboundary Movements of Hazardous Wastes and
their Disposal (WT/ CTE/W/163 and Corr.1);
- UNEP Chemicals on the Rotterdam Prior Informed Consent Convention and the draft
Persistent Organic Pollutants Convention (WT/CTE/W/166);
- The Intergovernmental Forum on Forests (WT/CTE/W/164);  and
- the UN Framework Convention on Climate Change (WT/CTE/W/174).
5. The International Tropical Timber Organization contributed a paper on the International
Tropical Timber Agreement (WT/CTE/W/169).  The Executive Secretary of the Convention on
Biological Diversity also attended this sessi on.  The UNEP Compliance and Enforcement Unit was
unable to be present.  See Annex II on the MEA Information Session.WT/CTE/M/25
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Item 9: The Decision on Trade in Services and the Environment
6. The representative of the United States said services liberalization was an important element
in promoting economic growth and participation of all WTO Members in expanded trade.  The scope
of the services negotiations was broad and included all sectors, with the exception of most airtransport services, and the four delivery "modes".  Negotiations were looking at possible new
disciplines, some of which the US supported, such as related to transparency, and others, such as
"necessity", about which the US was cautious.  The "bottom up" nature of scheduling GATS
commitments allowed Members flexibility to decide how and to what extent to make new
commitments.  The US was also looking at the issues  from an environmental perspective, such as in
the tourism and energy sectors.  The CTE could help in the negotiations by identifying, discussing and
informing national deliberations and the negoti ating groups on the environmental implications.
7. The representative of Japan said the CTE had yet to undertake sufficient work on this item.
Japan supported the US suggestion to examine the environmental impacts of liberalization in each
services sector in cooperation with other organizations, such as the OECD.  The CTE should
undertake case studies on the environmental impact of liberalization in as many services sectors as
possible, including tourism, transport, energy and financial services.  Japan requested the Secretariatto survey other fora's work in this respect and provide supplementary analysis, if necessary.  This
work would also be useful for the Council for Trade in Services as background for the GATS
negotiations.  Environmental benefits would ensue from reducing trade barriers, increasing
competition among environmental services providers and enhancing innovation.  Given the major
changes to the environmental services industry since the conclusion of the Uruguay Round, the GATSCommittee on Specific Commitments was discussing the possibility of revising the current
classification system to reflect the realities of the industry.  The CTE could discuss environmental
services liberalization in the light of environmen tal protection;  for instance, local governments
procured a major proportion of environmental services, and restrictions on procurement affected
market access in this sector.  The CTE also could analyse the sectors in which privatization wouldenhance efficiency and quality of environmental services and have presentations from other
organizations working in this area, such as the OECD.
8. The representative of Venezuela supported the suggestion for the Secretariat to study the
environmental effects of services liberalization.  The environmental services sector was dispersed and
it was necessary to go into detail to classify and assess the environmental impact of services
liberalization.  The OECD study and the EC paper in the GATS would contribute to the debate.
9. The representative of Norway said sustainable development was a main objective of the
WTO;  in the Seattle preparations, several Members had stressed the need to integrate sustainable
development and environmental concerns as horizontal issues in the relevant negotiations.  The
challenge was how to do this.  One important tool  was environmental reviews.  Norway welcomed
Members' environmental reviews and was undertaking a review of the transport sector.  Some services
sectors had clear environmental impacts, such as transport, environmental services and tourism.There were two sides to liberalization and environmental issues, i.e. sequencing and domestic
regulations.  On sequencing, it might be environmentally beneficial first to liberalize transport sectors
that polluted the least, rather than those that were more polluting.  On domestic regulations, it may be
important to have the necessary regulations implemen ted prior to liberalizing, for example in transport
and environmental services.  Norway drew attenti on to the ongoing work in the GATS Working Party
on Domestic Regulations on disciplines in GATS Article VI.4.  As mandated in the Decision on Trade
in Services and the Environment, the CTE should clarify whether GATS Article XIV was sufficient.
In this regard, Norway referred to recent decisions by the Appellate Body that clarified the term
"exhaustible natural resources" in GATT Article XX(g).  Work on GATS Article VI.4, as well as
recent Appellate Body decisions, might spur debate.  Norway suggested the Secretariat up-dateWT/CTE/W/9,  inter alia , based on these elements and GATS information exchange processes.WT/CTE/M/25
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10. The representative of India said the relationship between services agreements and the
environment raised the issue of the environmenta l impacts of specific services sectors, such as
transport, energy and tourism.  India wondered what the environmental impact of financial services
would entail.  Some of the problems faced by developing countries for goods were equally valid for
services, such as market access.  If market access were made available to developing countries, therewould be correspondingly increased financial resources available for environmental protection.
Noting that GATS Article XIV was modelled on GATT Article XX, regarding which India's views
were well known.  As services was even more complex than goods, it was premature to consider the
adequacy of GATS Article XIV.  India would be concerned if a examination of the relationship
between services and the environment were used to develop arguments in favour of restricting trade,
and if developing country concerns for goods were not taken into consideration.  Although sectors
with a clear link to the environment should be identified, India would be concerned if the whole rangeof services were included.
11. The representative of Mexico said it was premature to establish any recommendations on
services considering the ongoing negotiations in the GATS Council.  Mexico preferred to complete
CTE work under its current mandate, which was to discuss the general concepts of the relationship
between services and the environment, before establishing links or making recommendations.  Thedistinction needed to be drawn between the negoti ations in other WTO Bodies and the CTE mandate.
Classification of services sectors was being handled in the GATS.
12. The representative of Japan said the CTE had a broad mandate pursuant to the Ministerial
Decision on Trade in Services and the Environment to examine and report, with recommendations, if
any, on the relationship between services trade and the environment, including the issue of sustainable
development.  Financial services liberalization could affect the environment if there were no, for
example, codes of conduct in the banking sector stipulating that liberalization should not lead to
environmental degradation.
Item 10: Appropriate arrangements for relations with intergovernmental and non-governmental
organizations referred to in Article V of the WTO
13. The representative of Canada said that visitors to the WTO website would find a statement on
trade and sustainable development from the International Institute for Sustainable Development
(IISD).  The IISD had made useful contributions on trade and sustainable development, including a
Handbook on Environment and Trade  in cooperation with UNEP.  Canada welcomed the fact that
IISD's recent statement had been made available through the WTO website, as it contributed
constructively to the debate on trade and sustainable development.  Members who expected nothingbut criticism of the WTO from environmental NGOs may be interested to learn that this statement,
among other things, recognized that trade and foreign investment were important drivers to achieve
the economic growth that made sustainable development possible, and condemned blatant
protectionism as bad for the environment and development.  While not formally endorsing the IISD
statement, Canada felt it was an important contribution that was worth bringing to the CTE's attention.
14. Although emphasizing that the WTO was an intergovernmental organization, Canada
believed that a greater window onto the WTO would better enable the public to appreciate the benefits
of liberalized trade and the equitable rules that were the foundation of the international trading
system.  Supporting efforts to enhance the transparency of the WTO, Canada had submitted a paper,
WT/GC/W/415, for the General Council's discussion on external transparency.  The paper proposedseveral initiatives that Members could consider pur suing in the shorter and longer terms, including
allocating a proportion of the WTO Secretariat budget to fund regular outreach activities, such as
symposia, workshops and further improvements to the WTO website.  WTO Bodies could consider
convening small "dialogues" with Members and civil society representatives to tackle focussed issues
to inform debate and analytical work.  The CTE had convened symposia on trade and environment inWT/CTE/M/25
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1997, 1998 and 1999.  Canada believed that Members should consider convening another symposium
and/or a series of small-scale dialogues to enhance public understanding of the WTO.
15. Canada welcomed the announcement in Seattle in November 1999 by WTO Director-General
Moore and UNEP Executive-Director Töpfer to enhance cooperation.  There had been several
concrete results of this cooperation, including the valuable UNEP-MEA meeting on 23 October.Canada urged both organizations to further strengthen cooperation as an effective complement, at the
international level, to efforts at the national level to improve coordination among trade and
environment policymakers.  Canada also felt the WTO's regional seminars on trade and environment
were useful and welcomed the participation of UNEP and MEA Secretariats.  Canada also welcomed
the NGO workshops which had been arranged in conjunction with some of these seminars.  Canada
was considering contributing financially to the WTO trade and environment seminar in the Caribbean.
16. The representative of Japan supported the S ecretariat's NGO symposia, as well as regional
seminars to enhance the constructive dialogue with civil society and WTO credibility.  Japan was
studying Canada's well-written paper to the General Council on external transparency and urged
others also to do so.  Japan appreciated the Secretariat's efforts to improve the WTO's website, which
was being increasingly accessed, and asked the Secretariat to continue to update it.
17. The representative of Peru  said that her Government was undertaking initiatives to contribute
to the regional process on trade and environment, with the objective of involving governments and
NGOs at the highest level in a South American dialogue.  Peru thanked the WTO Secretariat for
participating in its national workshop on trade and environment in November.
18. The representative of the United States welcomed Canada’s statement on transparency and
believed there was a need to improve communications between the WTO and the public;  such efforts
were essential to ensuring public understanding and support of WTO work.  Progress in this area was
needed and could be accomplished while preserving the government-to-government WTO character.
The US noted its paper in the General Council on external transparency, WT/GC/W/413/Rev.1, in
which several opportunities for improvements were highlighted.  In particular, like Canada, the US
valued the strengthening of the WTO outreach efforts through regular seminars and symposia, andconsidering the practices of other international organizations to the extent relevant.  This was
particularly relevant in the CTE, where the benefits had been witnessed of the contribution to CTE
work of regional and global symposia, as well as dialogue with international organizations.
19. The representative of Hong Kong, China sought the Chairperson's guidance concerning
Canada's proposal for the CTE to consider organizing another trade and environment symposium.
Noting that external transparency was in the dom ain of the General Council and that the present
meeting was not the appropriate forum for substantive discussion, Hong Kong, China did not opposeputting this issue on the agenda of the next meeting.
20. The representative of Mexico supported Hong Kong, China's comments, and had strong
reservations on Canada's proposal.
21. The Chairperson said Members could take note of Canada's request, and this matter could be
placed on the agenda of the next meeting.
Items 1 and 5: The relationship between the provisions of the multilateral trading system and trade
measures for environmental purposes, including those pursuant to MEAs;  and the
relationship between the dispute settlement  mechanisms in the multilateral trading
system and those found in MEAs
22. The representative of Switzerland said that the discussion at the last CTE meeting and
UNEP's meeting on Enhancing MEA-WTO Synergies and Mutual Supportiveness on 23 October hadWT/CTE/M/25
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clearly shown that the WTO-MEA relationship was one of the core trade and environment issues.
Switzerland thanked those Members who had contribut ed actively and constructively to this debate
and noted that, at the UNEP meeting, several developing country delegations that did not normally
take the floor in the CTE had expressed their support for deepening the discussion of the WTO-MEA
relationship.  Switzerland welcomed the broadening support for a discussion of this relationship.
23. Discussion at the last CTE meeting had shown agreement that there was no hierarchy between
the WTO and MEAs, that the two regimes were mutually supportive and should be interpreted so as
not to create unnecessary conflicts.  There seemed to be disagreement on the need to clarify the WTO-
MEA relationship.  The Swiss paper, WT/CTE/W/168, illustrated that clarification would prevent
potential conflicts, increase the attractiveness of multilateralism versus unilateralism, create a clearer
policy-making framework, especially for MEA negotiators, and provide greater legal security for
MEAs and the WTO.  As the CITES Secretary General had noted at the UNEP meeting and the MEAInformation Session, without CITES there would ha ve been an enormous workload for the WTO
dispute settlement system, given the many unilateral measures which would have been adopted.
Multilateral solutions were also the best safeguard against protectionist or discriminatory measures,
and normally the most effective approach.  Incentives to facilitate multilateral approaches were also
necessary.  Multilaterally agreed trade measures must be viewed more favourably than unilateralmeasures in the WTO.  Lack of clarity in the WTO-MEA relationship should not be allowed to create
artificial and unnecessary impediments for multilateral approaches, as in the past.  To avoid that
uncertainty concerning this relationship be used  to prevent the conclusion of MEA negotiations, it
must be clarified by WTO Members, not panels.  Clarification would benefit all stakeholders who
preferred multilateralism.
24. For the general rules of no hierarchy, mutual supportiveness and deference to govern the
WTO-MEA relationship, Switzerland proposed that MEA measures be assumed to be necessary for
environmental protection, subject to the exceptions in Article XX(b).  This would not prevent a WTO
Member from challenging the way in which a measure was implemented, i.e. if it constituted a means
of arbitrary discrimination or a disguised trade restriction.  This would create an incentive formultilateral approaches, which would also promote a multilateral framework for capacity building and
technical assistance.  Trade measures should only be the last resort and should be the most effective
and least-trade-restrictive available.  The best way to ensure this was to create incentives against
unilateral measures by clarifying that MEA measures were assumed to be WTO compatible.
25. The representative of the European Communities presented his delegation's paper,
WT/CTE/W/170, which set out ideas to stimulate discussion.  The EC was keen to see a clarification
of the WTO-MEA relationship.  Since the outset of CTE discussion, the nature of these interactionshad evolved.  Beyond traditional MEA trade measures, MEAs containing measures which might have
trade implications and could interact with trade rules were now part of the picture.  One example was
the relationship between the TRIPS Agreement and the Convention on Biological Diversity, where
the challenge was to find a way to implement thes e two instruments in a mutually supportive manner.
Like many Members, the EC felt MEAs were the most effective way of tackling global environmentalproblems.  The fact that the MEA trade measures were agreed by multilateral consensus should be a
guarantee against discriminatory or protectionist action.  However, the WTO-MEA relationship in
general was unclear.  If MEAs were deemed to justify discriminatory, protectionist action, this could
set a damaging precedent for the WTO.  Subord inating MEAs to WTO rules would undermine
international efforts to tackle environmental problems and fuel the arguments of WTO opponents.The EC felt greater clarity would provide gains to all Members, greater legal security for MEAs and
the WTO, and reinforce the integrity of both systems.  It would create a clearer policy making
environment for trade and MEA negotiators.  Multilateralism would become de facto more attractive
than unilateralism, without changing WTO rules per se , an element of particular benefit to smaller
countries.  Clarification could prevent potential conflicts by creating clearer parameters, so that WTOconsiderations could be factored into MEAs from the outset.  To achieve greater clarity, a first step
could be consensus on basic principles on the relatio nship between these two sets of international law,WT/CTE/M/25
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incorporating elements of WTO dispute settlement practice.  Similar to the Swiss proposal, these
principles might include:  the WTO and MEAs should be mutually supportive;  multilateralism was
the best way to solve global environmental problems; multilateral environmental policy should be
made within MEAs, not the WTO;  conflicts be tween MEA Parties on implementation should be
solved within the MEA;  and WTO rules should not be interpreted in clinical isolation fromcomplementary bodies of international law, including MEAs.
26. The EC wished to see confirmation that the WTO and MEAs were separate but equal bodies
of international law, and that MEAs were not subordinate to the WTO, and vice versa.  That was
essential in developing a mutually supportive relationship.  At the moment, the onus fell on the WTO
Members defending a measure under Article XX to prove that a measure, if deemed incompatible
with other GATT provisions, met the requirements in Article XX.  Reversing the burden of proof for
specifically mandated MEA trade measures would mean that the country challenging the measure hadto prove that the measures at issue did not meet the conditions of Article XX, as under the TBT and
the SPS Agreements.  This would not affect the right of any WTO Member to resort to dispute
settlement, nor alter the substantive requirements of Article XX.  The EC supported strengthening the
dialogue with MEA Secretariats to exchange information and ensure transparency. To guarantee
mutual supportiveness, a code of conduct for the use of MEA trade measures should be developedjointly by the WTO, UNEP and MEA Secretariats.  These ideas should not been seen as a fixed
recipe, but merely as enriching the discussion;  the EC was open to other suggestions.
27. The representative of New Zealand said MEAs were an essential mechanism for addressing
environmental objectives.  Of the over 200 MEAs in force, only 20 contained trade provisions, with
two categories, protection of fauna and flora and biosecurity regulation, accounting for more thanhalf.  Thus, a potential WTO-MEA conflict was only likely to arise where MEA provisions were
unclear as to the action mandated among MEA Parties, or where trade measures were applied against
a non-party.  As this was a tightly circumscribed area, the likelihood of difficulties should not be
exaggerated.  However, trade measures would continue to be a feature of some MEAs and it was thus
important to develop an understanding of the WTO-MEA relationship.  In WT/CTE/W/162, NewZealand suggested encouraging clear drafting of future trade-related MEA provisions and robust
dispute settlement systems.  The second proposal was to consider the contribution that consultative
mechanisms guided by first-best principles developed within an MEA could make, including ongoing
information exchange with MEA Secretariats.  The third proposal was to establish an informal
mechanism for a broader dialogue on issues regarding the WTO-MEA relationship, including the
WTO, UNEP and MEA Secretariats, MEA Parties, as well as NGOs and industry.  This could build
on the useful process in the MEA Information Sessions and the UNEP meeting on MEA-WTOsynergies.  New Zealand looked forward to co mments on these proposals.  New Zealand would
elaborate further how the proposed consultative mechanism would work.
