RESTRICTED
WORLD TRADE WT/CTE/M/10
12July1996
ORGANIZATION(96-2761)
Committee onTrade andEnvironment
REPORT OFTHE MEETING HELD ON20-21 JUNE 1996
Note bytheSecretariat
1. TheCommittee onTrade andEnvironment meton20and21June1996 under the
chairmanship ofAmbassador JuanCarlos Sánchez Arnau ofArgentina. Theagenda contained in
WTO/AIR/353 wasadopted.
Item1: Therelationship between theprovisions ofthemultilateral trading system and
trade measures forenvironmental purposes, including those pursuant to
multilateral environmental agreements
2. Therepresentative ofKorea introduced hisdelegation 'snon-paper (dated 12June1996).
Indefining amechanism forreconciling MEAs withthemultilateral trading system, existing WTO
rules should beusedwhere possible andmodifications toWTO rights andobligations minimized.
Korea 'sproposals would enhance exantepredictability, while maintaining ex-post scrutiny asa
safety net.TheCTE should concentrate onthefollowing: (i)reiterate theWTO-inconsistency of
unilateral trade measures toaddress environmental concerns beyond national jurisdictions;
(ii)define aprocedure fornotifying environment-related trade measures anddevelop acooperative
mechanism between theWTO andMEAs; and(iii)explore thepossibility ofsetting differentiated
disciplines fortrade measures. Differentiated disciplines referred toamethodology introduced by
NewZealand toanalyze environment-related trade measures based ontheirspecificity anduse
among MEA Parties oragainst non-parties. Specific trade measures were based onMEA
obligations. Non-specific trade measures were based onMEA authorization. Trade measures
related to,butnotmandated inanMEA were unilateral. When trade measures were taken among
MEA Parties, Korea proposed anexanteapproach based oncodification withconditions,
including elements totheeffect thataspecific trade obligation setoutinanMEA would prevail
overtheWTO Agreement totheextent oftheirinconsistency. WTO Members 'rights toinvoke
theDSU would notbeaffected. WTO accommodation ofdiscriminatory trade measures applied
against MEA non-parties waspremature. TheCTE Report totheMinisterial Conference in
Singapore ("the Report") should clearly recognize unilateral action toaddress environmental
concerns extraterritorially wasnotallowed byexisting WTO rules. Thefocus should beon
general policy directions tobeadopted inSingapore.
3. Therepresentative oftheUnited States saidhisdelegation believed inmultilateral
approaches toglobal andtransboundary environmental challenges andwasacommitted participant
incurrent MEAs andthenegotiation ofnewones. Prudently used, trade measures were an
important tooltoachieve thegoals ofsome MEAs. MEA negotiators were bestpositioned to
determine when thistoolwasneeded. Proper useofsuchinstruments required coordination in
capitals between environment andtrade officials. Coordination hadnotalways beenasclose asit
should beandsteps todobetter should betaken. Coherence between theWTO andMEAs shouldWT/CTE/M/10
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beensured. TheSecretariat 'spractice ofobserving MEA meetings andreporting toMembers
helped facilitate cooperation between trade andenvironment officials. Efforts onthisItemcould
strengthen respect formultilateral approaches toenvironmental issues byunderlining thatthe
WTO welcomed them. However, thetaskwasnottoregulate MEA negotiations. Several
proposals appeared toplace newstrictures onMEA negotiators 'work, which sentasignal thatthe
good sense ofenvironmental colleagues negotiating MEAs wasnottrusted. Proposed criteria for
multilateral actions were stricter thanWTO rules ondomestic measures, which sentanunfortunate
signal concerning respect formultilateralism. Criteria alsoappeared toallow theWTO tosecond
guess MEAs inareas outside WTO competence. Several proposals would require MEA
negotiators tousetheleast-trade restrictive option, which inappropriately wentbeyond obligations
applying atthenational level. Under CITES, most parrots were listed asendangered andsubject
totrade restrictions. Even though most parrots were notendangered, theywere alllisted dueto
thedifficulty ofcustoms officials indistinguishing onetypefrom theother. Alesstrade
restrictive approach might betoeducate customs officials onparrots orstrengthen exporting
countries 'capacity tocontrol thetrade. CITES Parties hadnotseenthisasreasonably available.
Heasked iftheWTO should second guess thisdecision.
4. Hewasnotfamiliar withanyWTO jurisprudence thatreadeffectiveness intoWTO
disciplines; tothecontrary, astheAppellate Report onGasoline Standards argued, Article XX(g)
didnotincorporate aneffects test: "...in thefieldofconservation ofexhaustible natural
resources, asubstantial period oftime, perhaps years, mayhavetoelapse before theeffects
attributable toimplementation ofagiven measure maybeobservable. Thelegalcharacterization
ofsuchameasure isnotreasonably made contingent upon occurrence ofsubsequent events".
Discussion hadfocused toomuch onArticle XX(b) andthevarious concepts imputed toit.
Attention should bepaidtoArticle XX(g) asmany MEAs related totheconservation ofnatural
resources. Examining thejurisprudence, theUSfeltthere wasflexibility, subject toreasonable
disciplines, inArticle XX(g) forcountries totakeaction inMEAs. Such analysis putinquestion
arguments foramending Article XX. Theissue waswhether toensure coherence between trade
andenvironmental activities attheinternational levelortoregulate thenegotiation ofMEAs. The
latter course wasinappropriate andcastdoubts onthecommitment tomultilateralism. TheUSfelt
there wasbroad recognition: (i)trade measures were important tools forachieving thegoals of
MEAs; (ii)trade measures were notalways needed andshould beusedprudently;
(iii)cooperation between environment andtrade officials wasessential, atnational and
international levels; (iv)trade rules should provide sufficient flexibility toallow MEA trade
measures toaddress transboundary andglobal environmental problems; (v)consideration should
begiven totheimpacts oftheuseoftrade measures inMEAs; and(vi)MEA non-parties should
notbediscriminated against iftheytookaction equivalent tothatrequired ofMEA Parties.
5. LiketheECproposal, theSwiss proposal provided asafeharbour fortrade measures in
MEAs without creating newobligations forMEA negotiators, butthelegalapproach wasof
concern. Itappeared toeffectively amend WTO decision-making provisions, which were
fundamental totheoperation oftheWTO Agreement asreflected inthefactunanimous agreement
wasneeded tochange it.TheUSalsohadconcerns ontheSwiss proposal 'sreliance onWTO
Article IX.1which provided formajority voting andwasnotintended fordecisions onsubstantive
obligations. TheUShaddifficulty understanding whatJapan'sproposal accomplished andwhy
MEA negotiators would seebenefit from it.Itsuggested MEA negotiators accept newsubstantive
requirements, butoffered nothing inreturn. Substantive guidelines attempted toregulate the
negotiation ofMEAs, albeit inanon-binding fashion, withcriteria thatwentbeyond what
governments were subject tovis-à-vis national measures. While allMEAs presumably hada
scientific basis, itseemed inapt thatMEA trade measures should havethisbasis. Forexample,
while there could beareasonable basis forbanning trade inlook-alike parrot species inCITES,
thiswould notbeconsidered "scientific". Oftheproposals tabled, Korea 'swentthefurthest inWT/CTE/M/10
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proposing newrestrictions ontheuseoftrade measures inMEAs, while providing theleast
certainty forMEA negotiators. Itfocused onhowtotreatmeasures among MEA Parties where
WTO conflict wasleastlikely. Substantive obligations would stillbeapplied evenforspecific
measures between Parties, andWTO disputes were stillpossible.
6. Therepresentative ofSierra Leone saidMEAs hadapreference forfirst-best solutions to
environmental problems. Most dealtwithnon-participation through various incentives and
disincentives, through funding andtechnology transfer fordeveloping countries. Disincentives
tended totaketheform oftrade restrictions. MEAs were careful totailor theuseoftrade
measures tothetypeofenvironmental threat addressed withsome success; trade restrictions had
proven auseful toolinencouraging participation. WTO Members haddiffering social conditions,
levels ofeconomic development andenvironmental problems, which proposals toreconcile MEAs
andtheWTO must takeintoaccount. Conflicts arising therefrom might leadtounilateral trade
restrictions. Onedelegation wasonrecord asconsidering theuseofunilateral measures inthe
following cases: when required byanMEA towhich itwasaParty; when theenvironmental
impact extended intoitsterritory; when aspecies anywhere wasendangered orthreatened; or
when theeffectiveness ofascientifically-based environmental standard hadbeendiminished. This
approach raised theexpectation ofpolicy makers astowhatcould beachieved through unilateral
action. Sierra Leone supported multilateral efforts toaddress transboundary problems and
acknowledged theusefulness oftrade restrictions when theywere sufficiently mandated byan
MEA withbroad participation, butwaswary ofpotential abuse through unilateral action. Any
result onthisItemmust preclude thepossibility ofsuchaction. Sherecalled theWTO preamble,
which balanced environmental protection withdevelopment. TheSwiss non-paper provided
elements foraresult inSingapore. Itsuseof"with theviewto"suggested aspecific measure
taken under anMEA andapproved bytheWTO could bechallenged onlyifapplied withthe
intent ofachieving trade advantages. Sheasked whether thisimposed tooheavy aburden ofproof
fordeveloping countries. Inlightoftherecent Appellate Body Report, thisproposal could be
revisited totakeintoaccount thatinvoking anArticle XXexception faced atwo-fold hurdle.
7. Therepresentative oftheEuropean Communities feltinterest inthisItem, including allthe
proposals, wasevidence ofitsimportance torealworld interests, which would notabate untila
solution wasfound. AsNigeria hadsaidàpropos another subject, intheinterests ofitseffective
functioning, theWTO could notafford tosendthewrong signal. Thiswasnotanissue withthe
characteristics oftraditional negotiation. Thegoalwasnottogainindividual advantage, butto
strengthen thesystem. ThisItemwasamong thepriorities foraresult inSingapore.
Governments were making multilateral commitments withWTO implications andpolicy choices
reflecting acommitment tomultilateral action forsustainable development. TheECwas
committed toanopen, equitable andnon-discriminatory WTO andtoahighlevelof
environmental protection which could bestbeachieved through multilateral environmental action
supported byaclearly articulated WTO framework. Multilaterally-agreed trade measures taken in
anMEA could playaroleinabalanced package ofmeasures, including positive measures. He
responded tocomments onhisdelegation 'snon-paper (dated 19February 1996). Some
delegations hadsaidtheECapproach provided forexceptions from Article XXexceptions,
thereby making them intoprovisions. However, theintention hadbeentodevise rules toclarify
therelationship between theWTO andpermanent, legitimate exceptions. TheECapproach would
notresult inawide-open environmental window asitproposed accommodation foralimited
number ofclearly-defined measures. Itdidnotcover unilateral action, which should beavoided.
Todiscourage unilateralism, amore stringent framework thanexisted should bedevised. TheEC
agreed increased cooperation atthelevelofinternational institutions wasnotapanacea forlackof
coordination incapitals.WT/CTE/M/10
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8. Therepresentative ofJapan commented onhisdelegation 'sproposed guidelines
(WT/CTE/W/31). Aconflict concerning anMEA would besolved inaccordance withWTO
dispute settlement withrespect totherelationship between theWTO andthetrade measures
concerned. Japan would further examine thecriteria foritsproposed guideline ontheextent to
which theWTO should defer decisions made byarelevant MEA Convention oftheParties. Japan
didnotintend toimpose stricter conditions ontheuseoftrade measures inMEAs thanalready
existed. IfJapan'sproposed criteria were met,atrade measures against anMEA non-party could
avoid WTO conflict. Each panel, however, would havetojudge eachcase. Inresponse to
whether existing MEAs withtrade measures metJapan'sproposed criteria, heclarified Japan was
notchallenging theirlegitimacy. TheBasel Convention, theMontreal Protocol andCITES
qualified forparagraph 11.2ofJapan'sproposal. However, inthecasewhere there wasno
conflict inrelation tomajor existing MEAs, Japan wasnotinaposition tomake apreliminary
judgement onindividual MEAs. Bearing inmind theimportance ofprecautionary measures for
environmental protection asstated inRioPrinciple 15,Japan'srequirement ofnoother effective
alternative didnotrequire scientific certainty, butareasonable scientific basis tosupport theuse
ofatrade measure. Unilateral measures todealwithglobal environmental problems extra-
jurisdictionally andnotpursuant toanMEA should beavoided astheyinfringed onmarket access
andwere notnecessarily effective todealwithglobal environmental problems. Itseemed
discussion hadbeenpostponed oncaseCofKorea 'sproposal, which wasacrucial issue.
