RESTRICTED  
WORLD TRADE  WT/CTE/M/12  
 21 October 1996  
ORGANIZATION  
 (96-4380)  
 
Committee on Trade and Environment  
 
 
 
 REPORT OF THE MEETING HELD ON 11 -13 SEPTEMBER 1996  
 
 Note by the Secretariat  
 
 
1. The Committee on Trade and Environment met on 11 -13 September 1996 under the 
chairmanship of Ambassador Juan Carlos Sánchez Arnau of Argentina.  The agenda contained in 
WTO/AIR/403 was adopted.  
 
 
Items 1 & 5  The relationship between the provisions of the multilateral trading system and trade 
measures for environmental purposes, including those pursuant to multilateral 
environmental agreements ;  and  
 
The relationship between the dispute settlement mechanisms in the  multilateral trading system and those 
found in multilateral environmental agreements  
 
2. The representative of the United States  presented his delegation's non -paper (dated  
11 September 1996) which put forward a number of principl es relating to the relationship between 
multilateral environmental agreements (MEAs) and the WTO for inclusion in an agreed framework to 
be presented to Ministers for their endorsement.  
 
3. The representative of Japan  said that the WTO should demonstrate its willingness to respond to 
new issues, especially trade and the environment and that the results of CTE discussions would have an 
impact on WTO credibility.  CTE progress on Item 1 should be fully reflected in Section III of the 
Report of the CTE to the Singapore Ministerial Conference (the "Report"), from which further discussion 
on this Item could be built.  Japan proposed including the following elements in Section III:  (i) a 
mechanism to enhance dialogue and cooperation betwee n MEAs and the WTO should be established, 
with an expansion of the CTE mandate as necessary;  (ii) certain disciplines were necessary to provide 
predictability and stability on the relationship between trade measures pursuant to MEAs and the WTO;  
(iii) th e differentiated approach (i.e. the distinction between trade measures between MEA Parties and 
between Parties and non -parties, and the distinction based on the specificity of the trade measure) should 
be the basis for building consensus on possible discip lines for trade measures pursuant to MEAs and the 
WTO;  (iv) in the differentiated approach, priority should be given to the Party to non -party issue in 
future work;  and (v) to make trade and environmental policies mutually supportive, the WTO should 
ensure that any disciplines would be no more restrictive to MEAs than the status quo . 
 
4. The representative of New Zealand  said a range of approaches had been suggested to deal with 
this Item and views remained divergent and strongly -held.  In addition to the approach suggested by the 
United States, to adduce some "key themes" for Ministerial endorsement, New  Zealand saw merit in 
focusing on identifying common ground in Singapore based on an examination of different categories of 
trade measures.  Some of these categories could be dealt with before Singapore and the rest after. This 
was a useful way to proceed as there was a problem to be resolved and a "deliverable" package should be 
secured in Singapore.  On current indications, such a package was unlikely to resolve the fundamental WT/CTE/M/12  
Page 2 
 
disagreement over the compatibility of relevant international law.  If this issue were ignored, it would 
leave a dubious legacy for the trade and environment communities.  For example, there would continue 
to be the negotiation of trade measures in MEAs whose position vis-à-vis WTO rules was uncertain which 
would act as a deterrent to some countries to sign MEAs.  The CTE effectively would be saying that this 
was an issue which it would leave to the dispute se ttlement process.  It might be difficult, but it was not 
premature to address this issue.  A status quo  outcome which attempted to do more than reflect common 
conclusions could amount to an interpretation, which was not doing nothing.  Although "do -nothing " 
outcomes appropriately nuanced might constitute an acceptable result in Singapore, he asked if that was 
as far as the CTE's collective vision extended.  A better approach could be to present modest, but tangible 
results which demonstrated the seriousness  of the CTE's commitment to addressing this issue.  New 
Zealand saw merit in a statement that set out that specific trade measures agreed between MEA Parties 
were unlikely to represent a real problem of WTO -consistency.  This was possible and practical and  
addressed the desire that WTO rules should not hamper the ability of MEAs to achieve their 
environmental objectives.  Another possibility was to refer to factual observations on the WTO -MEA 
issue arising from the CTE's analysis.  Although it might not be possible to address substantively the non -
party issue, if it were agreed that the CTE needed to present credible results, this fact could be 
acknowledged and agreement reached to take up this issue after Singapore.  
 
5. The represent ative of the European Communities  said his delegation had ambitious expectations 
for results on this Item.  The EC's approach, contained in a non -paper (dated 23 February 1996) on how 
to address the interface between MEAs and the WTO, was based on certain philosophical assumptions.  
Results had to be presented which were credible on controversial issues, among which MEAs.  With this 
in mind, the EC was prepared to work towards the best possible outcome in Singapore.  Results should 
be balanced and should fo rm a package.  If ambitions on Item 1 aimed no higher than a policy statement 
along the lines of the US and Australia's proposals, then no more ambitious results could be expected on 
other Items.  
 