28. The representative of Hong Kong, China said the Secretariat's Matrix on MEA trade
measures, WT/CTE/W/160, was valuable, and could be updated periodically.  He welcomed
cooperation between the WTO and MEA Secretariats in preparing this document.   For selectedMEAs, the majority of WTO Members were non-parties, for example 109 WTO Members were not
party to CCAMLR.  For most of the MEAs identified in the Matrix, trade-related provisions, non-
compliance and dispute settlement mechanisms were general.  He agreed with New Zealand that the
likelihood of conflicts between the WTO and MEAs  should not be exaggerated, that customary rules
of public international law provided little room for MEA Parties to contest the legality of these
measures on WTO grounds, and that potential conflicts could be avoided by encouraging clear
drafting of trade-related MEA provisions.  Hong Kong, China was attracted by New Zealand's
approach to a consultative mechanism.  The concept of first-best principles was unclear.  Did it mean
there was a range of policy instruments suitable to  resolve an environmental issue, and if a trade
measure were necessary, the one chosen should be the least restrictive and distortive?  How such amechanism would address non-party situations could also be clarified.  The proposed informalWT/CTE/M/25
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mechanism for broader dialogue including NGOs should be treated with caution as this generic issue
was being dealt with in the General Council.
29. Hong Kong, China felt the last CTE meeting had illustrated Members' disagreement on the
need to clarify the WTO-MEA relationship.  The Swiss paper, WT/CTE/W/168, was an improvement
over the previous Swiss submission, but had not explained why Article XX was inadequate to addressthe WTO-MEA interface.  It was too simplistic to contend that broad-based MEA negotiations would
always include countries interested in preventing the inclusion of unnecessary trade measures.  This
presumed that all WTO Members had taken part in al l MEA negotiations and that, irrespective of their
development level, were equally effective in particip ating.  The reality fell short of such assumptions.
Most problematic was the principle that an MEA trade measures should benefit from a presumption of
WTO conformity for the requirements in Article XX.  Switzerland had correctly noted that the criteria
MEAs must fulfill should be supported by all relevant stakeholders, who should include all WTOMembers, if a WTO provision was being discussed.  However, a presumption of WTO conformity did
not work when WTO Members were not MEA Parties.
30. Many of the proposals in the EC paper, WT/CTE/W/170, were overly ambitious.  The
concept of reversal of the burden of proof was simply a non-starter;  it disregarded the nature of
Article XX, which was an excepti ons provision.  The related proposal to define an MEA was equally
problematic;  it suggested that environmental protection need not be the sole or even the primary aim
of the MEA, provided that the MEA be open to all countries concerned.  Thus, the actual number of
Parties did not matter.  The suggestion that relevant regional agreements should also be covered
accentuated the problem of non-parties.
31. New Zealand's paper, WT/CE/W/162, provided a good basis to proceed on this subject.  Hong
Kong, China was willing to work with New Zeala nd and others to clarify the outstanding issues.
Nevertheless, Hong Kong, China remained to be convinced of the existence and seriousness of a
potential WTO-MEA conflict, and that a WT O accommodation was necessary.  Any Members
proposing options to accommodate MEA trade measures should be prepared to show how the
proposed solutions would be applied to all other WTO Agreements, such as GATS and TRIPS.  Therewere repercussions upon which Members might wish to reflect further, and which were not
adequately addressed in the current proposals.
32. The representative of Australia welcomed the New Zealand, Swiss and EC papers, which
built on the constructive discussion at the July CTE meeting, including Canada's detailed intervention
at that meeting.  While the WTO-MEA relationship had not been addressed in any WTO disputes, the
relationship between different agreements had been considered in several disputes.  They had
emphasized the need first to identify the existenc e of an inconsistency or conflict between the
provisions of two agreements before concluding whether one prevailed.  In several cases, panels and
the Appellate Body had recognized that different agreements may overlap in application to a
particular measure, that they could co-exist and that one did not override the other.  While these
disputes had generally involved the relationship between different WTO Agreements, these
conclusions seemed applicable to the WTO-MEA relationship.  They pointed to the importance ofcountries which were Parties to both the WTO and MEAs acting in good faith in seeking to respect all
their treaty obligations.  This approach to the WTO-MEA relationship was confirmed by decisions
and reports endorsed by WTO Members, and by the work of MEA Parties.  The Marrakesh Decision
on Trade and Environment and the 1996 CTE Report emphasized the objective of mutually supportive
trade and environment policies, WTO-MEA complementarity, and the need for due respect to beaccorded to both.  The international community had also emphasized the importance of ensuring that
environment-related agreements were implemented in line with the mutually supportive objective in
recently concluded MEAs.  These had been established on an equal footing and demonstrated the
commitment to a non-hierarchical approach, as noted by Switzerland.  Given this and WTO
jurisprudence, Australia questioned whether there was the degree of uncertainty about thisrelationship, as suggested in the EC and Swiss papers.WT/CTE/M/25
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33. The Secretariat Matrix (WT/CTE/W/160) highlighted the diversity of MEAs that raised trade-
related issues.  This was a reminder of the need to be cautious about suggested courses of action for
clarifying the WTO-MEA relationship, such as approaches in Canada's "principles and criteria" or in
the Swiss and EC papers.  The Swiss paper made the valid point that the WTO should focus on its
field of competence, not engage in adopting environmental rules and standards.  One of the virtues ofexisting WTO rules, including Article XX, was that  they provided a robust framework for protecting
the trade interests of WTO Members, while not unduly interfering in the design of environmental or
other policy measures.  The evidence of the co-existence between this framework and MEAs was that
it had not constrained the ability of MEA negotiators to take pragmatic approaches in designing trade-
related measures appropriate for specific environmental problems.  As understanding of the
implications of implementing MEA trade measures increased, designing these measures could
become more complex, but evidence of a need for change should be sought before taking initiativesthat could disturb this framework.
34. Similar to the EC, Australia felt that efforts should focus on getting the most out of the MEA
Information Sessions and UNEP meetings.  The CTE should hold at least two MEA Information
Sessions each year.  Australia noted the value of summaries of these sessions along the lines of that
annexed to the report of the July meeting, WT/CTE/M/24, which were useful in domestic policycoordination.  Australia saw a strong role for UNEP in continuing to provide leadership to promote
dialogue and experience sharing by MEAs on the role of trade-related measures.  Australia agreed
with New Zealand on the importance of processes for cooperation and coordination at the national and
international level.  UNEP's initiative in organi zing the 23 October meeting was a welcome step in
furthering coordination efforts.  The scope for UNEP-WTO cooperation on capacity building shouldalso cover a shared understanding of the implic ations of trade and environment agreements for
domestic policy making.  Other bodies, like UNCTAD, FAO and OECD should also contribute,
particularly through preparing analytical studies and addressing development dimensions.
35. The representative of India made preliminary comments and shared Hong Kong, China and
Australia's views on the issues in general.  The problem had been defined as legal uncertainty and the
chances of a legal challenge, with reference to the Biosafety Protocol.  India supported Australia in
questioning whether legal uncertainty existed.  Although the number of MEAs negotiated did not
testify to any uncertainty, India was willing to discuss this issue.  However, it was necessary to be
clear about the definition of an MEA.  It was not conceivable that, for example, the EC and
Switzerland, which shared views on this issue, fo rmed an MEA and considered there should be a
presumption of WTO compatibility for that agreement.  Trade measures could not be dealt with in
isolation from a package of MEA measures, which included incentives.  The only conclusion thatcould be drawn was that certain trade measures in a given context in a specific MEA were necessary.
Thus, it was not possible to argue that trade measures per se  were necessary to achieve environmental
objectives.  The heart of the debate was whether existing WTO rules were adequate.  India
appreciated that the EC had made its position clear with respect to reversal of the burden of proof.
36. On the principles in the Swiss paper, Indi a had no problem with no hierarchy between the
WTO and MEAs.  For matters within WTO competence,  WTO rules should be supreme.  Within the
context of the MEA, India had no problem with MEA rules being supreme.  That was why MEA
dispute settlement mechanisms should be streng thened to avoid spillover into the WTO.  On
deference, the WTO and MEAs had their own responsibilities and mandates.  India asked what was
meant by deference;  deference by whom to whom?  It was possible to speak about mutual respect for
the competence of each forum, but was it implied that the WTO should be more deferent to MEAs?
37. A definition of an MEA was necessary.  If an MEA were defined to include all countries,
there would be no problem.  Problems could only arise in two circumstances:  an MEA were not
multilaterally negotiated, and with respect to non-parties.  India appreciated the Swiss definition of an
MEA as covering countries at all development stages.  India would add that it should be negotiatedunder the UN, with other criteria, such as adequate scientific evidence.  If these criteria were fulfilled,WT/CTE/M/25
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there would be no problem, as all WTO Members would be involved, nor the possibility of a WTO
challenge.  The presumption that a broad-based MEA would involve all stakeholders was not always
correct.  However, the biggest problem was the suggestion that an MEA would be in conformity with
the WTO and that the only scope for disagreement was its application.  In this respect, in the Shrimp-
Turtle case, the Appellate Body had concluded that the problem was not with the legislation per se,
but its application.  The concept of an artificial split between the law and its application was
problematic as measures or agreements in themselves could be in non-conformity with the WTO.
38. Some considered that the WTO had made it more difficult to arrive at a conclusion in the
Biosafety Protocol.  It was naïve to suggest that because of lack of coordination between trade and
environmental policymakers, developing countries were taking positions that were not in their best
interests.  A case could be made to strengthen coordination, but this would not result in fundamental
changes in a country's position.  If negotiators in the Biosafety Protocol were only able to achieve aconvoluted compromise, the situation in the WTO would not be any different.  The two preambular
clauses appeared to be written in code with one indicating that one agreement was not superior to the
other, and the other saying the opposite.  India had sent representatives from both trade and
environment to the Biosafety negotiations.  The ou tcome of the Biosafety Protocol was not one that
India particularly liked, but it was the outcome that the international community had been able toachieve.  Regardless of where this issue was negotiated, the outcome would not change.
39. India had a signficant problem with the EC in cluding regional agreements in the definition of
an MEA without mention of the type of trade, or whet her it were open to countries;  the only criterion
that the agreement be open to all countries concerned was not satisfactory.  It was not possible to put
different concerns on the same footing, e.g. agreement to conserve dolphins versus consensus to dealwith climate change.  There was value judgement in the protection of a particular species, as opposed
to global environmental concerns.
40. The EC should not be surprised at the negative reaction to its proposal on reversal of the
burden of proof, which was a far-reaching proposal that sought to fundamentally alter the limited
exceptions under Article XX.  Any attempt to change the Appellate Body reports on burden of proofshould be carefully considered.  The case between India and the US on Measures Affecting Imports of
Woven Wool Shirts and Blouses  was the first time the Appellate Body had made its views known on
burden of proof.  Customary GATT practice was th at the Party invoking an exception must offer
proof that the conditions had been met.  The Appellate Body had said that several GATT 1947 and
WTO panels required such proof for a Party invoking a defence, such as Article XX, which was a
limited exception, not a positive rule establishing obligations.  It was only reasonable that the burden
of establishing such a defence should rest on the Party asserting it.  Subsequent panels, such as EC
Asbestos,  Australia Measures Affecting Importation of Salmon  and Korea Definitive Safeguard
Measures  had reiterated this.  Prior to the EC paper,  there had been no suggestion that the Appellate
Body change the interpretation of burden of proof.
41. The implication of reversing the burden of proof was that Article XX would become a
positive rule, not an exception.  As it was, India had problems with Article XX, as portions of it werebecoming redundant.  There was concern for turtles, but no attempt to invoke Article XX(b), which
referred to protection of animal health.  Instead, Article XX(g) was invoked with respect to
exhaustible natural resources, as the test was less rigorous than Article XX(b).  When other provisions
were clearly applicable, making them redundant was not  legal.  In addition, to suggest that Article XX
should not be an exception and that there should be a reversal of the burden of proof meant thatArticle XX could be invoked with little opportunity to effectively rebut the use of trade measures for
unilateral environmental claims.  India did not consider the TBT and SPS Agreements to be relevant,
as they were positive obligations, not exceptions to WTO provisions.  On the proposed code of
conduct, MEA trade measures might have been necessary in specific cases.  The applicable test was
whether the measure were necessary, and whether alternatives had been exhausted.  thus, once thedefinition of an MEA had been established, it would not be necessary to develop a code of conduct.WT/CTE/M/25
Page 10
42. India supported New Zealand's approach in WT/CTE/W/162.  The first-best principles of
least-trade distortive and most efficient were valid.  India would add other first-best approaches to
achieving environmental objectives, such as financial and technology transfer.  For example, in the
Shrimp-Turtle case, concern for turtle conservation could have been solved effectively through
financing turtle excluder devices (TEDs).  It was unfortunate that countries agonized over WTO-MEAcompatibility and use of MEA trade measures, when the first-best solution need not be trade
measures, but financing of conservation.  In the Shrimp-Turtle case, all the resources spent on legal
fees could have covered the cost of TEDs throughout  the world.  Rigorous efforts should be made to
ensure that such matters be resolved without resort  to trade measures.  India supported New Zealand's
call for clear drafting of future MEA trade-related provisions and development of robust dispute
settlement provisions.  The Climate Change Secretariat had noted the intention to develop such a
system in the UNFCCC, which India welcomed.  Although supporting continued dialogue betweenthe WTO and MEAs, India shared Hong Kong, China's concerns.
43. The representative of Malaysia noted that Switzerland, Canada and the EC were advocating
an interpretative understanding of the WTO-MEA relationship, with the EC proposing basic
governing principles, and New Zealand suggesting a consultative process.  There were differences of
view on the need for clarification.  The Swiss a nd EC papers noted that WTO-MEA conflicts had not
and should not arise, although there was a remote possibility.  Several MEA Secretariats had indicated
that their agreements did not conflict with the WTO.  Given the low probability of a conflict,
Malaysia agreed with India and Australia that there was no need for an interpretative decision on the
WTO and MEAs.  WTO provisions were clear and sufficient, as Australia noted.  Malaysia shared
Hong Kong, China and India's concerns on the EC proposal to reverse the burden of proof.  Theburden of proof lay with the country implementing th e measure to ensure that measures would not be
more restrictive or arbitrary than necessary to achieve the objectives in Article XX.  Cooperation
between Secretariats, such as the WTO-UNEP arrangement, would increase coordination and
understanding of each Body's competence.  Malaysia did not see the value of turning this cooperation
into a formal process or mechanism.  Malaysia supported increased domestic coordination to ensureconsistency and compatibility of international agreements, but shared the concerns of Hong Kong,
China and India on New Zealand's proposal to broaden the dialogue to include NGOs.
44. The representative of Norway highlighted elements from the UNEP meeting on 23 October
and the MEA Information Session, which had pr omoted understanding and built confidence.
Communication between trade and environmental experts was important at the national and
international level.  Mutual supportiveness might not always be present, but it should be a goal as it
was relevant to trade, environment and development.   These "win-win-wins" should be taken together
in the WTO and in other fora, and include technology transfer, financial assistance and capacity
building.  Noting discussions to mainstream trad e into development, Norway said mainstreaming
environment into development also should be addressed.  It might be an idea to include the
environmental dimension in the WTO's Integrated Framework.
45. The WTO-MEA relationship had been on the GATT/WTO agenda for more than a decade
and a common understanding had been reached on several elements, some of which were in the CTE
Report to the Singapore Ministerial Conference.  The CTE should focus on the following basic
premises.  Trade-related measures might be needed in certain cases to achieve MEA objectives.
Disputes between MEA Parties over the use of specifically mandated trade measures were unlikely.
Policy packages in MEAs, including financial and technology transfer and capacity building wereimportant and might stimulate countries to become Parties.  In formulating Norway's position on the
WTO-MEA relationship, due regard had been given to these elements on the premise that conflicts
between MEA Parties over trade measures were unlikely.  The issue before the CTE concerned
potential conflicts with MEA non-parties, and measures between MEA Parties that were not
specifically mandated, which would constitute unilateral measures.  Norway had concluded that thereshould not be a hierarchy between the WTO and MEAs;  and that MEA trade-related measures should
only be taken pursuant to specific MEA provisions, and should not constitute a means of arbitrary orWT/CTE/M/25
Page 11
unjustifiable discrimination or a disguised trade restriction vis-à-vis  non-parties.  If MEA non-parties
fulfilled the obligations in the MEA, they should not be subject to less favourable treatment than
Parties.  Any clarification of the WTO-MEA relationship should ensure greater predictability for both
trade and environmental negotiators in relation to WTO rules on the use of MEA trade measures.
However, flexibility in the use of instruments in environmental policy must be maintained.
Clarification of the WTO-MEA relationship must not be more restrictive than current WTO rules.
46. Norway welcomed the Swiss and EC papers, as they focused on the above-mentioned
principles, and supported the EC's four principles, and that MEAs were not subordinate to WTO rules,
and vice versa.  The informal CTE dialogue with MEA Secretariats helped to exchange information
and ensure transparency.  The CTE was also confronted with interesting but difficult proposals from
the EC, which Norway was considering, such the burden of proof and a code of conduct.  He asked
for clarification on whether the Swiss proposal would be applied to MEA Parties or non-parties.Implementation of MEAs might become an issue if trade measures were not specified or mandated in
the MEA, and if a non-party were involved.
