WORLD TRADE  
ORGANIZATION  RESTRICTED  
 WT/CTE/M/15  
20 November 1997  
 (97-5117)  
  Committee on Trade and Environment   
 
 
 
REPORT OF THE MEETING HELD ON 22 -24 SEPTEMBER 1997  
Note by the Secretariat  
1. The Committee on Trade and Environment (CTE) met on 22-24 September under the 
chairmanship of Ambassador Björn Ekblom of Finland.  The agenda contained in WT O/AIR/632 and 
WTO/AIR/632/Add.1 was adopted.  
2. The Chairman  recalled the CTE's agreement to submit a brief factual report on its work in 
1997 to the G eneral Council and said he would circulate a draft report for consideration by Members 
prior to the CTE's meeting on 24 -26 November 1997.  
3. It was decided  to extend observer status to the Latin American Economic System (SELA).  
The linkages between the mul tilateral environment and trade agendas  
4. In order to deepen the CTE's understanding of the linkages between the multilateral 
environment and trade agendas, the Secretariats of several multilateral environmental agreements 
(MEAs) and multilateral financia l mechanisms were invited to participate.  
5. Representatives of the following Secretariats made presentations and prepared background 
papers to contribute to the discussions:  the Convention on International Trade in Endangered Species 
of Wild Flora and Fa una (CITES) (WT/CTE/W/63);  the Basel Convention on the Transboundary 
Movements of Hazardous Wastes and Their Disposal (WT/CTE/W/55);  the Montreal Protocol on 
Substances that Deplete the Ozone Layer (WT/CTE/W/57);  the UN Convention on the Law of the 
Sea (UNCLOS) (WT/CTE/W/62);  the Convention on Biological Diversity (WT/CTE/W/64);  UNEP 
Chemicals (IRPTC) (WT/CTE/W59); the Multilateral Fund for the Implementation of the Montreal 
Protocol (WT/CTE/W/60);  and the Global Environment Facility (GEF) (WT/CTE/W/5 8).  The 
Secretariat of the UN Framework Convention on Climate Change was unable to participate at the 
meeting, but submitted a statement (WT/CTE/W/61).  
6. Members welcomed the contributions from MEA and Secretariats and commented on the 
trade -related aspe cts of the agreements set out in their background papers and presentations.  
7. Following a request by the Dutch Government, a report was presented and circulated on the 
Conference on the Implementation of MEAs  in the Hague, 15 -16 September  1997.  
8. The obs erver of the UNEP  introduced an Information Note which had been circulated to 
Members on UNEP's activities in the area of trade and environment.  WT/CTE/M/15  
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 Items 1 & 5  The relationship between the provisions of the multilateral trading system and trade 
measures for e nvironmental purposes, including those pursuant to multilateral 
environmental agreements;  & the relationship between the dispute settlement 
mechanisms in the multilateral trading system and those found in MEAs  
9. The representative of the European Communi ties said the MEA presentations had helped to 
improve an understanding of the use of trade measures in MEAs.  The use of trade measures was 
usually part of a package which included positive measures, and which addressed the needs of 
developing countries.  The need to improve national coordination between trade and environment 
experts was an issue which had emerged from the discussions;  improved domestic coordination was 
the most effective way of preventing conflicts.  It was also necessary to reinforce coo peration and 
dialogue between MEAs and the WTO;  the WTO Secretariat had an important role to play in this 
respect.  The CTE had done an impressive quantity of work in 1996, particularly on the relationship 
between trade measures pursuant to MEAs and WTO r ules.  The EC was committed to the principles 
advocated in its non -paper (19  February  1996) and to the need to devise solutions to accommodate 
trade measures pursuant to MEAs in the WTO.  The necessary safeguards, particularly for MEA non -
parties, were alr eady contained in the chapeau to Article XX, which precluded the use of trade 
measures for protectionist purposes, and their arbitrary or discriminatory application.  The EC would 
not accept the establishment of a framework concerning the use of trade meas ures in MEAs which 
would be more restrictive than current WTO rules.   This would send the wrong signal to the 
international community, possibly creating an incentive for unilateral trade restrictions.  
10. It was inappropriate to draw conclusions from WT/ CTE/W/53 as the WTO dispute settlement 
practise continued to evolve.  However, while environmental protection was not explicitly mentioned 
in Article XX, environmental measures could be justified under Article XX(b) and (g).  Several 
GATT panel reports had  recognised that the notion of exhaustible natural resources encompassed 
living resources.  More recently, the Appellate Body Report on Reformulated Gasoline had 
recognised that clean air was an exhaustible natural resource.  Unlike Article XX(b), Article XX(g) 
did not include the notion of necessity and measures falling under this exception were not, in 
principle, subject to a necessity test.  Article XX(g) had a broader coverage than (b), and, thus, the 
chapeau to Article XX might become an important dete rminant of the scope to accommodate 
environment -related trade measures in the WTO.  As recognised by the Appellate Body Report on 
Reformulated Gasoline, it is the measure which is to be examined under Article XX(g) and not the 
legal finding of less -favoura ble treatment.  This implied that if a measure were covered by Article 
XX(g), the crucial test was whether the chapeau requirements were met in the implementation of the 
measure.  In Tuna II, the panel had recognised there was no valid reason for concludin g that either 
Article XX(b) or (g) applied only to measures relating to things located or actions occurring within 
the jurisdiction of the party taking the measure.  Therefore, these exceptions may justify some 
measures taken to protect the global commons.   The notion in the Appellate Body Report on 
Reformulated Gasoline that WTO Agreements should not be read in clinical isolation from public 
international law was also relevant.  
11. Dispute settlement practice had confirmed, as noted in paragraph 175 of th e 1996 CTE 
Report, that some Article XX exceptions provided scope for accommodating trade -related 
environmental measures.  Unilateral enforcement of trade measures to coerce other states into taking 
certain actions or changing their legislation was not per mitted under the chapeau of Article XX.  
Dispute settlement practise had determined that Article XX was a limited and conditional exception 
from WTO obligations, subject to a Member's interpretation.  The party invoking Article XX bore the 
burden of provin g the measure at issue met the relevant conditions.  More detail on the scope of the 
requirements in the chapeau to Article XX may be needed.  Whilst the dispute settlement process was 
performing a role in finding scope for accommodating environment -relate d trade measures in the 
WTO, Members should also address this matter directly.  Beyond legal technicalities, political choices 
had to be made.    WT/CTE/M/15  
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 12. The representative of Japan  suggested work on the relationship between the WTO and trade 
measures in MEAs b e based on the differentiated approach, taking into account that MEAs were the 
desirable form of cooperation to deal with transboundary or global environmental issues.  In providing 
a certain predictability for the use of trade measures pursuant to MEAs, t he WTO would encourage 
such approaches and avoid unilateral trade restrictions.  MEAs were negotiated for the purpose of 
environmental protection, and in the process of their negotiation the necessary expertise was utilized 
and trade measures were agreed b y Parties.  The objectives of MEAs should be widely shared and 
participation in MEAs should be open to all concerned countries.  Japan supported the comment in 
WT/CTE/W/53 that measures should be examined under Article XX for their WTO -consistency and 
not based on the policy goal of environmental protection, public health or conservation.  A panel 
should examine the discriminatory nature or trade impact of a measure's application.  The 
interpretation of Article XX should not be left solely to the dispute se ttlement process.  The CTE 
should establish a procedural framework, possibly improving the DSU, to accommodate and provide 
predictability for MEAs.  The CTE should clarify the concept of "specificity" in the differentiated 
approach;  whether a trade measur e should be stipulated in an MEA provision;  be provided for in a 
decision of the MEA Parties;  or be mandatory or authorized to each Party.  Japan hoped WTO 
Members, which were MEA Parties, would contribute to this discussion to achieve "win -win" trade 
and environment policies.   
13. The representative of Switzerland  said further sessions with MEA Secretariats would 
strengthen the dialogue between MEAs and the CTE.  WT/CTE/W/53 highlighted that Article XX had 
been interpreted on a case -by-case basis, which  had led to a certain legal insecurity, even if to date no 
party had invoked Article XX successfully.  Paragraph 5 recalled that panels had noted Article XX 
was "a limited and conditional exception from obligations under other provisions of the General 
Agreement, and, as opposed to the positive provisions of the General Agreement, does not establish 
obligations in itself."  This finding was not based on legal grounds.  Article XX exceptions may be 
invoked as a right, with the holder of the right ensuring th at they were not applied contrary to 
obligations in the chapeau;  this view had been confirmed on page 25 of the Appellate Body Report 
on Reformulated Gasoline.  For Switzerland, panels were not intended to study Article  XX exceptions 
which had not been in voked by the defendant because of the limited and conditional nature of the 
exceptions but because of the general principle of judicial economy of law, the applicability of which 
had been confirmed by the Appellate Body Report on Measures Affecting Imports  of Woven Wool 
Shirts and Blouses.  
14. Switzerland had reservations concerning the panels' interpretation of the idea that measures 
were necessary pursuant to Article XX(b) only if there were no other measures less incompatible with 
the General Agreement w hich might have been used to obtain the desired result (the least trade 
restrictive measure).  This interpretation of Article XX was not in conformity with the syntax of 
Article XX(b) in which "necessary" qualified the purpose of the protection, not the de gree of WTO -
conformity.  This interpretation would also introduce an odd hierarchy between measures applied 
pursuant to Article XX(b) and those pursuant to Article XX(g), the least trade restrictive requirement 
being applicable to measures aiming at the pr otection of life and health and not to measures aiming at 
the conservation of non -renewable natural resources.  Furthermore, such an interpretation would 
render the chapeau to Article XX useless when in fact Article 31 of the Vienna Convention and the 
gene ral principle of "effect utile" required a treaty be interpreted so as to give meaning to all its terms.  
WT/CTE/W/53 correctly referred to the "jurisdictional" application of Article XX(b) and (g)  rather 
than to their "territorial" application;  the subti tle after paragraph 29 should refer explicitly to 
"unilateralism" as the problems reviewed dealt with that issue.  Switzerland shared the interpretation 
of Article XX in the Appellate Body Report on Reformulated  Gasoline which was a two stage 
approach to determine if the measure at stake fell within the list of Article XX exceptions, and, if so, 
whether its application conformed with the chapeau.  In this respect, it was important to ensure that 
measures did not run counter to the objective and purpose of Article XX to avoid abuse of its listed WT/CTE/M/15  
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 exceptions.  He recalled Switzerland's non -paper (20 May 1996) on this Item and said his delegation 
was open to other proposals.  
15. The representative of Norway  said the dialogue with MEA Secretariats had contribute d to 
increasing awareness of the issues and helping prevent disputes.  The challenge was to clarify the 
relationship between the use of trade measures in MEAs and the WTO, which was not a unique task 
in the history of the trading system.  One example was h ow negotiators had addressed the issue of 
international standards.  Principles had been inserted in the TBT and SPS Agreements such that 
Members shall use international standards elaborated in competent standardizing organizations;  if 
such standards were followed measures were presumed to be in accordance with the relevant WTO 
rules.  International Commodity Agreements were another example mentioned in Article XX.  The 
relationship between MEAs and the WTO was more complex.  Further clarification of this 
relationship was needed to ensure predictability for environmental and trade decisionmakers on the 
use of trade measures in MEAs.   
16. It was important to maintain flexibility in applying environmental policy.  Norway raised the 
following issues:  (a) Conc erning the relationship between Parties and non -parties in view of the MFN 
principle, should a WTO Member, which was not a Party to an MEA, be treated like a Party provided 
it acted in accordance with the MEA's provisions;  (b) Concerning dispute settlemen t, should the tests 
in Article XX, such as the necessity test, be carried out in the WTO or in the MEA when the measure 
was selected.  If the WTO performed the necessity test, it could be said Members accepted that the 
WTO could overrule an MEA on trade -related environmental measures.  However, if substantive tests 
were carried out by the MEA when selecting and applying measures, new WTO disciplines would 
have to be agreed.  The issue was how to provide for protection of MEA non -parties;  (c) It should be 
clarified how trade measures in MEAs based on non -product related production and process methods 
would be dealt with in the WTO;  and (d) If a special regime in the WTO were established, it should 
be determined which MEAs should qualify for special treatmen t, taking into account the issues of 
specificity of trade measures, and participation and openness in MEAs.  Norway sought the 
Chairman's guidance on how to clarify the relationship between MEAs and the WTO.  
17. The representative of Hong Kong, China  said WT/CTE/W/53 illustrated the requirements of 
the necessity test in Article XX(b) with reference to panel reports.  The relevance of unadopted 
reports rested with Members.  Some legal aspects of environmental exceptions were not covered by 
WT/CTE/W/53 as the y had not yet been ruled on by panels.  For example, Hong Kong, China's view 
was that Article XX(b) and (g) were mutually exclusive;  they established different legal standards.  
Article XX(b) established "necessity" requirements, while (g) stipulated a me asure be "related to" a 
stated objective.  If there were an overlap in their coverage, then Article XX(b) would have fallen into 
disuse, since Members wanting to use Article XX would prefer the less stringent standard established 
by Article XX(g).  The wor ds "exhaustible natural resources" in Article XX(g) supported this view.  
"Exhaustible" meant "non -reproducible", whereas human and animal lives covered in Article XX(b) 
were "reproductive".  This interpretation conformed with the principle of effective tr eaty 
interpretation in the Vienna Convention on the Laws of Treaties;  no terms should become redundant 
in interpreting an Agreement.  An interpretation that condoned an overlap in the coverage of 
Article  XX(b) and (g) would run counter to this principle.  He suggested WT/CTE/W/53 be regularly 
updated.  
18. The representative of New Zealand  welcomed the participation of MEA Secretariats, whose 
activities were central to the debate under this Item;  the exchange of views between the CTE and 
MEA Secretariats s erved to enhance an awareness of the issues involved.  Although discussions 
leading to the 1996 Ministerial had suggested a consensus on Item 1 would take time to evolve, the 
1996 CTE Report provided the basis for further work.  CTE work should focus on en hancing an 
understanding of the issues to set the scene for the evolution of conclusions.  New  Zealand felt the 
concepts guiding its proposal (WT/CTE/W/20) and the methodology of the "differentiated approach"  WT/CTE/M/15  
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 for analysing the issues should be kept in mind  in further CTE work.  New Zealand's proposal had 
identified five categories of environment -related trade measures:  (a) measures between MEA Parties 
specifically mandated in an MEA;  (b) measures between MEA Parties taken pursuant to an MEA but 
not specif ically mandated;  (c) measures imposed on MEA non -parties taken pursuant to an MEA but 
not specifically mandated;  and (d) measures imposed by individual countries outside the context of 
MEAs.  Whilst a discrepancy in views on how to deal with these catego ries was likely, focusing on 
categories would clarify the way forward.  Some categories, particularly measures applied between 
MEA Parties which were specifically mandated, could be addressed easier than others.  Non -specific 
measures applied under an MEA,  and measures applied against MEA non -parties raised more 
complex issues.  
19. Unilateral measures should be addressed based on existing WTO provisions.  In this regard, 
WT/CTE/W/53 provided a useful summary of how panels and the Appellate Body had interpre ted 
WTO provisions.  To date, neither panels nor the Appellate Body had had to deal with a dispute 
involving the application of measures pursuant to an MEA.  There was no guarantee this would 
remain the case and it would be useful to explore how to avoid c onflicts.  There were instances, as in 
the case of the UNCLOS, where the scope for potential conflict had been avoided.  However, several 
MEAs had not been developed with WTO provisions in mind.  An MEA Party, therefore, might be 
unable to fulfil both its WTO and MEA obligations.  In addition there were concerns with respect to 
WTO Members that were MEA non -parties, but were affected by an MEA's application of trade 
measures.  Better coordination between trade and environment constituencies at all levels th rough an 
open dialogue, such as the CTE session with MEA Secretariats, would broaden an understanding of 
the issues.  It was in the shared interests of the WTO and the international environmental 
policymaking system for an understanding to be developed on the links between trade -related 
provisions of MEAs and WTO rules.   
20. The representative of Singapore, on behalf of ASEAN , said, in addition to helping Members 
follow MEA developments, the dialogue with MEA Secretariats had facilitated coordination betwe en 
WTO and capital -based officials.  A balanced mix of trade and positive measures was necessary to 
achieve MEA objectives.  ASEAN drew several points from WT/CTE/W/53:  (a)  Article XX's scope 
did not permit the use of extrajurisdictional or unilateral tr ade measures to protect extrajurisdictional 
environmental resources;  (b) Article XX required Members to adopt the least trade restrictive 
measure available, applied in a non -discriminatory manner;  (c) the necessity test in Article XX(b) set 
limits to the  use of trade measures for public policy goals;  and (d) WTO jurisprudence had not 
permitted import restrictions based on differences in environmental policies or processes and 
production methods.  
21. The representative of Canada  said the MEA issue was the  fundamental institutional issue 
before the CTE.  As had been demonstrated in the session with MEA Secretariats, the environmental 
agenda was as broad, varied and dynamic as the trade agenda.  Whether delegates were trade 
negotiators or environmental negot iators, they had a shared interest in ensuring these two sets of 