9. Therepresentative ofNewZealand saidthecontributions onthisItem, while differing in
keyrespects, were showing theemergence ofcommon ground onwhich tobaseconsensus. All
theproposals appeared toagree specific measures could betaken between MEA Parties without
raising questions ofWTO-consistency. Onspecific measures aimed atnon-parties and
non-specific measures between Parties consensus wasstillevolving, butthese measures could be
acceptable iftheypassed theArticle XXtestsorother agreed criteria. Itwasclear proposals to
datewere generally notsupportive ofnon-specific measures taken against non-parties, nor
supported unilateral measures. There wassome agreement thatcooperation between theWTO and
MEAs wasdesirable, although proposals differed onhowthiswould beoperationalized. There
wasalsocommon ground onthestructure ofaWTO approach totrade measures inMEAs. Toan
extent, alltheapproaches employed Korea 's"differential disciplines", which varied according to
thenature andcontext oftrade measures. While itwascritical tofocus onthedetail and
implications ofproposals, agreement might bereached onissues ofstructure andcontent. He
gavepreliminary comments onKorea 'snon-paper, which resembled NewZealand 'spaper in
differentiating disciplines applying totrade measures according totheirspecificity anduseamong
Parties andnon-parties. Korea 'snon-paper differed inkeyspecifics. NewZealand would reflect
ontheimplications oftheprocedural elements applying tocodification ofspecific andnon-specific
measures between Parties. Forcertain specific measures taken against non-parties, Korea 's
proposal relied onthestatus quo,plusnon-binding guidelines forMEA negotiators. Korea 's
non-paper foresaw atimewhen criteria forsuchmeasures, asproposed byNewZealand, would
bedeveloped. LikeNewZealand, Korea ruled outaccommodation forunilateral measures and
non-specific measures aimed atnon-parties. TheCTE might needtoaddress, asnoted inKorea 's
proposal, thepost-Singapore process. Ashape wasemerging under thisItemtoallow for
understandings insome areas, while "policy directions" might needtobeestablished inothers.
10. Therepresentative ofBrazil saidtheproposals reflected differences among Members.
However, allapproaches encompassed, explicitly ornot,thatthere should benoaccommodation
ofextra-jurisdictional unilateral trade measures. Toacertain extent, there wasnoaccommodation
ofnon-specific measures forthirdparties, which were comparable tounilateral measures. Several
proposals favoured arrangements forcooperation between theWTO andMEAs. Differences
remained formeasures taken between MEA Parties andforspecific measures against thirdparties.
Although merit could beseeninNewZealand andKorea 'sproposals, particularly onthenecessityWT/CTE/M/10
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testforsuchmeasures, andinJapan'sproposed guidelines, hiscomments were preliminary.
Brazil feltArticle XX,combined withArticles IIIandtherelevant TBTandSPSdisciplines,
provided sufficiently broad scope fortheuseoftrade measures inMEAs without conflict with
WTO rules. Non-specific trade measures should beavoided, evenamong Parties. Brazil would
consider guidelines forthenegotiation oftrade measures inMEAs iftheywere interpretative and
non-legally-binding. They might promote abetter understanding between theWTO andMEAs
andpermit mutually supportive trade andenvironment policies asenvisaged inAgenda 21.
11. Therepresentative ofSwitzerland responded toquestions onhisdelegation 'snon-paper
(dated 20may1996). Onthecooperation mechanism, doubts hadbeenraised ontheneedfor
formal Agreements. Some delegations feltcoordination between trade andenvironmental
authorities should bedoneatthenational level. However, acooperation mechanism would
contribute topreventing conflicts between trade measures pursuant toMEAs andWTO rules.
Dialogue between thetrade andenvironmental communities wasstillrudimentary, resulting from
lackofcoordination atthenational level. LikeCanada, Switzerland feltifMEA Bodies submitted
proposals fortrade measures totheCTE, thiswould facilitate national coordination between trade
andenvironment experts. Cooperation agreements would establish asystematic flowof
information between relevant organizations, which would heighten thetrade community 's
awareness ofMEA objectives andviceversa. Theform ofcooperation could follow themodel of
thedraftAgreement between theWTO andtheInternational Office ofEpizootics under
consideration intheSPSCommittee. Some delegations hadquestioned theneedtoauthorize the
WTO Secretariat toprovide factual information toMEAs astheSecretariat already hadthis
authority which should notbeputinquestion. Although Switzerland agreed, asituation had
arisen where anMEA Secretariat hadnotbeenabletoobtain information from theWTO
Secretariat. Thissituation should notberepeated andtheSecretariat should begranted thelimited
competence torespond toMEA requests forfactual information.
12. Thebasic ideaofthecoherence clause wasthatMEA Parties could judge thelegitimacy of
environmental objectives andselect theappropriate means fortheirachievement. TheWTO
should focus oncountering protectionist abuse oftrade measures. Ifthiswasaccepted, there was
aneedtodevelop anapproach which accommodated theuseofspecific trade measures inMEAs
inorder toidentify theapplicable lawintheevent ofadispute. Only aspecific trade measure
foreseen inanMEA textwould qualify; ageneral provision which leftleeway toMEA Parties
would notqualify. Switzerland proposed toestablish alistexplicitly setting forth MEAs subject
tothecoherence clause. Whichever ofthetwooptions proposed todevelop thislist,WTO
Members would accept orobject totheinclusion ofanMEA. Once aMEA wasonthelist,this
onlymeant thescrutiny ofthepanel established tosettle adispute onatrade measure taken
pursuant toanMEA would belimited towhether themeasure wasapplied inamanner which
constituted ameans ofarbitrary discrimination between countries where thesame conditions
prevailed ortoachieving atrade advantage. Unlike awaiver, thisleftthepossibility ofbringing a
conflict totheWTO andbetter preserved WTO Members 'rights. Inresponse toSierra Leone, he
saidtheSwiss proposal didimply areversal oftheburden ofproof.
13. Therepresentative ofNigeria agreed thisItemwasapriority, butitshould notberanked
above other Items which were alsopriorities. Itcould notbeleftunresolved, eventhough no
disputes hadbeenbrought totheWTO concerning theuseoftrade measures inanMEA. Despite
themultiplicity ofproposals, consensus wasemerging ontheexclusion ofunilateral measures, and
theinadvisability oftheuseofnon-specific measures against thirdparties. Korea 'sproposal
synthesized previous proposals andwasevidence ofthecomplexity oftheissue, forwhich there
wasnoquick fixsolution. Differentiated disciplines fortrade measures based ontheirspecificity
among Parties oragainst non-parties should beconsidered. Korea 'stwostepmodel showed thata
balance should beachieved between procedure andsubstance. Itwasconnected toNewZealand 'sWT/CTE/M/10
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proposal, butitaddressed exantepredictability aswellasexpostscrutiny. Heagreed with
Korea 'sdefinition oftheproblem, thattrade measures inMEAs might conflict potentially with
WTO provisions; withitsstarting point, thattrade measures were notthemost effective means of
achieving environmental objectives; withitsproposals ontransparency; andontherejection of
extra-jurisdictional unilateral trade measures. Heasked forclarification onthecodification ofa
specific trade obligation inMEAs andtheaccommodation ofexceptional circumstances under
which acasewaseligible forArticle XX. Heasked whyaspecific trade obligation inanMEA
would prevail overtheWTO iftheywere inconsistent; ifcodification modified WTO rights and
obligations andinvolved thesurrender ofrights; whythenecessity testwould beredundant for
caseA;andhowapanel would define leastWTO-inconsistent assufficient forcodification. It
waspreferable tostatetherules clearly andagree toexceptions, rather thannottousetestswhich
were difficult todefine andoperationalize andwould havetobelefttothejudgment ofpanels. If
codification oraccommodation waschallenged evenbyoneMember andunanimity wasrequired
forcaseA,heasked howdecisions would bemade. Nigeria could notagree totheuseofspecific
ornon-specific trade measures inMEAs against non-parties.
14. Therepresentative ofEgypt presented thenon-paper containing herdelegation 'scomments
(dated 18June1996). Differentiation should bemade between specific andnon-specific trade
measures required byanMEA tobeimposed byParties. There were specific measures thatwere
WTO consistent, which didnotraiseanyproblems, andWTO-inconsistent specific measures,
which were therelevant measures foranalysis. WTO-inconsistent trade measures could bedealt
withthrough awaiver orcould bechallenged byParties ornon-parties. ItwasuptoParties to
chose theforum inwhich toraiseadispute. Ifnon-specific measures were WTO-inconsistent, the
possibility ofsettling disputes intheWTO should beopentoParties andnon-parties. Here a
waiver approach wasnotapplicable asitgaveablank check tounilateral measures. Sheasked
whatwastherelevance ofcases A,B,CandDinKorea 'sproposal, astheonlydifference was
when measures were specified inanMEA or"pursuant to"anMEA. Intheformer category,
onlyWTO-inconsistent measures were relevant. Measures "pursuant to"ornon-specific measures
were WTO-inconsistent andshould beaddressed case-by-case. Egypt supported Korea 's
principles onbuilding abridge between theWTO andMEAs. Itwasunnecessary toexamine a
range oftrade provisions, asonlyspecific WTO-inconsistent trade measures inMEAs were
relevant. IfMEAs contained trade provisions, theyshould respect WTO rules. There wasmerit
incombining NewZealand 'sproposed criteria andKorea 'sexantepredictability through
non-legally-binding guidelines forMEA negotiators. Exantepredictability would apply solely to
trade measures specifically required inanMEA anddeemed tobeWTO-inconsistent. Egypt
supported Korea 'sproposal ontransparency anditsrejection ofunilateralism.
15. Therepresentative ofHong Kong saidparagraph 3ofKorea 'snon-paper castdoubts on
theneedtoaddress thecompatibility between MEAs andtheWTO. Unless adverse effects ofnot
addressing thequestion were demonstrated, orthepresent system wasinadequate tocopewith
trade measures inMEAs, Hong Kong feltmany Members would finditdifficult toaccept
proposals tomodify WTO rights andobligations. Viewed inthislight, Korea 'sproposal was
realistic. Thestarting point should betheexisting WTO framework. Korea 'sproposed
case-by-case qualification ofcodification byconsensus wasafairbalance. Unlike thewaiver
approach, onceaccepted byconsensus, noannual review orextension ofawaiver would needto
besought foranMEA, providing long-term security foritsimplementation. Theacceptance of
codification would discourage theMembers concerned from invoking DSU although theywere
legally entitled todoso.Preservation ofdispute settlement rights would enable Members to
favourably consider codification. Hong Kong supported Korea 'sproposals ontransparency.
16. Hong Kong sawmerit inJapan'sproposal; theuseofguidelines hadanimportant rolein
thediscussion ontherelationship between MEAs andtheWTO. Theargument thatwithout rulesWT/CTE/M/10
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onMEAs thesituation might result inallowing unilateral measures tobetaken inthename of
environmental protection wasnotclear. Unilateral measures ofthetypeenvisaged byJapan were
notallowed intheWTO, withorwithout newrules; thesafeguard wasArticle XXandnothing in
thedispute settlement process hadsuggested thissafeguard wasinadequate. Thecaseforapplying
guidelines forMEA negotiators wasstronger thanforguidelines inWTO dispute settlement.
Common elements intheproposals andcandidates forrecommendations were there should beno
accommodation ofunilateral measures andcooperation between WTO andMEAs should be
pursued. Onoption 1oftheSwiss coherence clause, hesaidonlyafewtrade measures inMEAs
were potentially WTO-inconsistent. Thus, Hong Kong hadreservations ontheneedforanew
WTO mechanism toexamine allMEAs containing trade measures. Theproblem wasnotthe
MEA, perse,buthowameasure wasapplied. Bearing inmind MEAs contained essentially
environmental, nottrade measures, theproposed examination wentbeyond WTO-competence.