6. The representative of Australia  said his delegation would consider the US proposal which 
presented the type of solution that would be of value to the CTE.  The focus should be on presenting 
results which were realistic, set out divergences of views and pro vided tangible outcomes, whereby the 
WTO recognized and would continue to work on difficulties.  
 
7. The representative of Switzerland  felt that although the type of solution proposed by the United 
States was minimalist, it provided a basis for tangible results.  Although it was true there were divergences 
in the CTE and positions were far from apart, as New Zealand had recognized, the CTE was confronted 
with a difficult problem with which it would have to deal.  Switzerland felt it w as a matter of defining the 
legal relationship between two types of international agreements, the WTO and MEAs.  From this 
perspective, a result which would be a political statement on the least problematic aspects of this issue 
would not permit a durable solution and was not satisfactory.  Further efforts should be undertaken to 
reach a consensus on the legal aspects.  Although it would be difficult to do so in the time available, any 
agreement in Singapore should not close any doors and should provide a p latform to continue work in 
this field with a view to reaching concrete solutions.  Switzerland supported Japan's comment that a clear 
message be sent to Ministers on the need to enhance cooperation between the WTO and MEAs, along 
the lines of the Swiss no n-paper (dated 20 May 1996).  
 
8. The representative of Korea  said that divergences in the proposals on this Item could not be 
attributed to technical factors but to systemic, legal and political aspects.  As a result, it was unlikel y that 
issues relating to Item 1 would be resolved entirely in Singapore even though a possible consensus was 
emerging on issues such as avoidance of unilateralism and enhancement of transparency.  The CTE's 
efforts had yielded meaningful progress and had crystallized several options and identified their merits 
and demerits.  The Ministerial Conference should take note of progress on this Item and take a decision 
to continue work in the CTE, including:  (i) analysis of all the options in the proposals takin g into account 
the concerns expressed, particularly in Section  II of the Report;  (ii) analysis based on elements such as 
specificity and trade measures between MEA Parties or against non -parties, as identified in Korea and          WT/CTE/M/12  
         Page 3 
 
New Zealand's proposals;  and (i ii) modalities to promote cooperation between the WTO and MEAs to 
enhance transparency.  
 
9. The representative of the United States  said his delegation was not looking for a minimalist 
solution and it's non -paper proposed a starting  point from which to build in order to reach the highest 
level of consensus possible.  
 
Item 2  The relationship between environmental policies relevant to trade and environmental 
measures  with significant trade effects and the provisions of the  multilateral  trading 
system  
 
10. The representative of the United States  said that the Ministerial Conference should endorse the 
concept of environmental reviews of trade agreements as had the UN Commission on Sustainable 
Development and other o rganizations.  In this regard, the United States had circulated a non -paper 
(dated 11 September 1996) containing a draft Decision on environmental reviews.  
 
11. The representative of Norway  said that recommendations to Ministers shou ld include 
environmental reviews of trade agreements in the context of further trade liberalization.  
 
12. The representative of Mexico  recalled her delegation's comments on environmental reviews of 
trade agreements at previous meetings.  
 
Item 3(b)   The relationship between the provisions of the multilateral trading system and 
requirements for environmental purposes relating to products, including standards  and 
technical regulations, packaging, labelling and recycling  
 
13. The representative of the United States  presented his delegation's non -paper (dated 11 
September 1996) containing a draft Decision on transparenc y of eco -labelling, which built on a previous 
proposal by the United States (WT/CTE/W/38).  In light of the disagreement regarding the issue of the 
coverage of the TBT Agreement and without proposing another notification requirement, the United 
States sugg ested that this be a Ministerial decision in which the importance of transparency could be 
agreed.  In his delegation's consultation with the private sector on this issue, the environmental and 
business communities and consumer groups had indicated that th e enhancement of transparency met 
their objectives.  
 
14. The representative of the European Communities  said his delegation's non -paper on 
eco-labelling (dated 23 July 1996) outlined that it might be inappropriate to address the transparency issue 
without first clarifying the status of life -cycle assessment (LCA) tools in voluntary eco -labelling. Although 
the US proposal was not consistent with this idea, the EC recognized that it contained some useful 
elements.  For the reasons o utlined under Item 1, the EC was not convinced that it would be appropriate 
to adopt a specific Decision on eco -labelling in Singapore.  At this stage, it was preferable to deal with 
eco-labelling in Section II of the Report, possibly including some policy  conclusions for consideration by 
Ministers depending on the format of the Report and the outcome on other Items.  The EC did not feel 
that the elements in the development of an eco -label listed in the US proposal constituted independent 
status in the deve lopment of eco -labelling programmes, e.g. the manner in which non -domestic 
environmental practices were taken into account in determining product eligibility was a horizontal 
requirement.  
 