international agreements and obligations complemented rather than conflicted.  Canada welcomed 
Singapore's circulation of the statement of its Prime Minister at UNGASS (WT/CTE/W/54).  This 
phase of the CTE's discussion should focus on further analysis of the approaches and proposals which 
had been submitted.  Members had a shared interest in addressing the WTO -MEA interface.  Whilst 
many CTE delegates approached this issue from a trade perspec tive, broader objectives should also be 
considered.  Just as environmental officials participated in WTO work, trade officials participated in 
MEA negotiations.  CTE discussion should result in greater WTO awareness of environmental policy, 
and greater awa reness in environmental negotiations of trade policy.  Although awareness had been 
increased by the information session with MEA Secretariats, there was scope for more.  In Canada, 
environment officials contributed to the development of environment -related  discussions in the CTE, 
TBT, and other WTO Committees;  Industry Department officials also contributed to the development 
of positions in MEA negotiations.  A parallel domestic consultation process with NGOs and the WT/CTE/M/15  
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 Provinces also took place.  This proces s had resulted in a greater understanding among trade and 
environmental officials of how best to achieve their policy objectives in a complementary manner.   
22. The analysis of the status quo  in WT/CTE/W/53 helped to advance the discussions.  Whilst 
each dispute would be judged on its own merits and without creating formal precedents, WTO 
jurisprudence would evolve.  Members should reflect on whether the MEA issue was best dealt with 
through evolving jurisprudence, or whether the CTE should provide policy direction.  Given the 
cross -cutting nature of the MEA issue, Canada's preference was for Members to provide the latter 
rather than relying on the former.  Since elements of Item 8 (TRIPs) and Item 7 (DPGs) were related 
to MEA issues, the analysis of MEAs w ould impact on their discussion.  
23. The representative of Nigeria  said the dialogue with MEA Secretariats should be repeated.  
Nigeria had noticed the difference between the dispute settlement mechanisms in MEAs and the 
WTO.  Whilst the CTE had been actin g on the assumption that the WTO would trump environmental 
law, for instance in MEAs, the MEA presentations had indicated this was not necessarily so.  It was 
possible for an MEA to have a strong dispute settlement mechanism, such as in the UNCLOS.  He fel t 
WT/CTE/W/53 had furthered an understanding of how panels had interpreted measures taken under 
Article XX.  In none of the disputes related to Article XX had the environmental policy objective of 
the country imposing the measures been questioned.  In the six cases considered, panels had 
determined that Article XX provisions were limited and conditional exceptions from WTO 
obligations.  He agreed that relying on the dispute settlement process was not a substitute for 
multilateral policymaking on trade and e nvironment.  Nine proposals had been submitted under 
Item 1, all of which were concerned with MEA trade measures;  the motivation was to achieve 
predictability, and deal with MEA non -parties.   
24. To further the discussion of how to accommodate MEA trade measures, positive measures 
should be addressed, even though this discussion seemed to go beyond the CTE's mandate.  
Concerning the suggestion for the CTE to determine which MEAs should  be considered in terms of 
their use of trade measures, he inquired as  to how the CTE would make this choice.  There were 
several possibilities in paragraph 174 of the 1996 CTE Report upon which to base the discussion.  
Finding a balance among the issues on the CTE agenda, including positive measures, was the way to 
proceed.   The CTE had reached the stage where Members should move away from formal statements 
and examining legal arguments.  With respect to MEAs, the issues were not solely legal;  political 
choices had to be made.   
25. The representative of Korea  said the "dif ferentiated approach" proposed by New Zealand and 
Korea was a useful basis on which to advance discussions.  Trade measures, applied with caution, 
were necessary to achieve MEA objectives.  The specificity of trade measures should be clarified so 
that they  were not disguised protectionism.  The Montreal Protocol Secretariat representative had 
mentioned that in cases of non -compliance between Parties the response was to identify the reason for 
non-compliance and to assist compliance.  Korea hoped the same sp irit applied to non -parties.  
26. The representative of Australia  said the session with the MEA Secretariats had provided a 
basis for improving the understanding of the use of trade measures in MEAs. The discussion had 
illustrated the difficulty of drawing  conclusions on how and why these measures had been used;  
MEAs used different approaches to deal with diverse environmental concerns and the use of trade 
measures differed between them.  Experience in MEAs raised issues about the role of trade in 
promotin g sustainable development, and how to ensure trade and environmental considerations were 
taken into account.  Important economic and trade interests might be raised by MEA negotiations, 
which may impact on the WTO's assessment of environmental priorities, or raise differences of view 
on the nature of an environmental problem or the appropriate means of addressing it.  The dialogue 
with MEA Secretariats helped to ensure the compatibility of environmental objectives and an open, 
equitable and non -discriminato ry trading system.  Effective environmental management may be  WT/CTE/M/15  
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 essential if trade were to be sustainable.  International cooperation was vital to ensure environmental 
concerns were adequately addressed, for example, in the form of shared responsibility betw een 
importing and exporting countries to address transboundary movements of hazardous wastes, trade in 
potentially hazardous chemical, or in threatened or endangered wildlife.  Shared responsibility may 
involve information exchange, prior informed consent or permit systems such as in CITES, the Basel 
Convention, or the PIC Convention negotiations.  In some cases, trade may be a major part of the 
environmental problem, providing incentives to over -exploit endangered species.  In these cases, 
action to monito r and regulate or prohibit trade may have a role to play, such as temporary bans or 
limitations on trade for some economically -valuable species until they had recovered and effective 
management was in place.  In other cases, trade may be only a minor part of the problem;  habitat loss 
and domestic wildlife use may be more of a threat to wildlife.  
27. In some cases, trade measures may contribute to an effective response strategy, but would 
also need to be complemented by other actions at the national, region al or multilateral levels.  Trade 
could play a positive role in advancing environmental objectives.  For example, sustainably managed 
trade could provide incentives and the financial means for local communities to participate in wildlife 
and habitat conser vation.  Trade could have a role to further the CBD's  objectives;  it could facilitate 
access to substitutes to substances subject to production and consumption phase -outs;  and contribute 
to technology transfer to facilitate cleaner production processes and to the diffusion of 
environmentally -sound recycling technologies.  Where trade led to resource over -exploitation, 
appropriate resource management may be the only way to ensure sustainable trade at non -detrimental 
levels.  The WTO and MEAs thus provided  a framework for sustainable trade that delivered both 
trade and environmental benefits.  
28. There was scope for enhancing the role trade played in providing incentives for sustainable 
resource management, technology transfer, and environmentally -preferabl e products.  Of key 
importance was how to ensure environmental concerns were addressed effectively while continuing to 
gain trade benefits.  Information exchange between importers and exporters, and the use of the PIC 
procedure would promote a shared respo nsibility.  Administrative controls on trade should be 
carefully designed and well -targeted without unnecessarily inhibiting trade.  This could be an area for 
further work.  Flexibility was evident in the use of instruments under CITES, such as quotas, ran ching 
and split -listing of species under its Appendices to ensure that the measures used were the most 
appropriate in addressing specific situations.  The Basel Convention provided that Parties could enter 
into bilateral, multilateral or regional agreement s with Parties or non -parties on transboundary 
movements of hazardous wastes, if these agreements were based on rules no less environmentally -
sound than those in the Convention.  Predictability, certainty and transparency of the conditions which 
applied to  trade were important, such as the Basel Convention's work to classify hazardous wastes.  
29. Another issue was the role of MEAs in developing technical guidelines, providing technical 
assistance, facilitating technology transfer and improving national capa cities to manage environment 
concerns, such as trade in hazardous chemicals, hazardous wastes or the phase -out of ozone -depleting 
substances.  If international trade were only one aspect of an environmental problem, then these 
measures would be essential t o ensure the environmental objectives were advanced.  There was also a 
role for development assistance to promote a positive interaction between MEAs and the WTO and to 
help developing countries meet international environmental obligations, while facilitat ing trade and 
reducing poverty.  Improved dialogue between the trade and environment communities was vital to 
build consensus and find environmentally -effective solutions.  WTO rules had a role in advancing 
environmental objectives, while maintaining the b enefits of trade.  WT/CTE/W/53 thus served as a 
reference point for the discussions.  Australia's national coordination processes was similar to 
Canada's.  
30. The representative of India  said the unanimity in the CTE that trade measures were not the 
best w ay to address environmental problems was reassuring for developing countries for whom WT/CTE/M/15  
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 positive measures in MEAs were important.  Trade measures were only part of a package of measures 
in an MEA.  It was not in the CTE's mandate to go into the environmental  objectives that such a 
negotiated package sought to address.  If the CTE were to focus on trade measures only, it would 
distort an MEA's essence.  Even if the CTE were to address the nature of trade measures in MEAs, 
questions would be raised about their necessity, effectiveness and proportionality.  Trade measures, 
which in MEAs were by definition restrictive, must respect WTO rules;  their use to achieve 
environmental objectives, even if pursuant to an MEA, should be dealt with under Article XX to 
ensure  the foundations of the WTO were not undermined.  As Article XX was capable of dealing with 
legitimate environmental concerns, trade measures taken pursuant to specific provisions of certain 
MEAs need not be accorded "special treatment".  The idea of "spec ial treatment" would have serious 
implications as some WTO Members might request "special treatment" for other non -trade issues.  To 
serve as a guide to dispute settlement, a reiteration of the scope of Article XX might be required.   
31. WT/CTE/W/53 noted  that in only one of the seven "environmental disputes" in the 
GATT/WTO had the Panel questioned the environmental policy choices underlining the measures 
concerned.  As stated in the 1996 CTE Report, WTO competence was limited to trade policies and 
those trade-related aspects of environmental policies with significant trade effects.  Paragraph 17 of 
WT/CTE/W/53 referred to the Appellate Body Report on Reformulated Gasoline, whereby the 
requirement to avoid arbitrary or unjustifiable discrimination in inter national trade in the chapeau of 
Article XX should be understood as a different sui generis  type of non discrimination which did not 
overlap with Articles I and III.  Concerning the necessity test, panels had not accepted the necessity of 
measures otherwis e inconsistent with other WTO provisions.  Paragraphs 27 -31, on the jurisdictional 
application of Article XX(b), were important.  As the two Tuna Panels had not been adopted, the issue 
remained unresolved.  WT/CTE/W/53 highlighted the difference in approac h between the two Panels.  
Tuna I had noted the concerns of the drafters of Article XX(b), which focused on the use of sanitary 
measures to safeguard human, animal or plant life or health in the importing country's jurisdiction.  
Tuna II had observed that:  "the text of Article XX(b) did not spell out any limitation on the location of 
the living things to be protected".  However, the Panel had found the policy to protect the life and 
health of dolphins in the Eastern Tropical Ocean, which the U.S. pursued wi thin its jurisdiction over 
its nationals and vessels, fell within the range of policies covered by Article XX(b).  It was necessary 
to understand the nuanced approach of Tuna II on the jurisdictional application of Article XX(b).  
India was convinced that the correct approach was to be guided by the negotiating history.   
32. Tuna I had rejected any extrajurisdictional application of Article XX(g) based on the 
negotiating history.  Tuna II adopted, in respect of Article XX(g), an approach similar to that ad opted 
by Article  XX(b),  emphasizing that the U.S. had pursued its policy within its jurisdiction over its 
nationals and vessels.  This Panel clearly stated that Article XX should be interpreted narrowly and 
found if:  "Article XX were interpreted to permi t Contracting Parties to take trade measures so as to 
force other Contracting Parties to change their policies within their jurisdiction, including their 
conservation policies, the balance of rights and obligations among Contracting Parties, in particular 
the right of access to markets, would be seriously impaired".  The Panel had concluded that: 
"measures taken so as to force other countries to change their policies, and that were effective only if 
such changes occurred could not be primarily aimed either at the conservation of an exhaustible 
natural resource, or at rendering effective restrictions on domestic production or consumption in the 
meaning of Article XX(g)".  WT/CTE/W/53 highlighted that the WTO was capable of dealing with 
trade measures arising from environmental concerns.  Experience thus far had shown that trade 
measures taken for allegedly environmental reasons had not fulfilled the requirements of Article XX.  
The treatment of the issues in WT/CTE/W/53 confirmed India's position that it was n ot necessary to 
amend Article XX and that trade measures taken for environmental objectives had to pass the scrutiny 
of Article XX.  India would participate in any further CTE work on the basis of the position contained 
in its non -paper (23 July  1996).   WT/CTE/M/15  
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 33. The representative of Mexico  appreciated the exchange of views with MEA Secretariats, 
which confirmed the conclusions in the 1996 CTE Report of the importance of promoting cooperation 
between environmental and trade authorities and between the WTO and ME A Secretariats.  In this 
regard, the Conference organised by the Netherlands had allowed a deeper analysis of the issues 
raised by the MEA/WTO interface.  Although the negotiation and implementation of trade measures 
in MEAs raised a diversity of issues wh ich went beyond legal considerations, the CTE had often 
limited the discussion to the legal aspects.  Political, economic and developmental factors had been 
raised in environmental decisionmaking as to when to include trade measures in MEAs.  Economic 
interests were particularly at stake, as seen in the discussions on climate change.  Countries had 
different powers to act on markets and to make use of trade measures in MEAs;  for some it was a 
matter of not abusing the use of trade measures.  The role of po sitive measures in MEAs should be 
considered as MEAs involved issues which could not necessarily be settled through legal 
arrangements or an allocation of jurisdiction.  Given the complexities involved, it should not a priori  
be taken for granted that reor dering the legal aspect of trade measures in the WTO would solve the 
substantive problems with MEAs.  Mexico supported Norway's reference to the relevance of the TBT 
Agreement.  The WTO had found a place for certain international standards in the SPS and T BT 
Agreements.  However, the process of the first triennial review of the TBT Agreement had indicated 
definitions of what constituted an international standard were important;  likewise, it was necessary to 
define what was meant by an MEA.  Mexico felt the  concepts of necessity, effectiveness and 
proportionality of trade measures should be addressed in order to find a solution.  WT/CTE/W/53 was 
a basis for understanding these concepts.   
34. The representative of Egypt  said unilateral actions to achieve env ironmental objectives were 
not covered in Article XX, and the burden of proof was on the Member invoking such measures.  
Concerning the concept of necessity, Switzerland's comments were valid with regard to the 
importance of differentiating between excepti ons under Article.  In this context, he referred to the 
1996 CTE Report and the importance of positive measures for developing countries to enhance their 
capacity to achieve environmental objectives.  Unilateral action to deal with environmental challenges  
outside the jurisdiction of the importing country should be avoided.  Trade measures addressing 
transboundary or global environmental problems should, as far as possible, be based on international 
cooperation.  
35. The representative of Morocco  said, when  implementing trade measures, MEAs should take 
into account the principle of proportionality of trade measures applied in accordance with the 
necessity of imposing trade restrictions, and that trade measures were WTO -consistent.  Trade 
measures should be c ombined with positive measures to assist developing countries in attaining 
sustainable development.  The session with MEA Secretariats had increased the CTE's awareness of 
MEA dispute settlement mechanisms.  Article XX did not allow for discriminatory, ext rajurisdiction 
or unilateral measures.  To promote a dialogue between the WTO and MEAs, Morocco proposed that 
the CTE examine the transparency of trade measures in MEAs.  In order to prepare for CTE meetings, 
Morocco would appreciate receiving CTE document s translated in all WTO official languages.  
36. The representative of the United States  said the MEA Secretariat presentations had 
contributed to the CTE's work.  The discussion had underlined the important role trade measures 
could play in achieving MEA o bjectives.  This did not mean trade measures were always needed in 
MEAs, but that they were a tool that must be available when needed.  In this respect, the U.S. was 
perplexed by India's reference to a broad agreement that trade measures were not the best way to deal 
with issues in MEAs.  India had been supportive of trade measures in various agreements such as the 
Basel Convention and the current negotiations on PIC and Bio -Safety.  Experience showed that, in 
some cases, trade measures were the best tools available to achieve an MEA's goals;  this should be 
determined on a case -by-case basis.  MEAs covered diverse subject matter, and the trade measures 
included in each MEA reflected the particularities of that MEA.  This fact accounted for the difficulty 
the CTE had had in agreeing on how to approach this issue.  The discussion had shown that MEAs did WT/CTE/M/15  
Page 10 
 