Option 2suggested prima facieablanket exemption fortrade measures pursuant tonotified
MEAs, which might openafloodgate forexceptions toWTO obligations andwasvulnerable to
protectionist abuse.
17. Therepresentative ofCanada saidtheincreasing number ofproposals indicated theinterest
infinding asolution. Nottosucceed would bealostopportunity tointegrate trade and
environmental policies andwould postpone asolution toapossible future conflict. Thiswasa
practical issue given thedynamic nature ofMEA negotiations. Principles toaddress MEAs inthe
WTO would reinforce theCTE'scredibility. Areview oftheproposals andanexamination ofthe
NAFTA model suggested areas ofconsensus were emerging. NewZealand 'sframework, which
hadbeenelaborated byKorea, helped toassess theproposals. There wassupport forwaiving the
Article XX(b) necessity testtodealwithconflicts arising from specific trade measures among
MEA Parties. Agreement hadnotyetbeenreached tolimitthesettlement oftrade disputes to
MEA mechanisms, butthere wasasense Parties should attempt tosettle them intheMEA. In
dealing withaspecific trade measure among MEA Parties, proposals suggested grounds forWTO
dispute settlement might belimited tosituations where ameasure 'sapplication hadbeenarbitrary
ordiscriminatory. There wasnoapparent support forspecial accommodation ofanMEA with
non-specific measures, either among Parties oragainst non-parties, forwhich thenecessity test
should beapplied inWTO dispute settlement. Proposals supported acase-by-case approach to
trade measures inMEAs, thatMembers retained therighttobring Party/non-party disputes tothe
WTO.
18. Several proposals recognized theadvantages oftheWTO clearly expressing itsviews on
theuseoftrade measures inMEAs toMEA negotiators toavoid WTO conflict. Canada was
attracted toaguidelines approach toguide MEA negotiators contemplating theuseoftrade
measures. Thisapproach could beintegrated withalltheproposals foraccommodation. Canada
hadnotyetdetermined whatform ofaccommodation would bestbeassociated withaguidelines
approach andwasrefining thecriteria ithadoutlined. Canada proposed thefollowing MEA
qualifying principles: (i)theMEA wasopentoallcountries ;(ii)theMEA reflected broad-based
support; (iii)provisions specifically authorizing trade measures should bedrafted asprecisely as
possible; (iv)trade withnon-parties waspermitted onthesame basis asParties ifnon-parties
provided equivalent environmental protection; and(v)theMEA explicitly considered theWTO
criteria fortheuseoftrade measures inMEAs. Canada feltthecriteria MEA negotiators should
consider inexamining thepotential fortrade provisions were: (i)thattrade measures were chosen
onlywhen effective andwhen alternative measures were ineffective inachieving theenvironmental
objective, orwhen other measures were ineffective without trade measures aspartoftheMEA;
(ii)thattrade measures benomore trade-restrictive thanrequired toachieve theenvironmental
objective; and(iii)thattrade measures didnotconstitute arbitrary orunjustifiable discrimination.WT/CTE/M/10
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19. While hiscomments focused onSwitzerland andtheEC'sproposals, some points applied
toNewZealand andKorea 'sproposals. While notpartoftheSwiss proposal, guidelines could be
added ascriteria forlisting anMEA. Once anMEA hadbeenlisted, certainty wasprovided that
itsprovisions would withstand thenecessity testifchallenged. However, there would stillbethe
possibility ofWTO dispute settlement onrestricted grounds forarbitrary ordiscriminatory
application. There wasaprecedent intheNAFTA forasimilar approach. Amendments toMEA
trade provisions havetobespecifically notified andtreated separately. Theproposal raised the
following issues. Itrequired aformal WTO decision, andMembers would beseenaspassing
judgment onindividual MEAs. Themechanism formaking thatdecision needed tobeestablished.
TheMEAs leastlikely tobechallenged intheWTO would bethemost likely tobelisted. He
asked when anMEA would beeligible tobelisted (e.g.upon ratification, orwhen alarge
majority ofWTO Members hadratified) and,ifanMEA wasnotlisted, whether thisimplied
WTO disapproval oftheMEA, evenifnotchallenged.
20. AWTO Understanding based onArticle XXhadadvantages anddisadvantages. While the
ECproposal wasforanamendment, anUnderstanding could achieve thesame objectives more
readily. Similarly, while theECproposal didnotcontain extensive guidelines, these could be
strengthened asCanada hadsuggested. Anadvantage ofanUnderstanding overthelisting
approach wastheWTO would onlyberequired toreview theMEA inadispute, which lessened
thepotential forconflict between trade andenvironment fora. Also, apanel andnottheWTO
would apply theguidelines toanMEA, which lessened thepotential forpoliticization. However,
itraised thespectre oftrade bureaucrats deciding thefuture ofMEAs andprovided lesscertainty
thanalisting asanMEA would notknow whether itqualified forthewaiving ofnecessity untilit
waschallenged andthere could beadisincentive tolegitimately challenge anMEA duetopublic
profile considerations. Ifpartofanaccommodation approach, Japan'sproposed non-binding
guidelines would havetheadvantage offlexibility. Itdidnothavetobea"yesorno"decision on
whether anMEA mettheguidelines, asapanel could takeintoaccount howclosely theguidelines
were followed todetermine theamount ofaccommodation. Non-binding guidelines provided less
certainty astothedegree ofaccommodation anMEA meeting theguidelines received. Although
Canada hadreferred tothevalue ofaWTO waiver, thiswasatemporary measure andhad
complex procedural requirements. MEAs hadanon-going existence anditwasundesirable to
repeatedly judge MEAs. TheMEAs most likely toreceive awaiver would beleastlikely to
require one. Forthese reasons, Canada hadmoved away from support ofthewaiver approach.
With respect tounilateral trade measures, i.e.measures notmandated inanMEA, theproposals
didnotprovide support foraccommodation. Some called forexplicit condemnation ofunilateral
actions. Canada supported associating accommodation formultilateral approaches withaclear
signal onthedangers ofunilateral approaches, along thelinesofRioPrinciple 12.Canada
supported improved cooperation between theWTO andMEA Secretariats. TheWTO Secretariat
needed direction from Members tocooperate formally withMEA Secretariats asinformation
exchange between them hadbeeninadequate andcumbersome. Although several proposals
supported improvement ofinformation flows, tooformal anapproach might becounterproductive.
21. Therepresentative ofChile saidCanada 'sproposal tooktheCTE along acertain lineof
consensus. AsBrazil hadnoted, theemerging consensus didnotinclude room toaccommodate
extra-territorial unilateral action. However, thisshould notimply thescope ofapplication oftrade
measures forenvironmental protection could notbemore farreaching when taken pursuant toa
globally-accepted MEA. Henoted theUScomment thatMEA negotiators 'hands should notbe
tied. However, restrictions already existed intheform ofdeclaratory instruments endowed with
broad acceptability intheinternational community, suchastheStockholm Principles, Rio
Declaration andAgenda 21.Proposals byAustralia andArgentina outlined thecomplementarity
ofpolicies related totrade liberalization, environmental protection andsustainable development.
Heinquired astohowtochoose theappropriate guidelines bearing inmind options suchasWT/CTE/M/10
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WTO Article IXwaiver provisions, andArticle Xamendment provisions. TheECproposal
deserved attention. Panellists 'decision making capacity might belimited bysuchan
Understanding. Chile preferred anagreement intheform ofanUnderstanding inthecontext of
NewZealand 'sproposal, taking intoaccount Egypt 'snotes ofcaution. There wasageneral
consensus oninstituting cooperation between theWTO andMEAs, forwhich there should bea
clear-cut mandate. MEA negotiators were aware oftheneedtoreconcile different interests, for
example, aclause similar tothatproposed bySwitzerland hadbeenproposed during the
negotiations oftheMontreal Protocol andClimate Change Convention. Chile'spaper
(WT/CTE/W/2) drew attention tothereference intheAgreement fortheImplementation of
PartIXoftheConvention ontheLawoftheSea,whereby trade competence wasgiven tothe
WTO. Even though thisConvention wasnotanMEA, perse,itencompassed environment-
related aspects. IfParties totheLawoftheSeaConvention were alsoWTO Members, then
WTO dispute settlement procedures andsubstantive rules would apply; ifoneofthem wasnota
WTO Member, thedispute settlement mechanism oftheLawoftheSeaConvention would apply,
butthesubstantive lawoftheWTO would apply broadly toproduction activities inthe
international seabed area, irrespective ofthefactthatenvironmental factors alsocould beinvolved
inthedispute. There wasafinedistinction between reconciling substantive rules andestablishing
procedures.
22. Therepresentative ofMexico saidherdelegation wasexamining alltheproposals and
suggested anyfurther proposals should besubmitted assoonaspossible tobeabletohavea
complete picture. Thiswasimportant tocarry outanassessment oftheissues andgiveanopinion
based onthisanalysis. Thequantity anddiversity ofproposals wassuchthatinorder tofocus
discussion ontheircontents, shesuggested theSecretariat could draw upanindicative summary
tablecomparing theelements andgeneral concepts ofproposals, permitting similarities of
structure andcontent tobeidentified. Korea 'sproposal defined categories ofnon-specific
measures which should beanalyzed. Unilateralism should bedefined todetermine theborderline
between aunilateral measure based onnational legislation andoneapplied based onanMEAs
objective without being explicitly defined. Until allproposals were onthetable, itwasdifficult to
reach aconsensus ontheReport. Sheagreed there were points onwhich consensus could be
reached, suchasrejection ofunilateralism.
23. Therepresentative ofColombia said,inconsidering theproposals, theDSU must be
safeguarded. Asonly18of180MEAs contained trade provisions andthere hadnotbeenany
WTO conflict, Colombia wasnotconvinced WTO reform should beintroduced tomake trade and
environment compatible. TheWTO offered anadequate framework totakemeasures toprotect the
environmental. Panels hadstated there wasample autonomy forcountries tosetupenvironmental
policies intheirsovereign territory. Discussion should continue, without taking adecision one
wayoranother. Hesupported Mexico 'sproposal todraw upatableoncurrent proposals.
24. Therepresentative ofIndia saidcurrent WTO provisions were adequate todealwithtrade
measures forgenuine environmental goals. Their conformity withArticle XXwastheonlyway
toensure theWTO remained multilateral andnon-discriminatory. Without prejudice tothisview,
hegavepreliminary comments onproposals. Hehesitated toconsider theuseofpunitive
measures toachieve environmental objectives, suchastrade measures inexisting MEAs, or
guidelines orcodification, unless discussion focused onexisting MEAs soasnottoprovide a
blank cheque forfuture MEAs. IftheCTE considered sanctioning punitive measures inexisting
MEAs, thenitshould consider alsopositive measures tomeetMEA objectives, including transfer
oftechnology andproducts. Inthiscontext, Korea 'sproposal offered concrete ideas. India
shared Korea 'scalltoreject unilateralism intheuseofenvironment-related trade measures, as
wellasitsideas fortransparency. India would study theproposal further.WT/CTE/M/10
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25. TheCTE mandate should notgointotheenvironmental issues these measures, taken asan
integral, negotiated package, addressed. Focusing ononepartofthepackage, i.e.trade
measures, would contribute todistorting theessence oftheMEA. Repeatedly discussing trade
measures might encourage dependence onthem toachieve environmental objectives. While in
principle India agreed trade measures were chosen onlywhen alternative measures were
ineffective, thefirstalternative should bepositive measures, suchasafinancial mechanism for
transfer oftechnology andsaleoffinalproducts asIndia proposed initsrevised submission on
Item8(dated 18June1996). Various factors influenced theformulation ofMEAs, suchas
compromises toreach consensus, changing scientific information, availability offinancial
resources, costs ofsubstitute products, andchanges intechnology andregulatory approaches. To
balance environmental protection andgreater market access, therelevant provisions ofallWTO
Agreements should beexamined. India could notaccept apriori assumptions thattrade measures
incorporated inMEAs would successfully passthetestsofnecessity, effectiveness, leastamount of
trade distortion andproportionality. Only existing MEAs fulfilling thefollowing criteria should
beconsidered: (i)itshould havebeennegotiated under theUNaegis (i.e.UNEP); (ii)its
procedures should stipulate participation inthenegotiations wasopentoallcountries; (iii)there
must havebeeneffective participation inthenegotiations bycountries from different geographical
regions andstages ofeconomic andsocial development; and(iv)procedures should provide for
accession ofcountries onterms equitable tothose oforiginal Parties.