47. Norway agreed with New Zealand's proposal to encourage clear drafting of future MEA
trade-related provisions.  The way to do so was by encouraging national coordination between trade
and environmental experts.  Norway recognized that where trade measures were imposed by an MEAParty vis-à-vis  a non-party, New Zealand's proposed consultative mechanisms could be useful and
should be explored.  On first-best principles, a policy package was the best way to achieve a given
result.  As noted by India, a policy package would include trade-related measures as well as financial
and technological transfer.  Norway felt New Zealand's suggested informal  mechanism for broader
dialogue on the WTO-MEA relationship was interesting.  This mechanism could also cover othertrade and environment issues and the trade effects of environmental policy and vice versa.
48. The representative of Iceland said the Swiss, New Zealand and EC papers contributed to
clarifying the issues under this Item, while demonstrating the complexities.  Iceland also appreciated
the contribution of the MEA Secretariats to the discussions.  The WTO-MEA relationship was highly
complex, not least because the raison d'être of these two international legal regimes was somewhat
different, whereby one sought to protect, the other to liberalize.  This did not mean these two regimes
could not be mutually supportive.  They could, and it was the role of their Members to ensure, as
Switzerland noted, certainty, predictability and coherence between them.  In terms of how, New
Zealand's paper provided a good starting point, as it sought to circumscribe the area where a conflict
might arise.  It made the obvious, but useful, distinction between existing agreements and future
directions, and the different approaches needed to address the two different circumstances.
49. New Zealand's paper pointed to Canada's earlier suggestion to develop principles and criteria
to assist negotiators in the use of trade measures in MEAs.  Iceland assumed the EC's suggested code
of good conduct went in a similar direction.  New Zealand's suggestion to negotiate rules of the game
for future trade measures in MEAs was worth explor ing.  While the future could be managed, the past
was more difficult.  The question of how to deal with potential conflict between existing agreements
remained, especially concerning the critical situation where trade measures were applied to protectenvironmental resources outside the jurisdiction of the country applying the measure.  Iceland had
expressed its concern that WTO jurisprudence had added to the legal confusion with respect to such
actions.  At the last meeting, Iceland also had stressed that clarification of the WTO-MEA relationship
was so fundamental that it should not be relegated to the WTO judiciary.  To be consistent with a
multilateral approach, it should be Members that determined this relationship as emphasized in theMinisterial Decision on Trade and Environment.  I celand sought clarification from the EC on the
suggestion to include regional agreements, notably fisheries agreements under MEAs, and on the
notion of reversal of the burden of proof, with which Iceland was not completely comfortable.
50. The representative of Canada referred to the UNEP meeting on the WTO and MEAs, which
had reinforced the need to act in different fora to  promote synergies.  Work was needed within theWT/CTE/M/25
Page 12
trade regime, the environmental regime and at their interface.  Canada was encouraged by the
collaboration between the UNEP and WTO Secretariats.  Canada did not feel that there was a crisis
with respect to the WTO-MEA relationship;  the objective was to ensure there would not be.  Trade
measures were not a first-best mechanism, but part of a package of instruments, which should not be
examined in isolation.  That was why Canada had emphasized at the UNEP meeting the need foraction within the environmental regime, particularly on capacity building.  There was much food for
thought in the Swiss, EC and New Zealand papers.  Canada noted particularly New Zealand's idea of a
consultative mechanism and that the proposals in  the Swiss and EC proposals had received much
discussion.  Canada would reflect on the issues raised and further develop its principles and criteria
approach, considering elements raised at the July CTE meeting.  While greater legal certainty was
desirable, the question was how much.  There was likely to be a trade-off between the degree of legal
certainty and the scope of issues covered.  Canada was also considering how an approach wouldrelated to all WTO Agreements, an issue raised by Hong Kong, China.  In its statement at the 23
October UNEP meeting, Canada had suggested that UNEP, in collaboration with the WTO
Secretariat, could undertake work on issues related to the use of trade measures in MEAs, including
what was meant by an MEA.  Canada would have further thoughts as to how WTO-UNEP
collaboration could address this issue.  Canada al so suggested that it might be useful for the WTO,
UNEP and MEA Secretariats to collaborate on a paper on compliance and dispute settlement
approaches in the trade and environment regimes to elucidate synergies.  These regimes were
different;  one was more focused on informal approaches to promote compliance, whereas formal
dispute settlement procedures were prominent in the other.
51. The representative of Brazil felt the Swiss paper had improved on the previous submission.
The fundamental issue with respect to the WTO- MEA relationship was whether current WTO rules
were adequate.  It was not necessary to clarify WTO provisions to avoid potential WTO-MEA
conflicts, as Article XX provided a basis to accommodate environmental exceptions.  On the EC's
suggested principle on mutual supportiveness, Brazil ag reed with India that this was an objective, not
a principle.  The best way to solve global environmental problems was multilaterally.  A conflictbetween MEA Parties on the implementation of that MEA should be solved within the MEA, not in
the WTO.  Brazil was concerned about the principle that WTO rules should not be interpreted in
clinical isolation from complementary bodies of international law, including MEAs.  Even if
agreement could be reached on principles to guide negotiators on the use of MEA trade measures, the
definition of an MEA should first be elaborated.  Brazil supported Hong Kong, China and India
concerning the EC's proposed reversal of the burden of proof. While there was no need to change
WTO rules, Brazil supported continuing the inform al dialogue and exchange of views between the
WTO, UNEP, and MEA Secretariats.  Brazil felt th e idea of a code of conduct was premature, and
wondered how the EC envisaged it  could jointly be developed between the WTO, UNEP and MEAs.
52. Brazil agreed with Switzerland that the WTO-MEA relationship should be governed by the
general principle of no hierarchy and that the criteria that MEAs must fulfill to avail themselves of
this presumption must be worked out.  An important  criterion would be that all stakeholders supported
an MEA.  Brazil supported New Zealand's call for cl ear drafting of future MEA trade provisions and
robust dispute settlement systems.  Brazil also supported the development of a consultative
mechanism, guided by first-best principles.  However, Brazil was concerned about New Zealand's
proposed informal mechanism for broader dialogue and asked how it would be organized.  The EC
and Swiss papers noted that one of the main reasons the WTO-MEA relationship needed to beclarified was the Biosafety Protocol.  This Protocol had turned out the way it did because both trade
and environment negotiators were aware of the challe nges with respect to addressing the environment
and trade concerns.  To create guidelines or alter WTO Agreements to accommodate such concerns
would create more problems than solutions.
53. The representative of the United States said MEAs were important to address global
environmental challenges.  Trade measures could be critical for achieving internationally-agreed
environmental objectives, when carefully tailored and appropriately applied, as exemplified in CITESWT/CTE/M/25
Page 13
and the Montreal Protocol.  MEA trade measures  were broadly accommodated by the WTO, and
WTO rules were sufficiently flexible in this regard.  Thus far, no MEA provisions had been
challenged under the WTO and it was very unlikely that widely supported MEAs would raise WTO
disputes.  The US had yet to see a demonstrated need for the rules to be changed or the WTO-MEA
relationship clarified.  The US appreciated concerns over the possibility of future challenges to MEAtrade provisions, which was one reason why it supported cooperation and dialogue between the trade
and environment communities to identify and avoid po tential conflicts.  The US drew attention to the
comment in the CITES paper, WT/CTE/W/165, that priority was best concentrated on trade and
environment coordination efforts, rather than  theoretical WTO-MEA compatibility.  The US
appreciated UNEP's efforts, in collaboration with the MEA and WTO Secretariats, to foster discussion
at its 23 October meeting.  On India's comment that assistance could have avoided the Shrimp-Turtle
dispute, the US recalled that in the Dispute Settleme nt Body, the US had set forth the assistance it was
offering to implement the ruling.
54. The representative of Venezuela appreciated the Secretariat's Matrix on Trade Measures and
Members' submissions.  Similar to India and Brazil, India could not support the EC proposals to
reverse the burden of proof and develop a code of conduct.  Venezuela wondered if a code of conduct
would be constructive, or only serve to give rise to more debate.  As noted by India, trade measuresshould not be considered in isolation from th e broader framework of MEA policy measures.  A
constructive approach would be to further the dialogue between the WTO, UNEP and MEA
Secretariats, but it would not be possible for them to develop jointly a code of conduct.
55. The representative of Mexico said his delegation was considering the Swiss, EC and New
Zealand papers.  Mexico agreed with Hong Kong, China, India, Malaysia, and Brazil that there was
no need to clarify the WTO-MEA relationship, gi ven the flexibility of WTO rules to accommodate
environmental concerns.  Consequently, there was no need to have any kind of principles or code of
conduct that would direct the interpretation of the WTO Agreements;  Mexico could not support such
proposals, at this stage, given that, among other things, they would require changing the whole WTO
system as they limited or modified several WTO Agreements, such as the DSU and GATT.  Mexicohad never supported including trade measures in MEAs, but if this were the case, they should be
WTO-compatible.  Information exchange with MEAs should continue on an informal basis.
56. The representative of Japan said that the Appellate Body had produced good reports that
represented case law.  According to the DSU, Memb ers were to make legal interpretations rather than
just leave matters to dispute settlement.  As India and others noted, there had yet to be a WTO-MEA
conflict.  However, Japan felt it was necessary to clarify the WTO-MEA relationship, and offered
preliminary comments.  New Zealand's paper contained interesting suggestions based on apreventative approach, and it was difficult for Japan to object to any of them.  Japan supported the
establishment of consultative mechanisms in parallel with discussions to clarify the WTO-MEA
relationship.  In controversial cases where trade measures were applied to MEA non-parties, a
consultative mechanism could prevent conflicts.  Japan agreed with New Zealand that if a trade
measure were specifically defined in the MEA, it was less likely for conflicts to arise.  However, theCTE should consider the degree to which clarity was needed.  Japan supported the Swiss and EC
papers, although it would be necessary to examine them further.  It was difficult to object to the EC's
principles, such as mutual supportiveness;  the importance of multilateral as opposed to unilateral
approaches to global environmental problems;  that environmental policies be developed within
MEAs, not the WTO;  that conflicts between MEA Parties be solved within the MEA;  and that WTOrules should not be interpreted in clinical isolation from relevant international law, including MEAs.
57. The definition of an MEA was a core issue, as noted by India.  If the major stakeholders were
represented in regional agreements, Japan felt regional agreements could be considered to be MEAs,
but this issue should be considered further.  A code of conduct was an interesting idea, similar to
proposals to develop guidelines or an interpretative understanding.  At the July meeting, Japan hadstated that the WTO should mainly focus on the application of MEA trade measures, and proposedWT/CTE/M/25
Page 14
that Members provide examples of arbitrary or unjustifiable measures.  A code of conduct could
include the content of measures that were justified and not arbitrary.  It might be a good idea to invite
eminent international legal scholars to contribute to  a Secretariat paper on the issues raised in the
Swiss and EC papers.  India had noted that Article XX was an exceptions provision.  However, if both
parties to a dispute were WTO Members and MEA Parties, Article XX could be viewed in a differentlight.  Issues such as reversal of the burden of proof should be examined case by case in consultation
with international legal scholars.  Japan supported positive measures in MEAs;  trade measures should
not be the primary means to achieve sustainable development.  India's comment that, instead of
paying legal advisors, it might be more useful to dedicate finances to address the environmental
problem was interesting.  Japan agreed that robust MEA dispute settlement provisions should be
developed so conflicts could be solved within the MEA.  Japan supported Canada's suggestion for a
Secretariat paper comparing WTO and MEA dispute settlement mechanisms.  Japan agreed with the
US that, rather than indulge in theoretical debate, coordination, consultation and dialogue at the
domestic and international level was important.  Japan would make further comments at a later stage.
58. The representative of Korea felt Members' proposals had provided momentum to revitalize
discussions.  Interventions by several Members cast doubt on the need to clarify the WTO-MEA
relationship.  However, given the increasing trend in MEAs to envisage trade measures as the primarymeans to achieve environmental goals, Korea was not sure there would not be future conflicts with the
WTO.  Hence, Korea deemed it necessary to address the possibility of conflict between these two
different international legal regimes.  Clarification was all the more important with the adoption of the
Biosafety Protocol.  While in the process of establishing national legislation to implement the
Protocol, Korea had faced difficulties reconciling the obligations, particularly related to theprecautionary principle, with WTO provisions.  This example illustrated why the WTO-MEA
relationship must be better defined.  The EC and Swiss papers contained some provocative notions.
Korea shared the concerns expressed by others, particularly on reversal of the burden of proof, which
might challenge the nature of WTO provisions and required further study.
59. A differentiated approach to trade measures for environmental purposes previously made by
Korea and New Zealand, depending on a measure's specificity and whether it applied only to Parties
or to non-parties, was a useful analytical framework.  However, as noted in New Zealand's paper, this
complex issue could not be solved by a "one size fits all" approach.  New Zealand's approach was
practical and could complement the CTE's analytical exercise.  Through its preventative role, a
consultative mechanism could help resolve any potential disputes over MEA implementation.  The
rationale behind such a mechanism was in line with the notion that trade measures be used as a last
resort, after all other available and effective policy instruments had been exhausted.  Trade measureswere not the only policy instruments in MEAs.  Positive measures, such as technology transfer and
capacity building, were also indispensable to ensure implementation of MEAs.  In line with this
approach, Korea supported New Zealand's suggestion for clear drafting of future trade-related MEA
provisions and robust dispute settlement systems.  Greater emphasis on such preventative measures
might avoid disputes in the first place.  Korea also welcomed the idea of an informal consultativemechanism including NGOs and industry, which could enhance the transparency of WTO activities
and contribute to a better understanding in civil society of CTE discussions.
60. The representative of Egypt reserved his dele gation's right to comment on the Swiss, EC and
New Zealand papers, and made preliminary general comments.  Changes to WTO rules should be
avoided to accommodate concerns about hypothetical WTO-MEA conflicts.  Any effort to renegotiateWTO rules would pave the way for unilateral measures that sought to impose domestic standards on
the international community.  Instead of having a rules-focussed approach, which might lead to such
undesirable consequences, the international community should formulate measures to support
developing countries' efforts to join and comp ly with MEAs.  Consideration should be given to
implementing positive measures, such as financial assistance, technology transfer and capacitybuilding.  Proposals to modify WTO rules, such as reversing the burden of proof, would introduceWT/CTE/M/25
Page 15
controversy and lead to mistrust, weakening the multilateral trading system.  Expecting the WTO to
assume functions for which it had not been created and did not have the expertise was problematic.
61. The representative of Cuba said his delega tion would comment on the Swiss, EC and New
Zealand papers at a later stage.  Cuba noted the importance to developing countries of alternatives to
trade measures in MEAs, such as technology and financial transfer and capacity building.  Noting thatsome delegations had referred to these alternatives as a potential antidote to trade measures, Cuba
recalled that in MEA negotiations, developing countries confronted difficulties with respect to the
actual implementation of these alternatives as provided for in MEAs.  Technology transfer was not
taking place as anticipated at UNCED and Agenda 21,  and this presented problems with respect to the
TRIPS Agreement and the Biodiversity Convention.  Cuba considered this to be a key factor for
developing countries.  Cuba hoped that the UNEP meeting on MEA-WTO synergies, and CTE
discussions would illustrate the importance of achieving a balance in the application of trademeasures.  Only political will would avoid confli cts in the implementation of MEAs and WTO rules.
62. The representative of Switzerland appreciated the critical yet constructive comments, which
represented a step forward in the debate that would have been difficult to imagine previously.  Thus, it
seemed that the CTE was progressing towards a common understanding of the complex WTO-MEA
issue.  If further improvement to the Swiss propos als occurred it would be thanks to the helpful
comments received at this meeting.  Switzerla nd agreed that the definition of an MEA was an
important issue that had yet to be resolved and would work with others to develop a response.  Some
delegations had questioned the degree of uncertainty that existed with respect to the WTO-MEA
relationship.  Switzerland referred to the Montreal Protocol's statement at the MEA Information
Session in July concerning the substantial potential for conflict between the Montreal Protocol and theWTO, given that not all Parties to the Protocol were necessarily also Parties to all subsequent
protocols.  Several other MEAs functioned in a similar manner.  Thus, the situation was more
complex than strictly between Parties and non-parties.
63. Switzerland felt Article XX was insufficient to deal with the WTO-MEA relationship, as it
only dealt with the relationship between GATT and MEAs.  What was required was a clarification of
the whole body of WTO law and MEAs.  According to Article XX, the burden was on the defending
party to prove that an environmental measure was necessary.  Herein lay the potential for substantial
conflict.  If the international community agreed  in an MEA that certain trade measures were
necessary, this did not ensure that a WTO panel, lacking the knowledge and competence of MEA
negotiators, would come to the same result.  Thus, the WTO should defer to MEAs, not adopt
environmental rules or engage in technical issues.  The MEA was the competent body to resolve these
issues.  Current WTO rules could be adequate depending on the way in which they were interpreted.In paragraph 19 of WT/CTE/W/165, CITES noted that there might be conflicts depending on the
interpretation of Article XX.  Although reference had been made to WTO jurisprudence, Switzerland
felt that was not the way to resolve fundamental issues.  Important decisions should be taken by WTO
Members, not panels.  WTO panels took decisions in specific cases, but did not establish general,
abstract rules.  Switzerland felt solutions should build on the approach of mutual supportiveness and
avoid unnecessary conflicts.  Thus, it would be necessary to use deference, which meant that the
WTO should focus on its areas of competence and respect the competence of other organizations.
One issue that should be deferred to others was whether specific MEA measures were necessary.