 
 not apply trade measures to non -parties if they acted in accordance with the MEA;  Article 11 of the 
Basel Convention permitted trade with non -parties if they treated wastes in an environmentally -sound 
manner.  A number of MEA Secretariats had noted the absence of a dichotomy between trade and 
positive measures, such as in the PIC Convention negotiations and the Basel Convention.  Broad 
agreement existed on the importance of coordination between trade and environment officials.  The 
WTO Secretariat had played a role by cooperating with MEA Secretariats and by providing 
information to the CTE on trade -related developments in MEAs.  The U.S. encouraged the Secretar iat 
to continue this work and noted with disappointment that the WTO had not been represented at the 
UNGASS.  
37. Paragraph 23 of WT/CTE/W/53 had inappropriately dealt with the jurisprudence by referring 
to panels' findings on the necessity test as "the lea st trade restrictive test".  This term had not been 
used in either report.  Interpretations of whether the jurisprudence had created a least trade restrictive 
test existed.  It was not the CTE's role to interpret WTO rules;  the value of opinions on the 
interpretation of WTO Articles was limited, and carried no legal weight.  Hong Kong, China had 
commented that Article XX(b) and (g) were mutually exclusive and had different tests, and that the 
application of Article XX(g) to subject matter covered by XX(b) would deprive the latter of meaning 
because XX(g) had less stringent tests.  This raised Switzerland's question as to the appropriate 
interpretation of Article XX and whether it should be assumed that GATT drafters had thought it 
should be easier to take a ction to conserve minerals than to protect life and health.  Article XX(g) had 
its own requirements, which it could not be assumed were easier to meet than those of Article XX(b).  
The Vienna Convention stipulated that the terms of a treaty should be inter preted in accordance with 
the "ordinary meaning to be given to the terms in their context and in light of its object and purpose".  
Nothing in the text or context limited Article XX(g) to measures involving the conservation of 
minerals.  
38. The U.S. disagr eed that Article XX could not be used with respect to measures dealing with 
environmental challenges located outside a country's territory or jurisdiction.  Tuna II had pointed in 
the opposite direction.  India seemed to suggest that Tuna I had examined th e negotiating history of 
Article XX more thoroughly than Tuna II.  The record showed the reverse was true.  While both 
Panels had dealt with this issue, only Tuna II had had an extensive discussion of the negotiating 
history.  As these issues were being de alt with elsewhere, the U.S. refrained from responding at 
length.   
39. The representative of Argentina  felt the analysis of this Item had been oversimplified, with 
too much attention given to the compatibility between trade measures in MEAs and the WTO.  
Discussions should reflect on the CTE's achievements in 1996 and consider the context in which trade 
measures were adopted in MEAs.  Trade measures in MEAs were not an end in themselves and 
should be seen alongside positive measures, such as technical coop eration and financial and 
technology transfer.  Trade measures were important in a negotiated package of measures to further 
an MEA's objectives;  it would not be useful to continue limiting the discussion to one element of the 
package, i.e. trade measures .  He agreed with Canada's comment on the evolution of WTO 
jurisprudence, and the need for political will to move the process forward.  The CTE should be able to 
make some recommendations on the relationship between WTO rules and MEAs, taking into account 
principles of international law.  
40. The representative of Brazil  said MEAs were the best forum to tackle global environmental 
problems;  multilateral environmental cooperation would avoid unilateral actions and prevent 
protectionist and discriminatory mea sures.  Trade measures might be necessary to address 
environmental concerns, but they could also be harmful to environmental interests.  In this respect, 
WTO legal scope might be sufficient to deal with trade -related environmental matters.  The CTE 
should analyze the WTO -compatibility of trade measures for environmental purposes.  In this respect, 
Brazil was prepared to explore the proposals which had been submitted.  The CTE should have further  WT/CTE/M/15  
 Page 11 
 