26. Therepresentative ofSingapore, onbehalf ofASEAN, agreed withparagraphs 3and4of
Korea 'snon-paper. Unilateral trade measures toaddress environmental issues
extra-jurisdictionally should berejected. Hehadconcerns ontheconcept ofdifferentiated
disciplines, which could require subjective interpretation. Codification would notallow anannual
review oftrade measures inMEAs. Specific trade measures inMEAs should notprevail over
WTO obligations. ASEAN preferred amulti-year waiver approach. Members 'rights toinvoke
theDSU should bereserved. ASEAN would submit apaper onthisItemfortheJulymeeting.
27. Therepresentative ofAustralia saidtheUSstatement recalled thatthefocus should not
onlybeonArticle XX(b), butalsoonArticle XX(g), which wasrelevant toMEAs related tothe
conservation ofnatural resources. Also, Articles XX(d) and(h)could berelevant. Inregard to
GATS, Articles XIV(b) and(c)needed examination. Several proposals responded topublic
concerns thattrade measures inMEAs might beWTO-inconsistent. However, oneofthe
consequences ofspeaking about aneedfortheWTO to"accommodate" theuseoftrade measures
inMEAs wasthatitcould beseenasconfirming these fears. There wasanunstated assumption
thatexisting MEAs were notadequately covered byGATT Articles, oranunstated expectation
thatnewMEAs orchanges toexisting MEAs would notbecovered. TheCTE must contribute to
agreater public understanding andthere should beasound analytical basis toanyconclusions or
recommendations. Hehaddoubts astowhether toomuch timehadbeenspent inexploring
solutions andnotenough toidentifying problems. Theissue posed byMEAs wasnotanarrowly
legaloneofgiving legalclarity totherelationship between WTO rules andtrade measures in
MEAs. Justasimportant wasdebate onthebroader policy issue ofensuring policy coherence and
complementarity between theWTO andMEAs. Thiswasnotanattempt bythetrade community,
ortheWTO, toregulate thenegotiation ofMEAs. Theissues were complex andinterdisciplinary
andthere wasarolefortheCTE toexplore policy questions raised bytheuseoftrade measures
inMEAs andtopromote adialogue between thetrade andenvironment communities. TheReport
would beaconstructive contribution tothepolicy issues raised.
28. Therepresentative oftheUnited States, referring toIndia'scomment, saidtrade measures
should notbeequated withnegative measures. InCITES, cooperative measures were notnegative
orcoercive. Trade measures were atooltowhich MEA negotiators needed tohaveaccess.
Although common points hadarisen inthediscussion, itwaspremature todraw upatableontheWT/CTE/M/10
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possibilities foraccommodation. Heasked whytheWTO would wanttosuggest MEA negotiators
besubject todisciplines beyond those inArticle XXfordomestic measures. Hesaidtheconcept
ofeffectiveness wasnottobefound inArticle XX. Thethreshold issue waswhether toexplain
current WTO rules toMEA negotiators, ortodetermine theextent towhich WTO rules were
appropriate toensure environmental objectives could beattained inMEAs.
29. Therepresentative ofKorea responded tocomments onhisdelegation 'snon-paper.
Several delegations suggested theproposal wasthemost stringent thusfar.Although trade
measures based onmultilateral consensus deserved favourable consideration, Korea feltasafety
netshould beprovided toavoid theirmisuse based oncompetitiveness orprotectionism. Forcase
C,Korea advocated thestatus quoandpossibly non-binding guidelines forMEA negotiators.
Cases AandBalready hadbeenagreed onamong Parties andshould havespecial treatment,
i.e.qualified codification. Several delegations hadsaidtheprocedural criteria forthis
codification were toostrict. Korea wasflexible onthispoint. IncaseA,thenecessity testshould
beexempted asthenecessity oftrade measures already hadbeenreviewed byParties andthere
waslittleroom fortheirarbitrary orextra-jurisdictional use. OnNigeria 'squestion astowhy
MEA obligations would prevail overWTO obligations inthiscodification, thiswastoensure legal
compatibility. However, Members 'righttoinvoke theDSU should bepreserved. Onwhycase
Cmeasures should notbeaccommodated intheWTO, hesaidparagraph 15and16explained
these measures were non-consensual measures which could haveextra-jurisdictional implications
andthere wasnoclear definition ofanMEA orcriteria tobeapplied. Korea hadnotprecluded
thepossibility ofaccommodation, butthiswaspremature. Theguidelines proposed byJapan and
Canada could berelevant tothenon-binding guidelines forMEA negotiators Korea hadproposed.
Korea wasnottrying topostpone discussion oncaseC,butitwasdoubtful agreement could be
reached onthiscomplex issue before Singapore. Thus, hesupported NewZealand 'ssuggestion to
elaborate areas ofemerging consensus, suchastheneedtoavoid unilateralism, andfurther
transparency andcooperation between theWTO andMEAs. Thiswould enable theCTE togive
clear policy guidance ondifferentiated disciplines inSingapore andadetailed mandate toelaborate
them post-Singapore. OnNigeria 'squestions onthedefinition ofdifferentiated disciplines, Korea
wasopentodiscussing thismatter, butitwasnotoptimistic thatagreement onclear definitions
could bereached bySingapore.
Item5: Therelationship between thedispute settlement mechanisms inthemultilateral
trading system andthose found inmultilateral environmental agreements
30. Therepresentative oftheUnited States saidthere hadbeenanincrease inWTO dispute
settlement activity. There would likely beanincrease indisputes involving technical matters
which might bebeyond thecompetence andexpertise ofpanellists. Herecalled theimportance
theUSplaced onpanellists making useofrecourse toexpert input envisaged intheDSU. Tothe
extent MEAs contained dispute settlement mechanisms, theUSfeltunfavourable comparisons
could bedrawn between transparency inherent inthose mechanisms andthatinherent intheDSU.
31. Therepresentative ofIndia saidUSconcerns were adequately covered bytheDSU and
there wasnoneedtoaddspecial requirements forexpertise tohandle environment-related
disputes. Article 8.4oftheDSU provided forthenomination ofexperts. Articles 13.1and13.2
oftheDSU provided forexpertise outside thetrade fieldtobedrawn onbyapanel. Trade
measures were tools which should beusedforpositive purposes suchastransferring mandated
environmentally-sound technology andproducts forachieving environmental objectives inMEAs.WT/CTE/M/10
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Item2: Therelationship between environmental policies relevant totrade and
environmental measures withsignificant trade effect andtheprovisions ofthe
multilateral trading system
32. Therepresentative ofIndia saidhisdelegation would submit aproposal onthisItem.
33. Therepresentative oftheUnited States saidhisdelegation would submit aproposal on
environmental reviews.
Item3(a): Therelationship between theprovisions ofthemultilateral trading system and
charges andtaxes forenvironmental purposes
34. Therepresentative ofAustralia saidthefactproposals hadnotbeensubmitted onthisissue
should notbeinterpreted aslackofinterest. Issues raised, suchasborder taxadjustment, were of
importance toAustralia.
35. Therepresentative ofIndia saidsight should notbelostoftheissues under thisItem.
Item3(b): Therelationship between theprovisions ofthemultilateral trading system and
requirements forenvironmental purposes relating toproducts, including standards
andtechnical regulations, packaging, labelling andrecycling
36. Therepresentative ofCanada outlined hisdelegation 'sviews onwhatwasattainable in
Singapore. Hesaideco-labelling programmes were valid environmental policy instruments, which
must bedeveloped andimplemented inaWTO consistent manner. Herecalled theproposed four
principles inCanada 'spaper (WT/CTE/W/21). There wassupport forCanada 'sposition that
eco-labelling programmes were covered bytheTBTAgreement anditstransparency-related
disciplines. However, extending thescope toinclude non-product-related PPMs raised legitimate
concerns, particularly theprecedent thatexplicit recognition could create. Sharing some ofthese
concerns, Canada proposed thescope oftheTBTAgreement onlybeextended forvoluntary
programmes. Recognizing eco-labelling programmes were based onlife-cycle approaches (LCA),
resulting standards were amixture ofcriteria based upon performance, product-related and
non-product-related PPMs. LCA didnotprejudge thetypeofstandard thatwould emerge. For
example, eco-labels forhome appliances generally included performance standards pertaining to
energy orwater use. Product-related PPMs were pesticide residues orfoodadditives. Eco-labels
onproducts based oneither ofthese standards didnotdiffer from other labels orstandards in
terms oftheTBTAgreement. Certain Members felteco-labels based onnon-product-related
PPMs were different. Paper products were anexample, given sustainable forest management.
Thedevelopment ofproduct criteria through LCA could notpredict exantewhich typeof
standard would predominate. Asthese programmes became more sophisticated intheiruseof
LCA, criteria would bebased onamixture ofthethree types ofstandards outlined above. As
such, itwasnotpractical toseparate coverage ofeco-labelled products based onthenature ofthe
standard. Allcriteria involved ingranting theeco-label should besubject tosimilar disciplines.
37. Hedistinguished between TBTcoverage (i.e.eco-labelling programmes were established
bystandardizing bodies which conferred labels onproducts thatmettheirstandards) andscope
(i.e.whether non-product-related PPMs were within thescope oftheTBTAgreement).
Ambiguous wording ofthedefinition ofstandards intheTBTAgreement leftopenwhether
non-product-related PPMs were within itsscope. Rather thanhaving panels decide, itwas
preferable todiscuss andeventually determine under which circumstances theirusecould occur.WT/CTE/M/10
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Thiswould provide greater predictability andsecurity tobothexporters andpolicy makers.
Canada hadconsulted withitsbusiness community oneco-labelling. While business leaders did
notlikenon-product-related PPMs, theyacknowledged them tobeamarket reality. Business
already dealtwithsystems involving PPMs, suchasquality management standards (ISO9000),
andenvironmental management standards (ISO14000). Business leaders were more concerned
about transparency andconsultation thanwhether astandard wasbased onnon-product-related
PPMs. Ifthelegitimate concerns ofbusiness were notconsidered, recourse todispute settlement
wasneeded. This"transparency withteeth" wastheessence oftheTBTAgreement. Theconcern
wasthatnon-product-related PPMs reflected onlyparticular domestic technologies and
environmental absorptive capacities. Adherence byeco-labelling programmes totheTBTCode of
Good Practice provided industry withtheassurance theywould know whatwasunder
development, could participate inthedevelopment ofstandards, andthatthese would notbebased
solely ondomestic considerations. Forthisreason, Canada 'sbusiness leaders feltCanada 's
proposal tosubject non-product-related PPMs tomultilaterally-developed criteria wasvalid ifsuch
criteria referred toguiding principles, methodologies andprocedures, rather thanspecific values
orindicators. Multilateral development ofprinciples, methodologies andprocedures wasdistinct
from agreement onindividual standards andwassound onenvironmental andtrade grounds.
From anenvironmental perspective, agreement ontheformer recognized policy requirements
differed between countries, whereas values orindicators could differ, reflecting sound
environmental andscientific assessment. From atrade perspective, useofcommon methodologies
withexplicit recognition ofdifferent policy requirements wasthebasis forequivalency
approaches, reflected inthepaper bytheCanadian Environmental Choice programme. Canada
hadtriedtooperate Environmental Choice inasleasttrade restrictive amanner aspossible and
hadnotified itunder theTBTAgreement (G/TBT/Notif.96.190).
38. Informal discussions withseveral delegations indicated there wasrecognition theWTO
needed toaddress theissue ofnon-product-related PPMs involuntary eco-labelling programmes.
However, forseveral other delegations discussion ofthisissue required reflection given its
complex nature andpossible repercussions. TheReport should reflect bothviews andreaffirm the
TBTAgreement covered alleco-labelling programmes, without prejudice totheissue ofscope
withrespect tonon-product-related PPMs. Thepost-Singapore agenda should include work onthe
latter issue jointly withtheTBTCommittee (CTBT). Thismeant voluntary eco-labelling
programmes would benotified aspertheCode ofGood Practice andsubject toTBTdisciplines
related tostandards andvoluntary labelling programmes. Aseco-labelling wasajointCTE/CTBT
issue, hewould request thisstatement beincluded intheminutes oftheCTBT 'snextmeeting.