64. Responding to Norway's question on the coverage of the Swiss proposal with respect to
Parties and non-parties, Switzerland said there could also be situations where both were MEA Parties.The distinction between the measure itself and its implementation was relevant.  There was agreement
that trade measures between MEA Parties should be considered WTO-compatible and not raise
conflicts.  However, the possibility could arise with respect to implementation of a measure in a way
that did not conform to WTO provisions.  Thus, ev en if both were MEA Parties, there was concern
from a WTO perspective and it should be possible to bring such situations to the WTO.WT/CTE/M/25
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65. The debate highlighted a common view shared by all WTO Members, namely that there was
no hierarchy between the WTO and MEAs and that the trade and environment regimes should be
mutually supportive.  Moreover, there seemed to be agreement that sometimes trade measures were
important to achieve environmental objectives, that multilateral approaches were preferable to
unilateralism, and that the WTO should not impede such measures.  These points of agreementrepresented a common basis upon which to address the WTO-MEA relationship, which was the first
step to resolving this challenge in a balanced manner.
66. The representative of the European Communities welcomed the stimulating discussion, which
had been the goal of the EC paper.  There was a convergence of views on the fact that the common
goal should be to ensure the mutual supportiveness of MEAs and the WTO.  That objective could not
be approached in the WTO except through general principles to clarify and ensure accommodation.
The status quo was not satisfactory, given the possibility of a conflict arising with non-parties.  TheEC's intention was to establish mechanisms and principles to prevent conflict, rather than to have to
manage conflict once it arose.  Even if conflicts were limited, the WTO-MEA interface was
increasing because MEAs were using trade measures or measures with trade implications, as
illustrated by the PIC and draft POPs Conventions and the Biosafety Protocol.  Negotiations on the
savings clause in the Biosafety Protocol had been particularly difficult, which was an indication of aproblem.  The Biosafety preamble was far from satisfactory, but it illustrated that the WTO-MEA
relationship had to be mutually supportive.   This would have to be echoed in the WTO to be fully
satisfactory.  The EC also wished to have a solution as panels were not sufficient to clarify the WTO-
MEA relationship, which required a political decision.
67. Reversal of the burden of proof was one of the options the EC was considering.  This was not
revolutionary in the WTO, given the presumption of conformity that existed in the TBT and SPS
Agreements between national legislation and international standards.  A parallel had to be drawn
between existing mechanisms and the solutions pr oposed for MEAs.  The EC's suggestions would not
involve substantial changes to Members' rights and obligations under Article XX.  Reversal of the
burden of proof as a mechanism to accommodate MEAs should only cover specifically prescribedmeasures in MEAs.  The distinction drawn by some Members between specific and unilateral
measures was too radical, since all non-specific measures were not automatically unilateral if they
were linked with the MEA.  Further thought should be given to categorize these measures.  Definition
of an MEA was important;  the EC proposed MEA negotiations be open from the outset to all
countries concerned, and that regional agreements be covered.  The EC agreed that trade measures
were not necessarily the first-best option in all situations.  However, there was also agreement that
trade measures were warranted and necessary in certain cases, such as in CITES.  It was also clearthat WTO rules should be taken into account in MEA negotiations through better domestic
coordination.  UNEP would have to be closely associated with the New Zealand's informal
consultative mechanisms between the WTO, UNEP and MEAs.  Although initially proposed by other
Members, the EC was open to a code of conduct.
68. The representative of New Zealand was encouraged that the CTE appeared to be broadly
supportive of New Zealand's three proposals.  Several Members had supported New Zealand's
proposal on the need to draft clear MEA trade measures, as well as robust dispute settlement
mechanisms.  New Zealand welcomed the broadly supportive remarks on the second proposal for
establishing a consultative mechanism guided by first-best principles.  In response to Hong Kong,
China, Korea, India and others, New Zealand said "first-best" was a mathematical model in economictheory that outlined approaches to a hierarchy of choices and utilised pareto concepts of allocative
efficiency.  First-best was an effective tool to establish choices.  In response to comments by
Malaysia, Korea, India and Hong Kong, China, New Zealand was not proposing that first-best only
apply to trade measures.  The idea was to use first-best approaches to assess a package of instruments.
Trade measures might not necessarily deliver the most efficient outcome in specific cases.  Financialassistance, technology transfer and capacity buildin g may be more effective in achieving a specific
environmental outcome.  The basic presumption on the application of first-best through a tradeWT/CTE/M/25
Page 17
measure was that it must be least-trade distor ting and non-discriminatory.  Hong Kong, China's
question as to how this mechanism would work for non-parties required further thought, and New
Zealand would seek to elaborate a suggestion for the next meeting, working with others.  New
Zealand was encouraged by the support for the principle underlying its proposed informal information
exchanges, similar to the UNEP meeting on 23 October.  New Zealand assured Brazil, Mexico, India,Hong Kong, China and others that concerns on the potential role of NGOs had been registered.
Although including NGOs in this process would be helpful, it required discussion.
69. The Matrix on MEA trade  measures in WT/CTE/W/160 was comprehensive and identified
specific MEA trade measures.  Given that the role of non-parties was at the crux of the WTO-MEA
relationship, provisions for non-parties were an important inclusion.  The use of a separate category
on dispute settlement mechanisms highlighted the pr oblem noted in New Zealand's paper that existing
mechanisms may not be as effective as desired.  The MEA Information Sessions and the MEA Matrixindicated the multifaceted nature of the efficiency of MEA trade measures, which were dependent on
the particular environmental problems addressed and the nature and role of the specific provision.
More discussion was needed on what worked and what did not work in terms of MEA trade measures
to ensure that evolving and new MEAs could design effective trade measures.  To that end, New
Zealand suggested the Secretariat prepare an analy tical paper outlining factors contributing to the
success of MEA trade measures and those which undermined those prospects.
70. It was agreed that the Secretariat would prepare a factual paper, in cooperation with UNEP
and the MEA Secretariats, on compliance and dispute settlement provisions in the WTO and MEAs.
Item 6: The effect of environmental measures on ma rket access, especially in relation to developing
countries, in particular to the least developed among them, and environmental benefits of
removing trade restrictions and distortions.
Fisheries
71. The representative of Japan presented his delegation's paper, WT/CTE/W/173, on Japan's
basic position on fishery subsidies and comments on the US paper, WT/CTE/W/154.  Many factors,
such as inadequate fishery management and illegal, unregulated and unreported (IUU) fishing were
likely to cause depletion of fishery resources.  To achieve a fundamental solution to overexploitation
of fish stocks, the FAO should continue to address all the possible negative factors affecting
sustainable use of resources, including subsidies.  It would be wise to utilize FAO expertise, given the
limited human resources in the CTE.  Japan wondered  why the US paper gave special consideration to
fishery subsidies when these subsidies were covered by the SCM Agreement.  The reason was,perhaps, that the fishing industry utilized fishery resources, which were renewable but exhaustible
natural resources that could be depleted without proper management.  The same consideration should
be given to other aspects of fishery trade.  The results of the recent OECD study should be fully taken
into account.  As the study clearly stated, possible negative effects of fishery subsidies can be
minimized if appropriate management and conservation measures were taken.
72. A case by case examination should be made under which circumstances a certain subsidy
actually produced negative impacts on fishery resour ces.  If the US wished to categorize fishery
subsidies into those having adverse resource impacts under inadequate management and those that did
not, Japan did not necessarily object.  However,  the WTO should not be expected to conduct such
fishery-related technical work;  the CTE should request FAO to conduct work and feed back theresults.  The CTE could then conduct further analysis on fishery subsidies based on FAO work.  The
FAO International Plan of Action for the Management of Fishing Capacity addressed fishery
subsidies.  Recognizing that the main concern wa s that certain fishery subsidies seemed to have
negative effects on sustainable resource use, Japan agreed that this concern was not appropriately
addressed by the SCM Agreement.  The US paper also covered the negative effects of fisherysubsidies on trade, but as long as these effects fell within the meaning of "adverse effects" stipulatedWT/CTE/M/25
Page 18
in Article 5 of the SCM Agreement, these subsidies could be dealt with by that Agreement.  However,
the fishery subsidy argument consisted of a variet y of factors and, among others, attention should be
given to resource sustainability in the CTE.
73. The representative of Korea introduced his delegation's paper, WT/CTE/W/175, which aimed
to contribute to the debate by sharing Korea's national experience and help the CTE form a balanced
view of the fisheries sector.  Korea agreed that fisheries subsidies should not be used in such a manner
as to have negative effects on resource sustainability or distort trade.  Korea's experience indicated
that fisheries subsidies had played a positive role in generating fisheries resources, particularly by
contributing to the improvement of the marine environment and enhancing productivity of fishing
grants to develop environmentally sound technologies to replenish marine resources.  Debate on
fisheries subsidies should be conducted from a comprehensive and balanced perspective, taking into
account socio-economic policies and different development levels.  It would be necessary to form aconsensus on the definition of fisheries subsidies.  The competence and role of each forum should be
respected, avoiding duplication.  Given that the FAO dealt with the relationship between subsidies
and resource conservation, its work should guide CTE discussion.  Korea hoped that Members would
consider all relevant factors and avoid premature conclusions on the effects of fisheries subsidies.
74. The observer of the OECD presented its recently concluded study reviewing financial
transfers in OECD countries and assessing their imp act on fisheries resource sustainability, which was
included in the OECD publication Transition to Responsible Fisheries – Economic and Policy
Implications .  Its conclusions had been agreed among all OECD countries.  The case studies and
background material were available at www.oecd/agr/fish.  The nature of OECD government
financial transfers had changed since the 1970's, when they were aimed at developing fisheries.  In1997, transfers to the fisheries sector amounted to  US$6.3 billion, with US$4.9 billion or 75 per cent
devoted to general services for infrastructure and activities to ensure sustainable use of fish stocks and
ecosystems, such as research, enforcement and management.  Effects of transfers on resource
sustainability were complex, given the many influences on fish stocks that were difficult to
disentangle.  Possible negative effects of certain transfers could be minimized when transfer andresource management policies were coherent.  Capacity and dependency-reducing transfers combined
with appropriate management could reduce pressure on fish stocks.  When compared to agricultural
transfers, fisheries subsidies in OECD countries were far lower.  Transfers to the fisheries sector,
including general services, were 17 per cent of the landed value, compared with 22 per cent of the
farmgate value in agriculture.  Market price support had been excluded from the study, given lack of
information.  The study used broad classifications of financial transfers according to economic effects,
i.e. direct payments, cost reducing transfers, and general services.  The study would be updated
annually in the OECD Review of Fisheries , and the trade effect of transfers would be assessed in a
study on market liberalization in the fisheries sector, to be completed in 2002.
75. The representative of Iceland said Japan and Korea's papers contributed to the debate.  Iceland
welcomed Japan's comment that the adverse effect of fisheries subsidies on sustainable use was a
topic for CTE discussion.   Iceland also agreed that inadequate fisheries management was the principal
cause of fish stock depletion and shared Japan's concern about IUU fishing.  The CTE should identify
the subsidies that had adverse effects on sustainable fisheries and trade.   Iceland shared Japan's view
that the CTE should involve more fisheries experts in its work and strengthen cooperation with FAO.
Iceland disagreed that addressing subsidies in th e WTO was singling out one issue from many factors
affecting fisheries management .  FAO technical expertise and regional focus was best equipped to
assist countries in developing fisheries management regimes that fitted their national and regional
situation.  A critical and common aspect of inadequate fisheries management was fleet overcapacity,
which had serious implications for sustainable fisheries, as demonstrated in the literature, Secretariat
reports and Members' submissions, including by Icel and.  Too many boats fishing too few fish in one
region frequently drove fleets to fish on the high seas or in other countries' jurisdictions, which couldtake the form of IUU fishing .  In addition to encouraging overfishing in domestic waters, overcapacity
encouraged excessive fishing in other regions.  Overcapacity caused supply distortions that putWT/CTE/M/25
Page 19
downward pressures on world seafood prices.  Such circumstances put pressure on global fishing
operations to meet diminished returns by increasing supply, and intensifying fishing, which adversely
impacted on fish stocks and trade.
76. Subsidies were the principal cause of overcapacity.  By reducing costs and increasing
revenues, subsidies attracted more entrants into the industry and encouraged expansion of fishing,particularly by operations that otherwise would have disinvested or left the industry.  Unlike fisheries
management, subsidies were not meaningfully addressed at the national and regional level.  Subsidies
should be addressed globally, as the ability of countries to remove subsidies depended on a level
international playing field in order to avoid domestic economic casualties.  The FAO was the
competent forum to address fisheries management and IUU fishing.  Given that subsidies were a
global trade issue, the WTO was the competent forum to address them.  No factor was being singled
out, and the WTO must cooperate with FAO.
77. Although certain government financial  transfers might contribute to sustainable fisheries, as
noted in Korea's paper, all types of subsidies should be assessed to evaluate their effects.  The
literature showed that while there might be some benign subsidies, they only contributed to
sustainability under certain conditions .  WT/CTE/W/167 provided a comprehensive review of work
on fisheries subsidies and information on the legal and institutional framework of the discussions.Iceland had requested that paper for two reasons.  Iceland's analysis had shown that fisheries subsidies
generated overcapacity and overfishing of global fishing fleets.  Fisheries subsidies thus harmed the
environment, distorted trade and undermined sustainable development in all countries.  Also, there
was a lack of factual analyses of the adverse impact of subsidies, especially on trade.
78. The Secretariat's paper showed that removing subsidies was a necessary condition to achieve
sustainable global fisheries.  It was clear that overcapacity of global fishing fleets was a common
consequence of inadequate fisheries management.  Subsidies were among those government policies
that could impact on capacity and fishing effort.  Governments had introduced subsidies that
encouraged entry into the fishery and expanded capacity beyond that which oceans could sustain.  In
open-access regimes, cost-reducing and revenue-enhancing subsidies encouraged increased effort andoverfishing.  Such subsidies led to more capacity than needed to harvest resources efficiently, which
drove down income and led to pressure on fisheries managers to set TAC levels higher than was
sustainable.  While the paper recognized that there might be some benign subsidies, these could only
support sustainable management under certain conditions.  The paper confirmed that empirical work
was needed on the nature, extent and implications of fisheries subsidies on trade and sustainable
management.  The paper confirmed that the WTO had a role to play in encouraging sustainable
fisheries within its mandate to address the major trade distortions, such as subsidies.  This wasconsistent with international law, such as UNC LOS, which attributed competence to the WTO in
settling disputes involving trade-related measures, notably production subsidies and trade restrictions.
79. The paper confirmed the need for the CTE to pursue a common methodology to identify and
assess the nature, extent and implications of subsidies.  The US paper, WT/CTE/W/154, was useful,
but more work was needed to develop categories of subsidies and clarify their trade-distorting effects.To assist the CTE in identifying those subsidies th at distorted trade and undermined sustainability,
and in assessing the adequacy of WTO rules, Iceland suggested the Secretariat develop its paper by
providing an overview of the attempts to categorize subsidies.  The CTE should also encourage FAO
to assess the impact of subsidies on sustainable management.
80. The representative of New Zealand welcomed Japan's recognition that the CTE was an
appropriate body to discuss the relationship between sustainable use of fishery resources and trade in
fish and fishery products.  New Zealand recognized that the CTE could explore the role played by
other trade restrictive measures in addition to subsidies, and looked forward to contributions in this
area.  Subsidization was not the only problem to be addressed if sustainable fisheries were to be
achieved.  Poor management and IUU fishing should be addressed through effective national, regionalWT/CTE/M/25
Page 20
and international action.  In relation to subsidies, the WTO had a key role to play given its expertise.
New Zealand noted Japan's request for Members to provide case studies illustrating that specific
fisheries had suffered due to subsidies.  Useful information had already been provided in this regard,
such as the US studies relating to its national experience.  UNEP also had convened a seminar on
fisheries subsidies, during which case studies had been discussed;  Members could review the papersprepared for those discussions, particularly by Dr. Gareth Porter.  New Zealand joined Japan in
encouraging Members to contribute case studies and experiences.  However, analysis should not be
restricted to a narrow focus on individual cases, without considering the broader whole, i.e. the high
level of global subsidies to a significantly depleted resource.
81. Work in other organizations, such as the OECD and FAO,  could  contribute to CTE
discussions.  New Zealand noted the relevance of FAO work on the International Plan of Action,
which explicitly recognized the impact of subsidies on resource sustainability by calling for thereduction and progressive elimination of subsidies that contributed, directly or indirectly, to excessive
fishing capacity, thereby undermining fisheries sustai nability.  Linkages between subsidies and their
negative impact on resource sustainability was recognized in the FAO Plan of Action's call for several
immediate actions, including mandating a 20-30 per cent reduction in capacity for large-scale tuna
long-line fleets.  OECD work also had focussed on the impact of subsidies on resource sustainabilityand had contributed to the CTE debate.  However, these activities in no way absolved the CTE of its
responsibility to discuss the broader trade and environment aspects of fisheries subsidies, including
the WTO contribution to solving problems in this area.  New Zealand encouraged the OECD and
FAO to continue their efforts in accordance with their mandates and to update the CTE.