 
 sessions with MEA Secretariats to help understand the rational e behind environmental negotiations, 
and further an understanding of the legal framework in which the CTE was deliberating.  
WT/CTE/W/53 should be revised as jurisprudence evolved.  
Item 7   The issue of exports of domestically prohibited goods  
41. The repre sentative of Nigeria  recalled the 1982 GATT Decision (BISD 29S/19) that 
Contracting Parties shall notify DPGs, which had been reaffirmed in 1984 (BISD 31S/14).  These 
Decisions remained valid.  Nigeria agreed with the analysis in WT/CTE/W/43 that indicated  there was 
not much information on DPGs in notifications under the TBT and SPS Agreements, and the 
Notification System on Quantitative Restrictions (QRs).  TBT notifications rarely addressed exports 
and the TBT Agreement was not designed to give informatio n on domestic production for export.  
Although Members were obliged to notify the domestic sale or restrictions on use for products, they 
were under no obligation to address production or exports.  Under the TBT Agreement, Members 
should notify technical r egulations, or domestic bans;  other product restrictions did not need to be 
reported.  In response to the 1996 CTE Report to determine what information existed in the WTO on 
trade -related environmental measures which related to DPGs, WT/CTE/W/43 illustrat ed that existing 
WTO notifications were not helpful.   
42. The CTE should request Members to recommence notification of DPGs pursuant to the 1982 
GATT Decision.  The CTE should also address the conclusion on DPG product coverage in paragraph 
27 of WT/CTE/W /43.  DPG producers and exports were aware of what was produced and prohibited 
domestically, yet exported.  Exports of these DPGs should be notified to the WTO, if they had not 
already been notified under other instruments.  An indicative list of these ins truments was contained 
in Nigeria's proposal (WT/CTE/W/32).  Although a definition was not central to DPG notification, the 
50 notifications pursuant to the 1982 and 1984 GATT Decisions demonstrated the need for a shorter, 
standardized format.  Notificatio ns should include the reasons for defining a product as a DPG and 
allowing it to be exported.  
43. The representative of the United States  questioned the weaknesses in DPG notification 
requirements set out in WT/CTE/W/43, such as the fact that TBT and QR no tifications did not 
provide information on whether the notifying country banned exports.  What was important for 
countries to know was whether a Member had found a product to present a serious risk to health or 
safety.  Even if a country had banned the exp ort of this product, other exporting countries would not 
necessarily view the risks identified as presenting the same hazard and may permit domestic sale and 
export.  Thus, the utility of knowing that one notifying country had banned a product was limited 
given that this product could also come from other countries and could impart a false sense of 
security.  Concerning the significance of the fact that the TBT Agreement did not require notification 
of measures covered by international standards, there was little to be gained from information already 
available through international standardsmaking bodies.  WT/CTE/W/43 would have befitted from a 
discussion of the SPS Agreement, as it covered a broader array of measures, including specific 
coverage of bans.  T he U.S. agreed that, while notification instruments could be a valuable source of 
information, the existence of national standards and their effective enforcement was the most 
important form of protection for developing countries against undesirable produc ts. 
44. The representative of Canada  said the DPG issue should also be seen in the context of MEAs, 
given the number of MEAs that had been or were in the process of being negotiated to address 
DPG -related issues.  The information session with MEA Secretari ats had indicated the degree to 
which the international community was addressing DPG -related issues.  WT/CTE/W/43 had noted 
that DPGs which were based on international standards or did not affect trade would not be notified.  
The practical impact of such e xceptions was limited. The development of international standards was 
based on consensus building and information sharing.  The result was that any such "multilateral" WT/CTE/M/15  
Page 12 
 
 
 DPGs were identified through this process and parallel notification to the TBT Agreement  would be 
duplication.  DPGs that did not impact on trade were less likely to arise in the context of increased 
globalization and trade flows. Based on Canadian technical regulations in this area, it would appear 
that virtually all DPGs impacted on trade a nd would be captured by TBT or SPS notifications.  The 
issue of product definition described in paragraphs 29 and 30 was germane, particularly given how 
contentious the lack of product definition had been in the amendment to the Basel Convention.  
Without a product definition, the scope for potential disputes could only increase.  Canada supported 
the emphasis in paragraph 32 on the need to build capacity to address the effective development and 
enforcement of domestic standards as the most important form o f protection for developing countries. 
Without improved enforcement, more information would not be effective to address the concerns 
raised by many developing countries.  
45. The representative of the European Communities  recognized the importance to develo ping 
countries of making progress on this Item;  the establishment of a WTO notification system would 
contribute to achieving the objectives in the WTO preamble.  The EC would play a constructive role 
in the discussion of Item 7, although it was aware of t he practical and political obstacles that needed 
to be overcome to devise solutions.  If the existing DPG Notification System were to be revived, its 
product coverage should be defined;  a notification system lacking a precise definition could not be 
enfor ced and would have a limited response from Members.  Although some DPG product categories 
were already subject to international disciplines, such as hazardous wastes, chemicals and pesticides, 
a WTO notification system could operate as a “safety net” cover ing DPG exports from WTO 
Members which were not Parties to other DPG -related agreements.  The Secretariat could explore this 
issue in cooperation with relevant international instruments to avoid duplication.  
46. Paragraph 32 of WT/CTE/W/43 noted that while  the development of domestic health and 
environmental standards by importing WTO Members was essential in addressing the issue of the 
export of DPGs, it was clear that cooperative efforts involving importing and exporting countries were 
also needed.  This was the reason international control regimes were being developed.  The role of 
technical assistance should be considered to assist developing countries to establish and enforce 
domestic regulations to protect human, animal or plant life or health and the environment.  This aspect 
was being addressed in several international agreements and could also be taken into account in the 
implementation of existing WTO provisions on technical assistance, notably Article 11 of the TBT 
Agreement.  
47. The representative  of Egypt  recalled that the 1982 GATT Decision was still in force.  Egypt 
agreed with the conclusions in WT/CTE/W/53 that a precise definition of DPG product coverage was 
necessary.  In this respect, it was important to revive the DPG Notification System t o provide 
sufficient and timely information on DPGs.  The Secretariat should cooperate with intergovernmental 
organisations to help define DPG product coverage, to provide technical assistance for developing 
countries and to assist in enhancing and strengt hening their capacity to monitor DPGs.  
48. The representative of India  said further work should be undertaken on the need for adequate 
information, including the format of notifications, and technical assistance.  As the EC had referred to 
Article 11 of th e TBT Agreement, he suggested the TBT Committee should be informed of the CTE's 
discussion so that this issue could be reflected in the TBT triennial review.  
49. The representative of Japan  said DPG notification should be based on a format designed  for 
DPGs.  This was impeded by an inadequate definition of DPG product coverage.  To help define 
DPGs, Japan suggested using the categories in WT/CTE/W/43.  Members might consider notifying 
products in category (a) whose export was not addressed by domestic laws  and regulations;  and 
category (b) which could be exported in accordance with the importing country standards and the 
importing country had been notified and approved the transaction.  Notification of categories (c) and 
(d) would also increase transparenc y.  To have a comprehensive DPG notification system, it would be  WT/CTE/M/15  
 Page 13 
 
 
 necessary for notifying Members to understand what information DPG importing countries sought.  
Examples of actual problems concerning DPGs would improve Members' ability to notify useful 
information.  In addition to providing information on DPG exports through a notification system, the 
CTE had also discussed providing technical assistance to DPG importing countries, although there 
had not been a request for such assistance.  The development and enforcement of domestic health and 
environmental standards by DPG importing countries, capacity building, and technical assistance 
were necessary.  In addition, DPG importing countries could, for example, request information from 
the relevant exporting  country.  
50. The representative of Nigeria  said issues had been raised on the need for importing countries 
to identify the type of information which would be useful concerning DPGs.  It was not helpful to 
reverse the responsibility from Members who produc ed and exported DPGs to importing countries 
who were not aware these imports were DPGs.  On the issue of DPG product definition, some DPGs 
were now recognized given scientific and technological developments.  The responsibility to notify 
DPG exports to the  WTO should lie with Members who produced and exported DPGs, if they had not 
done so under another instrument.  In the Montreal Protocol, recommendations were being made for 
products that may contain CFCs to be licensed to improve monitoring and tracing il legal trade.  
Bearing in mind these suggestions, Nigeria's proposal to notify DPG exports was a lesser request.  
Nigeria inquired as to the purpose technical assistance would serve.  At this stage, notification was all 
that was necessary to increase transp arency.  As illustrated by the problem of illegal trade in ozone -
depleting substances in the Montreal Protocol, trade in DPGs was a cross -cutting issue that was 
relevant to developed and developing countries.   
51. The representative of Morocco  said a clea r definition was needed for DPGs.  He agreed with 
Nigeria on the increasing importance of illegal trade in DPGs.  Studies had shown that in Africa more 
than FF 6 million had been paid in one year for expired pharmaceutical products.  The responsibility 
for DPG exports lay with the exporting country.  This responsibility was already found in several 
international instruments, such as the Basel Convention and the PIC Convention negotiations.  The 
CTE should analyze issues such as illegal DPG trade, responsibi lity and liability.  There was a need to 
build capacity in developing countries to deal with DPG exports, to identify relevant DPG products, 
and encourage their notification to the WTO.  Morocco suggested the Secretariats should prepare a 
paper on illegal trade.  
52. The representative of the United States  said work on pharmaceuticals was ongoing in the 
WHO as set out in the Information Note on WHO activities related to the DPG issue which had been 
circulated to Members;  this work should not be duplicated.   The CTE had discussed whether it should 
deal with categories of DPG products which were not environment -related, such as foodstuffs and 
would have to reflect on how a such a definition of DPGs would fit into its mandate.  
53. The representative of Nigeria  said DPGs should be notified to provide sufficient and timely 
information.  Notification could be a starting point, or the end of the process.  Any further CTE role 
could be based on examining DPG notifications.   
54. The representative of the European Co mmunities  also expressed concern about undertaking 
work on illegal trade.  
 WT/CTE/M/15  
Page 14 
 