15. The representative of Canada  responded t o comments on his delegation's draft Decision on eco -
labelling (WT/CTE/W/38 -G/TBT/W/30).  Many delegations had questioned the staged approach to 
eco-labelling whereby the CTE would agree in Singapore on notification requirements and address life -
cycle appr oaches (LCA) and non -product -related process and production methods (PPMs) after 
Singapore;  this would not prejudge the non -product -related PPM issue.  While it was clear that 
measures dealing with "labelling requirements as they apply to a product, proce ss or production method" 
fell within the TBT Agreement's scope generally, it was less clear whether coverage extended to all WT/CTE/M/12  
Page 4 
 
measures relating to any PPM, including those that were non -product -related, particularly with respect to 
standards, given the ambi guous wording of the definition contained in Annex 1 of the TBT Agreement.  
Canada's draft Decision was based on this distinction.  The CTE should be able to agree that eco -labelling 
programmes, as other labelling programmes, fell within the TBT Agreement' s general scope without 
prejudging whether specific eco -labelling standards based on non -product -related PPMs were covered.  
Although the CTE could agree to disagree on the TBT Agreement's coverage of the latter, this should 
not preclude the recognition th at eco -labelling programmes should be established in accordance with the 
TBT Agreement's provisions.  Within eco -labelling programmes, it was not possible to separate 
performance -based and non -product -related  PPM -based product criteria.  The EC's suggestio n for a 
parallel code of conduct for eco -labelling programmes meant taking out of the TBT Agreement 
performance -based product criteria even though they were standards like any others.  This could lead to 
"forum" shopping and possibly conflicting or reduced  obligations.  The US proposal on enhanced 
transparency could supplement basic TBT disciplines.  However, it was not viable as a stand -alone 
proposal and might provide encouragement to those that favoured a parallel code of conduct.  
 
16. Concern existed that action to recognize LCA and possible use of non -product -related PPMs in 
voluntary eco -labelling programmes might create precedents elsewhere.  Canada recognized and shared, 
to a certain extent, these concerns with respect to the c oncept of "like product".  Canada's approach 
reflected the business needs of it's forest products industry in responding to market demands although 
other industries, such as chemical industries, textiles, and consumer products, had faced similar issues.  
For example, paper had the same physical characteristics, whether it was produced from 
sustainably -managed forests, whether it used chlorine or alternate bleaching technology and whatever the 
percentage of recycled fibre content.  However, consumers had dem onstrated purchasing preferences 
for what they perceive as environmentally -preferable paper that pertained to non -product -related PPMs.  
Canadian industry had responded to this market reality and it's concern had shifted from "like products" 
to equivalency .  For business, the issue was whether product differentiation on the basis of non -product -
related PPMs reflected differences in environmental absorptive capacities and policy requirements 
between countries.  Concern had moved from whether such process dif ferentiation was valid to how to 
ensure that such differentiation was not abused for protectionist reasons.  
 
17. Another concern pertained to the fear of developing countries regarding labour standards, which 
was shared by at least o ne developed country, albeit from a different perspective.  For some, the CTE 
would be opening the door;  for others it would be closing it.  Canada had stated it's intent to ensure that 
non-product -related PPMs did not spread beyond the context of volunta ry eco -labelling programmes.  
Another concern related to the term "international standards" in the draft Decision.  Discussion of this 
issue had focused on the use of ISO 14000 as an example of work on international standards in this area, 
given concerns a bout the degree to which ISO reflected international consensus.  Acknowledging these 
concerns, Canada had proposed unsuccessfully that UNCTAD convene an experts group meeting to 
examine this issue.  Regardless of Canada's general views on ISO, the market i mpact of ISO 14000 must 
be recognized.  Industry participation at the recent ISO TC 207 meeting indicated the degree to which 
industry was looking to ISO to develop such standards to respond to market requirements.  This impact 
should be discussed jointly by the CTE and the TBT Committee.  Canada's reference to international 
standards in the draft Decision was open -ended given work underway in the Global Eco -labelling Network 
and the emergence of sectoral environmental management standards.  While Canada di d not preclude 
consideration of domestic standards based on LCA as suggested by one delegation, reference to 
international standards was appropriate for the reasons outlined above.  This responded to criticism of 
Canada's proposal (WT/CTE/W/21 -G/TBT/W/21) that eco -labelling programmes be developed 
according to multilaterally -agreed guidelines which were still under development.  Given that such 
guidelines, in the form of guiding principles, methodologies and procedures rather than specific values or 
indicat ors, would likely come into effect during the next CTE mandate, it was appropriate to review their 
possible impact.  
 