82. New Zealand welcomed Korea's national experience paper.  Most of the information appeared
to relate to measures adopted for inshore fishery.  New Zealand encouraged Korea to provide
information on the nature of support provided to distant water fishing operations to ensure a full
picture with regard to financial transfers to fisheries in Korea.  In this regard, the OECD and APEC
studies indicated that a number of Korean programmes did not appear to relate to its inshore fisheries,
for example loans for "Support for the Developmen t of Deep Sea Fishery," the "Fund for Supporting
Fishing Activities" and the "price stabilisation fund."
83. New Zealand welcomed WT/CTE/W/167, particularly the information on recent APEC and
OECD analysis, which provided useful material to examine different categories and types of fisheries
subsidization and complemented earlier World Bank work.  The nature of those measures was
relevant in considering their effects from a trade and environmental perspective.  New Zealand noted
the useful information in the APEC study on the re lationship of many subsidies in APEC Members to
the SCM Agreement.  In several cases, the subsidies reviewed were not considered to be actionableunder the SCM Agreement.  This did not mean that subsidy issues were less serious than earlier
suggested, but rather raised issues that should be addressed.  The CTE was confronted with several
simple, but significant realities:  the crisis around the world in fisheries sustainability was arising at a
time when significant government financial transfers that encouraged fishing effort continued to flow
into the sector.  The environmental damage created was self-evident.
84. Examining the World Bank, OECD and APEC studies, it was clear that an industry worth
around $100 billion a year appeared to be subsidized by some $20-25 billion annually on a global
scale.  Even if a particular subsidy may not be susceptible to challenge based on existing SCM
disciplines, it was necessary to determine the impact of the overall 25 per cent subsidization on
market prices for fish products.  The OECD also had observed that 17 per cent of the landed valuewas paid in subsidies by OECD countries.  This may not be as high as in the agricultural sector as a
whole, but was comparable to certain sectors, such as pork and poultry.  There inevitably had to be a
downward effect on fish prices, which impacted negatively on the returns that fishing nations,
including many developing countries, could make from the resource, thereby impeding sustainable
development.  It was that basic negative trade, environment and development equation that fisheriessubsidies raised;  it was imperative that the CTE deepen its analysis in this critically important area.WT/CTE/M/25
Page 21
85. The representative of Peru appreciated Japan, Korea and the Secretariat's papers, which
contributed to the discussion.  WT/CTE/W/167 gave an account of overexploitation of marine
resources and overcapacity in some developed countries that promoted fishing activities through
subsidies.  Overcapacity contributed to exhaustion of marine stocks.  Although recognizing that
inappropriate management was one of the factors underlying fish stock overexploitation, it was alsonoted that subsidies in some developed countries resulted in overcapacity of fishing fleets and
overexploitation of fisheries.  Subsidies distorted international trade in fish and fish products and led
to resource deterioration.  Peru highlighted the need to determine the nature, extent and effects of
subsidies on fisheries sustainability and trade.  Peru supported Iceland's suggestion for the Secretariat
to provide information to assist in categorizing those environmentally-harmful and trade-distorting
fisheries subsidies.  Peru reiterated the importance of working jointly to eliminate these subsidies and
their consequent adverse effects.
86. The representative of the United States appreciated that Japan and Korea had shared their
views and national experiences in the fisheries sector, and invited other Members to do so.  A
common theme that arose in the CTE meeting was that these exchanges of views were helpful to
understand the issues.  The US welcomed Japan’s confirmation that the CTE should play an integral
role in assessing and analyzing the effects of certa in subsidies on trade and resource sustainability in
the fisheries sector.  This issue was important as the depleted state of global fisheries was a major
environmental and economic concern.  Subsidies had contributed to these undesirable results, and
complicated Governments' attempts to reduce efforts and capacity levels in overexploited fisheries.
Many subsidies had aggravated the problem and obstructed solutions.  The US recognized the many
other challenges that should be addressed, including an urgent need to implement sound managementsystems world-wide.  The US had participated actively in regional and global efforts to deal with
many of the most significant obstacles to sustainable fisheries, including fleet overcapacity;  IUU
fishing;  by-catch of non-target and protected species;  strengthened Regional Fisheries Bodies;  and
protection of coral reefs.  The US also recognized that environmentally-harmful and trade-distorting
subsidies existed and contributed in a meaningful way to resource conservation problems in domesticand international fisheries.  The WTO provided an opportunity to reform subsidies in ways that were
beneficial for trade and fisheries resources.
87. The US agreed with Korea that not all subsid ies were "bad".  The US paper, WT/CTE/W/154,
had excluded certain environmentally-benign programmes.  "Bad" subsidies did not refer, for
example, to government-funded stock assessments.  If funding were to promote more efficient use of
raw fish or improved safety of fishing operations, such as described by Korea, the environmental
outcome could be benign or even positive.  If support promoted operations that targeted "under-
utilised" species without putting in place an adequate management structure, the result might be
undesirable.  In the US, as elsewhere, the Government had provided grants to stimulate new fisheries,
especially in the 1980s, and, in a few years, previously under-utilized fisheries had been over-fished.
The US would be pleased to confer with Korea to explain its position.
88. On Japan's request for specific case studies to corroborate the pernicious effects of certain
subsidies, the US noted that the literature substantiated this view and the US would provide
references.  A 1999 US Congressionally-mandated study, entitled Federal Investment Study , showed
that subsidies had some capacity-enhancing effects in some fisheries during certain periods, and
recommended certain changes in some programmes.  The US also appreciated the expert advice of the
FAO on the role of sustainable fisheries management, and hoped FAO would provide information onthe results of its Expert Consultations.  The US welcomed W/CTE/W/167, which was informative
about recent work in international fora on this topic and also highlighted some fundamental problems
that existed concerning the various studies undertaken in different fora.  Specifically, there was much
confusion about the analytical categories of different government programmes.  For example, the
FAO's 1992 work mentioned "subsidies" but projected global costs and revenues;  the OECDassembled information on government financial transfers to include all fisheries-related government-
funded programmes;  and APEC studied "subsid ies" and other support programmes.  The USWT/CTE/M/25
Page 22
supported the suggestion for the Secretariat to refi ne its paper by providing an overview of the
attempts to categorize subsidies to allow the CTE to  evaluate the information generated in other fora.
89. The representative of Australia welcomed the Secretariat's overview of the fisheries sector in
WT/CTE/W/167, which confirmed the importance of action to promote sustainable fisheries
management and the significant trade interests involved.  Australia thanked Japan and Korea for theirpapers.  While many of the capture fisheries appeared to have reached their maximum production
potential, fish remained a vital source of animal protein for some one billion people.  About one third
of fish production entered international trade, so that sustainable fisheries management was vital if
trade were to continue on a viable footing.  About 50 per cent of fish exports were sourced from
developing countries, so there was also an important development dimension to future fisheries trade.
This information illustrated why the WTO should pa rticipate actively in international consideration of
the environmental and developmental challenges facing fisheries.  Problems with data availability andother uncertainties that prevailed in the fisheries sector made sustainable fisheries management
challenging.  International cooperation in relevant fora was essential and the Secretariat paper
provided a useful overview of the actions under way in various fora.  There had been important
initiatives at the national, regional and international levels to improve fisheries management, provide
incentives for sustainable fishing practices, reduce fishing capacity, reform subsidy practices andaddress IUU fishing.  However, the evidence in the Secretariat paper indicated there was much work
to do to achieve sustainable fisheries management.  One of the key problems was that, when action
was taken to address overcapacity in one fishery, at the national or regional level, fishing resources
and capacity were often displaced to other fisheries, continuing the cycle of overuse and depletion.
90. The nature and scale of the challenges faced by fisheries pointed to the need for action on
many fronts.  Subsidies were only one part of the problem of fisheries resource sustainability.  There
was still uncertainty over the extent of subsidization, the nature of subsidies and the extent to which
certain subsidies had an adverse impact on fish stocks.  However, identification and reform of those
subsidies that contributed to fishing overcapacity was a necessary step towards addressing policy
failures impeding the development of sustainable fisheries management.  The US paper,WT/CTE/W/154, usefully attempted to categorize environmentally-harmful and trade-distorting
fisheries subsidies.  CTE work would be assisted by the Secretariat developing its paper to provide an
overview of attempts to categorize subsidies.  A detailed comparison of categorization would help the
CTE to identify those subsidies that might be environmentally-harmful and trade-distorting and to
assess how adequate WTO rules were in disciplining them.  Australia appreciated Members' differing
views on the extent to which different types of subsidies were harmful or helpful in their impacts on
sustainable fisheries management.  A better understanding of the types of subsidies identified invarious studies would help the CTE in its consideration of these views.
91. The representative of Chile said that, as noted in WT/CTE/W/167, the UN Convention on the
Law of the Sea gave coastal States exclusive rights over and the obligation to ensure sustainable
marine resources.  Korea's paper gave interesting examples of the reintroduction of fish species and
fisheries management.  Many domestic programmes to increase fishers' incomes and createemployment also had to be seen from the perspective of the market access implications for developing
countries.  Developing countries might have similar concerns regarding income and employment of
fishers, but were convinced that these concerns should be addressed through open and fair trade.
Clarification of concepts was necessary depending on the situation in each country.  Chile shared
many of the points in Japan's paper, particularly on the lack of appropriate fisheries management andthe contribution of IUU fishing to overexploitation.  Reference was lacking to the recent APEC study.
If the approach lay in sustainable fisheries management, how was it possible to justify subsidies to
distant water fishing fleets, which caught highly migratory species and jeopardized EEZ coastal
management systems?  Chile appreciated the OECD presentation, but emphasized that the study's
conclusions had been agreed by the OECD, in which Chile, like many others, was not a Member.Chile supported Iceland's suggestion to categorize environmentally-harmful and trade-distorting
fisheries subsidies.WT/CTE/M/25
Page 23
92. The representative of Tunisia said the fisheries sector was an important one for Tunisia and
her delegation attached importance to its development.  Tunisia had ratified the FAO Code of
Conduct for Responsible Fisheries.  The Mediterranean region suffered from fisheries
overexploitation by coastal States as well as foreign fleets, which had modern equipment to detect
stocks, particularly blue-fin tuna.  Thus, it was prudent to assess the effects of fisheries subsidies withsustainability in mind.  This exercise should identify the different subsidies and their impacts on
sustainability.  The CTE should carry out this analysis in cooperation with FAO.
93. The representative of Mexico welcomed the papers by Japan, Korea and the Secretariat.
Mexico made preliminary comments on WT/CTE/W/167.  Paragraph 28 carried a subjective
presumption that ICCAT and CC AMLR were considered to provide appropriate and WTO-
compatible examples of the use of trade measures.  The CTE had not given any consensus view on the
issue.  Given that there were Members that did not believe trade measures in MEAs were the best wayto reach environmental objectives, Mexico requested clarification from the Secretariat, as well as
rectification of the document.  The issue of subsidies was not just to determine whether they were
positive or negative.  This issue was covered by the SCM Agreement and work should not be
duplicated with respect to determining which subsidies were authorized or prohibited, which was a
matter for Members.  The CTE should assess the environmental effects of subsidies.  Mexicocontinued to maintain that subsidy elimination was beneficial not only for the environment, but for
trade, particularly for developing countries.
94. The representative of Norway appreciated the discussions on the possible effects of fisheries
subsidies, as Norway was a fishing nation.  Norway welcomed the US, Japan and Korea's papers, as
well as the Secretariat paper.  In many cases, government transfers to the fisheries sector couldcontribute to overcapacity, overexploitation and depletion of fish stocks.  However, fisheries subsidies
was only one of several elements that might have a negative impact on sustainable fisheries.  Lack of
fisheries management regimes, along with rapid te chnological developments, had been an unfortunate
combination, resulting in unsustainable development of fish stocks and excess fishing capacity.  There
was, to a large extent, an international acknowledgement that overcapacity and overfishing weremajor problems.  Although a responsible management regime had been introduced in many EEZs,
such systems were lacking in many countries.  Fisheries management must be in place to adapt fishing
capacity to available resources, including restrictions on vessel types and fishing gear, and access
limitations to fisheries or restrictions on the quantity and species caught.  Many subsidies had
increased the negative effects on fisheries sustainability and not helped to solving overcapacity.  Thus,
coherence between subsidy and resource  management policies was important.
95. The US paper, WT/CTE/W/154, gave an interesting overview of the situation and of work in
other fora, particularly concerning fisheries sustainability and trade.  The second part on the
categorization of subsidies should be regarded as preliminary.  The CTE could not base discussions of
harmful subsidies versus those that did not imp act on the environmental on brief descriptions.
Although "good" and "bad" subsidies may be discussed in the WTO, fishery experts must categorize
them.  International organizations, such as FAO,  with knowledge of management systems and the
status of fish resources and fish trade were indispensable to reach agreement on categorizing
subsidies.  Although the SCM Agreement categorized subsidies, identification and categorization of
fisheries subsidies with environmental impact call ed for the relevant expertise.  Norway supported
Japan's suggestion to request FAO to conduct work and report to the CTE.  This request should be
made prior to the FAO Expert Consultations on Economic Incentives in November, with a time-limitfor FAO to report .  Norway welcomed Iceland's suggestion for the Secretariat to develop its paper and
review Members' SCM notifications.
96. The representative of the Philippines welcomed Japan, Korea and the Secretariat's papers.
The Philippines had a keen interest in this issue given its vast marine resources and the importance of
the fisheries industry.  The fisheries sector accounted for 5 per cent of the Philippine GDP,representing a significant share of employment in th is export-driven industry, i.e. about 2 million jobs.WT/CTE/M/25
Page 24
Given the importance of this industry to its economy, the Philippines was committed to sustainable
management to conserve fisheries resources and ensure economic gains.  Efficient fisheries
management was indispensable for sustainable fisheries.  Moreover, impeding trade opportunities for
developing countries also would lead to unsustainable fisheries exploitation.  The Philippines
supported examining fisheries subsidies with a view to disciplining those that promoted overcapacity,
excessive fishing efforts, trade distortions and environmental degradation.  The Philippines agreed
with Korea that not all subsidies were "bad", some could benefit sustainability and play a role in
development strategies of developing countries.  The Philippines agreed with Japan that the CTE
should take into account studies in other fora, such as the OECD, UNEP and FAO.  The FAO and
others should be encouraged to continue work, which they could be invited to present to the CTE.
Given its experience in dealing with subsidies, the WTO had a vital role in complementing other
fora's work, within its mandate, to address trade-distorting and environmentally-damaging subsidies.
97. The representative of Thailand welcomed the Secretariat's fisheries paper, which permitted a
better understanding of the work in other international fora .  Developing countries were the key
exporters of fish products, representing nearly 50 per cent of the total value of exports .  Not only did
international trade in fish , fish products and fisheries services play a crucial role in development,
especially in developing countries, it also provided an important source of income.  Fisheriessubsidies in the developing countries, especially for artisanal fisheries and offshore fishing were
necessary and should be distinguished from other subsidies.  Thailand reiterated its request for the
Secretariat to address the socio-economic effects of fisheries subsidies in developing countries, and
asked that analysis be furthered based on the best available data, starting with Members' SCM
notifications.  The study should indicate measures to ensure equitable access to fisheries resources fordeveloping countries and to maintain sustainable fisheries.  Thailand welcomed the continued
dialogue between the CTE and other international fora, such as FAO, APEC and OECD .  Thailand
requested FAO to accelerate its work to facilitate CTE discussions.
98. The representative of Canada noted the threat posed by fisheries overcapacity to marine
resource sustainability.  Canada had participated in  discussion of this issue in several international
fora, including the FAO Fisheries Committee and the International Plan of Action for the
Management of Fishing Capacity.  Sustainability of fish stocks could be adversely affected by
subsidies that encouraged excessive capacity in the harvesting sector, and such subsidies ought to be
eliminated.  However, certain programmes, such as license retirement, and assistance to displaced
workers, could reduce excessive fishing capacity and pressure on marine resources.  Canada
welcomed the papers by Japan, Korea and the US.  Canada also welcomed the Secretariat's paper,
although it might be necessary to go beyond simply identifying the problem in order to examinesolutions.  Canada did not object to the Secretaria t elaborating on the paper in keeping with Members'
suggestions.  Canada noted that the APEC study had yet to be endorsed by the APEC Fisheries
Working Group and that, accordingly, it should not be used as a discussion piece in other fora.
Canada had noted its concern that the definition of subsidy in that report included expenditures on
fisheries management.  Canada agreed with Japan that it was only by adopting an effective fisheriesmanagement regime that the problem of overfishing would be resolved and that the FAO was the
proper forum to discuss this issue.  However, given that misuse of government support can facilitate
overexploitation of fish stocks, Canada could not agree with paragraphs 3 and 4 of Japan's paper,
WT/CTE/W/173, particularly with respect to being unaware of specific cases in which subsidies had
been a major cause of stock depletion.  Canada would comment at a future date on Korea's paper.  TheUS paper, WT/CTE/W/154, made a positive contribution, particularly in response to one of Canada's
primary concerns that the term subsidies needed to be better defined.  Although Canada was not
completely satisfied with the US definition, the paper represented a good starting-point and
appropriately excluded positive subsidies, such as government funded programmes to facilitate the
transition to sustainable fisheries.  Canada was interested in how the US had developed its categories.