 
 Item 8   The relevant provisions of the Agreement on Trade -Related Aspects of Intellectual 
Property Rights  
55. The representative of India  presented his delegation's submission (WT/C TE/W/65), which 
addressed the relationship between the TRIPs Agreement and MEAs containing IPR -related 
obligations, specifically the Convention on Biological Diversity (CBD) which contained several IPR -
related obligations.  The paper kept in view the 1996 CTE Report, particularly paragraph 208.  As the 
CBD and the TRIPs Agreement were intrinsically linked, the CTE should discuss:  (a) the relationship 
between the provisions of the CBD and the TRIPs Agreement;  and (b) how to reconcile any 
contradictions the rein, in line with the CBD, or with the objective of conservation of biological 
resources.  India felt the TRIPs Agreement could incorporate an obligation on patent owners to 
execute Material Transfer and Transfer of Information Agreements (MTA/TIAs) for t raditional 
knowledge which was in the public domain or was a part of publicly accessible knowledge as a 
specific form of IP.  This would give shape to the CBD's objective of benefit sharing.  The CTE could 
also examine a system for patenting of indigenous knowledge and local, contemporary innovations of 
traditional groups.  
56. The representative of Colombia  felt the relationship between the TRIPs Agreement and the 
environment was important, particularly its compatibility with the CBD and with respect to 
technology transfer and protection of the knowledge acquired by traditional communities.  Knowledge 
acquired by indigenous groups whose social, cultural and economic conditions distinguished them 
from other strata of the national community.  After two years o f negotiations, in July 1996 the Andean 
Group, Bolivia, Colombia, Ecuador, Peru and Venezuela, had approved the Andean Decision 391 on 
access to genetic resources.  This Decision had considered the necessity to recognise the historical 
contribution made by  indigenous communities to biodiversity, its conservation and development, and 
to the sustainable utilisation and benefits of its intangible components.  There existed a strong link 
between traditional communities and biological resources that must be rein forced to conserve 
biodiversity, and the economic and social development of these communities in Andean countries.   
57. The Decision's objectives were to provide conditions for an equitable and active participation 
in the benefits deriving from access to genetic resources in Andean countries;  to establish a basis for 
the recognition and valuing of genetic resources and its intangible components, especially with 
respect to the involvement of indigenous Afro -American or local communities;  and to promote th e 
conservation of biodiversity and the sustainable use of biodiversity that contains genetical resources.  
An intangible component was any knowledge, innovation, individual or collective practice with real 
or potential value associated with genetic resourc es, protected or not by IP regimes.  The Decision 
gave traditional communities the right to decide on their own knowledge, innovations and practices 
associated with genetic resources and productions.  When agro -industrial pharmaceutical companies 
wished to  have access to genetic resources, derived products, or associated knowledge in the Andeas, 
the general conditions they should adopt were established in cooperation with traditional communities 
and approved by Colombia's Ministry of the Environment.  When access to biodiversity resources, 
genetic resources, or their intangible components was requested, contracts would have an annex 
which set out a fair and equitable distribution of benefits accruing from the use of such components.  
No rights would be recog nised, even IPRs, for genetic resources derived or synthesised from 
biodiversity products that did not comply with the Decision.  Colombia was in the process of 
implementing this Decision and determining the terms of the first contract for access to geneti c 
resources.  
58. The representative of the United States  recalled that Article 16.5 of the CBD, which called on 
Parties to cooperate to ensure IPRs were supportive of, and did not run counter to its objectives, had 
been negotiated at UNCED in 1992.  The TR IPs Agreement, which had been negotiated subsequently, 
had taken into account the obligations in Article 16.5 of the CBD and had comprehensively dealt with 
all types of IP.  Although India's paper noted the need to reconcile the TRIPs Agreement with the  WT/CTE/M/15  
 Page 15 
 
 
 CBD, and referred to contradictions between them, the U.S. did not see any such contradictions.  India 
had suggested that the TRIPs Agreement could be modified to help achieve the CBD's objectives, but 
had not indicated that anything in the TRIPs Agreement w orked against these objectives.  This was an 
interesting approach.  India had stated under Item 1 that no changes to the WTO were necessary to 
accommodate MEAs.  However, India's paper on Item 8 set out that India was prepared to examine if 
the TRIPs Agree ment could be changed to support the CBD's objectives.  In this respect, it could be 
considered what changes to WTO Agreements would be supportive of the Climate Change 
Convention, or the PIC Convention.  This introduced a new dimension to the discussions.   It would 
help to understand India's proposal on indigenous knowledge if there were an indication of which 
mechanisms, such as had been provided by Colombia, were in place to ensure indigenous knowledge 
was protected and rewarded;  the TRIPs Agreement bui lt on national approaches to IPR issues.   
59. The representative of Malaysia, on behalf of ASEAN , supported the view set out in paragraph 
7 of India's paper, that the fair and equitable sharing of benefits arising from patenting and 
commercial exploitatio n of genetic resources had not been dealt with in the TRIPs Agreement.  This 
was relevant to the CTE particularly in light of Article 8(j) of the CBD.  ASEAN also supported the 
need for the CTE to examine issues related to Article 16.5 of the CBD, and conc erning the CBD's 
emphasis on the need to share the benefits of biodiversity utilization with developing countries, 
including technology development and transfer.   
60. The representative of Canada  welcomed the paper from the CBD Secretariat 
(WT/CTE/W/64), which contributed to orienting Canada's discussion of TRIPs -related issues.  IPRs 
served various functions, including the encouragement of innovations and artistic creations and the 
disclosure of information on inventions.  IP laws reflected the need to ba lance rights to exploit 
creative endeavours with the principle of free exchange and information use to meet socio -economic 
goals.  The CBD was the MEA that dealt with the interface between IPRs and sustainable 
development;  it did not derogate from the TRI Ps Agreement.  The CBD Secretariat and Conference 
of Parties should work with the WTO and WIPO on related IP issues.  Canada welcomed the decision 
to extend observer status to the CBD Secretariat, and efforts to enhance information exchange 
between the WTO  and the CBD.  Many of the IP issues related to the CBD's goals could be addressed 
through existing mechanisms under the TRIPs Agreement, WIPO and domestic legislation.  
Discussions were taking place between the Canadian government and Aboriginal groups on  issues 
such as:  (a) the suitability of existing IP regimes for protecting traditional knowledge;  (b)  alternative 
mechanisms to IP systems, such as codes of conduct relating to access to traditional knowledge;  and 
(c) equitable sharing of the benefits a rising from its use.  Canada had noted the relevance of this 
dialogue in the context of forests, which would influence the development of its position on these 
issues.  Empirical evidence should be developed on the implications of IPRs for biodiversity 
conservation and the results of national research on related IP issues distributed through the CBD's 
clearing -house mechanism.  
61. Canada welcomed the establishment of a Code of Conduct on bioprospecting and 
ethnobotany by several companies.  At a recent meet ing of the CBD's Subsidiary Body for Scientific, 
Technical and Technological Advice, Canada had stressed the importance of WTO Secretariat 
collaboration and government contributions in this initiative.  Contributions by WTO Members and 
cooperation between the CBD and WTO Secretariats would help to identify issues related to the latter 
issue and trade liberalization and agricultural biodiversity.   Further clarification by the CBD 
Secretariat on the process, expected output and timetable of this exercise was  necessary.  As an 
observer, the CBD Secretariat could provide the CTE with regular updates of its work.  Possible 
topics for CTE discussion included:  (a) cost internalization of conservation and sustainable use of 
biodiversity in agriculture;  (b) subsid ies for "biodiversity -friendly" agricultural practices;  and (c) 
trade liberalization and genetic erosion.   WT/CTE/M/15  
Page 16 
 
 
 62. On biotechnology and biosafety, Canada's regulatory policy did not distinguish between 
products produced from conventional means or biotechnolo gy;  it was the effect of the end product in 
terms of regulatory objectives that was important.  Canada had an active biotechnology industry that 
continued to develop innovative products.  Some agricultural products required reduced pesticide use 
and were thus more environmentally -friendly than conventional crops.  In this respect, it was 
important for Parties to the Biosafety negotiations to reflect on IPRs, as well as TBT and SPS 
considerations (i.e., science -based risk assessments).  Canada amongst other s had notified technical 
regulations related to genetically modified organisms under the TBT Agreement.  Scientifically 
unjustified restrictions against genetically modified products could not only impact on existing market 
access opportunities, but impair  the ability to exercise IPRs.  Canada had taken note of the CBD 
Secretariat's request for efficient mechanisms that ensured a greater understanding of CBD 
developments impacting on the WTO through information exchange between the WTO and CBD 
Secretariats.  
63. The representative of Norway  said the interface between the TRIPs Agreement and 
environmental issues was being discussed in several fora, including the CBD and the FAO.  
Consistency between developing and interpreting different IPR -related instruments  was important;  
the interpretation and application of one agreement should not undermine the interpretation of others.  
The complex issues covered by the linkages between the TRIPs Agreement and biodiversity issues 
were reflected in WT/CTE/W/64 and WT/CTE /W/50, as well as in the 1996 CTE Report;  opinions 
differed on their scope and substance, and on how work to address them should proceed.  This should 
not prevent further discussion and empirical analysis.  In the meantime, it was essential to maintain 
the flexibility provided by the TRIPs Agreement for IPR legislation relating to life and biological 
material.  Any interpretation restricting this flexibility would send the wrong signal, particularly as the 
conservation and sustainable use of biodiversity, and the fair and equitable sharing of the benefits 
arising from its use were considered to be one of the main challenges.  The CBD Secretariat's paper 
(WT/CTE/W/64) identified issues for the CTE, including the need for cooperation between the WTO 
and the C BD.  Issues raised by India's paper (WT/CTE/W/65) were also relevant to the discussion.  
64. The representative of the European Communities  recalled that paragraph 208 of the 1996 
CTE Report noted work should be undertaken on whether and how the TRIPs Agree ment related to 
several issues.  The Secretariat could identify the relationship between the TRIPs Agreement and 
environmental protection, including relevant objectives in MEAs, such as biodiversity conservation, 
its sustainable use and equitable sharing o f the benefits arising from its use.  Parties to both the TRIPs 
Agreement and the CBD should implement them in a manner consistent with both Agreements to 
prevent conflict.  The CBD called on Parties to cooperate with the WTO to ensure patents and IPRs 
were supportive of its objectives, whilst also stipulating that, in the case of technology subject to 
patents and other IPRs, access to and transfer of technology to developing countries "shall be 
provided on terms which recognise and are consistent with the adequate and effective protection of 
IPRs".  The relationship between both Agreements should be kept under review in the CTE, if 
possible in cooperation with the CBD Secretariat in view of its work on access to genetic resources 
and on the implementation o f Article 8(j).  Decision III/17 of the CBD provided ideas for studies.  
65. The representative of India  thanked Colombia for its presentation;  benefit sharing contracts 
related to genetic resources with indigenous communities in the Andean Decision illust rated that 
India's proposal in WT/CTE/W/65 on MTA/TIAs had already been operationalized.  The CTE would 
benefit from studying models of MTA/TIAs.  India intended to share its national system and 
suggested the CTE request the CBD Secretariat to provide info rmation on the operation of national 
systems.  
66. The representative of Argentina  said there were two issues which the CTE could examine 
without having to discuss changes to the TRIPs Agreement.  First, the CTE could work on the basis of 
Articles 16.3 and 16.4 of the CBD, which provided for Parties to introduce regulations in their  WT/CTE/M/15  
 Page 17 
 