18. Some delegations had questioned whether voluntary eco -labelling programmes were effective 
market -based policy in struments to encourage environmentally -preferable products and services.  Some 
had suggested analysis of their commercial impact, notwithstanding UNCTAD case studies and Agenda          WT/CTE/M/12  
         Page 5 
 
21 references to them.  While the success record of eco -labelling programmes wa s mixed, several had 
demonstrated market impact.  While further analysis was possible, it should not preclude action on basic 
notification and related disciplines.  Concern had been expressed by some developing countries on 
difficulties encountered by smal l and medium -sized enterprises (SMEs) in developing countries with 
respect to eco -labelling programmes.  As with all standards, the challenge for SMEs in all countries, 
particularly developing countries, was more difficult than for larger companies, but th e impact of eco -
labelling should not be exaggerated.  Experience with Canada's eco -labelling programme, shared by the 
Nordic Swan programme, was that producers need not be aware of the procedures of the eco -labelling 
programme given that it was their impor ter that provided the necessary interface with the programme.  
Consulting with eco -labelling experts on the problems of developing country exporters, particularly in the 
textile sector, revealed that, while developing country exporters strongly resented th e use of non -product -
related PPMs, they adapted to market requirements.  The issue was one of transparency and the 
opportunity to participate in product group selection and product criteria, which was the aim of the TBT 
Code of Good Practice.  
 
19. A valid concern of many developing countries was a requirement for more time to adapt to the 
new market requirements posed by eco -labelling programmes.  An example was the German technical 
regulation banning the use of azo dyes in textiles a nd clothing (G/TBT/Notif.93.312).  This 
non-product -related PPM had not been challenged by the countries most concerned, but rather their 
industry chose to adapt to it.  This likely reflected that the importing country provided opportunity to 
comment to af fected exporters and delayed the implementation date to provide time for exporters to 
adapt.  Some case studies demonstrated the practical approach taken by developing country industries.  
The Textiles Committee of Bombay had taken a "pro -active" role in a dvising member companies how to 
adapt to the requirements of eco -labels (see Eco-labelling and other environmental quality requirements 
in textiles and clothing:  indications for developing countries , International Trade Centre, 1996).  A 
leading Indian te xtile wholesaler and retailer, Ramlal Durgadutta and Co., developed an "eco -collection" 
of fabrics and found that "the cost of production increased only marginally but the product image and 
reliability gets significantly upgraded", which improved profitabi lity.  Canada's preliminary conclusion was 
that existing Article  12 provisions of the TBT Agreement were adequate to address the practical concerns 
of developing country exporters, particularly on the requirement for additional time to adapt to new 
market requirements.  For Article 12 to apply, agreement was necessary that eco -labelling programmes 
were within the TBT Agreement's general scope.  Once this first step had been taken, Canada would not 
object to exploring whether additional provisions were requi red in a post -Singapore work programme 
along with consideration of mutual recognition and equivalency.  One delegation had noted the absence 
of an equivalency provision in the Code of Good Practice in contrast to the relatively weak obligation of 
Article 2 .7 of the TBT Agreement.  The TBT Triennial Review should consider equivalency issues for 
the TBT Agreement and Code of Good Practice as this was a generic issue.  Canada's eco -labelling 
practitioners were addressing equivalency and related issues.  UNEP a nd UNCTAD also could play a 
role in this regard.  There had been suggestions that the CTE might look at how eco -labelling 
programmes carried out LCA in their selection of product criteria.  The distinction between full life -cycle 
analysis and more approxim ate life -cycle approaches had been noted and further consideration of how 
the latter were applied in the development of product criteria could be part of future work.  Concerning 
technical assistance, the ITC had an active programme that addressed the prac tical aspects of eco -labelling 
programmes and related requirements as part of it's Uruguay Round follow -up seminars.  
 