99. The representative of the European Commun ities said WT/CTE/W/167 contributed to the
discussions and was well researched.  The central issue for sustainable fisheries lay in sound resourceWT/CTE/M/25
Page 25
management.  The principal cause of stock depletion was inadequate fisheries management.  The
economic analysis highlighted the importance of good management instruments to avoid the so-called
"tragedy of the commons."  The EC would have welcomed a more in-depth economic analysis of the
trade-distorting effects of certain subsidies.  The key issue for work was identified in paragraph 49,
namely how to distinguish between potentially  environmentally harmful and environmentally
beneficial forms of fisheries support.  The paper showed that there were different approaches to
classifying subsidies and their effects, noting that despite a number of studies it was still difficult to
find a clear demarcation between those subsidies.  It was essential to reach a consensus at the
international level on these matters.  As several Members had noted, the CTE was not the only forum
in which fisheries management was being discussed.
100. The OECD presentation on the Transition to Responsible Fisheries set out several interesting
points, some of which were taken up in WT/CTE/W/167, such as the variety of objectives ofgovernment transfers.  Over three quarters of the transfers to the fisheries sector in OECD countries
represented general services, for which the largest proportion went to infrastructure, i.e. ports,
fisheries management, enforcement and research, which did not directly lead to overcapacity.  This
point was also noted in the US paper, WT/CTE/W/154.  Enforcement and research were essential for
ensuring sustainable use of fish stocks.  There were other points from the OECD study that could havecontributed to WT/CTE/W/167, such as the relationship between subsidies and other aspects of
fisheries management.  The OECD study set out several key findings, such as the fact that it was
difficult to determine the effect of transfers on resource sustainability, as there were many influences
on fish stock health that were difficult to disentangle.
101. Another forum that was debating the fisheries issue was the FAO, a body in which developed
and developing countries were represented.  The FAO should be the main forum for discussions on
fisheries management and could provide the CTE with valuable input.  This did not mean there should
not be an exchange of views in the CTE.  It was essential to establish a common terminology to form
the foundation of the debate on the significance of fisheries subsidies for trade and sustainability and
on possible options for action.  The EC was encouraged by the positive debate and hoped that, on thebasis of FAO work, the CTE would be able to develop a more structured approach to discussing the
link between government financial transfers and fisheries trade and sustainability.  The EC supported
the suggestion for the Secretariat to update subsidy notifications.  While the EC did not oppose further
Secretariat papers, the CTE could discuss in detail the FAO's pending report to allow any requests to
be refined and to dove-tail FAO work.  It would be opportune to invite the FAO to present the results
of its Expert Consultations at the next meeting.  The EC welcomed Japan and Korea's papers, which
underlined the complexity of the issues, and might comment further at a later stage.
102. The observer of UNEP said that, building on work since 1997, UNEP would hold a fisheries
workshop on 12 February 2001.  This work was linked to the assessment of the effects of trade
liberalization in the fisheries sector in country projects under way in Argentina and Senegal.
103. The observer of the FAO recalled that the FAO had made regular briefings to the CTE.  The
FAO publication, The State of World Fisheries and Aquaculture (SOFIA 2000) , had been finalized
and would be available at the 24th Session of  COFI, 26 February - 2 March 2001.  The FAO was
coordinating the implementation of the Code of Conduct for Responsible Fisheries.  The International
Plan of Action mandated FAO to collect data upon which to identify factors, including subsidies, that
might cause excessive fishing capacity, which in turn might threaten fish stocks.  The FAO
Subcommittee on Fish Trade had requested FAO to collect, analyse and disseminate information on
global fisheries subsidies.  An FAO Expert Consultation would be held on 28 November –
1 December to assess the state of knowledge of subsidies in fisheries and their likely impact on trade
and fishery resources sustainability.  The report would be submitted to the 24th Session of COFI and
was expected to include findings on the concept of subsidy in the fisheries sector, documentation on
the effects of subsidies on fish trade and fish stocks, including an assessment of the methods used andFAO's role in future studies.  Note had been taken of the requests for further FAO briefings.WT/CTE/M/25
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104. The representative of Japan noted the WTO Director-General's statement at the UNEP
meeting on 23 October with respect to fisheries subsidies constituting a "win-win" situation.  Given
the politically sensitive nature of this issue, the Secretariat should be more cautious in its references.
Japan appreciated the Secretariat's efforts to compile information on the status of global fisheries and
the relationship between resource management and subsidies.  However, FAO fishery experts wouldbetter digest this type of information.  The fundamental logic in WT/CTE/W/167 was that
overexploitation of fishery resources prevailed due to management failures.  If this were the case, the
adverse impacts of fishery subsidies, as well as the adverse impacts of trade on sustainability should
be considered.  At the 2
nd Session of the IUCN World Conservation Congress, in Jordan in October
2000, concern had been expressed that trade liberalization might encourage unsustainable resource
exploitation.  Japan noted that the draft APEC fisheries study had yet to be finalized, and that Japan
had requested its revision.  Given that reference to an incomplete study was misleading, as Japan hadnoted to the APEC Secretariat, the WTO Secretaria t should refrain from referring to the study until
finalized.  Japan noted that, as opposed to the OECD and APEC papers, the World Bank had not been
responsible for the paper referred to in WT/CTE/W/167, and should not be treated equally.
105. Japan appreciated Korea's efforts to share its national experience in WT/CTE/W/175,
particularly on the various factors that should be considered when assessing fisheries subsidies.  Japannoted the agreement that government expenditures on management, research and enforcement should
not be considered subsidies.  Not all subsidies were "bad," as noted by Korea.  Korea's paper would
also contribute to FAO discussions.  Japan observed a shift in Members' recognition of the nature of
fisheries subsidies.  The OECD study noted that 75 per cent of subsidies were not necessarily "bad".
One Member previously had stated that about 95 per cent of subsidies were "bad".  Japan welcomedthe fact that Governments were recognizing that ma ny factors other than subsidies caused fisheries
overexploitation.  Japan agreed that the CTE could have a role in discussing fisheries subsidies, as
well as the effect of trade on fisheries sustainability.  If those Members who advocated subsidy
elimination declined to discuss the negative effects of trade on fisheries sustainability, Japan would
have to reconsider its position.  Given that the WTO did not have an expertise in fisheriesmanagement, input from other international fora, such  as FAO and OECD, was necessary.  If Iceland's
proposal was for the Secretariat to update and compile other organizations' work, Japan had no
objections as long as it did not contain a biased analysis of this sensitive subject.  A further paper
could include the finalized APEC study and the results of the FAO Expert Consultations.
106. The representative of Korea appreciated the comments on Korea's paper and noted New
Zealand's request for information on distant water fishing fleets and related policies.  Korea would
give due consideration to the US comments, and welcomed its willingness to engage in dialogue inthis respect.  Korea noted Chile's concerns about the possible market access impacts of fisheries
subsidies.  Korea was pleased to observe that a broad range of Members also recognized the need for
enhanced cooperation between the CTE and other fora on sustainable fisheries management.
107. The representative of the Secretariat said that, given the breadth of the issue, work called for
cooperation with other international and region al fora, such as the FAO, OECD, UNEP, CBD,
ICCAT, and CCAMLR.  The Secretariat took note of the comments by Canada, Norway and Japan on
the preliminary nature of the APEC study;  when this study was finalized, along with work in the
FAO and OECD, a fuller picture of fisheries subsid ies would emerge.  Consideration could be given
to updating WT/CTE/W/167 once work under way in other fora had been finalized, and include the
development dimension.  In the meantime, the Secretariat could update the notifications under Article25 of the SCM Agreement.  Responding to Mexico, the Secretariat said paragraph 28 referred to
ICCAT and CCAMLR presentations on the measures in their respective agreements, i.e. catch
documentation schemes, which Parties to these regional fisheries agreements considered to be an
effective and non-discriminatory manner in which to deal with conservation.
108. The Chairperson said that Members' requests had been noted, particularly for other
international organizations to brief the CTE on their fisheries work and for further Secretariat papers.WT/CTE/M/25
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Environmental services
109. The observer of the OECD presented its recently released study, Environmental Goods and
Services:  An Assessment of the Environmental,  Economic, and Development Benefits of Further
Global Trade Liberalization , summarized in WT/CTE/W/172.  One of the key conclusions of the
research of the OECD Joint Working Party on Trade and Environment was the need for policy to
address supply and demand factors in the environmental goods and services industries.  Supply side
factors, including a diverse and cumulative range of trade barriers were more significant inhibitors to
the deployment of environmental technologies than previously thought.   Defining the environmental
industry was fraught with difficulties, for example there was no chapter in the Harmonized System
entitled "environmental goods."  Average tariff levels for the illustrative list of environmental goods
were set out in Table 5 of the study for:  the Quad countries;  three other OECD countries;  and agroup of seven emerging economies.  A state of the art manual on the classification of the
environmental industry by an OECD-Eurostat working group differed from the GATS classification
list (MTN.GNS/W/120), as it reflected the industry's evolving integrated nature.
110. Inventories of OECD countries and several n on-OECD countries illustrated the supply side
barriers facing the environmental services sector.  OECD work had examined whether "win-win"situations applied to environmental services libera lization through foreign participation in the sector.
"Win-win" outcomes from trade and investment li beralization on the environmental side included
increased access to clean water and waste collection, and availability of a larger choice of
environmental technologies.  On the development front, there had been reduced pressure on budgets
at the state and municipal levels with the creation of skilled and unskilled local employmentopportunities.  Availability of water and waste management attracted foreign and local investment and
increased the local tax base.  The trade wins includ ed local and foreign companies participating in this
trade gain, which provided new opportunities to employ skills and technologies.  At the global level,
trade and investment liberalization improved resource allocation and allowed supply side aspects to be
addressed.  Complementary actions to environmental goods and services liberalization were:  the needto strengthen the environmental regulatory framework and the choice of environmental policy
instruments;  the recognition that environmental goods and services were necessary, which had
implications for the timing and sequencing of servic es liberalization in relation to goods;  recognition
of the importance of pollution prevention;  and the need for appropriate technologies tailored to the
needs of emerging economies.  As technology transfer was a matter primarily for the private sector, it
was essential to enlist its cooperation.
111. The representative of the Secretariat said environmental services were part of the GATS
Article XIX negotiations.  The GATS Committee on Specific Commitments was dealing with the
classification of services, including consideration of a revision of the classification of environmental
services.  The Committee was taking a case-by-case approach to revising the classification of various
sectors.  Some Members felt there was a need to revise the current classification for environmental
services in W/120, which was considered not to adequately reflect current market reality.Consideration of revising W/120 was advancing on the basis of an EC proposal.  There were three
outstanding issues under discussion:  water distribution and purification services;  recycling services
and operation, maintenance and repair services.  There was no convergence of views on whether these
services should be classified as environmental services or, in the case of water and recycling, as
services.  Work would continue at the December session when the EC proposal would be revised.
112. The representative of India welcomed the presentations and noted the suggestion that
developing countries open their markets and remove barriers to the supply of environmental services,
which would result in "win-win" situations.  To the extent that market access benefits expected by
developing countries occurred in sectors and modes of their choice, this would lead to better
environmental protection.  India's concern was that developing countries had priorities for allocatingfinancial resources, such as poverty eradication or structural improvements.  There were different
perspectives from which this issue could be approached.  If the appropriate infrastructure andWT/CTE/M/25
Page 28
regulatory framework was not in place when environmental services were liberalized, there could be
an outflow of foreign exchange, with reso urce implications for developing countries.
113. The representative of the European Communities welcomed the presentations and the OECD
paper, WT/CTE/W/172, which the EC would examine in  greater detail.  The EC was keen to advance
work on environmental services and had put forward proposals for classification of environmentalgoods and services in the GATS.  There were clear links between Items 6 and 9 of the CTE work
programme.  The EC supported calls by other Members for the CTE to devote more time to services
issues and to examine the impact of liberalization on various services sectors.  Noting the recent trend
towards greater liberalization, including in the environmental sector, it was timely for the CTE to
return with renewed vigour to services, an area in which it had the potential to contribute.
114. The representative of Canada said his delegation was still analysing the OECD study.  Canada
underlined that, in the last two years, the GATS Committee on Specific Commitments had been
discussing the definition of environmental services.  While Canada welcomed technical input from the
CTE, the GATS Council was best placed to deal with this issue.  Canada would examine Annex V of
the OECD study on the list of measures affecting trade in environmental services.  Canada supported
liberalization of environmental services, including for its direct and indirect environmental benefits,
and wished to make progress on classification to encourage additional GATS commitments.
115. The representative of Mexico welcomed the presentations, but felt that the issues raised went
beyond the CTE mandate.  The CTE should discuss the issues related to its mandate, which was to
review, study and analyse the relationship between trade and services and the environment, and leave
other issues to the appropriate fora.  As noted by Canada, classification was being dealt with in the
special session of the GATS Council.  Mexico noted that these negotiations were not even discussedin the regular GATS Council meetings, let alone the CTE.
116. The representative of Venezuela welcomed the presentations and appreciated the EC
contribution to the GATS classification to improve the understanding of the scope of environmental
services and their environmental effects.  The CT E had a role to play in studying the effects of
environmental services liberalization, although not in the actual GATS negotiations.
117. The Chairperson said further consideration could be given to adopting a more focused
approach to this issue and to the requests for the Secretariat to update work on environmental services.
Market access
118. The representative of India presented his delegation's paper in WT/CTE/W/177, which was
part of an UNCTAD project involving India and nine other countries on the market access impacts of
environmental requirements.  The expectation had been that there would be a significant increase inmarket access following the Uruguay Round, at least in specific areas, such as textiles and agriculture.
Increased market access would result in increased financial resources for developing countries to
afford better environmental protection.  This expected market access had not materialized in areas
such as textiles, and existing market access had been reduced.  Environmental requirements had
increased significantly for developing countries, which had adversely affected their market access.India's paper gave examples of bans on azodyes that  affected India's textiles and leather sectors and
had led to market access being denied in its main export markets.  Strict requirements on pesticide
residual levels in the US and some European countries had led to increased compliance costs and had
become insurmountable market access obstacles.  A dditional compliance costs and social issues were
also emerging as market access barriers.  Suggestions on how to move forward were set out in India'spaper, which it hoped Members could react to at the next meeting.WT/CTE/M/25
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ANNEX I
Work Programme and Schedule of Meetings for 2001
1. The 2000 Report of the Committee on Trade and Environment (WT/CTE/5) sets out that the
CTE will continue to analyse all the items on its work programme based on the "cluster approach"
under the themes of market access and the linkages between the multilateral environment and trade
agendas.  Building on the contribution of Members, including where possible their national
experience, on the items of the work programme, the following tentative schedule of meetings is
proposed.  At each meeting, time will be allotted for Members, if they so wish, to return to Items
discussed at the previous meeting, and to raise other issues of relevance to the fulfilment of the
Committee's mandate.
2. At a meeting to be held on 13-14 February, the Committee will address those Items relevant
to the theme of market access, including:
Item 2: the relationship between environmental policies relevant to trade and environmental
measures with significant trade effects and the provisions of the multilateral trading
system;
Item 3: the relationship between the provisions of the multilateral trading system and:
(a) charges and taxes for environmental purposes;
(b) requirements for environmental purp oses relating to products, including
standards and technical regulations, packaging, labelling and recycling;
Item 4: the provisions of the multilateral trading system with respect to the transparency of
trade measures used for environmental purposes and environmental measures and
requirements which have significant trade effects;  and
Item 6: the effect of environmental measures on market access, especially in relation to
developing countries, in particular to the least developed among them, and
environmental benefits of removing trade restrictions and distortions.
3. On 27-28 June, the CTE will meet to discuss the Items related to the linkages between the
multilateral environment and trade agendas, including:
MEA Information Session;
Item 1: the relationship between the provisions of the multilateral trading system and trade
measures for environmental purposes, including those pursuant to multilateral
environmental agreements;
Item 5: the relationship between the dispute settlement mechanisms in the multilateral trading
system and those found in multilateral environmental agreements;
Item 7: the issue of exports of domestically prohibited goods;  and
Item 8: the relevant provisions of the Agreement on Trade-Related Aspects of Intellectual
Property Rights.
4. Discussions at the CTE meeting on 30-31 October will include:Item 9: the work programme envisaged in the Decision on Trade in Services and the
Environment;
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 theWTO;
Review of the two thematic clusters of market access (Items 2, 3, 4 and 6) and the linkages between
the multilateral environment and trade agendas (Items 1, 5, 7 and 8);  and adoption of the 2001 ReportWT/CTE/M/25
Page 30
ANNEX II
MEA INFORMATION SESSION
24 October 2000
A. O PENING STATEMENTS
1. The Director-General of the WTO made an openi ng statement (WT/CTE/W/178).  The Executive
Director of UNEP made opening remarks (WT/CTE/ W/179).  Members welcomed their contributions,
which illustrated the institutional commitment to  addressing the linkages between trade and
environment.  Several Members noted the emphasis on considering issues related to poverty.  The real
enemy of the environment was poverty;  trade played a crucial role in alleviating poverty throughout
the world.
2. Members also welcomed the UNEP-MEA sponsored meeting on Enhancing Synergies and
Reducing Tensions between MEAs and the WTO held in Geneva on 23 October.