Canada would work tosecure agreement onpoints (a),(b),and(c)ofitsproposal with
consideration ofpoint (d)post-Singapore andwould circulate adraftDecision prior totheJuly
CTE meeting.
39. Therepresentative ofBrazil supported point (d),aswellaspoints (a),(b),and(c)of
Canada 'sproposal. TheTBTAgreement should beconsidered ascovering non-product-related
PPM-based voluntary eco-labelling programmes, provided theyadhered tomultilaterally-agreed
guidelines based onscientific criteria andwere transparent, consensual andnon-discriminatory. A
fundamental guideline wastherecognition oftheexporting country 'srighttoapply its
environmental anddevelopmental policies, particularly indeveloping countries, asstated inthe
RioDeclaration. Forthisreason, PPMs intheexporting country might notbeequivalent or
comparable toPPMs required fordomestic producers. Brazil supported Canada 'sunderstanding
thatPPM criteria referred toguiding principles, methodologies andprocedures, rather than
specific values orindicators. AsBrazil supported theCanadian proposal 'sfirstthree points, it
would undermine theirefficacy nottoagree alsowithpoint (d).Taking intoaccount Argentina 's
comments ontheambiguity oflanguage inthedefinition ofstandards inAnnex IoftheTBT
Agreement andnotwithstanding Brazil 'sbelief thatnon-product-related PPMs were nototherwiseWT/CTE/M/10
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covered, thewideuseofeco-labelling should beregulated where possible through multilateral
negotiations. Thisissue should bediscussed inthepost-Singapore agenda.
40. Therepresentative ofJapan supported Canada 'sgoaltoenhance transparency of
eco-labelling programmes. Adecision oneco-labelling could havelegaleffects onstandards
based onnon-product-related PPMs other thaneco-labelling. While Japan wasaware ofthe
importance ofLCA asanelement ofenvironmental policy, theCTE should becautious in
determining whether theywere covered bytheTBTAgreement. Japan wasnotsurewhether the
USproposal aimed atrequesting public input indeveloping eco-labelling criteria bydisclosing a
drafttothepublic forcomment ateachstage. Ifso,itwasnotappropriate toimpose
requirements which were stricter thanexisting TBTnotification requirements. These requirements
would betime-consuming andwould delay criteria development. Japan could support theUS
proposal ifitexpected eco-labelling executing bodies toinvolve academic experts andcitizens '
groups ateachstage ofcriteria development.
41. Therepresentative ofSingapore, onbehalf ofASEAN, recalled hisdelegation supported
thefirstthree points ofCanada 'sproposal. However, ASEAN could notsupport the
interpretation ofthescope oftheTBTAgreement tocover theuseofstandards based on
non-product-related PPMs. Thisissue should notbeaddressed now, norevenpost-Singapore.
42. Therepresentative ofIndia saidtheissue ofeco-labelling wasrelated tomarket access.
India supported theconsensus ontransparency, withtheunderstanding itwaseffective andof
demonstrable WTO benefit, especially forsmall andmedium exporters indeveloping countries.
Ensuring theeffectiveness oftransparency would allow exporters toparticipate inthedevelopment
ofeco-labels. India could notjoinaconsensus oninterpreting thescope oftheTBTAgreement.
India could notlookattheTBTAgreement 'sprovisions onlabels orother issues linked with
technical barriers totrade ingoods inisolation. Reference totheTBTAgreement must takeinto
account theTBTAgreement 'sobjective toensure measures suchaslabels didnotcause
unnecessary barriers totrade. Article 12oftheTBTAgreement wasrelevant. Itstipulated more
favourable treatment forthe"special development andtrade needs" ofdeveloping countries and
addressed theneedtobuild capacity toensure effective market access, provide financial assistance
andtransfer know howandtechnology. India didnotsubscribe toanyinterpretation oftheTBT
Agreement which recognized LCA-based labelling programmes, incorporating non-product-related
PPMs. Attempts toincorporate thelatter ineco-labels restricted market access ofdeveloping
countries, ledtothefreezing oftechnology, restriction ofproduct choice, andinflexibility of
standards. Itundercut thecomparative advantage ofdeveloping countries. Since theCTE's
mandate wasnegotiated toconsider thetrade andenvironment interface inaholistic manner in
oneWTO Body, India preferred discussion oneco-labels andother Items tobeconfined tothe
CTE. There wasnoneedtohavejointsessions ofWTO Bodies.
43. Therepresentative ofSwitzerland saidhisdelegation supported points (a)(b)and(c)of
Canada 'sproposal. Labelling ofproduct characteristics orincorporated PPMs andtheir
conformity assessment procedures were covered bytheTBTAgreement, whether elaborated by
governmental ornon-governmental bodies. Switzerland expressed concern onanextensive
interpretation oftheTBTAgreement regarding labelling measures covering unincorporated PPMs.
Referring tothedefinition ofstandards andregulations intheTBTAgreement, hesaiditwas
difficult tointerpret theTBTAgreement 'sscope asextending tothese labels, without having the
same interpretation forterminology, symbols, packaging ormarking requirements. AstheCTE
hadnotexamined theconsequences ofsuchaninterpretation, itwasdifficult atthisstage to
extend thescope sobroadly. Information wastheimportant issue related tovoluntary labelling.
Given themultiplication oflabelling programmes, theCTE could examine usefully howto
increase transparency forvoluntary labelling schemes, including unincorporated PPMs.WT/CTE/M/10
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44. Therepresentative ofNigeria saideco-labels hadpotentially significant market access
implications, butwere valid policy instruments todealwithenvironmental problems within
national jurisdictions. MEAs were thevalid policy instruments todealwithtransboundary or
global environmental effects. Eco-labelling programmes addressing domestic environmental
externalities should nothavetransborder effects. Iftheydid,theywere being usedforpurposes
beyond theenvironment. TheWTO TBTAgreement wasconcluded in1990, prior to
GATT/WTO discussion ontrade andenvironment andprior tothedesign ofeco-labelling
programmes inmany countries. While Nigeria supported points (a),(b),and(c)ofCanada 's
proposal, itcould notagree thattheTBTAgreement 'sscope beinterpreted tocover theuseof
standards based onnon-product-related PPMs. Nigeria wasconcerned about theuseofLCA,
which wascentral toeco-labelling programmes. Existing WTO rules dealtwithPPMs atthelevel
ofconsumption andnotwithaspects ofLCA regarding production. Countries hadtherightto
impose restrictions under theTBTAgreement onlywhen PPMs affected product characteristics at
thelevelofconsumption. Initiatives toseekaccommodation tostretch WTO rules toencompass
measures merely toreflect current practise should notbefurthered iftheywere explicitly
WTO-incompatible. Non-product-related PPMs hadnoplace inWTO rules atthistime.
However, asCanada hadconsulted widely toseekaconsensus onthismatter, Nigeria agreed a
recommendation could bemade todiscuss non-product-related PPMs post-Singapore.
45. Therepresentative ofMexico supported thesubstance ofthefirstthree points ofCanada 's
proposal. However, Mexico didnotseeanyreason toreaffirm theTBTAgreement 'scoverage of
eco-labelling. Eco-labelling wascovered bytheTBTAgreement andeco-labelling programmes
were being notified toit.There wasneither more, norlessonthetablethanwhathadbeen
negotiated. Mexico didnotwanttocastdoubt onwhathadalready beennegotiated. Mexico 's
position onPPMs waswellknown. However, thisissue wasrecognized asacontroversial one
which required further consideration. TheReport should sumupissues raised andreflect
diverging positions. Theonlypossible recommendation Mexico envisaged atthisstage wasfor
theCTE tocontinue work onthisIteminacomprehensive manner (i.e.foreco-labelling asa
whole). Mexico would consider Canada 'scomments further.
46. Therepresentative ofSierra Leone saideco-labelling wasauseful toolforenvironmental
management. Astechnical regulations andstandards theycould fallwithin thescope oftheTBT
Agreement. Standardizing bodies should takeintoaccount theTBTCode ofGood Practice in
developing andimplementing eco-labelling programmes. Herconcern withCanada 'sproposal
wasitextended thescope oftheTBTAgreement toinclude non-product-related PPMs which was
nottheintention ofthenegotiators. Theissue wasnothow, butwhether toinclude
non-product-related PPMs. Work should focus ondeveloping standards formutual recognition of
eco-labelling programmes andequivalencies ofeco-criteria. Thiswould assist inincorporating
sensitivities todiffering environmental anddevelopmental conditions across countries and
promote transparency. Thefeasibility ofadministering measures concerning non-product-related
PPMs wasafactor. TheMontreal Protocol contained twoprovisions torestrict trade with
non-parties inproducts containing controlled substances andproducts made with, butnot
containing controlled substances. Measures toenforce theformer were ineffect. Asyet,no
measure hadbeenenacted torestrict trade ofthelatter. Ithadbeendeemed "notfeasible to
impose abanorrestriction onimports ofproducts made withbutnotcontaining controlled
substances..." (Report oftheTechnology andEconomic Assessment Panel, July1993). Methods
todetect products made withthese chemicals were totestfortrade residues, orinspect the
exporting country 'smanufacturing process intheexporting country. Theformer wastechnically
feasible buthadahighimplementation costandthelatter wasnotfeasible asitinvolved issues of
sovereignty. Arequirement toallow inspections could notberequired asacondition oftrade or
toobtain aneco-label. Ifaprogramme wasallowed which hadproblematic implementation, the
possibility ofarbitrary application andabuse increased. Given theTBTAgreement 'sclear scopeWT/CTE/M/10
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anddifficulties inadministering programmes covering non-product-related PPMs, discussion
should shiftfrom expanding thescope toharmonizing programmes thatexisted under theTBT
Agreement.
47. Therepresentative ofArgentina reiterated hisdelegation 'ssupport forCanada 'sproposal.
There wasacontroversial ambiguity related tothedefinition ofstandards concerning
unincorporated PPMs. Asnoted byBrazil, thepractise existed ofusing eco-labelling based on
LCA, which included non-product-related PPMs. Ambiguity wasbeing lost,andnotnecessarily
intherightdirection. Assuch, Canada 'sproposal wasopportune asthere wastimetoprevent
thisaspect ofeco-labelling from spilling intoother areas, suchastechnical regulations. The
solution totheproblem wentbeyond eco-labelling. Canada hadsuggested these standards strictly
adhere tomultilaterally-agreed guidelines, which would actasabarrier tounilateralism.
48. Therepresentative ofEgypt presented hisdelegation 'scomments initsnon-paper (dated
18June1996). Hedidnotshare Canada 'sinterpretation ofthescope oftheTBTAgreement.
There were significant differences onPPM-related issues. Heshared Sierra Leone, India, Mexico
andNigeria 'sviewthattheissue wasnothow, butwhether toinclude non-product-related PPMs.
49. Therepresentative ofMorocco saidhisdelegation could notaccept point (d)ofCanada 's
proposal. AsIndia said,special anddifferentiated treatment intheTBTAgreement clarified the
position ofdeveloping countries. TBTprovisions should notbeinterpreted toinclude LCA or
unincorporated PPMs. Herecalled UNIDO 'sResolution inDecember 1995 oneco-labelling.
Account should betaken ofactivities inother international fora.
50. Therepresentative ofKorea saidifitwasagreed alleco-labelling programmes were
covered bytheTBTAgreement, thiswould acknowledge eco-labelling based on
non-product-related standards were within theTBTAgreement 'sscope. Theissue ofTBT
coverage included thatofitsscope. Assuch, points (a),(b),and(c)ofCanada 'sproposal could
notbeseparated from point (d).Multilaterally-agreed guidelines were similar totheexante
approach inItem1.Difficulties hadbeendemonstrated indefining anMEA reflecting agenuine
multilateral consensus. Korea haddifficulty understanding whatmultilaterally-agreed guidelines
meant. Korea would study Canada 'sproposal further.
51. Therepresentative oftheEuropean Communities saidthere were positive elements in
Canada 'sproposal which should notbeunderestimated. However, afterlistening toreactions by
delegations, hehadstrong doubts onthepossibility ofseparating points (a),(b),and(c)from
point (d).Heagreed withMexico andKorea thatthese fourpoints were inextricably linked.