20. Concrete results on eco -labelling in Singapore were important.  It would be ironic if the CTE 
failed to address the one Item with the most immediate trade impact.  Agreeing on only further analysis 
would demonstrate to the business community that th e CTE was not serious in addressing the trade 
implications of environmental policies which risked a panel being established which involved these issues.  
The panel would in effect determine policy with only the input of the parties (and perhaps the third 
parties) to the dispute.  CTE Members should provide policy guidance to future panels on the issues 
related to eco -labelling.  Absent such policy guidance, Canada's understanding of the status quo  was:  
(i) eco-labelling programmes, whether voluntary or mandatory, would be considered to fall under the 
general scope of the TBT Agreement and the Code of Good Practice.  This reflected the fact that the 
granting of eco -labels was analogous to standard setting and the bodies that granted eco -labels were a form WT/CTE/M/12  
Page 6 
 
of standardizing body.  As noted by Australia, the TBT Committee's Decision that a label was covered 
by the TBT Agreement irrespective of the information contained in (or behind) the label was likely to be 
a relevant factor;  (ii) for volunta ry eco -labelling programmes, the coverage of the TBT Agreement with 
respect to non -product -related PPMs might be unclear given the ambiguity of the definition of standards.  
Depending on the case and the nature of the panel submissions, the panel might con sider the issue in 
terms of whether a particular eco -label criteria based on non -product -related PPMs was discriminatory, 
and not necessarily whether it was a non -product -related PPM;  and  
(iii) the emergence of international standards based on LCA such as  ISO 14000 might create the basis for 
the rebuttable presumption that any such standard did not create an unnecessary barrier to international 
trade (Article 2.5).  Given that ISO standards were management standards relating to compliance with 
local policy  requirements, the issue was more likely to revolve around whether the eco -label in question 
was discriminatory, rather than whether it was based wholly or in part on non -product -related PPMs.  
 
21. The representative of the United St ates said his delegation's view was the TBT Agreement applied 
to eco -labelling programmes.  The US proposal sought a political commitment to transparency, without 
prejudicing Members' views on coverage.  This was important for those who felt there should b e more 
in terms of clear obligations and for those who felt there should be better compliance with existing 
obligations.  The six elements in the development of an eco -label, listed in the US proposal, which 
required transparency might not all be independe nt steps and this was why the proposal noted that they 
might occur separately or simultaneously.  
 
Item 4  The provisions of the multilateral trading system with respect to the transparency of 
trade measures used for environmental purposes and environmental measures and  
requirements which have significant trade effects  
 
22. The representative of Norway  said that this issue had been discussed extensively, including in the 
EMIT Group, and it should be possible to present recommendations t o Ministers that:   
(i) any new transparency mechanisms should be linked to current disciplines;  (ii) requirements for 
notifications which might lead to duplication of other provisions in the WTO or other fora must be 
avoided;  (iii) relevant WTO fora sho uld be requested to improve compliance of existing notification 
obligations regarding trade -related environmental measures;  (iv) the Secretariat should be requested to 
provide an up -dated compilation of existing notifications for reference by Members;  an d (v) measures 
taken in accordance with Article XX should be notified.  
 
23. The observer from the International Trade Centre  (ITC) said that ITC worked with trade 
promotion institutions and the business sector to promote the trade of  developing countries and 
economies in transition.  ITC maintained databases on products and markets, buyers and sellers, export 
quality, export packaging and legal provisions governing foreign trade.  As environmental measures 
increasingly influenced the trade of developing countries, ITC had been mandated to undertake work on 
trade and the environment to provide:  (i) information on trade -related environmental measures to 
facilitate adjustments by exporters from developing countries and economies in trans ition to 
environmental requirements for international markets;  and (ii) identification of commercial 
opportunities for exporters from developing countries and economies in transition, e.g. green marketing 
and green purchasing.  As a first step, ITC was st udying the development of a database on trade -related 
environmental measures, which would benefit from information available in WTO notifications.  The 
ITC would make its proposal for a database available to interested delegations.  
 
Item 6  The effects of e nvironmental measures on market access, especially to developing 
countries, in particular to the least developed among them, and environmental benefits 
of removing trade restrictions and distortions  
 
24. The representative of Japan  said discussion on this Item should be broad -based, objective and 
should not highlight only the agricultural sector.  It was unacceptable to adopt a simplistic description in 
the Report that the elimination of trade distorting measures would bring about onl y positive          WT/CTE/M/12  
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environmental effects.  This would not automatically occur without appropriate environmental policies 
in place and the environmental impact of trade liberalization could differ between sectors and countries.  
 
25. The repre sentative of Argentina  said there was an inherent contradiction in claiming that free 
trade and environmental protection were mutually supportive, while at the same time, denying that trade 
distortions did not have negative environmental effects.  Argentin a was prepared to discuss sectors in 
addition to agriculture under this Item.  
 
26. The representative of Australia  agreed that discussion of the relationship between trade 
liberalization and environmental protection should be broad -based.  Australia's paper (WT/CTE/W/36) 
had cited agriculture as an example, but the Report should include other sectors for future work.  The 
relationship between the elimination of trade distortions and the environment was complex and adequate 
environmental measures needed to be in place for the environmental benefits of trade liberalization to be 
realized.  The Report should firmly rebut that there was conflict between the objectives of trade 
liberalization and environmental protection.  
 