 
 domestic legislation.  Article 63 of the TRIPs Agreement provided for IPR -related legislations to be 
notified.  Consequently, the Secretariat could review notifications to the TR IPs Agreement to see if 
legislation had been notified pursuant to Article 16 of the CBD.  Second, the CTE could consider the 
built-in agenda of the TRIPs Agreement, whereby Article 27.3(b) would be reviewed in 1999.  In this 
context, the TRIPs Council may consider environment -related issues under discussion in the CTE and 
might look to it for guidance.  
Other Items  
Item 6   The effect of environmental measures on market access, especially in relation to 
developing countries, in particular to the least develop ed among them, and 
environmental benefits of removing trade restrictions and distortions  
67. The representative of Norway  suggested one way to reconcile trade and environment policies 
was to identify "win -win" situations, where trade liberalisation met bot h economic and environmental 
objectives.  A more liberal agricultural policy might have negative environmental effects in countries 
where agricultural production expanded, for instance due to a shift to more fertiliser -intensive 
production.  However, the a gricultural sector also contributed to environmental benefits, including 
preservation of cultural landscape, securing biodiversity and sustainable resource use.  Reduced 
agricultural production could lead to a reduction of these environmental benefits.  In  this respect, 
OECD work had broadened the discussion of these issues.  Analysis should include all environmental 
aspects, taking into account the multi -functional role of agriculture, and recognised country -specific 
and socio -economic conditions.  With re ference to fisheries, some subsidies contributed to 
maintaining or increasing overcapacity in the fishing fleet.  From a global perspective, this was not 
only a fisheries management problem, but an environmental problem.  Norway supported 
observations made  by  the U.S. and New Zealand in their submissions on fisheries.  The UNGASS 
had agreed that all aspects of fisheries subsidies should be studied before drawing any conclusions on 
their effects.  Whether or not trade liberalisation affected the fisheries s ector was an important 
question.  Norway supported the results of OECD studies, which pointed towards trade liberalisation 
having a small impact in the fisheries sector;  environmental effects were the result of sustainable 
resource management.  The OECD d istinguished between overexploited and efficiently managed 
stocks.  Although resource management was outside the WTO's scope,  trade in fish products was 
affected by tariff and non -tariff barriers (such as quotas, embargoes, licence requirements, sanitary 
standards) and the environmental effects of their removal should be evaluated.  
68. Concerning energy -related policies which might be environmentally -harmful, it was likely 
that such measures which interfered with market mechanisms had led to global energy  consumption 
that was not optimal from an economic and environmental perspective.  The World Bank had 
concluded that price reforms were necessary in the energy sector.  In implementing price reforms, 
environmentally -friendly energy sources should be taxed less than polluting sources;  it should be a 
policy goal to reduce and eliminate subsidies relating to polluting energy sources.  Whilst the World 
Bank confirmed that fossil energy subsidies had been cut by 50 percent during the last five years, 
subsidy ra tes remained high in several countries.   
69. The representative of Switzerland  asked if the studies referred to in the agricultural section of 
the informal Secretariat paper had taken into account the intensification of trade in goods that 
accompanied tra de and its environmental impact.  Commenting on the graph in the Secretariat's 
informal paper, taken from the 1996 Swiss trade policy review, he said the PSE equivalent in the 
footnote was incorrect and the correlation drawn between the PSE figure and fert ilizer use needed to 
be scientifically proven.  Experience had shown that in the Swiss regions benefitting from the highest 
degree of support, i.e. mountainous regions, fertilizer was used less than in other regions;  data on 
fertiliser use per acre was no t comparable between countries.  Although the environmental benefits WT/CTE/M/15  
Page 18 
 
 
 resulting from the elimination of some forms of agricultural support could not be denied, in many 
countries policies were geared to encourage environmentally -beneficial production methods , taking 
into account the benefits of agriculture, particularly on preserving landscape and biodiversity.  
70. The representative of Brazil  said the 1996 CTE Report recognized that the WTO could 
contribute to making trade and environmental policies mutually  supportive through trade 
liberalization, accompanied by appropriate development and environmental policies determined at the 
national level.  An open, equitable and non -discriminatory multilateral trading system and 
environmental protection were essential  to promote sustainable development.  Also, the 1996 CTE 
Report referred to the linkage between poverty alleviation and improved environmental quality and 
the role of increased trade and market access opportunities in this regard.  In paragraph 198, Member s 
had agreed to broaden and deepen the discussion of market access through a more focused sectoral 
analysis.  Sectoral work in Brazil demonstrated that concerns existed about the effects of some 
environmental measures on market access opportunities for Bra zilian exports.  Despite the voluntary 
nature of many environment -related measures, they could limit market access.  For developing 
country industries, especially SMEs, compliance with certain measures in the importing market was 
unfeasible.  For example, in the footwear and leather sectors, the costs associated with compliance 
might be so high as to discourage companies from participating in environmental programmes.  For 
textiles, the incremental costs related to compliance may be greater than the benefit s.  In the pulp and 
paper sector, there was a tendency for some measures to reward production patterns that prevailed in 
the importing countries, which were not relevant or impacted to the detriment of environmentally -
friendly methods of production in deve loping countries.  For developing country industries, 
particularly SMEs, compliance was difficult given a lack of funds for technological innovation.  
71. To be less detrimental to developing economies, environmental measures with trade effects 
should be tr ansparent, be based on consensus, and should not be unilateral or discriminatory.  The 
development and implementation of environmental standards should observe certain multilateral 
rules, such as the TBT Agreement and its Code of Good Practice;  be flexibl e enough to accommodate 
different forms and timings of implementation;  and take into account the principle of "common but 
differentiated responsibilities".  As recognized in the 1996 CTE Report, further work should focus on 
the environmental benefits of e nhancing market access opportunities for developing countries;  the 
environmental benefits of removing subsidies, tariff escalation and other trade restrictions or 
distortions.  Subsidies negatively affected trade and could also be environmentally -harmful.   Tariff 
escalation also imposed obstacles to economic diversification and barriers to the production of value -
added goods.  It reinforced economic dependence on a few commodities and weakened developing 
countries' capability to increase foreign exchange e arnings.  The removal of trade distortions, such as 
subsidies and tariff escalation, would contribute to achieving the objectives of sustainable 
development.  A sectoral analysis should include leather, textiles, forestry and agriculture.  
72. The represent ative of Australia  said the Singapore Ministerial Declaration had emphasised 
that the CTE should continue to examine the scope of the complementarities between trade 
liberalization, economic development and environmental protection, in which work on Item 6  was a 
key part.  In its 1996 Report, the CTE had agreed to broaden and deepen its analysis of this Item, 
including for agriculture, natural resource -based products, textiles and clothing, fisheries and non -
ferrous metals.  Concerning subsidies use in the fisheries sector, in 1994 the FAO had suggested that 
US$124 billion had been spent worldwide annually to catch US$70 billion worth of fish.  Most of the 
US$54 billion difference appeared to be made up by governments through measures such as low -
interest lo ans and direct subsidies for boats and operations.  Given this situation, the papers tabled by 
the U.S. and New Zealand were a welcome contribution to the CTE's work;  they drew attention to the 
role subsidies may play in the overcapacity of industrial fis hing fleets.  A range of problems posed 
threats to world fisheries, including degradation of aquatic and coastal environments through pollution 
and habitat destruction, wasteful fishing practices, and overfishing.  The harvest of many capture 
fisheries pro bably exceeded their long -term sustainable levels.  As mechanisms to reduce the  WT/CTE/M/15  
 Page 19 
 
 
 overcapacity of fishing fleets were necessary, the CTE could highlight the scope to reduce subsidies 
creating both trade and environmental distortions.  
73. The fisheries sector  offered an opportunity to promote reforms that would have trade and 
environment benefits.  Further CTE work on the fisheries sector could:  (a) review existing 
information on the provision and use of subsidies;  (b) examine WTO rules and their adequacy in  
disciplining these subsidies;  (c) review existing studies on the use of other trade and trade -related 
measures (e.g. high tariffs, tariff escalation, non -tariff access barriers);  (d) review the information on 
the environmental effects of subsidisation a nd other trade measures; and (e) identify trade reforms 
which would have environmental benefits.  It would be useful for UNEP to provide more information 
for the CTE's next meeting on its workshop on The Role of Trade Policies in the Fisheries Sector , 
case studies it had reviewed on the impact of fisheries subsidies, and its policy recommendations on 
the phasing -out of subsidies.  CTE work in this area should recognize the complexities involved in 
investigating the links between trade reform and environment al change.  Trade reform could offer 
opportunities for strengthening the WTO's role in promoting sustainable development, particularly for 
fisheries and agricultural subsidies, and high tariffs, tariff escalation and non -tariff barriers on 
products of inte rest to low -income commodity -dependent countries.  Such an examination should also 
recognize that the implementation of appropriate environmental policies determined at the national 
level were necessary for the full benefits of trade reform to be realised.  
74. The CBD Secretariat had drawn attention to Decision III/11 adopted at the third Conference 
of the Parties, which related to the conservation and sustainable use of agricultural biodiversity;  this 
Decision deserved CTE consideration under Item 6 as we ll as under Item 8.  The Decision noted the 
impact of biodiversity on agriculture, including the role of indigenous and local communities, and the 
impact of agriculture on biodiversity.  The Decision also identified actions necessary to promote 
sustainable  agricultural production, including action to redirect support measures which ran counter to 
the CBD's objectives concerning agricultural biodiversity.  The Decision highlighted the need for the 
CTE to explore the links between trade measures and the envir onment, and identify concrete steps 
which could deliver environmental benefits.  Although some subsidies may have environmental 
benefits, such issues could not be confined to considering the direct environmental effects of subsidies 
or other measures in th e countries which used them.  Indirect effects should also be considered, such 
as those on the trading opportunities of other countries.  A key issue was the scope for trade and trade -
related policy reform to reduce subsidies and other forms of assistance to sectors including fisheries 
and agriculture, and to change the forms of assistance.  
75. Although reference had been made to subsidies which could be environmentally -beneficial, 
particularly in the fisheries and agricultural sectors, the CTE should disti nguish between what might 
be valid policy objectives and the particular policy instruments used to achieve these objectives.  
More effective policy instruments may be available to provide income assistance to farmers or 
achieve other policy objectives with  fewer adverse side -effects, whether directly in the country 
involved or in its trading partners.  Trade distorting policies that might conflict with environmental 
objectives and promoting development opportunities should be identified.  Reform of such pol icies 
may contribute to achieving more environmentally -friendly domestic policies whilst providing the 
benefits of more open trade policies.   
76. The representative of the European Communities  said the discussion of market access was an 
opportunity to exa mine potential "win -win" situations, where trade liberalisation could yield benefits 
for both trade and the environment.  A sectoral analysis could also address environmental services, the 
only sector listed in paragraph 198 of the 1996 CTE Report which ha d yet to be addressed.  The 
removal of trade restrictions and distortions would increase the efficiency of the global economic 
system and reduce incentives for environmentally -damaging activities.  As trade liberalisation did not 
automatically result in en vironmental benefits, greater efforts may be necessary to implement 
effective environmental policies and sustainable development strategies to ensure trade liberalisation WT/CTE/M/15  
Page 20 
 