Separating them would leadonlytofurther confusion.
52. Therepresentative oftheUnited States saidthere waswisdom inMexico 'scomment on
thispoint. Responding toIndia'scomment onjointCTE-CTBT sessions, hesaidthiswasa
decision which hadalready beentaken andTBTexperts were ofvalue when discussing issues of
technical complexity. Although views differed onTBTcoverage, there appeared tobeagreement
ontheimportance oftransparency ineco-labelling, which wastheissue ofhisdelegation 's
proposal onthisItem(WT/CTE/W/27). Hereiterated thatthisproposal didnotprejudice any
delegation 'sviews ontheTBTAgreement 'scoverage. There wasagreement certain types of
eco-labelling were covered bytheTBTAgreement, butdisagreement astohowfarthiswent.
Thisshould notstand inthewayofexamining ifthetransparency obligations oftheTBT
Agreement were adequate from thestandpoint ofthose aspects ofeco-labelling which were
covered, without having toagree onexactly whatwascovered. TheUSassessment wasthe
current disciplines didnotgofarenough andthere were twoareas ofweakness. Firm disciplines
ontransparency andparticipation were important intheprocess ofdefining product criteria foraWT/CTE/M/10
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label. Totheextent LCA entered intothecreation ofalabelthere should beanopportunity for
input. Hedidnotequate LCA automatically withthePPM issue. Inresponse toJapan'squestion
oninput intocriteria development, herecalled theUSproposal suggested public input could occur
separately orsimultaneously. Inlooking atthelacuna intransparency disciplines, itwasessential
tohavetheparticipation ofallstakeholders bothforeign anddomestic toprovide input,
particularly todefine product coverage ofaneco-labelling programme. TheUSfeltthere were
useful considerations fordesigners ofeco-labelling totakeintoaccount toachieve the
environmental purposes ofeco-labelling which alsoavoided trade friction, including transparency,
non-discrimination, truthfulness, andscientific basis. TheUSmight come backtothisissue.
53. Therepresentative ofHong Kong supported ASEAN 'sstatement. However, after
examining Canada 'sdraftDecision, hisdelegation might decide toconfirm ormodify itsposition.
54. Therepresentative ofVenezuela saidpoints (a),(b)and(c)were positive elements of
Canada 'sproposal. Although Venezuela hadserious reservations onnon-product-related PPMs, it
would consider favourably discussion ofthisissue inthefuture. Reference should bemade tothe
on-going work intheISOexpert group oneco-labelling.
55. Itwasagreed theChairman would consult informally withtheChair oftheCTBT
concerning ajointCTE-CTBT meeting oneco-labelling.
Item4: Theprovisions ofthemultilateral trading system withrespect tothetransparency
oftrade measures usedforenvironmental purposes andenvironmental measures
andrequirements which havesignificant trade effects
56. Therepresentative ofHong Kong saidhisdelegation wasencouraged byinterest inits
proposed database. After further consultation, Hong Kong would follow-up withsuggestions
agreeable toall.Hereiterated themain points ofHong Kong'snon-paper (dated 28May1996).
Henoted theconcerns related topossible duplication ofeffort, especially intwoareas:
(i)Environmental enquiry points might duplicate TBTandSPSenquiry points. Heagreed a
closer examination waswarranted toavoid duplication. However, enquiry point services should
beavailable fortherange oftrade-related environmental measures andnewenquiry points could
beadjusted toreconcile available mechanisms. Theproposal envisaged thatenquiry points would
provide theWTO Secretariat withinformation, including questions andanswers andwould entail
counter notification functions. (ii)Enquiry points might duplicate other fora'sinformation
systems ontrade-related environmental measures, suchasUNCTAD 'sGREENTRADE. Based on
information provided byUNCTAD, there wasnoduplication between theUNCTAD project and
theproposed WTO database. GREENTRADE wasbased onUNCTAD research, noton
notifications bynational governments andonlycovered some WTO Members. Since theproposed
WTO database didnotinvolve additional research, duplication wasnotanissue. AstheWTO
Secretariat hadconfirmed, theproposal hadnobudget implications. Thepurpose oftheTPRM
proposal wastouseenvironmental information already available intheTPRM. Thiswasadata
gathering exercise which should nothavepolicy implications. Heasked theSecretariat toprepare
aninformation noteonthecoverage andoperation oftheCentral Registry ofNotifications.
57. Therepresentative ofMorocco supported Hong Kong'sproposals. Notification obligations
ontrade-related environmental measures should beclarified. Morocco proposed aperiodic
up-date ofHong Kong'sproposed database. Hesupported thecreation ofenvironmental enquiry
points andthattheTPRM should refertoenvironment-related trade measures. Toenhance
transparency, theproposed enquiry points should cooperate withmultilateral agreements dealingWT/CTE/M/10
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withsimilar issues, suchasthedraftAgreement onPrior Informed Consent (PIC), aswellaswith
international organisations, suchasUNCTAD.
58. Therepresentative oftheUnited States saidHong Kong'sproposal toclarify notification
obligations wasuseful withrespect tousing theCTE toidentify whether there were any
ambiguities which might leadtotheirinconsistent application. Careshould betaken to
differentiate problems ofambiguity from those ofcompliance, which hadbeenaproblem inthe
past. Should areas ofambiguity beidentified, thematter should bereferred totheWorking Party
onNotification Procedures andtherelevant Committees andCouncils asthenotification
requirements inquestion covered more thanenvironmental measures; itwould notbewiseto
clarify them withrespect toonlyoneelement oftheircoverage. Asmost trade-related
environmental measures already should becovered bytheTPRM, heasked ifHong Kong's
proposal would reach measures notalready covered. Iftheideawastoenrich theTPRM, theUS
hadsome doubt ontheefficacy ofseeking information onanyparticular measure justbecause it
wasusedtoachieve anenvironmental goal. Forexample, concerns about taxmeasures were not
augmented orassuaged bythefactthatthepurpose ofthetaxmeasure wasenvironmental. He
wasnotconvinced oftheneedtohaveenvironmental enquiry points. TheSecretariat 'scollation
ofenvironmental measures might notbenecessary, butwasnottroubling. Theconcern wasover
singling outenvironmental measures foradditional notification, orspecial transparency.
59. Itwasdecided theSecretariat would prepare aninformation noteonthecoverage and
operation oftheWTO Central Registry ofNotifications.
Item6: Theeffect ofenvironmental measures onmarket access, especially inrelation to
developing countries, inparticular totheleastdeveloped among them, and
environmental benefits ofremoving trade restrictions anddistortions
60. Therepresentative ofNorway saidincreased market access wasimportant toallMembers,
particularly developing countries. Evaluation oftheenvironmental consequences oftrade policies,
including trade liberalization, andofother measures affecting trade wasessential asabasis forthe
market access debate ontrade andtheenvironment. Central issues were howtoavoid negative
environmental consequences following trade liberalization andhowtopromote environmental cost
internalization. Hepresented Norway 'snon-paper (dated 20June1996), which gaveguidance on
howtoidentify products which were candidates forliberalization from anenvironmental
perspective. Incertain conditions, theremoval oftrade restrictions might playarolefrom an
environmental policy perspective bycontributing toenvironmental costinternalization. From an
economic point ofview, liberalization contributed toeconomic growth andmore efficient resource
allocation. Assuch, trade liberalization might entail bothenvironmental andeconomic gains.
Onewaytoproceed wastoidentify sectors withapotential double dividend andtoprioritize the
removal ofbarriers inthose areas. Energy wasakeyfactor forglobal economic development and
global environmental protection. Acentral concern fortheenergy market washowtoachieve
global reduction ofpolluting emissions torestrict them tothelimits setbynature. Itwasrational
tohaveincentives forusing themost environmentally-benign energy sources anddisincentives for
themost unfriendly. However, thiswasnotthecaseand,inmany countries, theuseofcoalwas
nottaxed andtaxadvantages existed forcoalusedinindustry andpower generation. Coal
production wassubsidized, whereas theuseofoilandgaswasheavily taxed. Studies indicated
theelimination ofenergy subsidies would leadtoincreased economic growth andacleaner
environment. TheAgreement onSubsidies andCountervailing Measures prohibited subsidies
contingent ontheuseofdomestic overimported goods andcontained incentives thatfavoured
environmental concerns. Itwasparadoxical itallowed fornon-actionable subsidies topromote
adaptation tonewenvironmental requirements, butnotthose thatrestricted subsidies forWT/CTE/M/10
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environmentally-damaging products, where more benign products could besubstituted. Norway
suggested recommendations toMinisters include, interalia,thefollowing. (i)Innegotiations on
further trade liberalization, theWTO should ensure environmental consequences were considered,
focusing onproducts andservices withpositive environmental effects. (ii)TheWTO should be
supportive ofefforts tointernalize environmental costs. Inthisrespect, theCTE should examine
links between trade rules andenvironmental principles, inparticular thepolluter-pays principle
andtheprecautionary principle. (iii)TheCTE should examine howtointegrate concerns related
totheuseofLCA inareas suchaseco-labelling, packaging andre-use. (iv)TheWTO should
offer scope forincentives fortheuseofenvironmentally-friendly products; and(v)notencompass
incentives forproduction anduseofenvironmentally-damaging products.
61. Therepresentative ofIndia presented herdelegation 'snon-paper (dated 20June1996).
Shesaidenvironmental measures covered awidespectrum ofmeasures andhadsignificant market
access effects, particularly fordeveloping countries. Thepositive effects were noteasytoexploit.
Thenegative effects could bemitigated oreliminated ifsuchmeasures were based on
multilaterally-agreed criteria andwere WTO compatible. Thequestion washowtrade could
continue tobeliberalized andmarket access improved while taking intoaccount environmental
imperatives. Trade measures hadbeenapplied based onenvironmental considerations to:
(i)pursue defined environmental objectives; (ii)persuade other governments tochange their
environmental behaviour; (iii)protect domestic industry; or(iv)enforce international
environmental commitments. India felttrade could notbethearbiter ofallconcerns ofthe
international community. Sustainable development wasalarger issue, encompassing, interalia,
efficient resource allocation anddomestic environmental goals. Nevertheless, safeguarding and
enhancing market access would helpefficient resource allocation. ThisItemwascross-cutting,
having adirect linkwithItems 1,2and3.AsIndia'snon-paper outlined, discussion should focus
on:(i)safeguarding existing trading opportunities andmarket access from adverse trade effects of
environmental policies; (ii)obtaining additional market access asitpromoted environmental
protection; and(iii)removing trade restrictions anddistortions sotrade liberalization could
promote environmental protection. India would berefining itsproposal andwelcomed comments.
62. Therepresentative ofNigeria saidNorway 'snon-paper addressed issues ofinterest tohis
delegation. Norway hadintroduced newconcepts which required clarification. Inprinciple, he
supported Norway 'sobjective fortheWTO toinclude positive incentives forenvironmentally-
friendly products. Norway focused ontheenergy sector andtheinternalization ofenvironmental
costs formore polluting forms ofenergy andlesstaxation forcleaner ones. Notquestioning the
needtointernalize environmental costs, heasked howandforwhich sectors theWTO could
promote theintegration ofenvironmental costs intheproduction process. Heasked ifWTO
efforts inthisrespect would beundertaken inconcert withtheenvironmental community. Asthe
coefficients ofcostinternalization hadyettobedetermined andtaking intoaccount work inthis
area, heasked forclarification onhowthiscould bedone. Heasked howtheconcepts of
"nature 'slimits" and"tolerance" could bedefined andoperationalized, andiftheyvaried among
countries. Norway 'sproposal wasbuiltonthepremise ofLCA, which provided thefoundation
forenvironmental policies tosolve global andregional environmental problems. Although LCA
wasanimportant concept, Nigeria believed non-product-related PPMs were outside theWTO 's
scope, apoint which hehadmade under Item3(b). Ifincentives were given toenvironmentally-
friendly products intheSubsidies Agreement, particularly intheenergy sector, heasked what
form thiswould take, forwhich products, andiftheywould include technical assistance and
transfer ofESTs todeveloping countries onfavourable terms andtaking intoaccount IPRs.