27. The representative of Korea  said that, while in principle trade liberalization contributed to 
environmental protection, there w ere cases where if the appropriate environmental policies were not in 
place trade liberalization could exacerbate environmental protection, as had been identified in 
WT/CTE/W/1.  As such, there were no inherent contradictions in Japan's statement as trade distorting 
measures such as subsidies could contribute to environmental protection in certain cases.  
 
28. The representative of New Zealand  said the fact that trade liberalization in every instance would 
not lead to environmental en hancement indicated that this would require further analysis.  
 
29. The representative of Norway  said his delegation's non -paper (date 20 June 1996) had identified 
energy as an example of a sector which could yield a potential double dividend, whereby trade 
liberalization might entail both environmental and economic gains.  The CTE should explore whether 
such "win -win" situations prevailed in other sectors.  Agriculture was a case in point.  The Agriculture 
Agreement had initiated subs tantial agricultural reform, and its full effect remained to be seen.  More 
experience in the agricultural reform process was needed before conclusions were drawn on the nature 
of further liberalization.  Norway supported the general conclusions of the EC' s non -paper (dated 23 July 
1996) on the relationship between environmental benefits and agricultural reform.  Norway supported 
proceeding in a balanced manner and  recognizing and analysing non -trade concerns linked to farming, 
including the preservation o f agricultural land resources, cultural landscape and ecological processes, 
securing of biodiversity and sustainable resource utilization.  
 
30. The representative of the European Communities  said there were not significant difference s that 
could not be reconciled on this Item.  Where those differences existed, they should be recognized.  
 
31. The representative of the United States  said his delegation's paper (WT/CTE/W/35) had 
outlined that at the macro level tra de liberalization contributed to environmental protection through 
wealth creation and by addressing trade distortions that interfered with cost internalization, such as policies 
related to the environment and natural resources.  The complexities of this re lationship had been 
recognized in the US proposal for environmental reviews, a tool that countries might use to address these 
complexities.  Although the United States had not suggested that any one sector be examined, discussion 
should be informed not onl y by broad principles, but based on particular areas for which potential existed 
for trade -related reforms to result in environmental improvement.  Agriculture had received attention as 
there had been more analysis in this area.   
 
Item 8  Trade -related Aspects of Intellectual Property Rights and the environment  
 
32. The representative of Australia  presented his delegation's non -paper (dated 
11 September  1996) identifying several issues raised by the relationship between the TRIPS A greement 
and environmental objectives for further discussion.   WT/CTE/M/12  
Page 8 
 
 
33. The representative of the United States  said that his delegation would make available its 
comments on India's revised non -paper (dated 20 June 1996) on the TRIPS Ag reement and technology 
transfer, which had not make a convincing case for further work on the relationship of the TRIPS 
Agreement to access to, and transfer of, technology and the development of environmentally -sound 
technologies and products (EST&Ps).  Th ere was insufficient evidence of any conflict between 
intellectual property (IP) standards mandated by the TRIPS Agreement, MEA obligations, and the 
transfer of EST&Ps.  The United States objected to the presumption that problems existed or might arise 
over the use and availability of proprietary EST&Ps which were attributable to the TRIPS Agreement.  
The experience of the United States revealed that no substantial problems existed with the dissemination 
of proprietary EST&Ps among those countries that had established TRIPS -consistent IP systems.  India's 
non-paper did not examine the source of any problems that might exist related to EST&P transfer, such 
as environmental regulations, the foreign investment climate, and market conditions, which had a greater  
and more direct effect than IP.  The non -paper did not recognize that a country's lack of an effective IP 
regime could cause EST right holders to be less willing to transfer them to that country.  India's non -
paper contained a number of inaccuracies.  As had been noted in the CTE and in the July meeting of 
the TRIPS Council, several Articles in the TRIPS Agreement made it clear that a Member could not 
revoke EST&P patents and remain consistent with the obligations of the TRIPS Agreement.  To 
interpret the TRIPS Agreement in the way India suggested would nullify all the obligations in the patent 
section.  Article  27.1 of the TRIPS Agreement obligated countries to make patent rights available for 
inventions in all fields of technology, excepting those fields expressly identified in Article 27.3 as those 
inventions were new, involved an inventive step, and were capable of industrial application.  Patent rights 
were to be available without discrimination based on the place of invention, the field of technology, or 
whether the products concerned were imported or produced domestically.  If patents could be revoked 
for any reason, Article 27.1 would contain a hollow obligation.  Articles  27, 29 and 32 implied that the 
only basis for patent revocation was failure to meet patentability standards and any decision to revoke a 
patent on that basis was appealable.  Failure to meet Article 62 conditions could also result in patent 
revocation, even if that decision also was appealable.  
 