 
 was environmentally -beneficial.  Adverse production and consumption externalities sho uld be 
integrated into decision making processes, and reflected in the price of goods and services.  
Developed countries should improve their market access, particularly for LDCs.  Although 
environmental standards were not necessarily market access barrier s, implementing sustainable 
development required giving priority to the needs of developing countries.  To this end, transparency, 
technical assistance and differentiated schedules for the phasing -in of requirements would contribute.  
It was also necessary  to consider how to ensure exports from developing countries with a well -
assessed environmental advantage over other products benefited from the premiums ensuing from 
developed countries' environmental -related consumption patterns. A report of the Internat ional 
Institute for Environment and Development (IIED), Unlocking Trade Opportunities , illustrated how 
environmental policies and awareness in developed countries could enhance their export 
opportunities.    
77. Subsidies were not automatically trade -disrup tive or environmentally -damaging;  some were 
designed to overcome the market failure to account for environmental benefits.  Well -designed 
subsidies could play a role in environmental policies by providing positive incentives to encourage 
sustainable produ ction and consumption.  Where subsidies were linked to environmentally -harmful 
activities, steps could be taken to reduce and eliminate them.  Although agricultural trade 
liberalisation implied a modification in agricultural intensity affecting resource us e and the 
environment, such linkages were not automatic.  In certain circumstances, liberalisation might lead to 
an increase in intensity.  Sustainable agriculture required an integrated approach combining 
environmental, social and economic factors in a fr amework corresponding to agriculture's various 
functions.  Beyond the need to integrate environmental externalities, flanking policies may offset 
market failures, better incorporate environmental considerations into agricultural policy and support 
environm entally-friendly farming practices.  Without flanking support, liberalisation might have 
environmentally -harmful effects linked to land abandonment in marginal areas.  In areas which had 
been farmed for centuries, biodiversity was often linked to tradition al practices and, as noted at the 
1996 OECD Seminar on the Environmental Benefits of Sustainable Agriculture, in many countries 
farming was an environmental asset.  A distinction should be made between market distorting 
agricultural subsidies and those whi ch, by off -setting market failures, were designed to preserve 
common environmental utilities.   
78. An analysis of the forestry sector should consider the work of the Intergovernmental Panel on 
Forests.  Trade per se  was not the central issue for deforesta tion;  burning wood for fuel played a 
more significant role.  Emphasis should be given to the market advantages which could be gained 
through certification.  The IIED study was a useful reference.  Concerning fisheries, there had been a 
dramatic decline in  global fish stocks recently mainly due to overfishing.  National and international 
efforts to reverse this situation had not been entirely successful.  The EC asked whether the CTE 
should address in detail issues relating to resource management as these w ere already being 
considered in other fora, such as the FAO, OECD and UNEP, and was not covered by the CTE's 
mandate.  The EC welcomed the declaration of the Third Conference of Fisheries Ministers in 
September which called on international organisations w ith a competence in fisheries and trade to find 
solutions to work towards fisheries trade which complemented responsible fishing.  The CTE should 
focus on trade -related aspects, including whether WTO rules were supportive of initiatives to achieve 
sustaina ble fisheries management.   
79. There was no direct link between subsidies and overfishing.  As recognized in the U.S. paper, 
subsidies could have both negative and positive impacts on sustainable fisheries management and they 
could be a policy tool for en vironmentally -beneficial measures.  As recognized by UNGASS, they 
could also support sustainable fisheries management, aquaculture and traditional fishing methods.  
Information on other foras' work on subsidies should be obtained before the CTE decided to undertake 
an in -depth analysis to avoid duplication and identify opportunities for cooperation.  The EC 
supported New Zealand's proposal for the Secretariat to prepare a factual paper on WTO Articles  WT/CTE/M/15  
 Page 21 
 
 
 bearing on fisheries subsidies.  This analysis should be  extended to other sectors, particularly energy.  
New Zealand's proposal for the CTE to examine the extent to which WTO rules adequately regulated 
subsidies went beyond the CTE's mandate.  
80. Energy was an important sector, in view of the UNGASS and the De cember 1997 Conference 
of the Parties to the Climate Change Convention.  Whilst in some cases negative impacts on 
competitiveness could be viewed as a natural corollary of national priorities, in other cases 
environmental priorities responded to multilater ally-agreed objectives such as combatting climate 
change.  A relevant question was whether the WTO should develop mechanisms to address 
competitiveness concerns related to the introduction of measures to promote internalisation of global 
and transboundary environmental externalities.  As environmental externalities were not effectively 
internalised, renewable energy sources were at a price disadvantage compared to conventional energy 
sources.  Incentives to promote the development of renewable energy source s should be promoted.  
International cooperation to develop environmental taxation, especially to address global 
environmental problems, would reduce the risk of distortions and the need to rely on border tax 
adjustment to overcome the competitiveness impa cts of environmental taxes.  Scope for 
internalisation differed between sectors.  The EC would submit further suggestions on all sectors to 
the Secretariat in preparation for the Item 6 paper.  
81. The representative of Argentina  said, although his delegati on had focused on the 
environmental benefits of removing agricultural trade distortions, Argentina was ready to broaden the 
analysis for the sectors listed in the 1996 CTE Report.  In a market economy, prices were the 
arbitrators between factors intervenin g in production and signalling their shortage or abundance.  If 
prices were distorted by subsidies, they would not reflect the shortage of a given factor and 
consequently this factor could be overexploited.  Environmental factors might be undervalued or no t 
reflected in such a market system.  In the case of environmental factors, such as land, air, water, or 
natural resources, the effects may be irreversible.  Government interventions, such as subsidies or 
domestic support, and distorted market prices had n egative environmental impacts.  Conversely, their 
removal could yield environmental benefits.  Argentina was not suggesting trade liberalisation would 
bring about environmental benefits, per se .  However, if market interventions led to international price 
distortions, the government had the responsibility for the environmental consequences that this could 
generate elsewhere.  Whilst Argentina placed a high value on rural landscape, for example, it failed to 
see the link between protecting rural landscape an d distorting practices, such as export subsidies.  In 
effect, trade distorting practises could lead to rural poverty and urban migration, contributing to 
environmental and landscape deterioration.  Argentina's proposal on the environmental benefits which 
would ensue from agricultural trade liberalization (WT/CTE/W/24) had set out trade distorting 
practices already subject to reductions in so far as they affected production;  other measures such as 
those in the "Green Box" had been excluded as long as they d id not affect production or trade.  It 
would be useful for the CTE's discussions if UNEP could hold workshops similar to The Role of 
Trade Policies in the Fishing Sector , particularly for the agricultural sector.  
82. The representative of India  presented h is delegation's submission (WT/CTE/W/66) on the 
relationship of the TRIPs Agreement to the development, access and transfer of environmentally -
sound technologies and products (EST&PS).  The question of easy access to, and wide dissemination 
of proprietary EST&Ps through the transfer of such technologies and sale of such products on "fair 
and most favourable terms" was of particular interest to developing countries.  The paper limited the 
discussion to three situations:  (a) where proprietary EST&Ps were man dated to be phased -in directly 
or indirectly by an MEA (an MEA in terms of the definition under Item 1);  (b) where proprietary 
EST&Ps were related to national environmental standards or measures affecting imports into a 
country having such standards, espe cially imports from developing countries;  and (c) where 
proprietary EST&Ps were related to multilaterally -agreed environmental standards or measures 
affecting imports into a country having such standards, especially imports from developing countries, 
even  if they were voluntary.  The proposal brought out the relationship between WTO provisions on WT/CTE/M/15  
Page 22 
 
 
 IPRs and the environment, and addressed the need for the CTE to examine and recommend positive 
measures to achieve the environmental objective of encouraging the global use of EST&Ps that 
benefitted the environment, at least in the limited cases where these were mandated to be used under 
an MEA.  
83. The representative of Morocco  felt a discussion of the market access impacts of 
environmental measures should take in to account different country -specific natural and socio -
economic conditions and refer to the links between poverty and environmental degradation.  Although 
the U.S. and New  Zealand had dealt with fisheries, other sectors and issues merited attention.  The 
needs of commodity dependent and net food importing countries should be considered, as well as the 
conditions to allow SMEs to benefit from environmentally -beneficial market opportunities in textiles, 
leather and forest products.  Developing countries were  not generally in a position to incur the costs of 
environmental protection.  Elimination of tariff escalation would facilitate income gains in developing 
countries by increasing the value -added component of their exports.  Morocco supported a case -by-
case sectoral analysis to determine in which sectors the removal of trade restrictions and distortions 
could yield both economic and environmental benefits.   
84. The representative of  Canada  supported New Zealand's proposal for a study on the impact of 
subsi dies on the conservation of renewable fish stocks, which could be broadened to include tariffs 
and non -tariff measures.  Trade restrictions could impede conservation of fisheries resources by 
artificially inflating domestic fish prices, leading to overfish ing and impeding the adjustment process 
necessary for fisheries conservation.  Removing tariffs, non -tariff measures and subsidies could assist 
fish resource conservation by reducing fish prices and incentives to over -invest in the fisheries 
industry.  For  example, market reforms would help reduce the 25 per cent of world fish catch 
currently wasted.  
85. The representative of Japan  said the nature of the environmental effects of trade measures 
varied according to the natural and socio -economic conditions in  each country.  Thus, the claim that 
all trade measures preventing trade liberalisation should be removed was unacceptable.  Agricultural 
policies should be based on a mix of socio -economic and  environmental goals.  Implementing 
appropriate environmental policies was essential, without which trade liberalisation could be 
environmentally -harmful.  Trade measures designed to encourage environmental benefits should also 
be considered.  The U.S. and New Zealand's submissions noted that subsidies removal in the  fisheries 
sector would result in environmental benefits based on their understanding that subsidies contributed 
to overfishing.  Overfishing was a result of inadequate conservation management and could not be 
assumed to be the direct result of subsidies.  This issue should be clarified based on a case -by-case 
analysis of the fisheries sector.  
86. The representative of Mexico  said the structure of the U.S. paper would serve as a guide for 
the Secretariat's sectoral paper on Item 6.  In principle, Mexico sup ported New Zealand's proposal to 
study WTO Articles that had a bearing on fisheries subsidies, which could include market 
access -related issues and take into account work in other fora, such as the OECD.  
87. The representative of  the United States  said oth er fora were addressing fisheries subsidies;  
the CTE should not duplicate these efforts and should remain within its terms of reference.  The 
attention being given to trade distorting measures in the fisheries sector, including subsidies, was 
indicative o f the importance of this issue.  In response to Japan, the U.S. had not suggested that 
subsidies were the only issue in the fisheries sector;  to the extent trade reform could contribute to 
achieving environmental objectives, the CTE should examine this is sue.  Commenting on India's 
paper (WT/CTE/W/65), he asked if references made to MEAs mandating the use of certain 
technologies stemmed from practical experience.  Although certain MEAs prohibited the use of  
particular environmentally -damaging technologies , it was unusual for MEAs to require specific 
proprietary technology.  The U.S. could not support the solutions which India had identified.  With  WT/CTE/M/15  
 Page 23 
 