Concerning Norway 'sfocus ontheenergy sector asanexample ofanareawhere theWTO could
grant incentives toenvironmentally-friendly products, hesaiditwould bemore productive to
adopt amore comprehensive approach, suchasonewhich reviewed traded products inthe
Harmonized System based onenvironmental considerations. Norway 'srecommendations wereWT/CTE/M/10
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builtonconcepts which needed development tobeoperationalized. TheCTE wasnotatthestage
ofmaking recommendations. More analytical work wasneeded before anyrecommendations
could bemade, including anexamination oftheassumptions onwhich Norway 'sproposal were
based.
63. Therepresentative ofJapan presented hisdelegation 'sforthcoming non-paper (dated
28June1996). Importance wasattached toempirical andtheoretical analysis indiscussing this
Item. Inthiscontext, theWTO should cooperate withother international organizations, suchas
UNCTAD andtheOECD. Japan'sviews ontrade liberalization andtheenvironment needed tobe
fullyreflected intheReport. Herecalled the1995 OECD Ministerial Report stated trade
liberalization would havepositive environmental impacts provided effective environmental policies
were implemented andtheenvironmental effects oftrade liberalization would vary, depending on
thecountry, sector andcircumstance. Empirical andtheoretical analysis should focus onwhether
trade liberalization wasaccompanied byappropriate environmental policies andanalyze the
conditions necessary fortheirintroduction, including environmental costinternalization. TheCTE
should define itsfuture agenda inbroad terms andnotfocus onlyonagriculture. Agriculture and
theenvironment influenced eachother closely andagriculture hadbothpositive andnegative
environmental effects. Assuch, trade policies topromote sustainable agriculture should be
discussed inacomprehensive manner. Japan recognized thelinkbetween poverty and
environmental problems indeveloping countries, which necessitated theadoption ofappropriate
environmental policies toensure agricultural trade liberalization ledtoenvironmental
improvement. Japan felttherelation between domestic agricultural subsidies andtheenvironment
wasnotassimple ashadbeenclaimed, i.e.thatsubsidies were trade-distorting andlikely tocause
solely negative environmental impacts. Japan noted theimportance ofenvironmentally-friendly
agricultural policies promoted inmany countries. Other issues remained tobediscussed, suchas
tariff-escalation, export restrictions andexport taxes. TheOECD Joint Session hadconcluded
tariff escalation didnothaveamajor environmental impact. Tomake theMinisterial Conference
fruitful, theCTE should advance empirical andtheoretical analysis onthisItem.
64. Therepresentative oftheUnited States supported thewayAustralia 'snon-paper dealtwith
complementary environmental policies. Heagreed withthepremise trade liberalization could
contribute toenvironmental protection, butthiswasnotautomatic. Complementary environmental
policies were essential toensure trade achieved itspotential insupport ofenvironmental quality;
trade contributed byfostering economic efficiency. Environmental policies often were designed to
foster economic efficiency bycorrecting market failures andensuring costinternalization. He
agreed withAustralia 'sassessment ofthepotential benefits oftrade liberalization infostering
environmental objectives. Although therelationship between tariff escalation andtheenvironment
wasnotsimple, there wasaneedtostudy itindepth. TheUSwould analyze Norway 's
non-paper tostudy all"win-win" areas. Hewasconfused byparagraph 8oninput subsidies,
which were violations oftheSubsidies Agreement, theTRIMs Agreement andGATT Article III.
Creating greater opportunity forincentives fortheuseofenvironmentally-friendly products was
important, although there could betoomuch evenofagood thing. TheUSwould examine
Norway andJapan'sproposals further.
65. Therepresentative ofSierra Leone referred tothepriority of"win-win" reforms in
furthering environmental andtrade objectives. Therelationship between trade liberalization and
environmental protection wasindirect. Market distortions andinappropriate domestic policy
measures, nottrade, were thesource ofmost environmental problems. Thispoint should bemade
todemonstrate thelinkwasnotautomatic; liberalizing trade would helpfacilitate, butnot
guarantee environmental protection. However, trade liberalization offered benefits which could be
channelled intoefforts forenvironmental protection. Efforts toliberalize trade should be
accompanied byenvironmental policies bynational governments orthrough internationalWT/CTE/M/10
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environmental fora, keeping inmind environmental protection might differ between countries.
LLDCs should implement policies toaddress economic growth andenvironmental protection for
theirspecific situation. Sheagreed theCTE should examine theconcerns oflow-income,
commodity-dependent countries andagricultural reform. Since developing countries were
vulnerable todeclines inexport earnings, aheavy reliance onprimary commodity exports could
make sustainable resource management difficult. Eliminating hightariffs andtariff escalation
could contribute tosolving thisproblem byfacilitating themeans todiversify economies.
Technical assistance would enable industry totakeadvantage ofmarkets andensure sustainable
economic growth. Argentina 'spaper provided aframework foraddressing theissues. Thepaper
haddrawn some criticism asitfocused onagricultural reform. Astheissues were complex, it
wasunwise toexamine them using generalities. Agricultural issues were central tosustainable
development, asfoodsecurity wasessential toachieving sustainability. Since sustainable
agriculture wasofconcern todeveloping countries, theCTE should examine thisissue. The
approach ofidentifying theproblem, thesolution, andthendetermining further action could be
usedformany sectors ofinterest todeveloping countries. Further agricultural trade reform was
anexample ofthe"win-win" possibilities highlighted byNorway andAustralia. Current
agricultural support policies encouraged inappropriate resource usewhich ledtoenvironmental
degradation. TheCTE should examine howtheWTO could reduce trade-distorting policies and
market access barriers tofurther trade liberalization andsupport long-term resource sustainability
byproviding amore predictable trading framework. Thiswould provide opportunities forthe
rural poortoincrease theirincome, thusalleviating environmental problems linked topoverty.
Sectors yielding adouble dividend should beidentified. Thecoreissues under thisItemrelated to
safeguarding andenhancing market access.
66. Therepresentative ofEgypt saidAustralia 'sproposed elements fortheReport attempted to
strike abalance, butfellshort ofsuggesting concrete complementary environmental policies tobe
addressed within WTO competence. Heasked Australia toelaborate ontheforum andelements
forcomplementary policies andhowtheWTO would address potential environmental concerns
arising from trade liberalization. Thecontribution amore liberal trading system hadonlybeen
partially realized, asmany countries remained marginal participants inworld trade. TheCTE
should come upwitheffective measures within theWTO framework toaddress thisproblem.
Further trade liberalization intheagricultural sector wasnotapanacea. Measures toaddress
concerns oflow-income, commodity-dependent countries should becomplemented bymeasures to
build capacity andimprove market access. Egypt washesitant tosupport further trade
liberalization forenvironmental goals while leaving toother international forathecomplementary
actions needed tomitigate theiradverse effects indeveloping countries. Acaseinpoint wasthe
Decision onMeasures Concerning thePossible Negative Effects oftheReform Programme on
Least-Developed andNetFood-Importing Developing Countries (NFIDCs) which needed tobe
implemented. Toensure direct andsubstantial environmental benefits, trade liberalization should
becomplemented byadditional resources andaccess toESTs. Tariff peaks insectors suchas
textiles andclothing anddisguised protectionism should beaddressed. Egypt supported
Australia 'semphasis onthepolicy mixbetween Agenda 21,UNCED, World Summit onSocial
Development andinternational fora. However, mere acknowledgement ofthecomplementarity of
astrong multilateral trading system andother international foraraised doubts astothebalance and
degree ofimplementation ofobligations.
67. Therepresentative oftheEuropean Communities saidherdelegation would submit apaper
onthisItemfortheJulymeeting. Shefocused onthelinkages between agriculture, trade
liberalization andenvironment. Anopenmultilateral trading system allowed foramore efficient
useofnatural resources inbotheconomic andenvironmental terms, contributed tolessening
demands ontheenvironment andwasoneofmany factors which promoted sustainable
development. However, trade liberalization wasnotsufficient toguarantee sustainable agricultureWT/CTE/M/10
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anditwasnotclear itautomatically resulted inlower prices, which depended onmarket evolution
andfooddemand. Theeconomic concept ofefficiency optimisation ofincome through better
resource allocation should notbeconfused withthewider approach toefficiency, including
environmental efficiency, which necessitated theinclusion ofenvironmental costs intheeconomic
calculation. Ifenvironmental costs were notaccounted for,market mechanisms alone would not
leadtoecologically-optimal resource allocation. Including environmental costs wasnotafunction
ofprice level, butofpolitical will. Theintensity ofagricultural production depended largely on
thedemand forfood; regardless ofthetrading mechanism inplace, thechallenge wastomanage
soundly environmental risksinduced bygrowing fooddemand, inparticular bysound landuse.
Technological evolution played aroleinresource management. Extensive agriculture could be
environmentally-damaging, which could beavoided through agricultural practices appropriate to
theenvironmental sensitivity oflocalconditions, existing farming systems andcommodities.
68. Public management ofagricultural landensured environmental best-practice was
maintained, e.g.toavoid polarization intheterritorial distribution ofagricultural production.
Concentration ofproduction andincreased intensification infertile lands could leadto
environmental damage, suchaswater pollution, soilcontamination andbiodiversity loss.
Abandonment ofproduction onmarginal lands withlimited productive capacity hadsocial
implications andmight leadtolossofenvironmental assets, suchassemi-natural habitats and
site-specific biodiversity which required up-keep. The1992 CAP reform hadshifted emphasis
from price support tocompensatory payments; environmental concerns hadbeencentral in
formulating thenewCAP. Newpolicies included agro-environmental measures topromote
environmentally-friendly agricultural practices. CTE work onthelinkages between agricultural
policies andtheenvironment should consider work inother fora, suchasFAO, CSD, UNCTAD
andtheOECD toestablish theimportance ofpolicy measures toachieve sustainable agriculture,
andanalyze theirconsequences forthemultilateral trade approach.
69. Therepresentative ofSwitzerland recognized thesynergies between trade liberalization,
greater market access andsustainable development. Aspositive effects were notautomatic,
complementary environmental policies should beputinplace. Hecommented onNorway 's
incentives granted topolluting energy consumption. These incentives, intheform ofsubsidies,
might becovered bycertain WTO Agreements. Work tostrengthen suchdisciplines could
promote sustainable development. Switzerland fullysubscribed totheEC'scomments.
Agricultural reform should beconsidered bearing inmind environmental aspects. The
Agricultural Agreement stipulated non-trade concerns were anintegral partofagricultural policies;
ofparticular concern wasenvironmental protection. TheSwiss agricultural reform process to
implement theWTO Agreements encouraged agriculture which respected sustainable development.
TheAgriculture Agreement provided forsuchtypes ofsupport intheGreen Boxifdecoupled
from production. Inthisconnection, theprovision ofsupport toagriculture could helppromote
sustainable development. Inthemedium term, Switzerland aimed tohaveitsagriculture governed
bytheprinciples ofintegrated production andbiological cultures forsustainable development.
70. Therepresentative ofPerusaidIndia'sholistic approach addressed important issues of
market access fordeveloping countries anditsproposals forfuture CTE work were balanced.
71. Therepresentative ofCuba supported India'sapproach totheissues under thisItem.
72. Therepresentative oftheKorea supported thecomments made byJapan andtheEC. He
recalled theWTO preamble recognized thegoalofsustainable development. Trade liberalization
contributed tosustainable development ifeffective environmental policies were inplace. The
effectiveness ofsuchpolicies should bejudged byeachcountry according toitsspecific
conditions. Where markets failed toadequately reflect thesocial andenvironmental values ofWT/CTE/M/10
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agricultural production, theabsence ofpolicy interventions intheagricultural sector would bring
about negative consequences for,interalia,socio-economic stability, foodsecurity andsustainable
development. These cases hadreceived littleattention, andhadbeenoverlooked inthe
generalized conclusions drawn bysome proposals. Thisblind spotshould beaddressed. A
spectrum oftransmission channels between agricultural policy andtheenvironment existed, each
having different environmental effects. Itcould notbeconcluded thatremoving trade distortive
agricultural measures hadenvironmental benefits inallcases, ordistortive measures hadnegative
environmental effects inallcases. Incertain cases, acombination offactors indicated government
intervention intheagriculture sector might nothavenegative environmental consequences. In
some cases, socalled trade restrictive measures were measures tocorrect market failure.
Supporting theincome ofrural households indeveloping countries might benefit theenvironment.