34. India's non -paper (dated 19 July 1996) referring to technology transfer goals in the Convention 
on Biological Diversity (CBD), suggested the phrase "fair and most favourable terms" found in 
Article  16.2 of the CBD meant "preferential and non -commercial" terms;  this interpretation was 
unwarranted.  Article 16 of the CBD addressed "technologies that are relevant to the conservation and 
sustainable use of biological diversity or make use of genetic resources and do not cause significant damage 
to the environment", which  constituted a subset of ESTs.  The obligation applied to "each Contracting 
Party" not just to developed countries, and the obligation was not to "provide or facilitate access for and 
transfer to other Contracting Parties".  This obligation could be met by  facilitating technology transfer.  
India's non -paper overlooked the second sentence of Article 16.2 of the CBD which clarified that the 
effort of a country to facilitate the transfer of proprietary technology must be consistent with adequate and 
effective  IPR protection established by the TRIPS Agreement.  No obligation in the CBD mandated 
developed countries to provide developing countries with proprietary technologies owned by the private 
sector on "preferential and non -commercial terms".  
 
35. India's non -paper mischaracterized reference in WT/CTE/W/22 to the capability of technologies 
to be copied.  Certain technologies were more susceptible than others to misappropriation through 
copying by third parties without the authority of t he right holder.  India's non -paper converted discussion 
of the relative ease with which certain types of technologies could be misappropriated through "copying" 
into a suggestion that misappropriation was legitimate behaviour being promoted by WTO Members ;  
this was inappropriate.  India's non -paper suggested that Article 31 of the TRIPS Agreement should be 
weakened so that compulsory licensing could serve as a tool for ensuring rapid technology transfer, 
regardless of patent rights.  This ignored the purp ose of Article 31, evident from the restrictions on the 
availability of such licenses, which was to provide governments with specific, limited remedies for 
addressing patent abuse by a patent owner, while at the same time preventing abuse of those same rig hts 
by governments at the patent owner's expense.  The Article 31 provisions cited in India's non -paper as 
impediments to technology transfer were the backbone of the framework established to ensure          WT/CTE/M/12  
         Page 9 
 
governments did not abuse patent owners' rights.  India's  non-paper suggested that parties seeking to 
license patented technology and trade secrets should be able to go first to their government, rather than 
to the owner of the technology, and that governments should be given the authority to ignore the economic  
significance of their actions.  This would likely result in a decrease in the amount of R&D devoted to 
EST development.  India's non -paper suggested a "win -win" situation if the TRIPS Agreement were 
modified to permit Members to reduce the term of protect ion for EST patent owners to less than the 20 
years from the filing date required by Article 33.  This would serve neither the patent owner nor the 
public's interest.  The patent owner would have a shorter period of exclusive rights in which to recoup 
the cost of R&D and would have to increase the price of the product or face a loss of revenue for further 
R&D.  The public would pay higher prices or would discover fewer EST&Ps being developed.  It was not 
apparent that the issue of indigenous rights referred to in Australia's non -paper was one which involved 
the TRIPS Agreement.  This view should not be prejudiced in the Report.  
 
36. The representative of Switzerland  said that the TRIPS Agreement had only recently come into 
force and its  provisions would only be fully applicable to developing country Members after a transition 
period of five years.  The TRIPS Agreement's objective was not to protect the environment.  
Nevertheless, Article 27.3 permitted the exclusion from patentability of  invention which could cause 
serious environmental damage.  This provision would be reexamined in January 1999.  IP protection 
was essential to encourage the development of new technologies and ESTs and would facilitate technology 
transfer by offering a de gree of certainty to firms investing abroad or exporting their most recent products.  
The obligation to replace certain environmentally -damaging technologies with ESTs, such as contained 
in certain MEAs, might entail implementation costs for developing cou ntries and SMEs.  The solution 
to any such difficulties was not to decrease IP protection, but lay in positive measures, such as those 
included in the Montreal Protocol, including financing the substitution and transfer of appropriate 
technologies.  The tr ansfer of new, more environmentally -sound technologies might be encouraged 
through diverse measures which would favour investment independently of IP systems.  Switzerland felt 
that there was no contradiction between the TRIPS Agreement and the CBD and tha t nothing in the 
TRIPS Agreement went against Principle 2 of the Rio Declaration.  As such, there was no need to modify 
the TRIPS Agreement to take into account environmental concerns.  
 