 
 respect to compulsory licensing and reductions of terms of patentability for environmentally -friendly 
products , care was needed in finding such solutions.  If a situation were created with less incentives to 
produce environmentally -sound technologies, such as reduction in patent terms or compulsory 
licensing, the private sector would invest elsewhere.  This would not be environmentally -beneficial.  
He did not understand the linkage made by India between market access and technology transfer.  
88. The U.S. intended to submit a paper on market access for environmental services.  
Environmental services included implem entation of new or existing systems for environmental clean -
up;  pollution prevention;  source reduction and monitoring;  implementation of environmental quality 
control and pollution reduction services;  maintenance and repair of environmental -related sys tems;  
on-site environmental investigations;  evaluation monitoring;  and consulting relating to each of these 
sectors.  Estimates were that this sector would grow from approximately US$420 billion in trade to 
US$600  billion by 2010.  Survey work had sugge sted that, apart from a small number of large firms 
which were active in a few market segments, the environmental service industry was predominantly 
made up of SMEs, which would benefit from liberalization in this sector.  Market access for 
environmental s ervices could increase the availability of these services, thereby creating 
environmental benefits.  All countries would benefit from cheaper and more efficient environmental 
services, particularly developing countries.  Trade liberalisation in this sector  would also encourage 
technology flows to help build domestic capacity to improve environmental performance.  In the 
session with MEA Secretariats, the GEF had identified a lack of knowledge on the availability of 
environmentally -sound technologies.  In th is respect, trade liberalisation in environmental services 
would result in benefits for both trade and environment.   
89. The representative of New Zealand  felt more information on the UNEP Workshop on The 
Role of Trade Policies in the Fisheries Sector  would contribute to the CTE's understanding of the 
issues involved.  It was uncertain whether the distinction between positive and negative subsidies 
could be made in the fisheries sector.  Positive payments to the fishing industry were not likely to 
achieve good environmental outcomes.  For example, vessel buyback schemes designed to reduce 
fishing capacity and overexploitation of fisheries resources could result in old, inefficient vessels 
being replaced by new, efficient ones.  Views differed and no conclus ion should be made regarding 
positive fisheries subsidies contributing to fish conservation.  Since UNCED, several international 
mechanisms had been negotiated, such as the FAO Code of Conduct on Responsible Fisheries, and 
the UN Agreement on Straddling Fi sh and Highly Migratory Fish Stocks.  Although these instruments 
set out rules to assist fisheries conservation and management, none addressed subsidies and WTO 
rules directly.  Mexico and Canada's suggestions to broaden the scope of the Secretariat study 
proposed by New Zealand were useful.  As the EC had noted, only Members could determine how 
adequate WTO rules were in regulating fisheries subsidies.  This matter could be examined after a 
Secretariat background paper had set out the issues.  Argentina ha d had difficulty seeing the link 
between trade distorting policies and landscape preservation;  an environmental rationale should not 
be constructed for what appeared to be, in a number of cases, trade distorting or restrictive measures.  
He welcomed the U .S. intention to submit a paper on environmental services.  
Item 2   The relationship between the provisions of the multilateral trading system and charges 
and taxes for environmental purposes  
90. The representative of the United States  said the U.S. experie nce should be considered as an 
example of approaches to conduct environmental reviews of trade agreements.  In the NAFTA and 
WTO reviews, the analysis had used existing government resources.  While both reviews had drawn 
on published private sector analyse s on the possible environmental impacts of liberalized trade and on 
public input, the bulk of the analysis had drawn on U.S. government expertise.  The NAFTA review 
had been a two -stage process, while the WTO review had been conducted in a single stage.  F or 
NAFTA, an initial review had been conducted at the outset of the negotiations to identify the WT/CTE/M/15  
Page 24 
 
 
 environmental issues raised, assess the possible environmental impacts, and develop 
recommendations for U.S. negotiators on ways in which these issues might be  addressed.  The WTO 
review had been conducted at the end of the negotiations, and identified possible environmental 
impacts of the WTO Agreements.  
91. A two -stage review required more resources than a single -stage review.  The resources 
required were link ed to the number and complexity of environmental issues raised.  Most of the 
resource for a two -stage review were associated with the initial review which identified the issues and 
proposals to address them.  The second stage required fewer resources, as i t involved an assessment of 
the agreement in light of the issues initially raised.  This had been the case for NAFTA;  the initial 
review had taken eight months, and the follow -up eight weeks.  By conducting an initial review early 
in the negotiating proce ss of NAFTA, the U.S. had been able to respond to critical environmental 
issues and address public concerns at an early stage.  
92. Both the NAFTA and WTO reviews had involved legal analyses of the impacts of the 
agreements on U.S. laws on health, safety an d environment, which had not required significant 
additional resources, since U.S. negotiators had engaged in this analysis to determine their negotiating 
positions.  The NAFTA review had required more analysis of the potential environmental impacts of 
changes in trade flows on environmental factors (such as air and water quality, and species 
conservation), particularly on the U.S. -Mexico border.  While the WTO review also examined certain 
environmentally -sensitive sectors, the analysis was more general.   
93. The NAFTA review had used a two -scenario model ("NAFTA" and "no NAFTA").  Existing 
private sector analyses had been used to predict potential effects.  This model had not required 
significant additional resources.  The extent of public input had had a large impact on the cost of the 
reviews.  For NAFTA, public comments had been solicited (through publication of a Federal Register 
notice, as well as public hearings) on the potential environmental impacts, and a draft of the initial 
review had been issued  for public review in October 1991.  The final version of this review had been 
issued in February 1992.  Written comments had been solicited from the public (through a Federal 
Register notice) at the outset of the WTO review.  The public comment process ha d been useful in 
addressing potential environmental implications.  
94. The initial NAFTA review took 8 months to complete (from June 1991 to February 1992), 
while the follow -up required two months (from September to November 1993).  The WTO review 
required six months to complete (February to August 1994).  While it was more difficult to estimate 
the number of employee hours to produce these reviews, USTR and EPA each had contributed about 
3/4 and 1 1/2 person/years to prepare the NAFTA reviews, while more th an a dozen other agencies 
had contributed a total of two person years.  The WTO review had required only around two person 
years as the analysis was not as complicated as for NAFTA and the government had performed the 
substantive analysis.  For NAFTA, EPA had contracted out the printing of both reviews, which had 
amounted to $60,000 for the initial review, and $17,000 for the follow -up.  There had not been any 
extra costs for the WTO review as its production had been accomplished in -house.  
95. The represent ative of Norway  asked how the U.S. had dealt with the confidentiality of 
negotiations when consulting the public during the negotiations.  
96. The representative of the United States  replied that reviews solicited input into the 
development of U.S. negotiat ing positions and determined the environmental issues.  Follow -up 
reviews provided an explanation to the public as to how their comments had been incorporated in the 
negotiating positions and how environmental issues had been addressed.   
  WT/CTE/M/15  
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 Item 3(a ) The re lationship between the provisions of the multilateral trading system and 
charges and taxes for environmental purposes  
97. The representative of the Federal Office of the Environment of Switzerland  made a 
presentation on the Swiss incentive tax on volatile organic compounds (VOCs), which was an 
example of progress in environmental policy focusing on economic instruments.  This tax aimed to 
achieve efficient environmental protection by offering price -based financial incentives, and 
supplementing conventional command and control instruments.  A summary of the slide presentation 
and explanation of the VOC tax was circulated to Members.  
98. The representative of Canada  asked Switzerland to clarify how the tax was calculated and to 
give examples of products contai ning VOCs.  
99. The representative of Switzerland  replied that the tax was levied according to the VOC 
content of a product, by calculating the per cent of VOC to the product's total mass.  For example, if a 
100 kg product contained 20 per cent of VOCs, 20 kgs would be taxed.  The main VOC products were 
organic solvents, such as paints, varnishes and many cleaning products.  Cosmetics also contained a 
minimal VOC content of under 1 per cent.  The tax was not levied on products with lower than 3 
percent VOC c ontent to simplify its application at the border.   
100. The representative of the European Communities  said eco -taxation was an increasingly 
important issue as recognized by the UNGASS, and in view of its wide use in OECD countries.  This 
was a positive d evelopment as eco -taxes were less trade -restrictive, more market -friendly, and their 
operation more transparent than conventional command and control instruments.  The relationship 
between eco -taxation and the WTO raised complex issues, particularly on bor der tax adjustment.  
WTO rules on taxation applied to instruments irrespective of their policy purpose.  The ability to 
devise and enforce ad hoc  disciplines for a specific category of charges and taxes, such as 
environmental ones, was difficult as taxes r esponded to a variety of objectives.  As noted in the 
OECD Report on Environmental Taxes and Green Tax Reform , the definition of what constituted an 
eco-tax had not been agreed.  Another issue which deserved attention was the relationship between 
eco-taxes  and competitiveness.  Although policy choices in eco -taxation should not be unduly 
determined by competitiveness concerns, this was a factor which  impacted on the debate, both 
nationally and internationally.  Although the use of economic instruments was based on the fact that 
they were more effective and less costly than other instruments, proposals to introduce eco -taxes had 
been opposed by industry on competitiveness grounds.  The analysis in WT/CTE/W/47 was useful, 
but parts would benefit from refineme nt, such as the statement in paragraph 19 that, for reasons of 
competitiveness, it may prove difficult for governments to tackle production -related pollution.  The 
EC's experience had shown that environment policy had successfully dealt with industrial pro duction -
related pollution.   
101. The need to tackle other environmental problems played a role in the development of eco -
taxes, such as resource use, consumption, waste disposal and environmental cost internalization.  
Parallel application of price -based instruments might offer economic gains by reducing the risk of 
double taxation and addressing competitiveness concerns.  The OECD Report indicated that 
international coordination could minimise the risk of competitiveness effects in some sectors.  The 
CTE could recommend increased coordination on eco -taxation in appropriate international fora.  The 
suggestion in paragraph 22 of WT/CTE/W/47 to consider the establishment of rules and principles for 
standardisation of policies in eco -taxation similar to the TB T Agreement might go beyond the CTE's 
mandate.  
102. The representative of the United States  said the EC had raised some interesting issues related 
to border tax adjustment.  However, this was only part of a debate being developed in another forum.  
One iss ue was the extent to which multilateral agreements could coordinate policies and measures WT/CTE/M/15  
Page 26 
 
 
 such as taxation.  Coordination on taxation was a complex process whether within a country or 
between countries.  The U.S. did not feel the CTE could reach consensus on the EC's proposed 
recommendation.  
Item (3b ) The relationship between the provisions of the multilateral trading system and 
requirements for environmental purposes relating to products, including standards 
and technical regulations, packaging, labelling and recycling  
103. The representative of Canada  welcomed Japan's notification of its eco -labelling programme.  
Canada understood such notifications were under the terms of paragraph 185 of the 1996 CTE Report.