B. T HE CONVENTION ON INTERNATIONAL TRADE IN ENDANGERED SPECIES OF WILD FLORA
AND FAUNA (CITES)
3. The presentation by the CITES Secretariat was based on WT/CTE/W/165.  The CITES
Secretariat considered it necessary to work clos ely with other MEAs, UNEP and the WTO to promote
the formulation of common positions on international trade issues.  Discussion on synergies wouldraise practical concerns that MEAs might have on the multilateral trading system, e.g. how it intended
to internalize the cost of environmental degradati on generated by trade.  The main interfaces between
the MEA and WTO regimes should be clarified.  CITES dealt with a wide range of trade measures
and contained six categories of measures, incl uding trade bans on approximately 800 endangered
species.  There were, however, situations in which trade could help to transfer species from Appendix
I to Appendix II, under which trade was possible subject to export permits and, in some cases, import
permits.  Thus, there was a guarantee that exports were legal and sustainable.  In the CITES context, it
was becoming increasingly clear that trade was not necessarily the enemy of conservation.
4. Where there were serious cases of non-compliance with CITES provisions or a lack of
enforcement in general, or with respect to particul ar species, trade measures were also implemented
by the Conference of the Parties (COP) of CITES.  The CITES Secretariat described the decision-
making bodies in CITES, listed in paragraph 9 of WT/CTE/W/165.  The Convention permitted two
categories of stricter domestic measures adopted by the Parties, those based on CITES criteria and
those based on other criteria.  Technical input from the WTO on those trade measures, including
possible alternatives and their relationship to the WTO, would be useful.  The role of trade measures
in achieving CITES objectives was clear;  CITES established a multilateral legal framework for
regulation of trade to conserve a list of endangered species of wild fauna and flora.  Without CITES,there would have been numerous unilateral measures to restrict trade in certain species.
5. Increasingly, CITES provided technical assistance to wildlife producer countries, which were
developing countries.  CITES was providing capacity building and training for customs inspectors in
cooperation with the Basel Convention, there being similarities in the control of hazardous wastes and
endangered species.  CITES was enhancing its scientific basis in order for Parties to properlyimplement CITES, including in cooperation with IUCN.  Enforcement and compliance was lacking
partly due to capacity problems and inadequate political commitment.
6. For several reasons, the COP in April 2000 had been unable to adopt proposals to list shark
species in CITES Appendix II.  An important number of Parties had concerns about CITES with
respect to, for example, commercial fish and timber species.  More work was needed to show thatlisting species on CITES Appendix II would not entail the end of trade.  In fact, CITES-regulatedWT/CTE/M/25
Page 31
trade might well provide a means to promote trade in these species and to ensure sustainable and legal
use of particular species.  For example, there was scope for development of an eco-labelling scheme
to reflect CITES documentation (permits, certifications, markings, universal tagging systems, etc.) as
a "green label" for specimens traded in complianc e with CITES requirements.  CITES would continue
to work with the WTO, the World Customs Organization, Interpol, civil society, the media and othersto address synergies between trade and environment in CITES.
Comments and questions
7. The comment was made that CITES was basi cally a multilateral trade agreement with
environmental objectives, thus different from other MEAs.  As the principal objective of CITES was
to control trade in endangered species, trad e measures were intrinsic to the Convention.
8. Members appreciated the examples given by the CITES Secretariat to help understand the
nature of the issues.  It was pointed out that the future success of CITES as regards commerciallysignificant species and the avoidance of trade disputes would depend on its ability to assess the
situations of particular species and to devise management systems to sustain them as based on
scientific decision making.  There were trends towards extreme conservationism, for example with
respect to the listing of certain species.
9. It was noted that CITES, which had been operating successfully for several decades, provided
a valuable case-study for the CTE, particularly as its conservation objectives called for trade
measures.  It was also noted that CITES might ha ve an important role to play in promoting the
sustainable use of natural resources, not least by helping to produce a system of regulated trade to
give wildlife producers a stake in sustainable use.  The economic dimension was one in which there
was considerable work to be done, and for which there were potential synergies between trade,environment and sustainable development.
10. The comment was made that labelling was inte resting in the CITES context insofar as it
increased consumer awareness with respect to goods produced in a sustainable manner.
11. The importance of concentrating trade and environment coordination efforts on
implementation and capacity building, rather than on  the theoretical compatibility of MEA provisions
with WTO rules, was noted.  One of the reasons for the effectiveness of CITES was that the
Convention had adopted an elaborate multilateral process for evaluating the scientific status of a
species, based on detailed criteria for listing species.  That process would enable CITES to maintain
and adapt these scientific criteria and to apply them in cases where a species was or might be affected
by trade.  Although cooperation under CITES could help to protect those species, Parties should
consider strengthening the procedures for scientific evaluation.
12. The comment was made that trade and environment was a complex issue, with the impact of
linkages differing between regions and countries.  To address environmental concerns without
incurring adverse trade effects, policies should be premised on individual studies and local solutions,
given that MEAs were implemented at the national, subnational and local levels.  Provisions such as
"stricter domestic measures" left room for local solutions and priorities, and did not necessarily give a
blank cheque for implementation of an MEA.
On the potential for conflicts to arise between CITES and the WTO.
13. Given that CITES had dealt with species of relatively unimportant commercial value, there
had not been any disputes.  The process by which decisions on trade measures, such as Appendix
listings and quotas, were taken involved a two-thirds majority vote or consensus in the COP.  There
was also the possibility for Parties to make a reservation to a decisions on, for example, the listing of aWT/CTE/M/25
Page 32
particular species, which had helped to avoid disputes.  If CITES decided to take measures to restrict
trade in more commercially important species, the risk of disputes might increase.
On non-parties to CITES with significant wildlife populations.
14. CITES had 152 Parties, including all the important wildlife producer countries, with only a
number of major importing countries missing from the Convention.  Thus, CITES coverage could beconsidered to be effective.  Given that CITES had provisions for trade with non-parties if the non-
parties complied with CITES, there had not been any conflict in this respect.
On the provision for Parties to take stricter domestic measures.
15. Article 14 of CITES, which allowed both importing and exporting Parties to take stricter
domestic measures with respect to any species, those listed or not listed in CITES, had been a
necessary provision when the Convention was negotiated 25 years ago to ensure that Parties, certainly
importing countries, that were taking measures to restrict trade in certain species joined theConvention.  However, it had also been noted that Article 14 had not only been put in place for
importing, but also for exporting countries.  Stricter domestic measures could be based on multilateral
criteria.  For example, if a Party proposed to list a species in CITES Appendix I, yet during the COP it
was clear that there would not be a majority support ing such a listing, a compromise might be to list
the species in Appendix II.  If a Party considered that the criteria for an Appendix I listing had been
met, but for other reasons the COP could not agree, the Party could put in place a stricter measure to
treat the species at issue as if it were listed in Appendix I under its domestic legislation, and not
import it.  This was an example of a stricter measure based on criteria in CITES.  Other criteria were
not necessarily multilateral, for example, CITES covered many species subject to animal welfare
concerns in some countries, such as transport, mortality and housing, which were not covered byCITES or other multilaterally-agreed criteria.
On the need to focus on capacity building and technical assistance.
16. Capacity building in CITES had been financia lly strengthened at the last COP to help
countries to put forward project proposals in the interest of CITES species conservation, to find
appropriate donors, and satisfy their funding requirements.  CITES was concentrating on producingtraining packages to allow countries to train their own people at the national level.
On the use of the precautionary approach in CITES.
17. In effect Appendix II of CITES was the precautionary approach avant la lettre,  as it ensured
that trade in species was sustainable and thus followed a precautionary approach.  Some considered
that, if it were not known whether a species could sustain trade, then trade should be permitted, while
others felt it should be prohibited.  This was one of the issues that CITES had been tackling and the
COP was trying to find a balance.  It might be useful to clarify exactly what the precautionaryapproach was and what it meant in different fora.  For example, a future MEA Information Session in
the CTE could focus on issues of relevance to the debate, such as the precautionary approach.
On the coverage of CITES strategic management plans .
18. A five-year "strategic vision" for 2000-2005 was being put in place to enhance the capacity of
Parties to implement CITES;  to enhance the scientific basis for CITES decisions;  and to enhanceenforcement and compliance in cooperation with the World Customs Organization, Interpol, and
NGOs.  This issue was important, given the significant levels of illegal wildlife trade.  CITES
undertook capacity building and training based on Part ies' voluntary contributions.  Financing was a
major problem for every Convention, and expectations were created that could not be fulfilled given
the lack of financing.  Nevertheless, there was an important number of donors to CITES.  TheWT/CTE/M/25
Page 33
strategic plan included an action plan that implemented those objectives, which would be revised by a
Working Group.  Information was available at http://www.wcmc.org.uk/CITES/index.shtml .
On the use of science in CITES.
19. At the last meeting of the COP, the attention of Parties had been drawn to the fact that
although there had been 62 species proposals and approximately 50 other proposals, NGOs and themedia had concentrated on only four, specifically those relating to elephants, whales, sharks and
hawksbill turtles.  Those four species were the flag ships of CITES and thus it was not surprising that
any decision relating to them would be among the most politicized.  There were instances in which
decisions taken in relation to those flagship species were influenced by politics, either negatively or
positively depending on the perspective.  CITES could not operate in isolation from the wider context,
nor based solely on science.  If this were the case, there would be no need to discuss proposals, as
decisions could be based purely on scientific assessment.  It was the role of all CITES Parties to de-politicize the discussions.  This was difficult, particularly given the high degree of NGO participation
in CITES, which accounted for about half the 1,800 participants at CITES meetings.
On the potential inclusion of commercially significant marine species in CITES.
20. The comment was made that it was necessary to be cautious in including certain
commercially significant species in CITES, such as marine species, given that decisions might bebased on political motivations and not solely on scientific grounds.  There should be a demarcation
between the role of CITES and that of Fisherie s Management Bodies.  For example, ICCAT had
adopted certain measures for tuna conservation.  There could not be a biological extinction of marine
species, although it might not be commercially viable to continue fishing certain species.
21. The CITES Secretariat noted that it was not always possible for CITES to operate on a purely
scientific basis.  Where CITES could not contribute to species conservation, it should not be involved
the management of that species should be left to Fisheries Agreements.  It had yet to be discussed
where CITES could make a difference in this regard, given that certain Parties had rejected the
inclusion of certain commercially significant marine species in CITES.  CITES tended to intervene at
an early stage when a species was no longer able to play the role it was supposed to play in its eco-system.  This role had ceased well before the last fish in a stock was caught or purchased.
On whether trade restrictions were the best way to handle the conservation of certain species.
22. The sustainable use of species had been a difficult issue in CITES for some time.  Here,
perspectives had become more nuanced concerning the role of trade in conserving certain species.
For the most part, it was no longer the case that NGOs categorically opposed the downlisting or
transfer of species from Appendix I to Appendix II in order to facilitate regulated trade in that species.
Appendix I was not a haven for endangered species.  For example, the listing of rhinos in Appendix I
had not resulted in their conservation.  Trade restrictions were absolutely necessary for conservation
of tigers.  Even trade in captive-bred tigers could encourage illegal trade and undermine conservation
efforts.  It was becoming increasingly apparent that CITES should find solutions to individual
problems in specific countries, rather than blanke t prohibitions for a given species in all countries.
The principal aim of CITES was to ensure that species were traded sustainably;  where trade was anegative factor in conservation, it should be regulated.
C. T
HE BASEL CONVENTION ON THE TRANSBOUNDARY MOVEMENT OF HAZARDOUS WASTES
AND THEIR DISPOSAL
23. The Basel Convention Secretariat presented its background paper in WT/CTE/W/163.  The
first decade of the Basel Convention had seen the development of a technical and legal frameworkand a deepening understanding of the concept of environmentally sound management, particularlyWT/CTE/M/25
Page 34
through the new Annexes to the Convention containing the list of wastes pursuant to the Export Ban
Decision and the Protocol on Liability and Compen sation.  Development of technical guidelines on
environmentally sound management would enable Pa rties to comply with the Convention.  At the
COP in December 1999, Parties had set goals and adopted a Ministerial Declaration on
Environmentally Sound Management.
24. Three major developments were taking place in the Convention.  Parties were working to
enlarge the scope of the technical cooperation trust fund, which had a three-tiered approach to assist in
cases of emergencies;  compensate for damages;  and build capacity to prevent damages.  This work
was being conducted in relation to the Protocol on Liability and Compensation for Damages resulting
from Transboundary Movements of Hazardous Wastes or their Disposal.  Work was also under way
in the Legal Working Group to establish a mechanism to promote implementation of, and compliance
with the Convention in an effe ctive, transparent and non-confrontational manner.  The Technical
Working Group had started to review the list of waste in Annexes VIII and IX, specifically in order to
classify wastes, harmonize with other international lists of waste, and clarify the Convention's scope.
While implementing the review, the Technical Work ing Group had raised fundamental issues, such as
the purpose of Annex IX, the list of wastes characterized as non-hazardous and the impact of
decisions to amend this list on the waste management infrastructure of importing countries,particularly in developing countries and countries with economies in transition.  For environmentally
sound management and the Basel Declaration to be effective, policy convergence between
environment and trade law was crucial, for example in recovery, recycling, and services, such as the
disposal of hazardous waste.  Identification of re sponsibilities among stakeholders was also necessary.
25. The Basel Convention was a dynamic instrument with the potential to accommodate
emerging issues, for example end-of-life-cycl e equipment and post-consumer goods, such as
electronic and electrical equipment, used cars, and ship dismantling.  At present, the capacity did not
exist to develop or upgrade the waste management infrastructure of all Parties at a comparable level.
Discrepancies existed in know-how, experience and enforcement capacity.  Markets alone would not
help where there was no economic benefit involved.  For some countries, access to cleaner industrialprocesses would not happen soon, but delocalization of polluting industries could be a reality for these
countries.  Land contamination would require significant resources for clean-up activities.
26. Compliance and enforcement were critical to deal with hazardous waste disposal and called
for technical assistance, for example to manage used lead-acid batteries, which needed to be collected,
properly stored and disposed of in an environmentally sound manner;  the Convention Secretariat was
working with the US Government and industry to develop projects.  Development of methodologies
for inventories of hazardous waste was another important technical tool, as many countries might notbe fully aware of domestically-generated waste.  It was necessary to facilitate and support technical
assistance, access to technology transfer and know -how to minimize the generation of hazardous
wastes at source.  To promote technology for environmentally sound management of hazardous
wastes, a multi-stakeholder approach was called for in the Basel Declaration, as well as the
establishment and operation of regional centers for training and technology transfer.  The ConventionSecretariat welcomed the possibility of organizing workshops with the WTO at the Convention's
regional centers.  Cooperation and information sharing with other MEAs, UNEP and the WTO
Secretariats was an essential process towards a preventive approach and to enhance mutual
understanding of decisions in different fora.
Comments and questions
27. Members welcomed enhanced cooperation and complementarity between the Basel
Convention and the WTO.  It was noted that there was an increasing commitment to technical
assistance, capacity building and technology transfer as a means of implementing MEAs and
achieving MEA objectives.  It would be important to make the dialogue between MEA Secretariats,
UNEP and the WTO more concrete, based on practical experience.  Joint efforts between the WTOWT/CTE/M/25
Page 35
and Basel Convention Secretariats would be valuable, particularly with respect to whether Article 7 of
the TRIPS Agreement was enhancing technology transfer in practice.
28. The comment was made that establishment of dispute settlement mechanisms in MEAs, such
as the Basel Convention, would help ease the controversy between MEAs and the WTO.  The Basel
Convention Secretariat could provide the CTE with information on mechanisms related to complianceand enforcement that were being developed in the Legal Working Group.
29. Reference was made to the importance of the Bamako Convention, negotiated by African
countries to deal with movements of hazardous wastes.  This Convention could be reviewed by the
CTE.  Issues related to hazardous wastes were critical for African countries, particularly in the context
of technology transfer and capacity building.  The issue of environmental services and the Basel
Convention could be pursued.
On the disposal and dismantling of old ships.30. It was recognized that there were problems lin ked with the dismantling of ships.  The issue
had been raised in the Convention and had received a positive reaction from the international
community.  At present, the main objective was to develop technical guidelines for the
environmentally sound management of the dismantling of ships in cooperation with Parties, the
International Maritime Organization and the International Chamber of Shipping.  Thus, theinstitutional platform was being built to address the problem in a concrete way.
On the disposal of used lead-acid batteries.
31. Issues related to used lead-acid batteries concerned the economically viable trade in this
product for recycling.  In many countries, there was also a localized problem of how to dispose of
used car batteries.  The difficulty was that those countries did not have sufficient means to collect andstore batteries, nor the capacity to dispose of or recycle, their lead content.  The Convention
Secretariat was assisting countries to improve collection and storage of used lead-acid batteries and to
determine the best options for their disposal, keeping in mind the economic value of the lead.
On the compliance mechanism.
32. Parties to the Convention were negotiating a compliance mechanism.  In this regard, the
Convention Secretariat would make available the outcome of the work of the Legal Working Group.
On the list of hazardous waste.
33. An Annex to the Basel Convention contained a list of wastes characterized as hazardous
under the Convention, with the main criteria being their intrinsic properties, or whether they contained
elements that might reveal hazardous characteristics, such as eco-toxic, flammable, infectious.
On the scientific criteria used to permit imports of hazardous wastes.
34. This issue was at the centre of debate and analysis in the context of the Ban Amendment to
the Convention.  For the time being, the formulation that Parties had adopted was that Annex VII
Parties and others were not allowed to export hazardous wastes to non-Annex VII Parties.  Some
countries would like to develop technical criteria to determine if a country had an environmentally
sound waste management infrastructure to recycle hazardous waste.  It had been decided to wait until
the Ban Amendment had entered into force after the ratification of 62 Parties.  It would then bepossible to see how the Ban would operate and, if necessary, determine what criteria were necessary.