Theprice mechanism might notreflect thesocietal value ofagricultural output. Forexample, the
social, cultural, andhistorical importance ofriceproduction wasofmore value toKorea than
indicated bytheworld price. Agricultural environmental benefits should notbeoverlooked. He
recalled theCSD haddecided atitsthirdsession in1995 thatnon-trade concerns suchas
economic, social, foodsecurity andenvironmental impact oftrade policies should bemonitored to
promote sustainable development, taking intoaccount theirimpact ondeveloping countries.
73. Although perfectly competitive markets offered foodsecurity, uncertainty infoodmarkets
might necessitate aminimum levelofdomestic production. Thecurrent surplus intheworld grain
market wasnotguaranteed inthelongrun. Countries lacking sufficient foreign reserves might
facethreats ifoverly dependent onforeign foodsupply. Hedrew thefollowing conclusions:
(i)theperception there wasnoinherent conflict between trade liberalization andenvironmental
protection wasvalid. However, itwasinappropriate todeclare alltrade restrictive agricultural
measures hadnegative environmental consequences; (ii)while itcould berecognized some
distortions hadnegative environmental effects, other distortions were environmentally-neutral, or
evenpositive depending ontheconditions. Itwasinappropriate todraw generalized conclusions
orrecommendations; (iii)theAgriculture Agreement wastheforum toconsider agricultural
liberalization, given many relevant factors, suchasmarket failures andfoodsecurity, were
cross-cutting andcould notbeconsidered intheCTE. TheAgricultural Agreement hadabuilt-in
structure todealwithsuchissues; (iv)theneedforconsideration ofNFIDCs andheterogenic
socio-economic conditions should beemphasized; and(v)itwasinappropriate tooveremphasize
onlyafewsectors. Korea 'sabove statement should beregarded asaformal proposal.
74. Therepresentative ofNewZealand saidAustralia andArgentina 'sproposals were abasis
fortheReport. There might beenvironmental benefits from trade liberalization evenwithout
complementary environmental policies. Ifnot,environmental policies were thebestwaytosecure
environmental benefits. Hewould comment further ontheproposals ofNorway, India andJapan.
75. Therepresentative ofAustralia saidhisdelegation would submit aformal paper onthe
basis ofcomments onitsnon-paper (dated 21May1996). Issues offoodsecurity should notbe
equated withconcerns ofNFIDCs; thecommunique oftheCartagena Cairns Group Ministerial
noted trade liberalization wasthesolution totheconcerns ofNFIDCs.
76. Therepresentative ofArgentina referred toJapan'scomment thatinternal support
measures were nottrade distorting. Ifso,thenthere would notbeaSubsidies Agreement. He
agreed withtheECthattrade liberalization wasnotaguarantee forsustainable agricultural
policies. Asoutlined inArgentina 'spaper (WT/CTE/W/24), implementing sustainable
agricultural policies must reflect private costs ofproduction, which were affected byintervention
policies, subsidies, andtariff escalation. Marginal private costs above thedistorted market price
ledtotheoveruse ofnatural resources. Itwasimpossible toimplement sustainable agricultural
policies onthebasis ofdistorted prices.WT/CTE/M/10
Page24
77. Therepresentative ofNorway responded tocomments onhisdelegation 'snon-paper. The
definition ofterms requested byNigeria hadtaken place inother foraandshould beaccepted in
theWTO. Itwaspreferable toexplore howincentives could befurther introduced intheWTO to
contribute tosustainable development. TheWTO must beresponsive toenvironmental concerns
byallowing theuseofenvironmental instruments toachieve environmental goals. TheUruguay
Round hadadopted environmental incentives intoWTO rules, suchasintheSubsidies,
Agriculture andTBTandSPSAgreements. Anillustration wastheSubsidies Agreement 's
provision topermit non-actionable subsidies topromote adaptation tonewenvironmental
requirements. Although costinternalization wasmainly theresponsibility ofnational
governments, Norway wasinterested inhowother delegations felttheWTO could contribute in
thisrespect. There should beacomprehensive approach todiscussion ofincentives; energy was
onlyanillustration oftheuseofsubsidies without regard totheenvironment.
Item7: Theissue oftheexport ofdomestically prohibited goods
78. Therepresentative oftheEuropean Communities supported Nigeria 'sproposal and
recalled hisdelegation 'ssupport fortheGATT 1991 draftDecision. Developments inthe
15international instruments inWT/CTE/W/29 revealed lacuna incoverage waslimited and
products notcovered were difficult toidentify. TheECsupported thenegotiation towards aPIC
Convention forpotentially dangerous chemicals andhoped itwould cover asmany chemicals as
possible andadopt anotification procedure fortheirexport. TheECsupported theWTO carrying
outtheroleofasafety net,which should beprecisely defined without riskofoverlap. The
appropriate manner totakeintoaccount other fora'swork should beanelement oftheReport.
79. Therepresentative ofSierra Leone saidNigeria 'sdraftDecision (WT/CTE/W/32)
provided abasis fordiscussion. Theanalysis inWT/CTE/W/29 indicated theneedtoproceed
withcaution nottoundermine orduplicate progress inother fora, butdidnotsuggest acourse of
WTO inaction. AsNigeria hadoutlined, gapsexisted, specifically forcertain cosmetics and
consumer products ofimportance toAfrican countries, which were notcovered byany
international instrument. Thevoluntary nature ofmany instruments combined withtheirlackof
participation restricted information onthose DPGs thatwere covered. Although ithadbeen
argued covering these gapslayoutside WTO competence, since theissues concerned trade the
WTO wastheplace toaddress them. International instruments hadprogressed intheDPG area
andtheirexpertise must notbeundermined. AnyWTO action should allow thedevelopment of
PICprocedures, while covering gapscreated byitsvoluntary nature andcurrently limited
coverage. ThePICprocedure applied onlytochemicals, notproducts containing chemical
residuals. Gaps incoverage could befilled without undermining whatwascovered already
through aproposal similar totheGATT 1991 draftDecision. ThedraftDecision encouraged
participation inexisting international instruments andstipulated exports ofaproduct concerned did
notneedtobenotified under GATT iftheexporting contracting party hadnotified italready
under aninstrument listed inanAnnex totheDecision.
80. Nigeria 'sproposal called fortechnical assistance forLLDCs tobuild capacity for
controlling DPGs andcontribute tothesuccess ofmechanisms, likePIC,which relied onan
infrastructure intheimporting country. Nigeria 'sproposal encouraged Members touse
appropriate international organizations tofacilitate technical assistance. TheReport from thethird
meeting oftheConference oftheParties totheBasel Convention suggested thisreinforcement
could behelpful, given thelackoffinancing intheBasel Convention 'sTrust Fund. Although it
hadbeensuggested theWTO lacked expertise toprovide technical assistance inthisarea, ithad
theexpertise toprovide technical assistance toprepare technical regulations andto"adjust to,and
comply with, SPSmeasures necessary toachieve theappropriate levelofSPSprotection"WT/CTE/M/10
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(Article 9oftheSPSAgreement). Recalling theWTO preamble, sheasked howtrade ingoods
which presented serious anddirect danger tohuman, animal orplant lifeorhealth orthe
environment could contribute toraising living standards without theexchange ofinformation on
suchgoods andtheirhazards. Atthe38thSession oftheContracting Parties, aMinisterial
Declaration called forDPG notification toprovide adatabase tostudy theproblem. The
"notifications received didnotprovide asufficient database toassess" thesituation
(PC/SCTE/W/7). TheDeclaration wasrepeated atthe40thSession withdiscouraging results.
Action onNigeria 'sproposal would ensure thatcompliance withfuture requests fornotification
would notfollow thistrend.
Item8: TRIPS andtheenvironment
81. Therepresentative ofIndia introduced herdelegation 'srevised non-paper (dated
18June1996). India would submit aseparate proposal ontherelationship between theTRIPS
Agreement andMEAs which contain IPR-related obligations, suchastheBiodiversity Convention.
While India stillbelieved intheuseoftheconceptual framework initsfirstnon-paper (dated
2April 1996), thescope ofenvironmentally-sound technologies hadbeenbroadened tocover
products produced bysuchtechnologies. Where environmentally-sound technologies andproducts
(EST&Ps) were covered byIP,theywere called "proprietary EST&Ps", irrespective oftheIP
typecovered ifrelevant tosituations covered intheproposal. Three situations forproprietary
EST&Ps were covered: (i)mandated forusedirectly orindirectly byanMEA, which waslinked
tothedefinition ofanMEA under Item1;(ii)related tomandatory national environmental
standards ormeasures affecting exports; and(iii)related tomultilaterally-agreed environmental
standards ormeasures affecting exports, evenifvoluntary. IfMEA provisions called fortransfer
oftechnology on"fairandmost favourable terms", thisshould bereconciled withtheTRIPS
Agreement. Intheinterests oftheglobal environment, trade measures, essentially negative
measures, andtechnology transfer provisions, essentially positive measures, should bereconciled
withWTO provisions. Relevant tothefirsttwosituations were theguiding principles in
Article 12oftheTBTAgreement. Thereasons forselecting these three situations andthelikely
solutions totheissues raised were described insections IIItoVIofIndia'snon-paper.
82. Forcopiable technologies, there waseither theuseofpatent revocation which wasalready
TRIPS compatible, oraninterpretation ofArticle 31toallow foreasier useofcompulsory
licensing. Shortening thetermofprotection wasa"win-win" situation. India recognized
weakening ofIPprotection onlyhelped countries withthetechnological capability tocopythe
required EST&Ps andwasnotuseful fortechnologies thatwere difficult tocopywithout theIP
owner 'scooperation. Ascompliance withmandatory environmental standards affected MEA
Parties andexporters tocountries imposing these requirements, India'srevised non-paper
proposed thefollowing obligation beadded: "The owners oftheEST&Ps shallsellthese
technologies andproducts atfairandmost favourable terms andconditions, upon demand, toany
interested party which hasanobligation toadopt these under national lawofanother country or
under international law". Tomaintain incentives forEST&P generation, international
organizations andnational governments which hadmandatory environmental standards should
institute financial mechanisms forcompensation. India wasopentosolutions onhowtoreconcile
EST&P generation witheasyaccess toandtransfer ofthem onfairandmost favourable terms.
83. Therepresentative oftheUnited States saidIPsystems based ontheTRIPS Agreement
promoted technological innovation andefficient andeffective technology transfer. Companies
routinely licensed IPRs inestablishing jointventures which resulted intransboundary technology
transfer. Thefocus should notbeexclusively onIPprotection asthefactor affecting technology
transfer. Policies related toinvestment, ownership andoperation offoreign businesses were alsoWT/CTE/M/10
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significant fortechnology transfer involving proprietary technology. Hegavepreliminary
comments onIndia'snon-paper. Based onArticles 27,32and33oftheTRIPS Agreement, he
saidunfettered discretion didnotexisttorevoke patents ongrounds notspecified intheTRIPS
Agreement. India hadinterpreted thephrase "fairandmost favourable terms" ascontained in
certain MEAs tomean "preferential andnon-commercial terms". TheUShadconcerns withthis
interpretation based onthenegotiation ofArticle 16oftheBiodiversity Convention, during which
India'sinterpretation hadbeenanalternative proposal tothecurrent language.
84. Therepresentative ofIndonesia, onbehalf ofASEAN, supported thethrust ofIndia's
non-paper andwould comment further onthisItem.
85. Therepresentative oftheEuropean Communities saidtheEChadhighlevels ofIPand
environmental protection. TheECwould study further therelationship between these twoareas.
86. Therepresentative ofIndia saidpatent revocation wasamatter ofinterpretation ofthe
TRIPS Agreement; Article 32didnotrestrict thegrounds ofrevocation andMembers were free
tohaveanygrounds ofrevocation compatible withtheParis Convention. Shedidnotdispute
that,atasubsequent stage, anyrevocation could besubject tojudicial review. Ifacountry had
grounds, suchaspublic interest, forpatent revocation thiswasnotTRIPS-incompatible. India's
interpretation remained "preferential andnon-commercial terms".
87. TheChairman saidthemeeting tobeheldon24Julywould constitute thelastopportunity
tosubmit proposals. Atthismeeting, hewould report ontheresults oftheinformal consultations
onspecific issues, Items andproposals.