37. The representative of India  referred to comments on his delegation's non -paper on the transfer 
of EST&Ps (dated 20 June 1996).  He referred to the comment that problems did not exist for EST&P 
dissemination for countries which had established a TRIPS -consi stent IP system and that these problems 
tended to occur due to impediments to foreign investment and trade in such products.  The question 
was whether a country which had the domestic capability to use certain technologies and was self -sufficient 
in the pr oduction of certain products which then were mandated to be phased out by an MEA should 
become dependent on imports and change its industrial and trade structure in these sectors because of 
the MEA.  He asked what then was the meaning of "common but differ entiated responsibilities", or "fair 
and most favourable terms".  He asked how these terms were to be operationalized except through the 
TRIPS Agreement, which was the only relevant international trade law on this subject.  The true source 
and solution to these problems lay in the TRIPS Agreement and the CTE provided Members with the 
opportunity to reconcile environmental and IP protection.  The interface between these two objectives 
had to be facilitated.  There were many factors affecting technology trans fer, but in the case of proprietary 
EST&Ps the key factor was IP protection. Demanders sought and obtained global protection through the 
TRIPS Agreement as IP protection was considered important.  If the EST&Ps involved were in the 
public domain, such IP p rotection might not be a key factor.  However, when technologies were closely 
held, a solution needed to be found to make them available for environmental protection to countries 
which did not have access to them on "fair and most favourable terms".   
 
38. India's non -paper highlighted the contradictions between MEA provisions and the TRIPS 
Agreement and suggested that where certain EST&Ps were mandated to be used by national or 
international law, copying or reverse -engineering should  be encouraged for their wider dissemination, 
especially if no obligation existed to transfer it on "fair and most favourable terms".  Compulsory licensing 
provisions of the TRIPS Agreement could be used for this purpose.  India's intention was to weave th e 
CBD's objectives into the TRIPS Agreement and to discuss technology transfer in the context of the WT/CTE/M/12  
Page 10 
 
TRIPS Agreement as it had not been a central issue in the negotiations.  India's non -paper on the TRIPS 
Agreement and the CBD (dated 19 July 1996) tried to  incorporate the concerns of the CBD into the 
TRIPS Agreement in order to reconcile their objectives.  It addressed issues related to the CBD other 
than the issue of technology transfer, which was discussed in India's revised non -paper on the TRIPS 
Agreeme nt and technology transfer (dated 20 June 1996).  The issue was whether a country's sovereign 
rights over its genetic resources were adequately protected by the TRIPS Agreement, which was the only 
agreement that could address the issue of what happened to the benefits obtained from commercial 
exploitation of indigenous biological material and traditional knowledge in developing countries.  This 
was the issue that India wished to deal with in the context of Article  27.1 of the TRIPS Agreement.  
Australia's n on-paper raised similar issues to those raised by his delegation but from a different 
perspective.  India supported the last paragraph of Australia's non -paper and the Report should try to 
accommodate the ideas it contained.   
 
39. The representative of the United States  said that in the context of an MEA, there might be a 
shared objective that a particular technology was environmentally -harmful and should be phased out. The 
MEA was not addressing a country's comparative advantage, bu t had reached a conclusion that there was 
an environmental problem.  In effect, this changed the market because an environmentally -damaging 
pattern of behaviour needed to be changed.  It was difficult to accept that the WTO should deal with 
market changes which resulted from the realization of environmental objectives differently than other 
market factors which led to market changes.  It was difficult to accept India's proposal to put elements of 
the CBD into the TRIPS Agreement.  The WTO should be supporti ve of activities in other 
organizations and not hamper efforts to deal with environmental challenges multilaterally, but the WTO 
was not an environmental organization and it lacked the competence to insert MEA goals in WTO 
Agreements.  
 
40. The representative of Cuba  said that as a preliminary comment on Australia's non -paper his 
delegation supported its last paragraph.  
 
Item 10  Input to the relevant bodies in respect of appropriate arrangements for relations with 
non-governmental orga nizations referred to in Article V of the WTO  
 
41. Following the Decision of the General Council on 18 July 1996 on "Guidelines for observer status 
for intergovernmental organizations in the WTO" (WT/L/161/Rev.1), the CTE decided  to extend 
observer status on a permanent basis to those intergovernmental organizations which it had previously 
granted observer status on an ad hoc  basis.  
 
42. The representative of the United States  attached importance to this Item an d welcomed the 
Decision of the General Council (WT/L/160) on "Guidelines for arrangements on relations with non -
governmental organizations (NGOs)" in order to enhance the interaction between the WTO and NGOs, 
particularly in the environmental area.  
 
43. The Chairman  recalled that the Secretariat would organize two informal briefing sessions for 
NGOs involved with issues related to trade and environment on 26 -27 September and  3 October.  
 
44. The Chairman  recalled  the agreement of the CTE that a draft of Section III of the Report be 
circulated by the Chairman for discussion and in preparation for the CTE's adoption of the Report as a 
whole at the 24 -25 October meeting.