Parties had made clear that there should not yet be discussion of technical criteria to include or
exclude countries from Annex VII.  However, give n that views differed on the Ban and Annex VIIWT/CTE/M/25
Page 36
membership, the Convention Secretariat had been asked to analyse issues related to Annex VII for the
next COP, including the environmental, economic, social, institutional and legal aspects.
On capacity building to assist African countries in handling waste and training customs officials.
35. The Convention was attempting to implement potential synergies through regional training to
elaborate, for example, the relationship between technology transfer in the Convention and the TRIPS
Agreement.  Apart from access to new and sophisticated technologies, there were many possibilities
to promote existing affordable and socially acceptable local technologies.  The Convention Secretariat
was assisting the Bamako Convention to organize  its first COP, which would focus on lack of
resources and the need to enhance capacity of competent authorities.
36. The Convention was undertaking technical assistance based on identification of hazardous
waste streams, particularly in Africa.  Assistance was being given to develop inventories of hazardous
wastes.  In January 2001, the Basel Convention was organizing the first conference for Africa onenvironmentally sound management of unwanted stocks  of hazardous waste, focusing on pesticides,
which were critical for many African countries and for which the political awareness and funding was
insufficient.  The environmentally sound management and disposal of those pesticides would be
complemented by a strategy to prevent their furthe r accumulation.  Training activities for compliance
and enforcement were in place, in cooperation with CITES, UNEP Chemicals, the RotterdamConvention, the World Customs Organization, the Montre al Protocol and others dealing with illegal
trade.  In December 2000, a meeting in Hong Kong, China had been organized to build institutional
capacity with respect to port enforcement.
On the effects of the Ban Amendment to th e Basel Convention on the Bamako Convention.
37. The Bamako Convention was a regional agreement that prohibited imports of hazardous
wastes from outside Africa.  The Basel Convention's Export Ban Amendment was valid for exports
from OECD countries, EC, and Liechtenstein (i.e . Annex VII Parties) to non-Annex VII Parties.
Thus, the Bamako Convention and the Basel Ban reinforced each other.
D. UNEP C
HEMICALS ON THE ROTTERDAM CONVENTION AND THE DRAFT POP S CONVENTION
38. UNEP Chemicals made its presentation of the Rotterdam Convention on Prior Informed
Consent (PIC) Procedure for Certain Hazardous Chemicals and Pesticides in International Trade and
the draft Convention on Persistent Organic Pollutants (POPs), based on a background paper in
WT/CTE/W/166.  UNEP Chemicals noted that Dr. Töpfer had referred to several key issues,
particularly sustainable development and poverty.  In the case of toxic substances, these two issues
clearly came together.  Chemicals were an integral part of a country's development and their proper
management was essential to achieve sustainable development.  The Rotterdam and draft POPs
Conventions addressed the linkages between health, poverty and sustainable development.
39. Governments had decided that the Rotterdam Convention would be operated on an interim
basis, with an interim Secretariat operated jointl y with FAO.  The essence of the Convention was a
country's right to know what it was importing and the belief that a country needed to be confident that
it could manage these substances soundly prior to permitting import.  Part of the process was to
determine the substances being imported, and to decide if a given substance should be imported,based on whether it could be managed appropriately.  Information exchange was crucial to the
Convention.  A key element of the Convention was that it was trade neutral and non-discriminatory;
if a country took a decision not to import a chemical, it must also not allow its domestic production.
In general, a Party that took an action on a chemical must notify the Secretariat.  Following receipt of
notification on a chemical from more than one PIC region, the Secretariat passed on the informationto a scientific review body for a recommendation to the COP on whether it should be listed in Annex
III.  If the COP decided to list the chemical, a management document was prepared to informWT/CTE/M/25
Page 37
countries on how it should be managed.  The obligation on exporting countries was to ensure that any
chemical contained in Annex III was not exported unless the importing country was notified and an
export notification process followed.
40. The final negotiating session of the POPs Convention, a legally-binding instrument for the
control of 12 persistent organic pollutants, was scheduled in Johannesburg in December 2000.  Theintention was to adopt the Convention at a diplom atic conference in Stockholm in May 2001.  Given
that once those highly toxic POPs were released into the environment, it was not possible to retrieve
them, eliminating their production and release was the key objective.  Although there had been action
at a national level in OECD countries for many years, and there were several regional POPs
agreements, the Convention under negotiation was the first truly global initiative.  The draft text of
the Convention reflected the precautionary principle and identified specific control measures.  There
were some exceptions for essential use of certain chemicals for the protection of human health, forexample DDT, a pesticide also used for malaria control, and PCBs widely in use, particularly in the
energy sector.  Cooperation between the Basel and POPs Conventions was essential.  The Convention
had provisions for financial and technology transfer to enhance capacity.  It was anticipated that
ratification would take around two years and that interim measures were necessary.
Comments and questions
41. The comment was made that the draft POPs Convention raised an issue that the CTE had
been emphasizing for some time, namely the need to ensure that MEAs and the WTO were mutually
supportive.  On the eve of the final negotiating session for a POPs Convention, it was noted that
Members should carefully examine those provisions of relevance to WTO rights and obligations.
While supporting the precautionary approach set out in Rio Principle 15, concern was expressed thatthe proposed references to the precautionary principl e in the POPs Convention could lead to a lack of
transparency and consistency in decision-making, and impact on rules and guidelines affecting
science-based decision-making, including WTO rights and obligations.  Governments negotiating the
POPs Convention had made an effort to develop science-based criteria and procedures to assess
nominated substances, given the regulatory experience with POPs chemicals.  Import and exportmeasures should be practical and suitable for countries at all stages of development, and consistent
with other POPs provisions on exemptions and waste, as well as WTO rights and obligations.  It was
unlikely that a well-designed set of trade measures within a POPs Convention that enjoyed broad
international support would lead to WTO disputes.
42. It was noted that the trade-neutral approach of the POPs Convention was an efficient manner
in which to tackle those environmental issues.
On whether the Rotterdam Convention notifications on domestic bans and import restrictions were
also notified to the WTO.
43. At present there was no obligation.  The WTO and Rotterdam Secretariats could consider this
issue in their cooperation efforts.
On the interim operation of the Rotterdam Convention and when it was expected to enter into force.
44. For all intents and purposes, operating the Rott erdam Convention on an interim basis meant
implementing it as a fully-fledged Convention.  The prior informed consent process in the Convention
had previously been essentially in operation on a voluntary basis.  Entry into force of the Convention
depended on each country's domestic ratification process.  Available information indicated that this
process was well advanced in many countries.WT/CTE/M/25
Page 38
On the process through which new chemicals may be added to the POPs Convention.
45. Although the POPs Convention focused on 12 init ial chemicals, it was likely that the list
might be expanded.  A scientific process had been agreed to screen potential additional chemicals.  It
remained to be determined how the COP would take  up the results of this screening process.  The
point of application of the precautionary principle was a key issue that could affect the basis on which
the COP took decisions.  This was a matter fo r Governments to resolve when finalizing the
Convention.  There were likely to be proposals to add new POPs in the fullness of time.
E. T HE INTERGOVERNMENTAL FORUM ON FORESTS (IFF)
46. The IFF Secretariat presented the recent developments concerning the IFF, based on the
background paper in WT/CTE/W/164.  As the IFF was dealing with forest policy deliberations and
was not a legally-binding agreement, the nature of the IFF was different from MEAs under
consideration at this Information Session.  The IFF deliberations on trade and environment wererelevant to the CTE.  Trade and environment was one of the programme elements under discussion in
the IPF/IFF as set out in WT/CTE/W/164.  A trend that could be discerned during the IFF process was
the shift of focus towards trade in support of sustainable forest management.
47. Certification of sustainable forest management was an increasingly important issue.  Of the
total area of global forests, around 3.5 billion hectares, approximately 75 million hectares or 2 percent was certified, mainly in developed countries.  Two-thirds of global timber harvests was used
domestically for fuel and local consumption, and did not enter international trade.  Tropical
deforestation in the 1980's had been 15.5 million hectares per year and, according to FAO figures, it
had slightly decreased during the 1990's to 14 million hectares.  Against this background, the IPF and
the IFF recognized that, although market-based certification was not sufficient to decrease the rate ofdeforestation, it could be seen as one of the many potential market-based tools to promote sustainable
forest management.  In 1997, the IPF had developed guidelines for certification involving open access
and non-discrimination, credibility, non-deceptiveness, cost effectiveness, participation, sustainable
forest management and transparency.  Further studies were needed, particularly on effectiveness in
promoting sustainable forest management and to clarify the relation between certification (markettool) and criteria and indicators (forest policy and monitoring tool), consistency in terminology and
mutual recognition of certification schemes.  Discussion had also emerged on the role of governments
in this process as regulators and, in some countries, forest owners.
48. The UN Forum on Forests (UNFF), the permanent body open to all countries that would
succeed the IPF, had been established on 18 Oct ober by an ECOSOC resolution.  Its first meeting
would be held on 12 February 2001 in New York to elect a bureau and discuss its location.  The first
substantive meeting would be in June 2001 to decide a multi-year work programme and develop aplan of action to implement the IPF/IFF proposals for action.
Comments and questions
49. It was noted that UNFF had a mandate within five years to recommend to ECOSOC the
parameters in which to develop a legal framework on all types of forests, as well as to take steps to
devise approaches towards appropriate financial and technology transfer support for sustainable forestmanagement.  It would be important to work towards a legally-binding agreement on forests.
On the cross-sectoral forest issues related to the UNFCCC, CBD and the Desertification Convention.
50. The IFF Secretariat was cooperating with several MEAs, including UNFCCC, CBD, and the
Desertification Convention on forest-related issues.  The COP of the CBD had taken into account the
IPF/IFF decisions and proposals for action.  Carbon sequestration and the role of forests wereincreasingly important in the UNFCCC.WT/CTE/M/25
Page 39
On the development dimension, as forests were a major economic resource in developing countries.
51. In the IPF/IFF, the concept of sustainable forest management was discussed from a
comprehensive and holistic approach to incorporate the different dimensions of sustainable forest
management, including economic, social, environmental, cultural and spiritual aspects.
On how sustainable forests management would be judged.52. There was no mechanism at the global level to judge whether particular countries were
moving toward sustainability.  There were eight regional processes, with approximately 150 countries
participating in the development of criteria and indicators for sustainable forest management.
On the valuation of forest goods and services, an important economic tool to achieve the objectives of
sustainable forest management.
53. The IPF and IFF had discussed this issue in the context of increasing revenues, particularly in
developing countries, and had noted that many non-wood forest products were undervalued or had no
commercial value.  There was considerable work to be done on valuation of forest goods and services.
F. T
HE UN F RAMEWORK CONVENTION ON CLIMATE CHANGE (UNFCCC)
54. The UNFCCC Secretariat presented developments in the Convention based on
WT/CTE/W/174.  Measures to implement commitments included market-based and regulatory policy
instruments.  The Kyoto Protocol would examine economic issues and instruments.  Development of
the compliance system and the implications for non-compliance was adding greater clarity to the
commitments under the Protocol.  There were different types of commitments, emissions reduction
targets, specific quantitative commitments, as well as requirements for eligibility to participate in the
market-based mechanisms.  Focus was also on Parties' capacity to generate and transmit the relevant
information to determine compliance.  There were also domestic measures to be taken to reduceemissions and set up national systems to measure progress.  The UNFCCC had financial and
technology transfer provisions common to other ME As.  In accordance with the principle of common
but differentiated responsibility, developing country Parties had general commitments to reduce
emissions.  Developing country Parties were arguing that their commitments were contingent on the
provision of financial and technology transfer.
55. There was a broad consensus that a strong compliance system was needed.  The development
of a compliance system had borrowed in fair measure from the WTO experience and would consist of
two aspects:  facilitative measures, modelled on the Montreal Protocol, and enforcement, drawing on
the WTO.  The key element of the compliance syst em, however, remained enforcement facilitation, as
enforcement consequences were likely to be li mited to the commitments related to emissions
reduction.  While there was no agreement on the consequences of non-compliance, the options ranged
from political consequences, such as publication of non-compliance and suspension of rights andprivileges, to economic consequences, including financial penalties.  Within this range, there were
measures that needed to be taken by Parties to ensu re that shortfalls were met in their commitments to
reduce emissions and that they could lose the flexibility of emissions trading, thereby requiring the
shortfall to be met through domestic measures.  Borrowing from the WTO experience, Parties were
stressing an element of automaticity in de termining the consequences of enforcement.
56. The procedures to develop a compliance system in the UNFCCC provided for input from
relevant organizations.  The UNFCCC Secretariat placed great emphasis on a continuing dialogue
with the WTO Secretariat, and had met with the Directors of the WTO Legal Affairs Division and the
Appellate Body.  The UNFCCC Secretariat welcomed  the opportunity to participate in WTO regional
trade and environment seminars.  The UNFCCC Secretariat looked forward to briefing the CTE onthe results of the COP in The Hague on 13-24 November 2000.WT/CTE/M/25
Page 40
Comments and questions
57. The comment was made that the development of strong dispute settlement mechanisms within
MEAs was the way to make progress, instead of discussing the theoretical WTO-MEA relationship.
Discussing trade outside the larger context of a p ackage of measures, such as financial and technology
transfer, was difficult.  It would be useful for the UNFCCC to contribute a paper describing thedevelopment of its compliance mechanism.
On the contribution of nuclear energy to meeting commitments under the Kyoto Protocol.
58. This issue had not been raised officially in th e UNFCCC process, as the Protocol did not refer
to nuclear energy.  There was a divergence of vi ews as to whether nuclear power plants would be
eligible for credits under the Clean Development Mechanism.   The economic instruments under
negotiation in the Protocol allowed for transfer of emission reduction credits generated by projects in
developing countries that were financed by developed country Parties.
On the merits of market-based versus regulatory instruments in the Kyoto Protocol.
59. Under the Kyoto Protocol, Parties had undertaken commitments to reduce emissions with
provisions for traditional domestic regulatory command and control measures and cost-effective
market-based mechanisms, i.e. joint implementation, emissions trading and the Clean Development
Mechanism in order to transfer emissions reductions from one country to another.  There was anincreasingly supported view that market-based in struments were the most cost-effective means of
reducing pollution.  Market-based mechanisms introduced the element of transferring credits from one
country to another in order to be more cost-effective than efforts purely at the domestic level.  The
way in which credits could be transferred would be developed at the November 2000 COP.
On the concept of shortfalls in excess emissions reduction commitments.60. Shortfalls in excess emissions commitments refe rred to the market-based arrangements that
were flexible instruments for developed country Parties to meet their commitments.  Thus, it was
developed country Parties that would lose an element of flexibility and have to undertake more of
these measures domestically, possibly at high cost.  There would be further information on these
aspects following the November 2000 COP.
On the need for a strong compliance and enforcement system.
61. The comparison with the WTO Dispute Settlement Understanding had been made to illustrate
that the WTO was considered to have a strong compliance system when compared with those in
existing MEAs, the features of which the COP was considering in developing a strong compliance
mechanism.  The compliance system being developed was likely to be as strong as in the WTO and
stronger than in other MEAs.WT/CTE/M/25
Page 41
LIST OF PARTICIPANTS
Dr. Klaus Töpfer WT/CTE/W/179
Executive Director
United Nations Environment Programme (UNEP)P.O. Box 30552, Nairobi, Kenya
Tel:  (254 2) 623-386;  Fax:  (254 2) 624-275
E-mail:  Agnes.Atsiaya@unep.org
Professor Willem Wijnstekers WT/CTE/W/165
Secretary General
Convention on International Trade in Endangered Species of
Wild Fauna and Flora (CITES) Secretariat
Chemin des Anémones 15, CP 456
CH-1219 Châtelaine, Switzerland
Tel:  (41 22) 917-8149; Fax:  (41 22) 797-3417
E-mail:  Willem.Wijnstekers@unep.ch
Mr. Pierre Portas WT/CTE/W/163
Senior Programme Officer,
Basel Convention Secretariat
Chemin des Anémones 15CH-1219 Châtelaine, Switzerland
Tel:  (41 22) 979-9213;  Fax:  (41 22) 797-3454
E-mail:  Pierre.Portas@unep.ch
Mr. John Whitelaw WT/CTE/W/166
Deputy Director
UNEP Chemicals
(PIC and POPs Conventions)
Chemin des Anémones 15
1219 Châtelaine, Switzerland
Tel:  (41 22) 979-8360; Fax:  (41 22) 797-3460
E-mail:  JWhitelaw@unep.ch
Ms. Tina Vähänen WT/CTE/W/164
Forest Policy Advisor
Secretariat of the Intergovernmental Forum on Forests (IFF)
Division for Sustainable DevelopmentDepartment for Economic and Social Affairs, Room DC2-1270
United Nations, New York, N.Y. 10017, USA
Tel:  (1 212) 963-3160;  Fax:  (1 212) 963-3463
E-mail:  Vahanen@un.org
Mr. Mukul Sanwal WT/CTE/W/174
Deputy Coordinator, and
Ms. Xueman Wang, Programme Officer,
UN Framework Convention on Climate Change (UNFCCC) Secretariat
Martin-Luther-King Strasse 8, 53175 Bonn, GermanyTel:  (49 228) 815-1429/815-1000;  Fax:  (49 228) 815-1999
E-mail:  Secretariat@unfccc.int
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